Lenau, N. v. Co-Exprise, Inc.
102 A.3d 423
| Pa. Super. Ct. | 2014Background
- Subsidiary Co-eXprise pooled Beaver County landowners to bid on oil/gas leases via MarketPlace agreements.
- Owners signed MarketPlace Agreements promising Co-eXprise five percent of upfront bonus as a transaction fee.
- Chesapeake Appalachia, LLC was identified as highest bidder but not meeting MarketPlace thresholds; Lenau/Trieschock signed on.
- Landowners were urged to sign and attend lease-signing events; once a lease was signed, Co-eXprise collected the fee from Chesapeake.
- Appellants sued for breach of contract, unauthorized practice of law, UTPCPL, securities act violations, fiduciary duty, and unjust enrichment; trial court sustained demurrer and dismissed claims.
- Appeal from the May 1, 2013 order dismissing the complaint; court affirmed the dismissal on all claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MarketPlace Agreement 3 is ambiguous | Lenau argues Section 3 is ambiguous and favors landowners | Co-eXprise argues Section 3 unambiguously assigns the fee to landowners | Not ambiguous; contract interpreted as landowners pay the fee as written |
| Whether Co-eXprise engaged in unauthorized practice of law | Appellants allege advisory/legaldoc activities constitute practice of law | Courts should distinguish business brokerage from legal practice | No unauthorized practice; activities within ordinary business of securing leases |
| Whether Co-eXprise acted as an unregistered investment adviser under the Pennsylvania Securities Act | MarketPlace transactions are securities; Co-eXprise must be registered | Leases/royalty rights not securities; not within Act’s scope | Transactions not securities; not required to register as investment adviser |
| Whether there was a fiduciary duty and breach related to Co-eXprise's conduct | Co-eXprise owed fiduciary duties via MarketPlace; breached by fees/acts | No fiduciary duty beyond contract; no illegal conduct shown | No fiduciary duty breach; claims dismissed |
Key Cases Cited
- Hutchison v. Sunbeam Coal Corp., 519 A.2d 385 (Pa. 1986) (contract interpretation; ambiguity governs parol evidence)
- Steuart v. McChesney, 444 A.2d 659 (Pa. 1982) (ambiguity and contract interpretation principles)
- Marcone, 855 A.2d 654 (Pa. 2004) (public interest in determining what constitutes the practice of law)
- Yaste, 70 A.2d 685 (Pa. Super. 1950) (definition of security includes fractional undivided oil/gas interests)
- Nolfi v. Ohio Ky. Oil Corp., 675 F.3d 538 (6th Cir. 2012) (fractions of mineral interests; securities analysis under Howey framework not applicable)
- Adena Exploration, Inc. v. Sylvan, 860 F.2d 1242 (5th Cir. 1988) (royalty/lease rights generally not securities; Congress targeted fractional interests)
- Woodward v. Wright, 266 F.2d 108 (10th Cir. 1959) (investment contract analysis for mineral rights; Something more than naked lease)