Pennsylvania General Energy Co. v. Hershey, M.
Pennsylvania General Energy Co. v. Hershey, M. No. 908 WDA 2016
| Pa. Super. Ct. | Feb 13, 2017Background
- PGE (lessee) and Melvin B. Hershey (lessor) executed an Oil and Gas Lease, an Addendum, and an Order of Payment on November 1, 2014 for 243.52 acres (paid-up interest for 121.76 net acres).
- The Order of Payment promised a $243,520 bonus for a 50% interest, subject to PGE’s inspection/approval of surface, geology and title and a record title adjustment clause.
- PGE issued two checks totaling $243,520 on February 19, 2015; Hershey cashed them.
- A March 2015 title opinion showed Hershey only had good title to ~5.019 acres; PGE demanded return of $238,551.19 (the overpayment) and sued when Hershey refused.
- Trial court granted PGE’s motion for judgment on the pleadings and entered judgment for $238,551.19 plus interest; Hershey appealed.
Issues
| Issue | Plaintiff's Argument (PGE) | Defendant's Argument (Hershey) | Held |
|---|---|---|---|
| 1. Did PGE’s failure to complete a title search before payment prevent formation of a binding lease? | Contract formed when documents were executed; the conditional language affects performance, not formation. | The Order of Payment created a condition precedent to acceptance—PGE’s failure means the lease never became operative. | Rejected Hershey’s argument; lease was formed. Conditional language related to PGE’s performance, not contract formation. |
| 2. Did PGE breach the contract by paying before approving title, barring its recovery? | Title-approval language is a condition precedent to payment, not a duty whose breach prevents PGE from seeking restitution for lessor’s breach of title warranty. | PGE breached an affirmative covenant to perform a title search and therefore cannot sue the non-breaching party. | Rejected Hershey’s claim: PGE had no duty breached; the title approval clause was a condition on payment, not an affirmative duty preventing recovery. |
| 3. Did PGE fail to state a claim for unjust enrichment because payment was voluntary? | PGE did not seek judgment on unjust enrichment by motion and relied on contract/warranty remedies for recovery. | Payment was voluntary and equitable relief should be denied. | Court did not address unjust enrichment on the motion; PGE’s contract/warranty claims sustained judgment. |
| 4. Should Hershey have been allowed to amend pleadings before judgment on the pleadings? | No prejudice; pleadings were closed and judgment was proper on admitted facts. | Trial court erred by not granting leave to amend or further opportunity to respond. | Denied: Hershey never requested leave to amend in the trial court; claim waived. |
Key Cases Cited
- Cardinale v. R.E. Gas Dev., LLC, 74 A.3d 136 (Pa. Super. 2013) (conditional language in an Order for Payment relates to the lessee’s duty of performance and does not negate contract formation).
- Rourke v. Pennsylvania Nat’l Mut. Cas. Ins. Co., 116 A.3d 87 (Pa. Super. 2015) (standard and review for judgment on the pleadings).
- Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418 (Pa. 2001) (principles of contract interpretation and when extrinsic evidence is permissible).
- Hart v. Arnold, 884 A.2d 316 (Pa. Super. 2005) (elements required to establish a breach of contract).
- Cmty. Coll. of Beaver County v. Cmty. Coll. of Beaver County, Soc. of the Faculty (PSEA/NEA), 375 A.2d 1267 (Pa. 1977) (ambiguity in written instruments presents factual questions for the factfinder).
- McCausland v. Wagner, 78 A.3d 1093 (Pa. Super. 2013) (discusses the principle that a breaching party may be barred from seeking performance when appropriate).