Standard Oil Company, Inc. v. Consolidation Coal Company
15-0655
| W. Va. | Oct 17, 2016Background
- In 1998 Standard Oil granted Consol a written option for 90 years to purchase any of Standard Oil’s oil, gas, or coalbed-methane wells for $25,000 each; stated consideration for the option was $10.00.
- Standard Oil’s then-owner, Joe O’Ferrell, testified Consol bought and plugged some wells under the option but later took and plugged additional wells without paying; O’Ferrell knew of unpaid takings by 2002 but chose not to sue while he pursued other business with Consol; he sold Standard Oil around 2010.
- In 2014 Standard Oil sued declaratorily, seeking (1) the option void for inadequate consideration, (2) void for vagueness as to which wells were covered, and (3) void as violating the rule against perpetuities; later it sought to amend to add a “first breach” claim after O’Ferrell’s deposition.
- Consol moved for summary judgment on the declaratory claims and opposed the amendment; the circuit court granted summary judgment for Consol (finding consideration adequate in 1998, the agreement sufficiently definite, and the 90-year term permissible under the Uniform Statutory Rule Against Perpetuities) and denied leave to amend (finding Standard Oil knew of breaches by 2002 and that a breach claim would be time-barred).
- Standard Oil appealed; the Supreme Court of Appeals of West Virginia affirmed, holding the declaratory complaint did not seek the narrower relief Standard Oil later claimed and that denying the amendment was not an abuse of discretion because the proposed breach claim was barred by the ten-year statute of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of consideration for 1998 option | $10 was grossly inadequate given potential Marcellus/Utica value | $10 was valid consideration in 1998 for the bargained option | Court: consideration was sufficient when made in 1998; summary judgment for Consol |
| Vagueness/identification of wells | Agreement ambiguous as to which wells (and future horizontal wells) are covered | Agreement sufficiently identifies wells; plaintiff didn’t plead narrower relief | Court: agreement not unduly vague; summary judgment for Consol |
| Rule against perpetuities (90‑year term) | 90‑year option may violate RAP | Statutory rule validates nonvested interests that vest or terminate within 90 years | Court: 90‑year term complies with Uniform Statutory Rule Against Perpetuities; summary judgment for Consol |
| Motion to amend to add "first breach" claim | Amendment required after deposition; seeks declaration Consol cannot enforce option due to Consol’s prior breaches | Amendment would inject a time‑barred claim and prejudice Consol | Court: denial was not an abuse of discretion — plaintiff (through its officer) knew by 2002; ten‑year statute bars the breach claim; amendment would be prejudicial |
Key Cases Cited
- Painter v. Peavy, 451 S.E.2d 755 (W. Va. 1994) (summary-judgment standard)
- Cox v. Amick, 466 S.E.2d 459 (W. Va. 1995) (declaratory-judgment review de novo)
- Town of S. Charleston v. Bd. of Ed. of Kanawha Cty., 50 S.E.2d 880 (W. Va. 1948) (declaratory relief limited to matters pleaded)
- State Farm Mut. Auto. Ins. Co. v. Schatken, 737 S.E.2d 229 (W. Va. 2012) (court cannot decide issues not in original complaint)
- Black v. St. Joseph’s Hosp. of Buckhannon, Inc., 764 S.E.2d 335 (W. Va. 2014) (same limitation on declaratory relief)
- Nellas v. Loucas, 191 S.E.2d 160 (W. Va. 1972) (abuse of discretion standard for denial of leave to amend)
- Brooks v. Isinghood, 584 S.E.2d 531 (W. Va. 2003) (Rule 15 interpreted liberally to permit merits adjudication)
- Hurley v. Bennett, 176 S.E. 171 (Va. 1934) (first-breach doctrine described)
- Blue v. Hazel-Atlas Glass Co., 147 S.E. 22 (W. Va. 1929) (first-breach doctrine authority)