Case Information
PA Super 13 LUCINDA A. CARDINALE AND IOLA IN THE SUPERIOR COURT OF HUGNEY, ON BEHALF OF THEMSELVES PENNSYLVANIA AND ON BEHALF OF ALL THOSE
SIMILARLY SITUATED
v. GAS DEVELOPMENT, LLC, AND REX
ENERGY CORPORATION
APPEAL OF: IOLA HUGNEY, ROBERT L.
HENRY AND ELAINE M. HENRY
No. WDA 2015 Appeal from the Order July 6, 2015 In the Court of Common Pleas of Clearfield County Civil Division at No(s): 2011 -1791 -CD MARY R. BILLOTTE, ON BEHALF OF IN THE SUPERIOR COURT OF HERSELF AND ON BEHALF OF ALL THOSE PENNSYLVANIA SIMILARLY SITUATED
v. GAS DEVELOPMENT, LLC, AND REX
ENERGY CORPORATION
APPEAL OF: IOLA HUGNEY, ROBERT L.
HENRY AND ELAINE M. HENRY
No. WDA 2015 Appeal from the Order July 2015 In the Court of Common Pleas of Clearfield County Civil Division No(s): -1099 -CD BEFORE: SHOGAN, OLSON STRASSBURGER,* JJ.
*Retired Senior Judge assigned to the Superior Court. FILED JANUARY 17, 2017
OPINION BY OLSON, J.: Appellants, Iola Hugney, Robert L. Henry, and Elaine M. Henry, appeal from the orders entered on July 6, 2015, denying the Motions Class Certification were filed on behalf of "Lucinda A. Cardinale and Iola Hugney, on behalf of themselves and on behalf of all those similarly situated," and "Mary R. Billotte, on behalf of herself and on behalf of all those similarly situated." After careful consideration, we vacate and remand.
On October 2011, Lucinda A. Cardinale ( "Cardinale ") and Iola Hugney ( "Hugney ") filed action complaint against Gas Development, LLC ( "R.E. Gas ") and Rex Energy Corporation ( "Rex Energy ") (hereinafter, collectively, "the Defendants "),1 behalf of themselves on behalf of all those similarly situated. Cardinale Hugney Complaint, 10/25/11, [1] -17. complaint docketed at 2011 -1791 -CD and, within their complaint, Cardinale Hugney claimed that, 2008, the Defendants entered into Marcellus Shale oil and gas leases number Id. at individuals Pennsylvania, including Cardinale Hugney. ¶¶ -11. According complaint: Within the Cardinale Hugney Complaint, Cardinale Hugney averred wholly -owned subsidiary Rex Energy.
Hugney Complaint, ¶ 5.
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J-A16018-16 Rex Energy an independent oil and gas company that operates the Appalachian Basin where it produced in approximately 2.8 Million Mcf of natural gas per day in . Rex Energy used its wholly owned subsidiary[,] 2008. . . R.E. Gas[,] obtain oil and gas leases Clearfield County and elsewhere Pennsylvania.
In 2008[,] R.E. Gas delivered ... each plaintiff and each member the standard form Oil and Gas Lease and standard form memorandum of lease into which all of the required information, such the lessors' identities property identifications had been inserted. Each of the standard form Oil and Gas Leases was identical or substantially identical all material respects except for references identity lessor, the description of leased premises and the amount of the prepaid rental or bonus was to paid. The amount of the prepaid rental or bonus depended upon the number of acres that were included the standard form Oil and Gas Lease.
Id. ¶ ¶7, 9, and 15.
Cardinale and Hugney claimed they signed Oil and Gas Lease, Addendum, an Order Payment, and Memorandum of Oil and Gas Lease, and then delivered the executed documents either R.E. Gas' agent and landman, Western Land Services, Inc. Id. ¶¶ -13, and 18. then "executed accepted" the documents from Cardinale July 23, 2008 from Hugney on August Id. at ¶¶ and 19. Cardinale Hugney claimed:
Under the terms of [] Cardinale's Oil Lease, R.E. Gas had to pay [] $105,875.00 within [60] banking days its receipt [] Cardinale's order for payment executed oil and gas lease, which occurred on shortly after July 23, 2008. Gas's obligation to pay subject only "to its inspection, approval of the surface, geology title" of the leased premises.
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J-A16018-16 Under the terms of [] Hugney's Oil and Lease, R.E. Gas had to pay [] Hugney $71,925.00 within [60] banking days its receipt of [] Hugney's order for payment and executed oil and gas lease, which occurred or shortly after August Gas's obligation to pay subject only "to its inspection, approval of the surface, geology title" leased premises. Id. at ¶¶ 25 -26 (paragraph numbering omitted).
According to complaint, after 60 -day time period expired, the Defendants "den[ied] that any contract or lease interest exist[ed] between [the Defendants Cardinale, Hugney,] or those similarly situated [Cardinale Hugney]" the Defendants failed to pay bonuses or rents due to the landowners. Id. at ¶¶ -29. Further, the Cardinale Hugney Complaint claimed the Defendants denied leases either without having inspected the landowners' properties or without having inspected land within the requisite "60 banking days" after Gas received leases and orders payment. Id. ¶¶ 30 -33. Finally, complaint claimed the Defendants "denied any contract lease members existed not because of any purported right inspect approve the surface, geology title, but for other reasons, including but not limited [D]efendants' decision reduce capital expenditures in late 2008" due to the economic downturn. Id. ¶ 43(e). Hugney Complaint contained three counts: breach contract against Gas; tortious interference with contract against Rex
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J-A16018-16 Energy; and civil conspiracy against both Defendants. Moreover, Cardinale and Hugney sought to represent the following the lawsuit:
All persons who signed an oil and gas lease with R.E. Gas Development, LLC, related to property located in Clearfield County, Pennsylvania, or elsewhere in Pennsylvania for which Western Land Services, Inc., acted as agent for or represented Gas Development, LLC, for which Gas Development, LLC, pay amounts specified the oil and gas leases or orders payment, rental "bonus" including the applicable pre -paid payments.
Id. ¶ 41.
The following contractual documents were attached the Cardinale Oil and Gas Lease, Addendum, a and Hugney Complaint: Memorandum of Oil and Gas Lease, and an Order Payment. In relevant part, the Oil Lease between Hugney Gas reads as follows:2
OIL AND GAS LEASE (PAID UP) Project: Skywalker III
THIS AGREEMENT is made as of the 6t" day AUGUST, by and between Iola Hugney . . Lessor, R.E. . Development, LLC, ... Lessee. Oil and Gas Lease, Memorandum of Oil Lease, and Order for Payment are standard forms. As complaint correctly states, Cardinale's documents "identical substantially identical all material respects [to Hugney's documents,] except references identity of the lessor, description of the leased premises amount prepaid rental or bonus paid." Hugney Complaint, at ¶ Therefore, we will only recite relevant terms of Hugney's documents. Moreover, we will not restate the terms of the Addendum, as Addendum irrelevant current appeal.
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J-A16018-16 1. Lessor, for and consideration of One Dollar ($1.00), and other good and valuable consideration, the receipt of which is hereby acknowledged, and the covenants and agreements Lessee hereinafter contained, does hereby grant, lease and let unto Lessee land described below, including all interests therein Lessor may acquire by operation of law, reversion otherwise, (herein called the for "Leasehold Estate "), exclusively, purposes of exploring by geophysical and other methods, drilling, operating for and producing oil and /or gas from any strata . together with all rights, privileges and any depth . . easements . . useful or convenient connection with . foregoing and connection with treating, storing, caring for, transporting removing oil and /or gas produced from Leasehold Estate... .
2. It is agreed this lease shall remain force for a primary term five (5) years from date of this lease, as long thereafter as operations conducted upon Leasehold Estate lands pooled or unitized therewith no cessation for more than consecutive days... .
3. Within sixty (60) days from the date of execution of this lease, Lessee agrees pay Lessor sum [$71,925.00] full complete bonus payment for this lease for entire primary term this lease. This is a paid -up lease no delay rentals shall be due. The bonus paid hereunder consideration this lease shall not allocated mere rental period. Lessee covenants agrees to pay the following royalties: [stating the computation of royalties]... .
Iola Hugney This instrument prepared Timothy J. Kotzman, agent Development LLC. . .
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J-A16018-16
Oil and Lease between Hugney and Gas, -4.
The Memorandum of Oil and Lease between Hugney and Gas reads, in relevant part, as follows:
MEMORANDUM OF OIL AND GAS LEASE Project: Skywalker III
THIS MEMORANDUM OF LEASE, dated this 6t" day August, 2008, and between Iola Hugney . . hereinafter . called Lessor ... and Development LLC ... hereinafter referred as "LESSEE "... .
WITNESSETH: 1. For and in consideration Ten Dollars ($10.00) and
other good and valuable consideration paid and be paid by Lessee to Lessor and further consideration of the rents reserved and the covenants and conditions more particularly set forth certain lease between Lessor Lessor dated August 6, 2008, (hereinafter referred as "Lease ") does hereby lease and let exclusively unto Lessee the following described premises: [describing the leased premises]... .
Containing total of 28.77 acres, more or less, (hereinafter referred as the "Premises ") for the purpose of exploring for ... , drilling, operating, producing removing oil, gas and all constituents thereof
2. TO HAVE AND TO HOLD Premises Primary Term of five (5) years from August as long thereafter as prescribed payments are made, or as long thereafter operations conducted Premises search of oil, gas their constituents... . rental, covenants, provisions conditions of within Memorandum Lease shall same rental, covenants, provisions conditions set forth Lease to which rental, covenants, provisions conditions
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J-A16018-16 referenced hereby made same are hereby incorporated by reference though fully written herein. This memorandum of Lease executed simplified
short form the convenience of the parties and for purpose of recording same, this Memorandum of Lease shall have the effect of any way modifying, supplementing abridging Lease any of its provisions same or now or may hereafter be force effect. Iola Hugney
This instrument prepared by Timothy J. Kotzman, agent Development LLC... . Memorandum of Oil and Gas Lease between Hugney Gas, 8/6/08, -2. Order Payment then declares:
ORDER FOR PAYMENT Lessee shall, subject its inspection, approval of the surface, geology title, make payment to Lessor as indicated herein check within banking days of Lessee's receipt of this Order For Payment executed Oil Lease associated herewith. No default shall be declared for failure make payment until days after written notice from Lessor intention declare such default... .
For collection, the original copy herein must submitted directly Lessee at the address below along an executed original Oil and Gas Lease.
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J-A16018-16
PAYEE (Lessor): Iola Hugney
Address:
Phone: amount of: ($71,925.00) Dollars This payment represents full consideration Five (5) year paid-up Oil Lease dated August 2008 covering following described lands: [stating a description land].
Issued behalf of Lessee by:
Timothy J. Kotzman, Agent Development LLC
This Order Payment expires one year from date issuance, unless paid sooner, terminated or replaced by Lessee.
Order Payment, 1.
As this Court previously explained:
[The Defendants] filed preliminary objections complaint. Their objections span[ned 27] pages and consist[ed] [84] numbered paragraphs. After [Cardinale Hugney] filed their response the objections, the trial court entered the following order.
Now, this 9th day of May, 2012, following argument on [the Defendants'] Preliminary Objections Class Action Complaint receipt review of the parties' briefs and applicable case law, it is ORDER of this [c]ourt as follows:
1. As to [the Defendants'] Demurrer to the Complaint in its entirety this [c]ourt agrees as a matter of law [the Defendants] not accept [the Cardinale and Hugney Plaintiffs'3] offer[s] enter into binding gas leases.
2. As such, no contracts were formed between [the Cardinale and Hugney Plaintiffs] and Gas.
3. Accordingly, it is ORDER of this [c]ourt [the Defendants'] Demurrer and is hereby GRANTED. [Cardinale and Hugney's] Complaint hereby DISMISSED its entirety, with prejudice; In support of its dismissal the [c]ourt hereby adopts legal reasoning and conclusions set forth in paragraphs 8 through [55] [the Defendants'] Preliminary Objections Class Action Complaint filed on January 2012.
Trial Court Order, 5/10/12[, at 1]. . . .
In paragraphs eight through [55] of their preliminary objections, [the Defendants] presented following arguments support their request demurrer [Cardinale Hugney's] complaint.
According to [the Defendants], the parties never entered into binding lease/contract. In support this position, [the Defendants] noted that, addition signing "Oil Leases," [the Cardinale Hugney Plaintiffs signed "Orders Payment." [The Defendants] highlighted the following language from the "Orders for Payment:" As shorthand, we will refer Cardinale, Hugney, proposed members of the Cardinale Hugney wished to represent "the Hugney Plaintiffs." i.e., R.E. Gas,] shall, subject its
Lessee[, iLidection, approval of surface, geology and title, make payment to Lessor[, i.e., the Cardinale and Hugney Plaintiffs] indicated herein by check within 60 days of Lessee's receipt of this Order For Payment and the executed Oil Gas Lease associated herewith. [Order for Payment, (emphasis added)]. [The Defendants] also pointed out the "Orders for Payment" state, "This Order for Payment expires one year from date of issuance, unless paid sooner, terminated replaced by Lessee." Id. thrust of [the Defendants'] argument was follows: . R.E. Gas not make offers to [the Cardinale and
. . Hugney Plaintiffs] enter into contracts include the Bonus Payments because Orders for Payment: (i) gave R.E. Gas an unlimited right terminate Orders of Payment and, therefore, decide later the nature and extent of its performance, (ii) required further manifestation of assent by R.E. Gas.
As result, the provision of the Proposed Leases and Orders Payment merely invitation to bargain part R.E. Gas. Then [the Cardinale and Hugney Plaintiffs], signing and returning Proposed Leases Orders Payment, made offers enter into Proposed Leases and Orders Payment under the terms conditions contained those documents.
However, explicitly rejected [the Hugney Plaintiffs'] offers Rejection Letters.
As result, because rejected [the Cardinale Hugney Plaintiffs'] offers, no contracts include Bonus Payments were ever formed. Therefore, the [c]ourt should . . dismiss Count I Complaint as . legally insufficient.
[The Defendants' Preliminary Objections, 1/24/12,] VI] 48-51 (citations omitted). In paragraphs [52] through [55] their preliminary objections, [the Defendants] argued that, because no contracts were ever formed [the Cardinale and Hugney Plaintiffs] and Gas, counts two and three complaint also are legally insufficient should be dismissed.
Cardinale v. R.E. Gas Dey., LLC, A.3d 136, 138 -139 (Pa. Super. 2013).
As noted, on May 10, 2012, the trial court sustained the Defendants' preliminary objections and dismissed the Cardinale and Hugney Complaint. Cardinale and Hugney filed timely notice appeal and this Court vacated the trial court's order published opinion. Within this Court's opinion, we held trial court erred when it concluded that "the parties never entered into contracts /leases." Id. at 140.
At the outset, Cardinale Court held the following clause in Oil and Gas Lease "places unconditional duty upon Gas to pay [Hugney] bonus payment:" Within sixty (60) days from the date of execution this
lease, Lessee agrees to pay to Lessor sum [$71,925.00] full complete bonus payment for this lease entire primary term of this lease. This is a paid -up lease no delay rentals shall be due. The bonus paid hereunder consideration this lease shall not allocated mere rental period. Oil Lease between Hugney Gas, -4; see also Cardinale, A.3d 140.4 Within the opinion, this Court directly quoted excerpts from
Lucinda Cardinale's contracts documents. However, we noted:
[t]he Hugney/R.E. documents identical Cardinale /R.E. documents respect the questions this Court must address to dispose of this appeal.
(Footnote Continued Next Page) Court then held: "the language utilized in lease
agreement documents strongly indicates that the parties manifested an intent to bound by terms of documents[;] that the terms of the documents were sufficiently definite[, and,] consideration existed." Cardinale, 74 A.3d at Further, we held that "[n]o language contained in 'Order for Payment' alter[ed] [our] conclusion" valid contract between Hugney Gas existed. Id. First, we cited to the following language the Order Payment:
Lessee[, i.e., Gas,] shall, subject to its inspection, approval of the surface, geology title, make payment Lessor[, i.e. Hugney,] indicated herein check within 60 banking days of Lessee's receipt of this Order For Payment executed Oil Gas Lease associated herewith.
Hugney's Order Payment, 1; see also Cardinale, A.3d at 141.
(Footnote Continued)
Thus, our analysis of, holding upon, the Cardinale /R.E. Gas documents applies equal force Hugney /R.E. documents. Cardinale, A.3d n.1.
In case at bar, we have quoted the relevant portions of Hugney's documents with Gas. Further, "[t]he Hugney/R.E. documents are identical the Cardinale /R.E. documents with respect the questions this Court must address dispose this appeal." See id. As such, when quoting analyzing this Court's prior opinion Cardinale, we will utilize the language contained Hugney's documents opposed to language contained Cardinale's documents.
On appeal in Cardinale, the Defendants claimed that above language "created condition precedent to formation an agreement." Cardinale, A.3d at 141. We disagreed with the Defendants held: conditional language the "Order for Payment" does
not directly relate to the existence of agreement between R.E. Gas [Hugney]. Rather, the language deals Gas's duty of performance. R.E. Gas is required to perform by paying [Hugney] indicated the "Order Payment," subject to the conditions stated therein. Consequently, this provision "Order for Payment" does render the parties' lease agreements invalid.
Id. at -142.
Next, Court interpreted the language the Order for Payment, which declared: "This Order Payment expires one year from date of issuance, unless paid sooner, terminated replaced Lessee." Hugney's Order Payment, at 1; see also Cardinale, A.3d at On appeal, the Defendants argued that this language gave Gas "the discretion to terminate leases will." Cardinale, A.3d 142. We held the Defendants were incorrect:
This statement, at best, allows terminate "Order for Payment." This statement does not allow R.E. terminate the parties' lease agreement or even R.E. Gas's duty perform under lease agreement. Moreover, there nothing of record suggests R.E. sought terminate the "Order for Payment." Id.
On June 19, we vacated the trial court's order remanded case for further proceedings. While the Cardinale and Hugney appeal was pending before this Court, substantially similar action complaint was filed trial court, at docket number 2012 -1099 -CD, by "Mary R. Billotte, on behalf of herself and behalf of all those similarly situated." Billotte Complaint, 7/18/12, at [1] -16 and Attachments. Billotte Complaint is, all relevant respects, identical to the Cardinale and Hugney Complaint and the documents attached Billotte Complaint "identical or substantially identical in all material respects [to Cardinale and Hugney's documents,] except for references identity lessor, the description of the leased premises amount of the prepaid rental or bonus was be paid." See Cardinale Hugney Complaint, 10/25/11, at ¶ 15; see also Billotte Complaint, 7/18/12, at -16 Attachments. Further, true Hugney, Billotte sought represent the following class:
All persons who signed an oil and gas lease with Development, LLC, related to property located in Clearfield County, Pennsylvania, or elsewhere in Pennsylvania for which Western Land Services, Inc., acted agent for or represented Development, LLC, which Development, LLC, pay amounts specified oil and gas leases orders payment, rental "bonus" including the applicable pre -paid payments.
Billotte Complaint, 7/18/12, ¶ 35.
On October 2014, the trial court entered order declaring Billotte Case the Cardinale Hugney Case were "consolidated all purposes." Trial Court Order, 1.
On February 5, 2015, counsel Appellants filed a "Motion to Substitute Class Representatives" at both docket numbers. motion sought "substitute members Robert L. Henry Elaine M. Henry [(hereinafter, collectively "the Henrys ")] as representative plaintiffs place Lucinda Cardinale." Appellants' Motion Substitute, at 1. Further, within motion, Appellants averred Henrys are class members Appellants sought substitute Henrys Lucinda Cardinale because "Ms. Cardinale entered into a plea agreement on January 2015, criminal matter." Id. Appellants further averred that Mary R. Billotte passed away on January 24, 2015 "counsel will consult Ms. Billotte's personal representative about substitution under Pa.R.Civ.P. 2351 et seq. after personal representative appointed." Id. n.1. The trial court, however, never ruled Appellants' "Motion Substitute Class Representatives" Ms. Ms. Billotte remain designated plaintiffs cases.
On March 6, 2015, Appellants filed Motion Class Certification at both docket numbers.5 Within the motion, Appellants sought certification for the following class:
All persons who signed oil and gas lease with Development, LLC, related to property located in Clearfield County, Pennsylvania, elsewhere in For purposes brevity, we will refer the two identical motions a singular "motion."
Pennsylvania (other than persons who signed top lease) for which Western Land Services, Inc., acted agent for or represented Development, LLC, for which R.E. Development, LLC, not pay amounts specified by the oil and gas leases orders payment, including the applicable pre -paid rental or "bonus" payments.
Appellants' Motion for Class Certification, 3/6/15, at [1] -2.
Appellants claimed all requirements for certification were 1) "there are 112 present because: dispute, affecting leases approximately different individual landowners" (therefore, "the is so numerous that joinder all members impracticable "); 2) used standard form leases and other documents all members of the class, terms of the documents are materially identical, the breach every case essentially identical (therefore, "there are questions of law fact common class "); 3) the representative plaintiffs' claims are typical of the claims of the class; 4) representative plaintiffs "will fairly and adequately assert protect the interests class;" and, 5) "this class action provides fair efficient method for adjudicating controversy." Appellants' Motion for Class Certification, [1] -34.
The Defendants filed response opposition the motion class certification argued trial court should deny Appellants' motion individual questions of fact law predominate across because proposed class and because the claims of the representative parties not typical of the claims of the class. See Defendants' Response, 4/20/15, -54. With respect Defendants' claim individual questions law fact predominated across proposed class, Defendants first argued that, under the lease documents, "R.E. Gas had right to condition its payment of prepaid rent on [R.E. Gas'] inspection under the lease approval of the surface, geology and title to parcel." Id. (internal emphasis omitted); see also and Hugney Complaint, 10/25/11, at ¶ (averring: "[R.E. Gas'] obligations under the Oil Gas Leases were unconditional except that R.E. Gas had right to condition its payment of prepaid rent [R.E. Gas'] inspection under the lease approval of the surface, geology title to parcel. [R.E. Gas], however, did not invoke or rely upon any such rights "). Therefore, the Defendants claimed, "[i]n order to determine whether the conditions precedent were satisfied [for Gas to pay the landowners the bonuses,] each proposed lease, well conditions circumstances surrounding it, must individually analyzed to determine whether approved the surface, geology, title each proposed lease and, therefore, whether each putative member is entitled bonus payment." Defendants' Response, 18 (some internal capitalization omitted). the Defendants claimed, "the evidence
Second, this case in demonstrates reviewed each proposed lease individually decide whether approve the surface, geology, title and, therefore, Id. (some internal establishes individual questions predominate." capitalization omitted). With respect this claim, the Defendants cited to record exhibits, which declared some leases were rejected because R.E. approve individual's purported title oil and gas interests, some leases were rejected because R.E. Gas did not approve the geology of the land, some leases were rejected because R.E. Gas not approve the surface of the property. Id. at 19 -26.
Further, the Defendants claimed any argument that they "waived" or were estopped from relying upon the conditions precedent contained in the lease documents supported denying class certification, waiver estoppel inquiries individual fact -intensive. Id. at -30.
Finally, the Defendants claimed representative plaintiffs' claims were not typical of the putative class members. As the Defendants argued, "R.E. rejected the proposed leases [representative plaintiffs] Lucinda Iola Hugney because they both had significant title issues associated their proposed leases." Id. 37 n.24.
On June 19, 2015, the trial court held hearing Appellants' motion certification. During the hearing, the parties introduced, trial court accepted, certain documentary evidence the parties then orally argued their respective positions. See N.T. Hearing, 10- As relevant current appeal, during the hearing, Appellants introduced evidence demonstrating proposed consisted 112 leases. evidence further demonstrated that, when calculated calendar days from date leases were signed until the date Gas purportedly "rejected" leases: rejected of the leases (or, 97.3% leases) untimely manner; rejected one leases timely manner, there no record evidence demonstrate when R.E. Gas rejected two of the 112 leases. See Plaintiffs' Exhibit 8, 6/19/15, at "Exhibit 67, Exhibit A." Moreover, when calculated in "banking days" from the date the leases were signed until the date R.E. Gas purportedly "rejected" leases: rejected 97 of the 112 leases (or, 86.6% leases) an untimely manner; rejected 13 112 leases timely manner, there was no record evidence demonstrate when rejected two of the 112 leases. Id.
On July 8, 2015, the trial court entered order denying Appellants' motion certification. Trial Court Order, 7/8/15, Within the trial court's accompanying opinion, the trial court analyzed case only insofar necessary support its conclusion that, respect breach of contract claim, Appellants failed to establish "common questions of law fact predominate over any question affecting only individual members." See Trial Court Opinion, -8; see also Pa.R.C.P. 1702(5) and Pa.R.C.P. 1708(a)(1); but see Pa.R.C.P. ("Mn certifying, refusing certify or revoking certification of action, court shall set forth in an opinion accompanying the order the reasons for its decision the matters specified in Rules 1702, 1708 including findings of fact, conclusions law appropriate discussion ") (emphasis added). trial court reasoned that individual questions of law fact predominated breach contract claim because:
To fully resolve the case, finder of fact would have to analyze each individual property the circumstances surrounding the Defendants' refusal to pay bonus to determine if the Defendants breached each contract, or if the Defendants simply not approve of the surface, title, geology of each parcel of land according to the Order for Payment. A separate factual determination would have to be made each lease which necessarily means that individual factual questions predominate. In this manner, proof as to one claimant would not necessarily proof as any other claimant, much less proof as to all other claimants. Therefore, the case is not proper class certification... .
Trial Court Opinion, (internal emphasis omitted).
Appellants6 filed a timely notice of appeal both docket numbers. See Kern v. Lehigh Valley Hosp., Inc., 108 A.3d 1283 n.2 (Pa. Appellants at both docket numbers include Robert L. Henry Elaine M. Henry, who are two nonnamed members of the class described the complaints. Nevertheless, as Pennsylvania Supreme Court has held, nonnamed class members are parties the action upon the filing of the class action complaint. According the Supreme Court:
When an action is instituted a named individual behalf of himself a class, the members of the class are more properly characterized as parties to the action. A subsequent order of a trial court allowing action proceed class action is a joinder of the parties not yet the action. class the action until properly excluded.
Bell v. Beneficial Consumer Discount Co., 348 A.2d 734, 736 (Pa. 1975); see also Alessandro v. State Farm Mut. Auto. Ins. Co., 409 A.2d 347, 350 n.9 (Pa. 1979) ( "[u]nlike case where parties are joined, all members of class action are 'parties pi.ntif' upon the filing - defendant -dant successfully y mo,,,es for decertification, complaint. When c
decertified parties are 'put out court' :action "); Prince George Ctr., Inc. v. U.S. Gypsum Co., 704 A.2d 141, (Pa. Super. 1997) ("Mn Pennsylvania all members plaintiffs the action upon (Footnote Continued Next Page)
Super. 2015) ( "an order refusing to certify a class is an appealable collateral order "); see also Pa.R.A.P. 313; see also McGrogan v. First Commonwealth Bank, 74 A.3d 1063, 1076 1079 (Pa. Super. 2013) ( "an order denying class certification is usually appealable under the the order is separable from collateral order doctrine because . . collateral to cause of action for liability, class certification issue is not concerned the underlying merits of the action. . [Further, . . (Footnote Continued)
the filing of the complaint "); but see Devlin v. Scardelletti, U.S. 1, 16 (2005) (Scalia, J., dissenting) ( "[n]ot even petitioner . is willing to . . advance novel surely erroneous argument that a nonnamed class member is a party to class- action litigation before the class is certified ") (emphasis omitted); Smith v. Bayer Corp., U.S. (2011) ( "[i]n general, a 'party' to litigation is one by against whom a lawsuit is brought, one who becomes a party by intervention, substitution, or third -party practice. And [the United States Supreme Court has] further held that an unnamed member of a certified class may considered a 'party' particular purpose of appealing an adverse judgment. But as the dissent Devlin noted, no one that case willing advance novel surely erroneous argument that nonnamed class member is a party class- action litigation before the class is certified. Still less does argument make sense once certification is denied ") (internal citations, corrections, emphasis omitted) (some internal quotations omitted). Pennsylvania Supreme Court precedent, which defines nonnamed "class members" "parties" action even prior class certification, binds us and, since the Defendants do contest the Henrys' standing appeal the orders denying certification, we conclude both appeals properly before this Court. See Pa.R.A.P. 501 ( "any party who is . may appeal therefrom "); In re aggrieved appealable order . . Nomination Petition of de Young, 903 A.2d 1164, 1168 (Pa. 2006) ( "[the Pennsylvania Supreme Court] has consistently held court prohibited from raising issue of standing sua sponte ").
order usually] involves a right too important to be denied review [and] presents a question that, if review postponed until final judgment in case, the claim will irreparably lost ") (internal quotations, citations, and corrections omitted). Appellants now raise the following claims this Court:7
[1.] Can individual questions predominate over common questions class certification purposes where, for the vast majority members, [the Defendants] did not timely invoke any right to cancel the oil and gas lease based on defects surface, geology title land, thereby making [the Defendants'] obligation to pay absolute any evidence of defects inadmissible?
[2.] Do common questions predominate over individual questions where [the Defendants] presented evidence from which jury could conclude that [the Defendants] rejected leases not on basis of any contractual right but because [the Defendants] decided to change their business strategy cut their leasing budget? [3.] Did this Court's earlier decision v. R.E. Development, LLC, A.3d (Pa. Super. 2013), parties' oil and gas leases manifested intention form contracts "subject to" language Order Payment was condition contract formation preclude the trial court from holding "subject to" language condition contract formation?
[4.] Did [the Defendants] "thoroughly rebut" Appellants' prima facie case certification where (a) [the Defendants] not invoke any contractual right to cancel oil and gas leases within time permitted lease documents (b) [the Defendants] could identify no For ease of discussion, we have renumbered Appellants' claims appeal. defect surface, geology or title in rejecting the vast majority of the leases?
[5.] Where no individual questions existed of the 112 leases because [the Defendants] could identify no defect in surface, geology or title rejecting those leases and all other class certification standards were satisfied, should trial court have certified a class at least lessors of those 89 leases?
Appellants' Brief at 4.
We have stated: lower court's determination regarding certification
is mixed finding of law fact entitled appropriate deference upon appeal. . . Trial courts vested with . broad discretion determining definition of the as based on commonality issues propriety of maintaining the action on behalf of the class. Accordingly, lower court's order granting or denying class certification will not be disturbed appeal unless the court neglected to consider the requirements of rules or abused its discretion applying them.
Nye v. Erie Ins. Exch., 503 A.2d (Pa. Super. 1986) (internal quotations citations omitted). "An abuse of discretion may found merely because appellate court might have reached different conclusion." Ball v. Bayard Pump & Tank Co., A.3d 759, 767 (Pa. Instead, "[a]n abuse 2013) (internal quotations citations omitted). discretion occurs only where the trial court has reached conclusion that overrides or misapplies the law, or when the judgment exercised is manifestly unreasonable, the result of partiality, prejudice, bias ill - will." Id.
First, Appellants claim that the trial court erred denying their Motion Class Certification. According to Appellants, the trial court erred when it that class certification was inappropriate because common concluded questions of law fact not predominate over individual questions. As Appellants argue, their class action revolves around the claim Defendants "did not timely invoke" their right to cancel the standard -form oil and gas leases. As such, Appellants claim, the Defendants' contractual obligation to pay the stated bonuses the leases became "absolute" at the conclusion of the relevant time period and, thus, common questions of law fact predominate this class. We agree thus vacate the trial court's order.
The Pennsylvania Supreme Court has explained:
For the trial court, the question whether a class should be certified entails a preliminary inquiry into the allegations of putative class and its representative, whose purpose is establish the identities of the parties class action. Pa.R.C.P. 1707 cmt. (certification process "is designed to decide who shall the parties the action nothing more "). As practical matter, trial court will decide whether certification is proper based on parties' allegations the complaint answer, on depositions or admissions supporting these allegations, any testimony offered at the class certification hearing. court may review substantive elements of case only envision form trial on those issues would take.... Debbs v. Chrysler Corp., A.2d 137, (Pa. Super. 2002) (perceived adequacy of underlying merits claim should factor into certification decision). Any consideration of merits issues at the certification stage pertains only stage; the ultimate factfinder, whether judge jury, must still reach its own determination these issues at the liability stage. Even if the certified, before a decision on the merits, the certification order may be revoked, altered or amended the court on its own motion or on the motion of any party.
Pursuant Pennsylvania's civil procedure rules, the trial court may allow a representative to sue behalf of a class is numerous ("numerosity"); there are the class if, questions of fact common the class law or to ("commonality"); the claims of the representative are typical of the class ("typicality"); the representative will fairly adequately protect the interests of the class ("adequate representation"); class action is a fair efficient method for adjudicating the parties' controversy, under criteria set forth Rule Pa.R.C.P. 1702. Among the Rule criteria for determining whether class action is fair efficient method of adjudication is "whether [the] common questions of fact law or predominate over any question affecting only individual members" ("predominance"). Pa.R.C.P. 1708(a)(1) (also listing six factors addition predominance). The class "is the action until properly excluded" by, e.g., an order court refusing certification an order de-certifying the class. Pa.R.C.P. 1701(a) & cmt.; B3II, 348 A.2d at 736 (same).
During certification proceedings, the proponent of class that bears the burden establish Rule 1702 prerequisites were met. burden is not heavy at the preliminary stage case. Indeed, evidence supporting prima facie case will suffice unless class opponent comes forward with contrary evidence; if there is actual conflict on an essential fact, the proponent bears the risk of It essential proponent of the non-persuasion. requisite underlying facts sufficient establish persuade court Rule prerequisites were met.
Samuel-Bassett v. Kia Motors Am., Inc., A.3d 16 (Pa. 2011) (some internal citations quotations omitted).
In this case, trial court concluded certification was inappropriate solely because common questions of law fact not predominate over individual questions respect to breach of contract claim. As the Supreme Court of Pennsylvania Samuel-Bassett, we will "address [the] commonality predominance" requirements together. Samuel-Bassett, A.3d at 22; see also Pa.R.C.P. 1702(2) (commonality); Pa.R.C.P. 1708(a)(1) (predominance). According to the Samuel-Bassett Court:
To establish commonality requirement, [the class proponent] had to identify common questions of law and fact - a common source of liability. Simply contending that all putative members of class have complaint is not sufficient the complaints are disparate personal if allegations arising from different circumstances and requiring different evidence, i.e., one requiring less, the other requiring more, the one not indicative merits, other appearing to approach the merits individual cases. Commonality may not be established if various intervening possibly superseding causes of damage exist. The critical inquiry for the certifying court is whether material facts and issues law are substantially same all class members. The court should be able envision the common issues could be tried such that proof to one claimant would proof as to all members of the class.
[The class proponent is] not required prove claims of all class members [are] identical; the existence distinguishing individual facts not "fatal" certification. The common questions of fact law merely must predominate over individual questions. Pa.R.C.P. 1708(a)(1). The standard showing predominance is more demanding than showing commonality, but is so strict vitiate Pennsylvania's policy favoring certification of actions. predominance inquiry tests whether proposed classes warrant adjudication by sufficiently cohesive
representation. Thus, consisting of members for whom most essential elements its cause causes of action may be proven through simultaneous class -wide evidence better suited treatment than one individuals whom resolution of such consisting of elements does not advance the interests of the entire class. See [Liss & Marion, P.C. v. Recordex Acquisition Corp., 983 A.2d 652, 666 (Pa. 2009)] ( "[c]lass members may assert single common complaint even if they have all suffered actual injury; demonstrating all class members are subject same harm will suffice "); Delaware County v. Mellon Fin. Corp., A.2d 475 (Pa. Cmwlth. 2007) (existence of separate questions "essential" individual claims does not foreclose certification); Cook v. Highland Water & Sewer Auth., 530 A.2d 499, (Pa. Cmwlth. 1987) ( "[w]here common source of liability can be clearly identified, varying amounts of plaintiffs will not preclude class damage among certification. However, where there exist various intervening possibly superseding causes of the damage, liability cannot determined class -wide basis. ").
Sar.;ul- Bassett, A.3d -23 (some internal quotations, citations, corrections, internal parentheticals omitted) (emphasis original).
According to trial court, "[t]o fully resolve the case, finder fact would have to analyze each individual property the circumstances surrounding the Defendants' refusal to pay bonus to determine if the Defendants breached each contract, or if the Defendants simply not approve of the surface, title, geology of each parcel land according the Order for Payment." Trial Court Opinion, Respectfully, we conclude trial court's holding reasoning error.
We have jurisdiction over this appeal way collateral order doctrine. As such, this Court may not consider the merits of the claims or interpret relevant contractual language contained the documents. See Jacksonian v. Temple Univ. Health Sys. Found., A.2d 1275, (Pa. Super. 2004) ("for a claim arising from a non-final order be separable collateral, the nature of the issue reviewed must be such that it can addressed without need to analyze the central issue of the case. An order not separable if the matter being reviewed has potential resolve issue the case") (internal quotations citations omitted). Nevertheless, we note that, during the class certification hearing, Appellants presented evidence which, they claim, show that: every member entered into a standard-form oil and gas lease R.E. (or R.E. Gas' alleged agent landman, Western Land Services, Inc.); under terms of each lease, R.E. was obligated to pay each member of a stated "bonus" following the expiration a certain time period (usually days) from "execution of" lease; under the terms of the lease the Order Payment, during the (normally) 60-day time period, Gas had right reject the lease based upon a good-faith determination title was uncertain or that the surface geology was inappropriate; all but three cases, failed to reject lease within the contractual time-frame; and, Gas' decision to reject each lease was based upon the Defendants' determination they needed to cut costs, rather than upon good faith determination that title, surface, geology inappropriate. Defendants contest number Appellants' arguments. However, Defendants' arguments do not change the fact Appellants' primary class action claim breach contract revolves around the claim R.E. Gas failed to pay the class members the stated "bonus" within the specified time period failed to reject the parties' agreements within the allowable deadline. Under Appellants' interpretation of the lease documents, it matters whether the Defendants' eventually- stated reason "rejecting" the lease was based upon title, surface, or geology, when the rejection was untimely. This because, Appellants claim, under the plain terms of the contractual documents, R.E. Gas' obligation to pay "bonus" became absolute upon the expiration of the contractually- stated time period. Further, during the class certification hearing, Appellants presented evidence tending to show R.E. rejected 97% of the entire, - lease- proposed -class untimely manner. As such, under Appellants' theory case, the vast majority of the proposed class, the fact -finder will not have to consider whether the title, surface, or geology was inappropriate for R.E. Gas, as R.E. Gas' duty to pay the bonus became "absolute" upon expiration of the stated time -period.
Again, this Court may not consider the merits of Appellants' claims. However, we note fundamental questions this case common all class members, including: whether contract was formed between R.E. members; what point was contract between members "executed;" under the contractual documents, when time begin to run regarding Gas' obligation pay "bonus" each class member; Gas' obligation to pay bonus to each class member contingent upon its approval of title, surface, geology; Gas' obligation to pay the bonus to each class member become absolute at the expiration of the stated time, notwithstanding R.E. Gas' failure inspect the title property; and, whether the time for paying the stated bonus to each class member is be calculated in "calendar days" "banking days." As Chief Judge Joy Flowers Conti noted a closely analogous case:
Resolution of the foregoing questions will depend on an interpretation of certain key provisions form in documents are materially uniform applicable all transactions. court will have to determine, first instance, whether contractual provisions at issue are ambiguous their meaning and, if so, what legal [T]he determination of whether consequences are. . . . contractual language is ambiguous is a question of law for If the agreements found to be unambiguous, the court. court can declare their meaning matter law. court adopts plaintiffs' proposed Moreover, if construction agreement, plaintiffs will be able to liability classwide basis by virtue establish nonpayment alone. Thus, plaintiffs' breach contract theory can potentially resolved reference to, interpretation of, common form documents. At the very least, common, classwide issues are present, the resolution of which will drive this litigation forward, toward either judgment possible settlement.
Walney v. SWEPI LP, WL 5333541, *13 (W.D. Pa. 2015) (internal citations omitted).
Since trial court's sole stated reason denying certification erroneous, we conclude that trial court abused its discretion denying Appellants' Motion Class Certification. We thus vacate the trial court's order remand so that trial court may utilize its discretion determine whether class certification is proper in this case, including whether class definition is overly broad insofar it may include individuals whose leases or orders for payment were rejected in timely fashion.8
Orders vacated. Cases remanded. Jurisdiction relinquished.
Judgment Entered.
J: seph D. Seletyn,
Prothonotary
Date: 1/17/2017 We have determined that trial court erred in denying Appellants' motion for class certification have vacated the trial court's order. Therefore, we will not review the remainder of Appellants' claims on appeal. To extent Appellants claim this Court should order that "all requirements for class certification are satisfied," we refuse Appellants' request, trial court failed make the necessary "findings of fact, conclusions of law, appropriate discussion" required under Rule See Pa.R.C.P. ("Mn certifying, refusing certify revoking a certification of action, the court shall set forth opinion accompanying the order reasons its decision matters specified Rules 1709, including findings fact, conclusions law appropriate discussion "). Therefore, this Court is not position hold certification is proper this case.
