Opinion
J-A23011-15 No. 695 WDA 2014
10-22-2015
AMERICAN EXPLORATION COMPANY, Appellant v. JOHN M. HARIM, JR., AND SALLY D. HARIM, His Wife, Appellees
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order entered on April 4, 2014 in the Court of Common Pleas of Fayette County, Civil Division, No. 2167 of 1997 G.D. BEFORE: GANTMAN, P.J., LAZARUS and MUSMANNO, JJ. MEMORANDUM BY MUSMANNO, J.:
American Exploration Company ("American" or "Plaintiff") appeals from the Order denying its Motion to Enforce Settlement Agreement ("Motion to Enforce") pertaining to an oil and gas lease ("Lease"), which American's predecessor-in-interest entered into on February 25, 1995, with John M. Harim, Jr., and his wife, Sally D. Harim ("the Harims" or "Defendants"). This Order also denied American's Motion for Preliminary Injunction ("Motion for Injunction"). We affirm.
American does not challenge on appeal the trial court's denial of the Motion for Injunction.
In its April 4, 2014 Opinion and Order, the trial court concisely set forth the relevant facts and procedural history underlying this appeal, as well as the parties' respective positions concerning American's Motion to Enforce. See Trial Court Opinion and Order, 4/4/14, at 1-5. We incorporate the court's recitation herein by reference. See id.
To the extent the trial court states, on page 3 of its Opinion, that "[a]t some unspecified time between 2005 and 2012, Atlas[ Resources]'s pipeline system was purchased by Williams[,]" Trial Court Opinion and Order, 4/4/14, at 3 (emphasis added), the court refers to The Williams Company, Inc., a national energy company specializing in natural gas.
American challenges on appeal the trial court's factual finding, concerning the natural gas well at issue herein ("the Well" or "Harim Well 109"), that "[t]here is no dispute that Harim Well 109 has never been put into production[.]" Trial Court Opinion and Order, 4/4/14, at 2; see also Brief for Appellant at 16.
As an addendum, and by means of background, we observe the following. The Harims own an approximately 110-acre parcel in Fayette County ("the Property"). In 1995, the Harims leased the oil and gas rights to the Property to American's predecessor-in-interest under the Lease, for a primary term of two years. Subsequently, the Well was drilled on the Property.
The relevant provisions of the Lease provide as follows:
5(d)[.] This [L]ease shall continue in full force so long as there is a well or wells on leased premises capable of producing oil and gas even though all such wells are shut in and not produced by reason of the lack of a market at the well or wells ..., or for any other reasons, but in such event[, American] shall ... pay to the [Harims] ... a sum equal to the annual rental provided for in [the Lease], as royalty, and thereby maintain this [L]ease in force and effect for each annual period covered by such payment[.] ...
* * *
15[.] All of [American's] obligations and covenants hereunder, whether express or implied, shall be suspended at the time[,] or from time to time[,] as compliance with any thereof is
prohibited, prevented, or hindered by[, inter alia,] ... inability to obtain materials in the open market or transportation thereof ...[,] or other conditions or circumstances not wholly controlled by [American], and this [L]ease shall not be terminated in whole or part .... Should such prohibitory condition continue throughout the remainder of the primary term of the [L]ease, then [American] may extend the primary term of this [L]ease from year to year beyond the original 2 year primary term by continuing the payment of the annual rentals provided for herein ....Lease, 2/25/95, ¶¶ 5(d), 15, 16.
16[.] In the event that [the Harims] consider[] that [American] has not complied with all covenants, conditions and obligations hereunder[,] both expressed and implied, [the Harims] shall notify [American] in writing, setting out specifically in what respects it is claimed that [American] has breached this contract, and [American] shall not be liable to [the Harims] for any damages caused by any breach of a covenant, condition or obligation[,] express or implied, occurring more than sixty (60) days prior to the receipt by [American] of the aforesaid written notice of such breach. ...
Following litigation between the parties in the ensuing years concerning the enforceability of the Lease, they entered into a settlement agreement in October 2004 ("the Settlement Agreement"), as well as a Ratification of the Lease. The trial court entered an Order (hereinafter "the Settlement Order"), which memorialized the terms of the Settlement Agreement. The provision of the Settlement Order relevant to this appeal provides as follows:
9. Upon the [c]ourt's entry of this Order of Court, [American], its successors and assigns, shall be free to enter upon the [Property] for the conduct of all gas well operations authorized under the [L]ease, and specifically for undertaking the immediate production and marketing of gas from the Harim Well [] 109[,] located on [the P]roperty[.]Settlement Order, 10/24/04, at ¶ 9 (emphasis added).
On May 28, 2013, American filed its Motion to Enforce and Motion for Injunction. By the Opinion and Order entered on April 4, 2014, the trial court denied both Motions. The Order provided, in relevant part, as follows:
[T]he [] Motion to Enforce ... is denied for the reason that the Settlement Agreement concerned an oil and gas Lease, executed in 1995, which has long since expired under its own terms due to [American's] failure to act in accordance with the terms thereof[,] as formalized in the directives and mandates set forth in the [trial] court's [Settlement] Order[.] ...Trial Court Opinion and Order, 4/4/14, at 10 (some capitalization omitted).
American filed a Motion to reconsider the April 4, 2014 Order, which was denied. American timely filed a Notice of Appeal, after which the trial court ordered it to file a Pa.R.A.P. 1925(b) concise statement of errors complained of on appeal. American timely filed a Concise Statement.
On appeal, American presents the following issue for our review: "Whether the [trial c]ourt erred in not enforcing the [S]ettlement [A]greement[,] and [by] invalidating the [L]ease[,] where the record reveals that [American] did not breach any contractual duty to [the Harims] in any material way?" Brief for Appellant at 4.
Our standard of review of a trial court's grant or denial of a motion to enforce a settlement agreement is plenary, as the challenge is to the trial court's conclusion of law. We are free to draw our own inferences and reach our own conclusions from the facts as found by the trial court. However, we are only bound by the trial court's findings of fact which are supported by competent evidence.Casey v. GAF Corp., 828 A.2d 362, 367 (Pa. Super. 2003) (citation omitted).
The Pennsylvania Supreme Court has observed that an oil and gas lease
is in the nature of a contract and is controlled by principles of contract law. It must be construed in accordance with the terms of the agreement as manifestly expressed, and the accepted and plain meaning of the language used, rather than the silent intentions of the contracting parties, determines the construction to be given the agreement.T.W. Phillips Gas and Oil Co. v. Jedlicka , 42 A.3d 261, 267 (Pa. 2012) (citations, internal quotation marks and brackets omitted). The interpretation of a lease, or any contract, is a question of law and this Court's scope of review is plenary. Humberston v. Chevron U.S.A., Inc., 75 A.3d 504, 509 (Pa. Super. 2013).
Before reaching the remainder of American's arguments, we must address its claim that the record belies the trial court's factual finding that the Well has never been put into production. See Brief for Appellant at 16; see also Trial Court Opinion and Order, 4/4/14, at 2. In support of its allegation that "th[e] Well was previously an actively producing Well[,]" Brief for Appellant at 16, American summarily cites to two pages of the transcript from the hearing on the Motion to Enforce. These two pages contain the testimony of two of American's employees, Timothy Matthews ("Matthews") and James Howard ("Howard"). Id. (citing N.T., 8/19/13, at 19 (wherein, responding to the Harims' counsel's question as to whether American knew, at the time of the Settlement Agreement in October 2004, that there was no capacity in the pipeline to produce gas from the Well, Matthews stated that "[w]e had [the Well] on line for some period of time."), and id. at 25 (wherein Howard stated that, when he first became employed with American, in approximately 1997, "we had put [the Well] online and it was producing[.]")).
Because American merely cited to the two pages of testimony, but otherwise failed to adequately develop this claim or identify which portion of the testimony was relevant, we could deem it waived. See Umbelina v. Adams , 34 A.3d 151, 161 (Pa. Super. 2011) (stating that "[w]here an appellate brief fails to provide any discussion of a claim with citation to relevant authority or fails to develop the issue in any other meaningful fashion capable of review, that claim is waived." (citation omitted)); see also Pa.R.A.P. 2119(a). Nevertheless, we will briefly address American's claim.
Even assuming, arguendo, that American is correct in asserting that the Well had been producing at some prior time, the record reveals evidence that, at all relevant times to the instant dispute, the Well was not in producing status. See , e.g., American's Memorandum of Law in support of Motion to Enforce, 10/10/13, at 3-4 (unnumbered) (wherein American conceded that "until [it had] signed a[] purchase agreement with Atlas Resources [in 2012], there was no access to and no capacity in the pipeline to produce gas from the Harim 109 Well." (citing N.T., 8/19/13, at 16 (testimony of Matthews)). Accordingly, we cannot agree with American that the trial court's finding in this regard lacks support in the record.
American argues that the trial court erred by denying the Motion to Enforce because American had performed all of its obligations pursuant to the Lease, and the record belies the court's finding that American had failed to comply with the terms of the Settlement Agreement and Settlement Order. Brief for Appellant at 13; see also id. at 22 (citing, inter alia, Miller v . Clay Township , 555 A.2d 972, 973 (Pa. Cmwlth. 1989) (stating that "[j]udicial policy favors the settlement of lawsuits and in the absence of fraud and mistake the courts will enforce an agreement to settle a legal dispute.")). American concedes that the Well was "shut in" at the time of the Settlement Agreement and thereafter, but points out that American had paid annual shut in royalties to the Harims every year, pursuant to paragraph 5(d) of the Lease. Brief for Appellant at 14.
Additionally, American argues that the trial court erred in failing to acknowledge that, in violation of paragraph 16 of the Lease, the Harims never gave American notice of any alleged breach of the Lease. Id. at 17. According to American, "[the] Harim[s'] admission that [they] failed to provide Paragraph 16 written notice deprives them of any argument that ... the [L]ease was [] somehow invalid." Id.; see also id. at 19 (asserting that "[i]t was not until the evidentiary hearing that [the Harims,] for the first time[,] claimed that [American] had failed to comply with the terms of the [S]ettlement [A]greement.").
Moreover, relying upon paragraph 15 of the Lease, which, American maintains, "specifically contemplates challenges in transportation in the marketplace[,] and creates a mechanism to extend the [lease] term[,]" American contends that the trial court improperly overlooked this paragraph, and American's "regular efforts, albeit lengthy, to get the Well back into production." Id. at 19.
Finally, American argues that "[t]he trial court essentially held that [American] forfeited its rights under the [L]ease because too much time [had] elapsed before resuming production. ... [However, the] Lease does not contain any provision whatsoever for automatic forfeiture[.]" Id. at 23 (citing Schwartz v. Rockey , 932 A.2d 885, 898 (Pa. 2007) (stating that "the law abhors forfeitures and penalties and enforces them with the greatest reluctance when a proper case is presented.") (citation and quotation marks omitted)).
In its Opinion and Order, the trial court cogently set forth the relevant law concerning oil and gas leases, addressed American's claims, and determined that they lack merit. See Trial Court Opinion and Order, 4/4/14, at 6-9. Our review discloses that the trial court's analysis is sound and supported by the record, and we discern no error of law or abuse of discretion in the court's determination. See id.
To the extent that the trial court's findings were based upon its credibility determinations, see Trial Court Opinion and Order, 4/4/14, at 7, we may not disturb such findings. See Gillingham v. Consol Energy , Inc., 51 A.3d 841, 861 (Pa. Super. 2012) (observing that the fact-finder is free to believe all, part, or none of the evidence and to determine the credibility of the witnesses).
As an addendum, we are unpersuaded by American's claim that the Harims are precluded from claiming that the Lease is no longer valid because of their failure to give American proper notice pursuant to paragraph 16. Rather, we agree with the trial court's following discussion concerning paragraph 16: "[The Harims] contend that Paragraph 16 of the Lease does not actually require written notice of an alleged breach, but rather limits damages for a breach to those allegedly arising after notice is given in accordance with this provision. [The Harims] are not seeking monetary damages ...." Id. at 5; see also Brief for Appellees at 8. Though the trial court did not explicitly state that it agreed with the Harims' position, it is clear that it was not persuaded by American's argument concerning the lack of notice. We discern no error of law or abuse of discretion in the trial court's determination, as it is supported by a plain reading of the Lease. Furthermore, even assuming, arguendo, that the Harims failed to comply with paragraph 16 in this regard, it does not preclude them from raising a claim that the Lease is no longer valid.
Moreover, we find no merit to American's claim that the trial court had improperly implied an automatic forfeiture provision into the Lease. Rather, the court correctly determined that the Lease had expired under its own terms. Accordingly, we affirm based on the trial court's analysis with regard to American's sole issue on appeal, see Trial Court Opinion and Order, 4/4/14, at 6-9, and conclude that the court correctly denied American's Motion to Enforce.
Order affirmed. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/22/2015
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