Court Denies Defendant's Motion to Dismiss in Shafer v. Range Resources-Appalachia, LLC

Plaintiffs initiated this action alleging breach of contract for non-payment of a lease signing-bonus in exchange for right to develop oil and gas their property.  Defendant, Range Resources-Appalachia, LLC (Range) contended that no contract had been formed, as language in the documents subjected all leases to "management approval," a condition precedent to formation that never occurred.  The impact of a "management approval" provision on the formation of a lease had not previously been ruled on in The United States Court of Appeals for the Third Circuit.  The Court ruled that Plaintiffs' interpretation of management approval was plausible enough to overcome the motion to dismiss, as the term was not defined in the alleged contract, and that Plaintiffs' may be able to establish facts tending to show implicit management approval through the addition of special terms to the lease at the request of Plaintiffs. Accordingly, the Court dismissed Range's motion to dismiss, allowing the case to proceed.  To read the full opinion, please view the Memorandum Opinion and Order.

Written by Steven P. Trialonas, Research Fellow

February 16, 2011