Monday, July 8, 2013

Cardinale v. R.E. Gas Development LLC, No. 2011-1791-CD, 2013 WL 3213321 (2013 Pa. Super. 146).

On June 19, 2013 the Pennsylvania Superior Court reversed a lower court decision that granted a gas company’s motion to dismiss a landowner’s claims to compel payment of lease bonuses.

R.E. Gas, the gas company, a subsidiary of Rex Energy and Cardinale, the landowner, negotiated gas leases in Clearfield County in 2008. Under the lease, R.E. Gas committed to pay $2500 per acre of land. The gas company, however, never paid the bonuses. At trial, the Defendant gas company argued that it had never entered into a lease with the Plaintiff landowner. The gas company pointed to the “Order for Payment,” which it argued combined with the lease only created an invitation to bargain on its part. Therefore, the landowner signing the lease signified an offer, which the gas company “explicitly rejected” in letters to the landowner. At trial, the Clearfield County Court granted the gas company’s motion to dismiss because the parties never entered into a lease agreement.

On appeal, the Superior Court reversed. It held the Clearfield County Court erred in dismissing the landowners’ complaint because the county court isolated the “Orders for Payment” provision, instead of evaluating the entirety of the relevant documents to determine if the parties entered into a lease. The Superior Court explained that the number of details laid out in the agreement (i.e. the subject land, the primary lease term, effective dates, etc.), and language in the bonus payment provisions and the “Order for Payment” signified an offer by the gas company, which the landowners accepted by signing. The terms were “sufficiently definite” to signify the parties intended to be bound by the agreement, and that consideration existed.

The bonus payments provision stated that the gas company would pay the landowner the full amount within sixty days, which the court construed as an unconditional duty for the gas company to pay the landowner. Further, the “Order for Payment” termination clause’s language stated “this order for payment” may be terminated by the lessee (gas company). The court explained that this was applicable only to the Order for Payment and not the entire lease agreement because the provision’s language only mentions the Order for Payment. As such, the gas company could terminate the Order for Payment, but not the separate lease agreement.

Therefore, the Superior Court found the Clearfield County Court erred in determining a lease was not entered into by the parties and remanded the case.

A link to full opinion can be found here.

Written by: Garrett Lent, Research Assistant
Agricultural Law Resource and Reference Center
July 2013

No comments:

Post a Comment