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Kropa v. Cabot Oil & Gas Corp.

April 17, 2009

JOHN KROPA, PLAINTIFF
v.
CABOT OIL & GAS CORPORATION, DEFENDANT



The opinion of the court was delivered by: Judge James M. Munley United States District Court

(Judge Munley)

MEMORANDUM

Before the court for disposition is the defendant's motion to dismiss. Having been fully briefed and argued, the matter is ripe for disposition.*fn1

Background

Plaintiff John Kropa of Hop Bottom, Pennsylvania entered into a preprinted form oil and gas lease with Defendant Cabot Oil and Gas Corporation covering fifty-one (51) acres of real property located in Brooklyn Township, Susquehanna County, Pennsylvania. (Doc. 17, Amended Complaint at ¶ ¶ 1, 4, 5).

As an inducement to sign the lease, defendant offered the plaintiff $1,275.00 representing $25.00 per acre of property. (Id. at ¶ ¶ 7-8). Defendant told plaintiff: "Defendant would never pay any more than $25.00 per acre so he better take the $25.00 per acre and that the Plaintiff will never get anymore." (Id. at ¶ 8). Plaintiff has since learned that this statement is inaccurate and that defendant has paid his neighbors more than $25.00 per acre. (Id. at ¶ 9). Defendant also informed plaintiff that the lease conformed to Pennsylvania law, but according to the plaintiff, it does not. (Id. at ¶ ¶ 10 -11).

Based upon these allegations the plaintiff instituted the instant action asserting two counts:

Count I, Fraudulent Inducement (Id. at ¶ ¶ 12 - 18), regarding the statements that he would never be offered more than $25.00 per acre and that the lease conformed to Pennsylvania law.

Count II, Action for Declaratory Relief, in which plaintiff seeks to have the court deem the lease invalid under 58 PENN. STAT. § 402(8). - -

The Oil and Gas Conservation Law.

Defendant filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), bringing the case to its present posture.*fn2

Jurisdiction

This Court has jurisdiction pursuant to the diversity jurisdiction statute, 28 U.S.C. § 1332. The plaintiff is a citizen of Pennsylvania (Doc. 17, Amended Complaint at ¶ 1), and the defendant is a Delaware corporation with a principal place of business in Houston, Texas. (Doc. 1, Notice of Removal at ¶ 5). Because we are sitting in diversity, the substantive law of Pennsylvania applies to the instant case. Chamberlain v. Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)).

Standard of Review

When a 12(b)(6) motion is filed, the sufficiency of a complaint's allegations are tested. The issue is whether the facts alleged in the complaint, if true, support a claim upon which relief can be granted. In deciding a 12(b)(6) motion, the court must accept as true all factual allegations in the complaint and give the pleader the benefit of all reasonable inferences that can fairly be drawn therefrom, and view them in the light most favorable to the plaintiff. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).

Discussion

The motion to dismiss attacks both counts of the plaintiff's complaint, and we will discuss them separately.

I. Fraudulent Inducement

Count I of plaintiff's complaint advances a cause of action for fraudulent inducement (Doc. 17, Amended Compl. at ¶ ¶ 12 - 18), regarding the statements made by defendant's representative that plaintiff would never be offered more than $25.00 per acre to lease the property and that the lease conformed to Pennsylvania law. The complaint avers: "what the Defendant's agent told Plaintiff was false, and that Defendant has in fact offered and paid Plaintiff's neighbors more than $25.00 per acre, and continues to offer and pay more than $25.00 per acre to others. Had Plaintiff known Defendant's representations were false, Plaintiff would not have entered into the lease." (Doc. 17, Amended Complaint, ¶ ¶ 17-18).

Thus, plaintiff asserts a fraudulent inducement cause of action. Fraudulent inducement may be found where a contracting party made false representations "that induced the complaining party to agree to the contract." Toy v. Metropolitan Life Ins. Co., 928 A.2d 186, 205 (Pa. 2007) ...


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