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Kropa v. Cabot Oil & Gas Corp.

June 9, 2010


The opinion of the court was delivered by: (Judge Munley)


Before the court is defendant's motion for reconsideration (Doc. 48) of the court's memorandum and order denying defendant's motion to dismiss.


Plaintiffs initiated the instant dispute on March 25, 2008 by filing a lawsuit in the Court of Common Pleas of Susquehanna County, Pennsylvania. (See Amended Complaint (hereinafter "Complt.") (Doc. 17)). Plaintiffs are residents of Pennsylvania and Defendant is a Delaware Corporation with its principal place of business in Houston, Texas. (Notice of Removal at ¶¶ 4-5). On or about March 8, 2006, the plaintiff entered into an oil and gas lease with the defendant. (Complt. at ¶ 5). Defendant owns fifty-one acres in Brooklyn Township, Susquehanna County, Pennsylvania. (Id. at ¶ 4). Defendant authorized its agents to offer $25.00 per acre for the lease. (Id. at ¶ 6). Defendant thus offered plaintiffs a total of $1,275.00 as consideration for the lease. (Id. at ¶ 7). Defendant's agents also told plaintiffs that defendant would never pay more than $25.00 per acre for the lease. (Id. at ¶ 8).

Subsequently, plaintiffs' neighbors were apparently paid more than $25.00 per acre for leases on their property. (Id. at ¶ 9). Despite assurances from the defendant, the lease the plaintiffs signed with defendant did not conform to Pennsylvania law. (Id. at ¶¶ 10-11).

Plaintiffs' complaint contains two counts. Count I alleges fraudulent inducement. Plaintiffs contend that defendant's agents assured them that the company would never pay more than $25.00 per acre. They relied on this statement and signed the lease, only to discover later that these statements were false and that others had signed far more lucrative deals with defendant. (Id. at ¶¶ 15-17). Defendant also represented to plaintiffs that if they failed to sign a lease defendant would negotiate leases with neighbors and capture the gas under plaintiffs' land through the rule of capture, leaving plaintiffs without a lease or gas on their land. (Id. at ¶ 19). According to the complaint, these statements all were false and all induced plaintiff to sign the lease. (Id. at 15). Count II alleges that the lease plaintiffs signed violates state law by requiring that plaintiffs pay a portion of the production costs of any natural gas on their land before receiving the proceeds from any royalties from that gas. As relief, plaintiffs request that the court declare the lease signed by the parties invalid.

On March 25, 2008, defendant filed a notice of removal with this court. (Doc. 1). Less than a week later, defendant filed a motion to dismiss (Doc. 2). The parties briefed the motion to dismiss, and the court held oral argument. The court granted the defendant's motion in part and denied it in part. (See Doc. 48). The effect of that decision was to allow plaintiff's claims for fraudulent inducement and for declaratory judgment to go forward. (Id.).

After the court issued this decision, the defendant filed a motion with the court to stay proceedings, or in the alternative for reconsideration of the order denying defendant's motion to dismiss. (See Doc. 49). The basis of defendant's motion to stay proceedings was that the Pennsylvania Supreme Court had before it a petition seeking extraordinary jurisdiction to consider the proper interpretation of the Pennsylvania Minimum Royalty Act. Since the proper interpretation of this act was at issue in plaintiff's second claim and the court would be bound by the decision of the Pennsylvania Supreme Court, the defendant requested that the court stay the case pending that court's resolution of the matter. The court agreed to stay the case and directed the parties to notify the court when reopening the case was appropriate. (See Doc. 61).

On March 26, 2010, defense counsel wrote to inform the court that the Pennsylvania Supreme Court has issued a decision interpreting the minimum royalty act. The Supreme Court concluded, as the defendant here argued in its motion to dismiss, that the royalty payment should be calculated at the wellhead, not the point of sale. As such, the royalty agreement at issue in the Supreme Court case (and in this case) was valid under Pennsylvania law.

The court had stayed the case pending this decision from the Pennsylvania Supreme Court. As the reason for staying the case has now expired, the court will reopen the case and consider the defendant's motion for reconsideration.

Legal Standard

"The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Harsco Corp. v. Zlotnicki, 799 F.2d 906, 909 (3d Cir.1985); Max's Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). The movant must demonstrate one of three grounds for such a motion to be granted: (1) an intervening change in controlling law; (2) the availability of new evidence not previously available; or (3) the need to correct a clear error of law or to prevent manifest injustice. Max's Seafood Cafe, 176 F.3d at 677. A motion for reconsideration is not a proper vehicle to attempt to convince the court to rethink a decision it has already made. Glendon Energy Co. v. Borough of Glendon, 836 F. Supp.1109, 1122 (E.D. Pa. 1993). Such motions also may not be used to give a dissatisfied party a chance to "[change] theories and try again," obtaining a "'second bite at the apple.'" Bhatnagar v. Surrendra Overseas Ltd., 52 F.3d 1220, 1231 (3d Cir. 1995); see also Ogden v. Keystone Residence, 226 F. Supp. 2d 588, 606 (M.D. Pa. 2002) (finding that "The simple fact that Ogden is unhappy with the result of the April 19, 2001 opinion is an insufficient basis to grant her relief.").


A. Royalty ...

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