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Mickel Drilling Partners, By Guy Mickel, Robin Zink, and Kyle J. v. Cabot Oil & Gas Corporation

October 16, 2012

MICKEL DRILLING PARTNERS, BY GUY MICKEL, ROBIN ZINK, AND KYLE J. MICKEL; DAVID ZINK AND SARAH MICKEL, HIS WIFE; THE ESTATE OF EARL E. MICKEL, BY E. JANENE MICKEL, EXECUTRIX, AND KYLE J. MICKEL AND SARAH ELIZABETH MICKEL, PLAINTIFFS,
v.
CABOT OIL & GAS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: (judge Caputo)

MEMORANDUM

Presently before the Court is the Motion to Dismiss Plaintiffs' Amended Complaint (Doc. 25) filed by Defendant Cabot Oil & Gas Corporation ("Cabot"). Plaintiffs*fn1 initiated this action in December 2010 alleging Cabot breached the terms of an oil and gas lease executed on October 8, 2008. Eighteen months later, in May 2012, Plaintiffs were granted leave to amend their complaint to "further set forth the facts of the subject lease signing." The Amended Complaint alleges that Cabot breached the terms of a different version of the oil and gas lease- one that was executed on August 8, 2008. Cabot has now moved to dismiss the Amended Complaint. In support of its motion to dismiss, Cabot asserts that Plaintiffs have improperly renounced the October 2008 Lease despite having represented to the Court for over eighteen months that this contract governed the instant dispute. Cabot therefore contends that Plaintiffs are now seeking to rely on a draft lease in support of their breach of contract claim. In opposition, Plaintiffs argue that whether the August 2008 Lease was only a draft lease is an issue that cannot be resolved on a motion to dismiss. Essentially, Plaintiffs' position is that the Court must accept as true the allegation that the August 2008 Lease is the governing document to this action despite its prior filings that the parties' contractual relationship was controlled by the October 2008 Lease. I disagree. Because Plaintiffs represented in their Original Complaint and in multiple subsequent filings for approximately eighteen months after the action was commenced that the October 2008 Lease was the operative document in this breach of contract action, I accept as true the allegation that this breach of contract dispute is governed by the terms of the October 2008 Lease. And, because Plaintiffs fail to state a breach of contract claim under the October 2008 Lease, Cabot's motion to dismiss will be granted.

I. Background

Plaintiffs commenced this action against Cabot on or about December 3, 2010 in the Court of Common Pleas of Wayne County, Pennsylvania. (Doc. 1, ¶ 1.) Cabot subsequently removed the action to this Court on January 10, 2011. (Doc. 1.) The Original Complaint alleged that on August 8, 2008, Plaintiff Estate of Earl E. Mickel entered into a Gas Lease with Cabot. (Compl., ¶ 4.) Attached to the Original Complaint as Exhibit "A" is a copy of the Gas Lease executed on October 8, 2008 (the "October 2008 Lease"). (Id. at Ex. A.) Cabot accepted, agreed, and acknowledged the October 2008 Lease by letter on November 5, 2008. (Id. at Ex. B.) The Original Complaint averred that Cabot agreed to pay Plaintiffs a sum of $95,925.00 as bonus consideration pursuant to an overall area lease arrangement with Plaintiffs. (Id. at ¶ 5.) The parties' agreement further provided that "[s]ubject to Cabot Oil & Gas Corporation's approval of title, Cabot Oil & Gas will pay, within 60 days receipt of the subject Oil and Gas Lease, properly executed, the sum of $95,925.00 Dollars, which represents the bonus consideration . . . ." (Id. at Ex. C.) Despite demand by Plaintiffs, however, Cabot refused to pay the $95,925.00 after sixty days as agreed upon by the parties. (Id. at ¶ 5.)

On January 17, 2012, a Joint Case Management Plan was submitted by the parties. (Doc. 9.) Plaintiffs identified the principal issues in this action as follows:

On August 8, 2008, Plaintiff, the Estate of Earl E. Mickel, entered into a Gas Lease with Defendant, copy of which was attached to Complaint as Exhibit "A," [the October 2008 Lease], as accepted, agreed, and acknowledged by letter on November 5, 2008, attached to the [Original] Complaint as Exhibit "B."

Pursuant to said lease, Defendant further agreed to pay Plaintiff a sum of $95,925.00 Dollars which represented the bonus consideration for said Oil and Gas Lease in Texas Township, County of Wayne, Pennsylvania pursuant to an overall lease arrangement with the Plaintiffs and related parties, Defendant paid all other related leases adjoining said acreage as set forth in Exhibit "D" of the [Original] Complaint.

Despite demand, Defendant failed to pay Plaintiffs the aforesaid sum of $95,925.00 Dollars after sixty (60) days as agreed. (Id. at 1-2.)

On May 2, 2012, Plaintiffs filed a Motion to Amend the Complaint. (Doc. 16.) Plaintiffs, with the concurrence of Cabot, sought "to file the attached Amended Complaint to include all partners and further set forth facts of the subject lease signing." (Id.) The next day, on May 3, 2012, Plaintiffs' Motion to Amend the Complaint was granted. (Doc. 17.)

The Amended Complaint was filed on May 4, 2012. (Doc. 18.) As alleged in the Amended Complaint, on Friday, August 8, 2008, Plaintiff E. Janene Mickel, as Executrix of the Estate of Earl E. Mickel, properly executed an Oil and Gas Lease with Cabot. (Am. Compl., ¶ 5, Ex. G.) The lease attached as the controlling contractual agreement to the Amended Complaint, however, is not the October 2008 Lease, but rather an Oil and Gas Lease executed on August 8, 2008 (the "August 2008 Lease"). (Id. at Ex. G.) The Amended Complaint also alleges that Cabot's representative took the lease after it was signed and notarized and at least five other Oil and Gas leases were also signed and notarized at the same time, date, and place. (Id. at ¶ 5.)

The Amended Complaint further avers that Plaintiff E. Janene Mickel executed on August 8, 2008 two acknowledgments for intended payment. (Id. at ¶ 6.) One of the acknowledgments was signed by all partners for Mickel Drilling Partners and the other was signed on behalf of the Estate of Earl E. Mickel. (Id. at Exs. C, D.) Both acknowledgments were signed by Cabot's representatives on the same date and provided that "subject to Cabot Oil & Gas Corporation's approval of title, Cabot Oil & Gas will pay, within sixty days receipt of the subject Oil and Gas Lease, properly executed, [the sum owed]." (Id.) As such, Plaintiffs allege that Cabot "had a properly executed lease in its possession through October 8, 2008, i.e., the sixty day 'waiting' period set forth" in the acknowledgments. (Id. at ¶ 7.)

Under the terms of the August 2008 Lease, Cabot agreed to pay Plaintiffs a sum of $95,925.00 as bonus consideration for the Lease "pursuant to an overall area lease arrangements with the Plaintiffs and related parties." (Id. at ¶ 8.) However, Cabot: despite having receipt of the properly executed lease, Exhibit 'G' [the August 2008 Lease], then required resignature [sic] of the same Lease with same Addendums, then executed by E. Janene Mickel as 'Personal Representative' of the Estate of Earl E. Mickel, all still dated August 8, 2008, with alleged notary date of October 8, 2008, copy of the same attached as Exhibit 'A.' (Id. at ¶ 9 (emphasis added).) Despite a demand for payment, Cabot refused to pay Plaintiffs the $95,925.00 bonus consideration after the sixty day waiting period expired. (Id. at ¶ 10.)*fn2 The August 2008 and October 2008 Leases do not contain the same addendums, however, despite the representations of Plaintiffs to the contrary. Rather, the October 2008 Lease contains additional terms not present in the August 2008 Lease. (Compare August 2008 Lease with October 2008 Lease.) For example, paragraph 32 provides that "[a]ll bonus, rental, shut-in, storage and royalty payments due are to be directed to Mickel Drilling Partners . . . . " (Id.) The August 2008 Lease does not contain this provision. (Id.)

As a result of Plaintiffs' shift in position as to which version of the lease is the operative document in this breach of contract action, Cabot filed the instant Motion to Dismiss Plaintiffs' Amended Complaint on June 29, 2012. (Doc. 25.) In support of its motion to dismiss, Cabot contends that the Amended Complaint fails to state a breach of contract claim. Specifically, Cabot argues that Plaintiffs have not alleged the existence of a contract because the August 2008 Lease was simply a draft of the parties' final agreement. (Doc. 26, 11-13.) And, as Cabot properly exercised its surrender rights within sixty days of the final agreement, which Cabot asserts is the October 2008 Lease, it contends that the breach of contract claim should be dismissed with prejudice. In opposition to the motion to dismiss, Plaintiffs argue that:

Plaintiffs alleged in Paragraph 9 of the Amended Complaint that the lease signed on 10/08/2008 was the same lease re-signed with the same Addendum and both were dated and effective 08/08/2008. Defendant counters that the ...


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