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Walter and Louise Horton Tuhro Family Limited Partnership v. Chesapeake Appalachia, LLC

United States District Court, M.D. Pennsylvania

June 18, 2015

WALTER and LOUISE HORTON TUHRO FAMILY LIMITED PARTNERSHIP, Plaintiff
v.
CHESAPEAKE APPALACHIA, LLC, STATOIL USA ONSHORE PROPERTIES, INC., and ANDARKO E&P COMPANY LP, Defendants

MEMORANDUM

MALACHY E. MANNION, District Judge.

Plaintiff Walter and Louise Horton Tuhro Family Limited Partnership ("Tuhro Partnership") seeks a new gas lease after their lease expired in September of 2011. The gas companies refused to give plaintiff a new lease since plaintiff's property was included in a gas drilling unit and the lease stated that production of oil and gas in that unit or the drilling of a well in that unit followed by the tender of shut-in royalties will continue the original lease's term. Pending before the court are: (1) a motion for summary judgment with respect to plaintiff's amended complaint filed on behalf of defendant Andarko E&P Company ("Andarko"), (Doc. 43); and (2) a motion for summary judgment with respect to plaintiff's amended complaint filed on behalf of defendants Chesapeake Appalachia, LLC ("Chesapeake"), and Statoil USA Onshore Properties, Inc. ("Statoil"), (Doc. 47). The defendants also seek summary judgment with respect to their counterclaims against plaintiff. For the reasons stated below, the motions of defendants will be GRANTED.

I. PROCEDURAL HISTORY

On April 12, 2013, an action was commenced against Chesapeake by the original plaintiffs Richard and Mary Tuhro (the "Tuhros") by filing a complaint in the Court of Common Pleas of Bradford County seeking a declaratory judgment against Chesapeake. (Doc. 1-2). Specifically, the Tuhros sought declaratory relief regarding the oil and gas lease they held regarding their 157 acres of land in Sheshequin Township, Bradford County, Pennsylvania, (the "Property"), and requested a declaration that Chesapeake had no rights under the lease. On May 17, 2013, Chesapeake removed this case of federal court pursuant to 28 U.S.C. §§1332, 1441, and 1446. (Doc. 1). On May 24, 2013, Chesapeake filed a motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). (Doc. 4). In response, the Tuhro Partnership filed an amended complaint for declaratory judgment on July 3, 2013, against Chesapeake, Statoil and Andarko, along with several exhibits. (Docs. 12, 14, 17, 18, 19, 20, 21). Chesapeake's motion to dismiss the original complaint was dismissed as moot. (Doc. 22).

On September 3, 2013, defendants Chesapeake and Statoil filed an answer to the amended complaint with affirmative defenses and a counterclaim against the Tuhro Partnership, along with exhibits. (Doc. 23, Docs. 23-1 to 23-5). On November 8, 2013, defendant Andarko filed an answer to the amended complaint with affirmative defenses and a counterclaim against the Tuhro Partnership. (Doc. 30). On April 21, 2014, the Tuhro Partnership filed answers to the counterclaims of Chesapeake and Statoil, and of Andarko. (Doc. 38, Doc. 39).

After discovery was completed, on September 5, 2014, defendant Andarko and defendants Chesapeake and Statoil filed motions for summary judgment with respect to the Tuhro Partnership's amended complaint and with respect to their counterclaims. (Doc. 43, Doc. 47, respectively). Accompanying the motions were supporting briefs and exhibits, (Doc. 45, Andarko, Doc. 48, Chesapeake and Statoil), as well as statements of material facts, (Doc. 44, Andarko, Doc. 49, Chesapeake and Statoil). Tuhro Partnership filed briefs opposing both of the defendants' motions on October 17, 2014.[1] (Doc. 52, Doc. 53). Tuhro Partnership did not respond to Anadarko's statement of material facts or to Chesapeake and Statoil's statement of material facts. On October 31, 2014, the defendants each filed their reply briefs and exhibits were submitted by Chesapeake and Statoil. (Doc. 54, Doc. 55, Doc. 55-1, Doc. 55-2).

II. STANDARD OF REVIEW

The defendants' motions for summary judgment are brought pursuant to the provisions of Fed.R.Civ.P. 56. Summary judgment is appropriate "if the pleadings, the discovery [including, depositions, answers to interrogatories, and admissions on file] and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). A factual dispute is genuine if a reasonable jury could find for the non-moving party, and is material if it will affect the outcome of the trial under governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Aetna Cas. & Sur. Co. v. Ericksen, 903 F.Supp. 836, 838 (M.D. Pa. 1995). At the summary judgment stage, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249; see also Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (a court may not weigh the evidence or make credibility determinations). Rather, the court must consider all evidence and inferences drawn therefrom in the light most favorable to the non-moving party. Andreoli v. Gates, 482 F.3d 641, 647 (3d Cir. 2007).

To prevail on summary judgment, the moving party must affirmatively identify those portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323-24. The moving party can discharge the burden by showing that "on all the essential elements of its case on which it bears the burden of proof at trial, no reasonable jury could find for the non-moving party." In re Bressman, 327 F.3d 229, 238 (3d Cir. 2003); see also Celotex, 477 U.S. at 325. If the moving party meets this initial burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts, " but must show sufficient evidence to support a jury verdict in its favor. Boyle v. County of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). However, if the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to [the non-movant's] case, and on which [the non-movant] will bear the burden of proof at trial, " Rule 56 mandates the entry of summary judgment because such a failure "necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 322-23; Jakimas v. Hoffman-La Roche, Inc., 485 F.3d 770, 777 (3d Cir. 2007).

In determining the existence of an issue of material fact, the reviewing court must consider the evidence in the light most favorable to the nonmoving party. White v. Westinghouse Electric Co., 862 F.2d 56, 59 (3d Cir. 1988). As such, the court must accept the nonmoving party's allegations as true and resolve any conflicts in his or her favor. Id. (citing Gans v. Mundy, 762 F.2d 338, 340 (3d Cir. 1985), cert. denied, 474 U.S. 1010 (1985); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038 (1977).

The Federal Declaratory Judgment Act states that "in case of actual controversy within its jurisdiction... any court of the United States, upon filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking declaration, whether or not further relief is or could be sought." 28 U.S.C. §2201(a). The United States Supreme Court has held that "district courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdiction prerequisites." Wilson v. Seven Falls Co., 515 U.S. 277, 282 (1995). The Third Circuit has held that "federal courts should hesitate to entertain a declaratory judgment action where the action is restricted to issues of state law." Atl. Mut. Ins. Co. v. Gula, 2003 WL 22962947, at *2 (3d Cir., Dec. 17, 2003)."Declaratory relief is within the sound discretion of the district court to grant, and in deciding whether to do so the court is obliged to consider facts bearing on the usefulness of the declaratory judgment remedy, and the fitness of the case for resolution.'" Stewart v. SWEPI, LP, 918 F.Supp.2d. 333, 339 (M.D.Pa. 2013) (citation omitted).

III. MATERIAL FACTS

As indicated above, the defendants have each filed a statement of material facts in support of their respective motions for summary judgment and Tuhro Partnership has not responded to them as required by Local Rule 56.1, M.D.PA. Since defendants have properly filed their statement of material facts in support of their motions for summary judgment, as required by Local Rule 56.1, M.D. PA., and their facts are properly supported by citation to the record, and since Tuhro Partnership has not responded to them, (Doc. 54, at 1-2, Doc. 55, at 5) the court will deem as admitted their facts contained in their statements. See Carpenter v. Kloptoski, 2012 WL 911558, *1 (M.D. Pa. March 16, 2012) ("Because Plaintiff has failed to file a separate statement of material facts controverting the statement filed by Defendant, all material facts set forth in Defendant's statement [] will be deemed admitted.").[2]

Based upon a review of those statements, the following are the facts which are undisputed.[3] On September 27, 2006, the Tuhros knowingly and voluntarily executed an oil and gas lease covering the Property (the "Lease") with East Resources, Inc. ("East Resources"). (Doc. 14, Doc. 55-1). The Tuhros are Tuhro Partnership's predecessor-in-interest with respect to the oil and gas underlying the Property and the Lease. The Tuhro Partnership is a family limited partnership formed by the Tuhros. The Tuhros are the managing members of the limited liability company that is the family limited partnership's general partner. The Tuhros manage and control the Tuhro Partnership. The limited partners in the Tuhro Partnership are the Tuhros and their children.

There is no dispute that the Lease is a contract that binds the lessee (East Resources) and the lessors (the Tuhros) and their successors and assigns. The Lease provided that the Tuhros lease their Property "exclusively to Lessee, its successors and assigns, ... for the purpose of exploring for, developing, producing and marketing oil and gas along with all hydrocarbon substances produced in association therewith by all methods now known or hereafter known or hereafter discovered, in and under [the Property.]" The Lease is for a defined primary term, and it can be extended beyond that primary term if certain conditions specified in the Lease are satisfied. Paragraph 3 of the Lease defines the primary term as follows:

(3) TERM - Subject to the other provisions contained herein, this lease shall be in force for a primary term of Five years from 27 September 2006, hereinafter called the "Effective Date", and for so long thereafter as oil, gas or other substances covered hereby are produced in paying quantities from the leased premises or from lands ...

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