LUCINDA A. CARDINALE AND IOLA HUGNEY, ON BEHALF OF THEMSELVES AND ON BEHALF OF ALL THOSE SIMILARLY SITUATED
R.E. GAS DEVELOPMENT, LLC, AND REX ENERGY CORPORATION APPEAL OF: IOLA HUGNEY, ROBERT L. HENRY AND ELAINE M. HENRY MARY R. BILLOTTE, ON BEHALF OF HERSELF AND ON BEHALF OF ALL THOSE SIMILARLY SITUATED
R.E. GAS DEVELOPMENT, LLC, AND REX ENERGY CORPORATION APPEAL OF: IOLA HUGNEY, ROBERT L. HENRY AND ELAINE M. HENRY
from the Order July 6, 2015 In the Court of Common Pleas of
Clearfield County Civil Division at No(s): 2011-1791-CD,
BEFORE: SHOGAN, OLSON and STRASSBURGER, [*] JJ.
Iola Hugney, Robert L. Henry, and Elaine M. Henry, appeal
from the orders entered on July 6, 2015, denying the Motions
for Class Certification that were filed on behalf of
"Lucinda A. Cardinale and Iola Hugney, on behalf of
themselves and on behalf of all those similarly
situated," and "Mary R. Billotte, on behalf of
herself and on behalf of all those similarly situated."
After careful consideration, we vacate and remand.
October 25, 2011, Lucinda A. Cardinale
("Cardinale") and Iola Hugney ("Hugney")
filed a class action complaint against R.E. Gas Development,
LLC ("R.E. Gas") and Rex Energy Corporation
("Rex Energy") (hereinafter, collectively,
"the Defendants"), on behalf of themselves and on
behalf of all those similarly situated. Cardinale and Hugney
Complaint, 10/25/11, at 1-17. The complaint was docketed at
2011-1791-CD and, within their complaint, Cardinale and
Hugney claimed that, in 2008, the Defendants entered into
Marcellus Shale oil and gas leases with a number of
individuals in Pennsylvania, including Cardinale and Hugney.
Id. at ¶¶ 10-11. According to the
Energy is an independent oil and gas company that operates in
the Appalachian Basin where it produced approximately 2.8
Million Mcf of natural gas per day in 2008. . . . Rex Energy
used its wholly owned subsidiary[,] R.E. Gas[,] to obtain oil
and gas leases in Clearfield County and elsewhere in
In 2008[,] R.E. Gas delivered ... to each plaintiff and each
class member the standard form Oil and Gas Lease and the
standard form memorandum of lease into which all of the
required information, such as the lessors' identities and
property identifications had been inserted. Each of the
standard form Oil and Gas Leases was identical or
substantially identical in all material respects except for
references to the identity of the lessor, the description of
the leased premises and the amount of the prepaid rental or
bonus that was to be paid. The amount of the prepaid rental
or bonus depended upon the number of acres that were included
in the standard form Oil and Gas Lease.
Id. at ¶¶ 7, 9, and 15.
and Hugney claimed that they signed the Oil and Gas Lease, an
Addendum, an Order for Payment, and a Memorandum of Oil and
Gas Lease, and then delivered the executed documents either
to R.E. Gas or to R.E. Gas' agent and landman, Western
Land Services, Inc. Id. at ¶¶ 12-13, 16
and 18. R.E. Gas then "executed and accepted" the
documents from Cardinale on July 23, 2008 and from Hugney on
August 6, 2008. Id. at ¶¶ 17 and 19.
Cardinale and Hugney claimed:
Under the terms of  Cardinale's Oil and Gas Lease, R.E.
Gas had to pay  Cardinale $105,875.00 within  banking
days of its receipt of  Cardinale's order for payment
and executed oil and gas lease, which occurred on or shortly
after July 23, 2008. R.E. Gas's obligation to pay was
subject only "to its inspection, approval of the
surface, geology and title" of the leased premises.
Under the terms of  Hugney's Oil and Gas Lease, R.E.
Gas had to pay  Hugney $71,925.00 within  banking days
of its receipt of  Hugney's order for payment and
executed oil and gas lease, which occurred on or shortly
after August 6, 2008. R.E. Gas's obligation to pay was
subject only "to its inspection, approval of the
surface, geology and title" of the leased premises.
Id. at ¶¶ 25-26 (paragraph numbering
to the complaint, after the 60-day time period expired, the
Defendants "den[ied] that any contract or lease interest
exist[ed] between [the Defendants and Cardinale, Hugney,] or
those similarly situated to [Cardinale and Hugney]" and
the Defendants failed to pay the bonuses or rents due to the
landowners. Id. at ¶¶ 28-29. Further, the
Cardinale and Hugney Complaint claimed that the Defendants
denied the leases either without having inspected the
landowners' properties or without having inspected the
land within the requisite "60 banking days" after
R.E. Gas received the leases and orders for payment.
Id. at ¶¶ 30-33. Finally, the complaint
claimed that the Defendants "denied that any contract or
lease with class members existed not because of any purported
right to inspect and approve the surface, geology or title,
but for other reasons, including but not limited to
[Defendants' decision to reduce capital expenditures in
late 2008" due to the economic downturn. Id. at
Cardinale and Hugney Complaint contained three counts: breach
of contract against R.E. Gas; tortious interference with
contract against Rex Energy; and civil conspiracy against
both Defendants. Moreover, Cardinale and Hugney sought to
represent the following class in the lawsuit:
All persons who signed an oil and gas lease in 2008 with R.E.
Gas Development, LLC, related to property located in
Clearfield County, Pennsylvania, or elsewhere in Pennsylvania
for which Western Land Services, Inc., acted as agent for or
represented R.E. Gas Development, LLC, and for which R.E. Gas
Development, LLC, did not pay amounts specified by the oil
and gas leases or orders for payment, including the
applicable pre-paid rental or "bonus" payments.
Id. at ¶ 41.
following contractual documents were attached to the
Cardinale and Hugney Complaint: the Oil and Gas Lease, an
Addendum, a Memorandum of Oil and Gas Lease, and an Order for
Payment. In relevant part, the Oil and Gas Lease between
Hugney and R.E. Gas reads as follows:
AND GAS LEASE (PAID UP)
Project: Skywalker III
THIS AGREEMENT is made as of the 6th day of
AUGUST, 2008, by and between Iola
Hugney ... as Lessor, and R.E. Gas Development, LLC,
... as Lessee.
1. Lessor, for and in consideration of One Dollar ($1.00),
and other good and valuable consideration, the receipt of
which is hereby acknowledged, and the covenants and
agreements of the Lessee hereinafter contained, does hereby
grant, lease and let unto Lessee the land described below,
including all interests therein Lessor may acquire by
operation of law, reversion or otherwise, (herein called the
"Leasehold Estate"), exclusively, for the purposes
of exploring by geophysical and other methods, drilling,
operating for and producing oil and/or gas from any strata
and any depth . . . together with all rights, privileges and
easements . . . useful or convenient in connection with the
foregoing and in connection with treating, storing, caring
for, transporting and removing oil and/or gas produced from
the Leasehold Estate. . . .
2. It is agreed that this lease shall remain in force for a
primary term of five (5) years from the date of this
lease, and as long thereafter as operations are conducted
upon the Leasehold Estate or on lands pooled or unitized
therewith with no cessation for more than 90 consecutive
days. . . .
3. Within sixty (60) days from the date of execution of this
lease, Lessee agrees to pay to the Lessor the sum of
r$71,925.001 as full and complete bonus payment for
this lease for the entire primary term of this lease. This is
a paid-up lease and no delay rentals shall be due. The bonus
paid hereunder is consideration for this lease and shall not
be allocated as mere rental for a period.
4. Lessee covenants and agrees to pay the following
royalties: [stating the computation of royalties]. . . .
This instrument was prepared by Timothy J. Kotzman, agent
for R.E. Gas Development LLC. . .
Oil and Gas Lease between Hugney and R.E. Gas, 8/6/08, at
Memorandum of Oil and Gas Lease between Hugney and R.E. Gas
reads, in relevant part, as follows:
OF OIL AND GAS LEASE
Project: Skvwalker III
THIS MEMORANDUM OF LEASE, dated this 6th day
of August, 2008, by and between Iola
Hugney . . . hereinafter called Lessor . . . and
R.E. Development LLC . . . hereinafter referred
to as "LESSEE". . . .
1. For and in consideration of Ten Dollars ($10.00) and other
good and valuable consideration paid and to be paid by Lessee
to Lessor and in further consideration of the rents reserved
and the covenants and conditions more particularly set forth
in a certain lease between Lessor and Lessor dated August
6, 2008, (hereinafter referred to as the
"Lease") does hereby lease and let exclusively unto
Lessee the following described premises: [describing the
leased premises]. . . .
Containing a total of 28.77 acres, more or less,
(hereinafter referred to as the "Premises") for the
purpose of exploring for ..., drilling, operating, producing
and removing oil, and gas and all the constituents
2. TO HAVE AND TO HOLD the Premises for a Primary Term of
five (5) years from August 6, 2008 and for
as long thereafter as prescribed payments are made, or for as
long thereafter as operations are conducted on the Premises
in search of oil, gas or their constituents. . . .
3. The rental, covenants, provisions and conditions of the
within Memorandum of Lease shall be the same as the rental,
covenants, provisions and conditions set forth in the Lease
to which rental, covenants, provisions and conditions
referenced in hereby made and the same are hereby
incorporated by reference as though fully written herein.
4. This memorandum of Lease is executed in simplified short
form for the convenience of the parties and for the purpose
of recording the same, and this Memorandum of Lease shall not
have the effect of in any way modifying, supplementing or
abridging the Lease or any of its provisions as the same or
now or may hereafter be in force and effect.
This instrument was prepared by Timothy J. Kotzman,
agent for R.E. Development LLC. . . .
of Oil and Gas Lease between Hugney and R.E. Gas, 8/6/08, at
Order for Payment then declares:
Lessee shall, subject to its inspection, approval of the
surface, geology and title, make payment to Lessor as
indicated herein by check within 60 banking days of
Lessee's receipt of this Order For Payment and the
executed Oil and Gas Lease associated herewith. No default
shall be declared for failure to make payment until 20 days
after written notice from Lessor of intention to declare such
default. . . .
For collection, the original copy herein must be submitted
directly to Lessee at the address below along with an