United States District Court, M.D. Pennsylvania
WILLIAM N. EARNSHAW and HELEN A. EARNSHAW, Plaintiffs,
CHESAPEAKE APPALACHIA, L.L.C. and EQUINOR USA ONSHORE PROPERTIES, INC. f/k/a USA ONSHORE PROPERTIES, INC., Defendants.
Richard Caputo United States District Judge
before me is the Motion to Dismiss Counts I-II of the
Complaint (Doc. 6) filed by Defendants Chesapeake Appalachia,
L.L.C. (“Chesapeake”) and Equinor USA Onshore
Properties, Inc. (“Equinor”) (collectively, where
appropriate, “Defendants”). In support of their
motion, Defendants submit, inter alia, an oil and
gas well production report to support their position that the
Lease was held by production. As a result, Defendants
conclude that the declaratory judgment claim in Count I and
the trespass claim in Count II fail as a matter of law.
Plaintiffs William N. Earnshaw and Helen A. Ernshaw
(collectively, where appropriate, “Plaintiffs”)
object to Defendants' attempt to interject the well
production report at this stage of the litigation. Because
the truth of the contents of that report cannot be considered
on a 12(b)(6) motion, Defendants' motion to dismiss will
facts as alleged in the Complaint are as follows:
and Rosemary Shoemaker (the “Shoemakers”) were
owners of certain parcels of property (the
“Property”) in the Township of Mehopany in
Wyoming County, Pennsylvania. (See Compl., ¶
11). On October 12, 2007, the Shoemakers entered into an Oil
and Gas Lease (the “Lease”) with Magnum Land
Services, LLC (“Magnum”). (See id. at
¶ 12 & Ex. “B”). Magnum assigned all of
its rights, title and interest in and under the Lease to
Chesapeake. (See id. at ¶ 13). Chesapeake
subsequently assigned an interest in the Lease to Equinor.
(See id. at ¶ 14).
and Equinor are currently the only lessees under the Lease.
(See id.). On or about September 14, 2011, the
Shoemakers sold, transferred, and conveyed a portion of the
Property to Plaintiffs. (See id. at ¶ 15 &
original primary term of the Lease was for a period of five
(5) years, which expired on October 11, 2012. (See
id. at ¶ 16; see also id. at Ex.
“B”, ¶ 5). The pertinent Lease language
This lease shall continue in force and the rights granted
hereunder be quietly enjoyed by the Lessee for a term of five
(5) years and so much longer thereafter as oil gas and/or
coalbed methane gas or their constituents are produced or are
capable of being produced on the premises in paying
quantities in the judgment of the Lessee or as the premises
shall be operated by the Lessee in the search for oil gas
and/or coalbed methane gas and as provided in Paragraph 7
(Id. at Ex. “B”, ¶ 5). Prior to the
expiration of the primary term, Defendants exercised their
rights under Paragraph 19 of the Lease and extended it for an
additional five (5) years. (See Doc. 1, ¶ 16;
see also id. at Ex. “B”, ¶ 19
(“This Lease may at Lessee's option be extended as
to all or part of the lands covered hereby for one additional
primary term of five (5) years commencing on the date that
the lease would have expired but for the extension.”)).
After the extension of the original primary term of the
Lease, “Defendants failed to comply with the terms of
the Lease and as such, the Lease expired by its own terms on
October 11, 2017.” (Id. at ¶ 16).
Specifically, Defendants attempted to “hold the Lease
by production” by violating the terms of the Lease,
namely, the Lease's unitization provision. (See
id. at ¶ 17 & Ex. “B”, ¶ 8).
on the foregoing, Plaintiffs commenced this action by filing
a Complaint against Chesapeake and Equinor on August 1, 2019
in the Court of Common Pleas of Wyoming County, Pennsylvania.
(See Doc. 1, Ex. “A”). The Complaint
contains three causes of action: (1) declaratory judgment
(Count I); unlawful trespass on land (Count II); and breach
of contract pled in the alternative (Count III). (See
August 26, 2019, Defendants removed the action to this Court
on the basis of diversity of citizenship. (See Doc.
1, generally). Defendants subsequently filed the
instant motion to dismiss Counts I and II of the Complaint.
(See Doc. 6, generally). The motion to
dismiss has been fully briefed and is now ripe for
Rule of Civil Procedure 12(b)(6) provides for the dismissal
of a complaint, in whole or in part, for failure to state a
claim upon which relief can be granted. See Fed. R.
Civ. P. 12(b)(6). “Under the ‘notice
pleading' standard embodied in Rule 8 of the Federal
Rules of Civil Procedure, a plaintiff must come forward with
‘a short and plain statement of the claim showing that
the pleader is entitled to relief.'” Thompson
v. Real Estate Mortg. Network, 748 F.3d 142, 147 (3d
Cir. 2014) (quoting Fed.R.Civ.P. 8(a)(2)).
resolving a Rule 12(b)(6) motion, “a court must
consider no more than whether the complaint establishes
‘enough facts to raise a reasonable expectation that
discovery will reveal evidence of the necessary elements'
of the cause of action.” Trzaska v. L'Oreal
USA, Inc., 865 F.3d 155, 162 (3d Cir. 2017) (quoting
Connelly v. Lane Constr. Corp., 809 F.3d 780, 789
(3d Cir. 2016)). In reviewing the sufficiency of a complaint,
a court must take three steps: (1) identify the elements of
the claim; (2) identify conclusions that are not entitled to
the assumption of truth; and (3) assume the veracity of the
well-pleaded factual allegations and determine whether they
plausibly give rise to an entitlement to relief. See
Connelly, 809 F.3d at 787 (citations omitted). “To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ...