Frankovitch
WHEELING – A federal judge has granted Chesapeake Appalachia’s motion for summary judgment in a lawsuit filed against it by a Hancock County woman.
On Aug. 21, U.S. District Judge Frederick Stamp, of the Northern District of West Virginia, ruled for the company in Vaunie Brown’s class action lawsuit. Brown was challenging the company’s decision to exercise an option in her oil and gas lease that allows the company to use her land for five more years.
Brown’s original agreement was with Great Lakes Energy Partners, which assigned the lease to Chesapeake Appalachia. Because no drilling occurred during the lease’s initial five-year term, the defendant should not be able to renew or extend it, she argued.
“(T)he plaintiff argues that, if the relevant sentence of Paragraph 19 (of the lease agreement) grants the defendant a unilateral right to extend the Lease under the same terms, it violates the rule against perpetuities, as it would give Chesapeake an unfettered ability to extend the lease in perpetuity,” Stamp wrote.
“This argument fails as a matter of West Virginia law. West Virginia courts have consistently found that extension and renewal clauses in leases, barring the inclusion of language ‘so plain as to admit no doubt of the purpose to provide for a perpetual renewal,’ grant the lessee a right to a single renewal or extension.”
Brown’s lawsuit also sought damages for what she said was tortious behavior on the part of Chesapeake Appalachia relating to the lease.
In 2007, Brown entered into the oil and gas lease with Great Lakes Energy Partners. It had a primary term of five years and contained a lease extension provision in Paragraph 19.
The provision stated: “Upon expiration of this lease and within sixty days thereinafter, Lessor grants to Lessee an option to extend or renew under similar terms a like lease.”
In the five years after the agreement was reached, no drilling took place on Brown’s property. Great Lakes assigned the lease to Chesapeake Appalachia, too.
Thirteen days before the lease’s expiration, Chesapeake Appalachia filed a notice of extension and gave Brown a bonus payment of $1,000. Her lawsuit followed in Hancock Circuit Court, and the defendant removed it to federal court.
