ILNews

Lessor entitled to judgment that oil and gas lease expired

Back to TopCommentsE-mailPrintBookmark and Share

Partial summary judgment for the lessor was affirmed Wednesday by the Indiana Court of Appeals in a contract dispute involving an oil and gas lease of land in Sullivan County.

Owners of the land entered into the agreement with Maverick Energy Inc.’s predecessors as lessee. The original lease contained a Demand Clause and Advance Royalties Clause. Under the lease, Maverick had the option to either renew the lease each year by timely paying advance royalties or allow the lease to expire – considered an “unless” clause.

Maverick did not pay advance royalties for 2012 by the Jan. 3, 2012, deadline. Hoosier Energy informed Maverick in February that the lease had terminated because those royalties were not timely paid. Both sides sought judicial review of Maverick’s plans to begin drilling on the property. The trial court granted Hoosier Energy’s motion for partial summary judgment.

“Unless” clauses provide a lease will terminate automatically after the expiration of a specified term unless the lessee either drills or pays advance royalties by a prescribed date. But Maverick argued the Advance Royalties Clause in its contract is not a standard “unless” clause because it does not contain the words “terminate” or “unless.”

“Here, it is clear that the parties intended for the lease to continue year-to-year upon timely payment of advance royalties. The only reasonable interpretation of the Advance Royalties Clause is that if advance royalties were not timely paid, the lease would not continue, i.e., it would terminate,” Judge Ezra Friedlander wrote.

Maverick also argued that the Demand Clause required the lessor to issue a demand prior to terminating the lease for failure to timely pay advance royalties. But the language in the Demand Clause contemplates the existence of separate termination provisions set forth in the lease and unambiguously states that it does not supersede them, Friedlander pointed out.

“We conclude that the lease clearly and unambiguously provided that if Maverick had not begun paying production or shut-in gas royalties by the end of the initial term, the lease would continue year-to-year upon the timely payment of advance royalties. Because Maverick failed to timely pay advance royalties, the lease expired by its own terms and without the need for Hoosier Energy to issue a demand,” the court held in L.C. Neely Drilling, Inc. and Maverick Energy, Inc. v. Hoosier Energy Rural Electrical Cooperative, Inc., 49A02-1305-MI-457.  

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. @ President Snow, like they really read these comments or have the GUTS to show what is the right thing to do. They are just worrying about planning the next retirement party, the others JUST DO NOT CARE about what is right. Its the Good Ol'Boys - they do not care about the rights of the mother or child, they just care about their next vote, which, from what I gather, the mother left the state of Indiana because of the domestic violence that was going on through out the marriage, the father had three restraining orders on him from three different women, but yet, the COA judges sent a strong message, go ahead men put your women in place, do what you have to do, you have our backs... I just wish the REAL truth could be told about this situation... Please pray for this child and mother that God will some how make things right and send a miracle from above.

  2. I hear you.... Us Christians are the minority. The LGBTs groups have more rights than the Christians..... How come when we express our faith openly in public we are prosecuted? This justice system do not want to seem "bias" but yet forgets who have voted them into office.

  3. Perhaps the lady chief justice, or lady appellate court chief judge, or one of the many female federal court judges in Ind could lead this discussion of gender disparity? THINK WITH ME .... any real examples of race or gender bias reported on this ezine? But think about ADA cases ... hmmmm ... could it be that the ISC actually needs to tighten its ADA function instead? Let's ask me or Attorney Straw. And how about religion? Remember it, it used to be right up there with race, and actually more protected than gender. Used to be. Patrick J Buchanan observes: " After World War II, our judicial dictatorship began a purge of public manifestations of the “Christian nation” Harry Truman said we were. In 2009, Barack Obama retorted, “We do not consider ourselves to be a Christian nation.” Secularism had been enthroned as our established religion, with only the most feeble of protests." http://www.wnd.com/2017/02/is-secession-a-solution-to-cultural-war/#q3yVdhxDVMMxiCmy.99 I could link to any of my supreme court filings here, but have done that more than enough. My case is an exclamation mark on what PJB writes. BUT not in ISC, where the progressives obsess on race and gender .... despite a lack of predicate acts in the past decade. Interested in reading more on this subject? Search for "Florida" on this ezine.

  4. Great questions to six jurists. The legislature should open a probe to investigate possible government corruption. Cj rush has shown courage as has justice Steven David. Who stands with them?

  5. The is an unsigned editorial masquerading as a news story. Almost everyone quoted was biased in favor of letting all illegal immigrants remain in the U.S. (Ignoring that Obama deported 3.5 million in 8 years). For some reason Obama enforcing part of the immigration laws was O.K. but Trump enforcing additional parts is terrible. I have listed to press conferences and explanations of the Homeland Security memos and I gather from them that less than 1 million will be targeted for deportation, the "dreamers" will be left alone and illegals arriving in the last two years -- especially those arriving very recently -- will be subject to deportation but after the criminals. This will not substantially affect the GDP negatively, especially as it will take place over a number of years. I personally think this is a rational approach to the illegal immigration problem. It may cause Congress to finally pass new immigration laws rationalizing the whole immigration situation.

ADVERTISEMENT