ILNews

Lessor entitled to judgment that oil and gas lease expired

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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.  

 

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  1. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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