ALMA LEE MISH V ERVIN RICHTER
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STATE OF MICHIGAN
COURT OF APPEALS
ALMA LEE MISH, individually and as Trustee of the
ALMA LEE MISH TRUST, and as Co-Trustee of the
ROBERT T. MISH TRUST, and KELLY MISH, CoTrustee of the ROBERT T. MISH TRUST,
UNPUBLISHED
March 28, 1997
Plaintiffs-Appellees,
v
No. 183693
Genesee Circuit Court
LC No. 90-108951-CK
ERVIN RICHTER and MARY RICHTER,
Defendants-Appellants,
and
MILDRED BLAESS, JAMES CROSS, and
MARY LOU CROSS, individually and jointly,
SHARLOTTE COOLEY, GEORGE ELLIOTT,
LEO SAMMONS, and NORMA SAMMONS,
individually and jointly,
Defendants.1
Before: McDonald, P.J., and Griffin and Bandstra, JJ.
PER CURIAM.
In this case involving an oil and gas lease and allegations of environmental contamination,
defendants Ervin and Mary Richter appeal as of right2 the trial court’s grant of summary disposition on
two counts of plaintiffs’ complaint. We affirm.
I
Plaintiffs owned land that was subject to several oil and gas leases entered into by plaintiffs’
predecessors. Defendant Ervin Richter owned lessee interests in two of these leases, the Elliott lease
and the Wint lease. Pursuant to the Wint lease, the Arlie Wint #1 Well (the Wint Well) was drilled and
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completed in 1946, producing oil and brine. Richter became the operator of this well in 1965.
Pursuant to the Elliott lease, the Elliott-Sammons Unit No. 1 Well (the Elliott-Sammons Well) was
drilled and completed in 1971 with Richter as the operator. Prior to 1989, this well produced oil,
natural gas, and brine. The parties agree that no oil or gas has been produced from the well since April
1989.
Plaintiffs allege that Ervin Richter has been responsible for numerous instances of environmental
contamination in and around their property. The Michigan Department of Natural Resources (DNR)
has cited defendant for noncompliance with environmental regulations on numerous occasions since the
early 1980s, including citations for the commission of waste, pollution contamination or damage by brine
or salt water, and improper disposal of brine or salt water. In March 1988, Richter was ordered to
submit a Remedial Action Plan to the DNR, which he failed to do. Because of the contamination at the
two well sites, the DNR has determined the sites violate the Michigan Environmental Response Act,
MCL 299.601 et seq.; MSA 13.31(1) et seq.3 (commonly referred to as Act 307), and placed the
sites on their published “Act 307 list,” which has effectively rendered plaintiffs’ land unmarketable.
Plaintiffs’ third amended complaint alleged nine counts. In count IV, plaintiffs requested that the
trial court order defendants to immediately undertake an environmental study of their land to identify the
degree and extent of soil and groundwater contamination, find that defendants had violated the
Environmental Response Act, order defendants to undertake any and all actions necessary to correct
the violations, and order defendants to pay them damages and attorney and expert witness fees. In
count V of the complaint, plaintiffs alleged that there had been a permanent cessation of production of
oil and gas at the Elliott-Sammons Well, and the Elliott lease had therefore expired on its own terms.
They asked that the trial court find that the lease had expired and order defendants to plug the well,
remove all equipment, and level and clean the well site in compliance with DNR rules. Plaintiffs also
requested an order that defendants record a release of the Elliott lease with the register of deeds and
pay damages.
The trial court granted summary disposition against defendant Ervin Richter only on count IV
and against defendants Ervin and Mary Richter on count V. Plaintiffs had filed their motions for
summary disposition pursuant to MCR 2.116(C)(9) and (C)(10). It is not clear from the record which
paragraph of MCR 2.116(C) formed the basis of the trial court’s grant of summary disposition. When
both parties rely on matters outside the pleadings, as these parties do, this Court will assume that the
motion was granted pursuant to MCR 2.116(C)(10). Butler v Ramco-Gershenson, Inc, 214 Mich
App 521, 524; 542 NW2d 912 (1995).
II
Defendant Ervin Richter first argues that the grant of summary disposition on plaintiffs’
environmental claim must be reversed because the trial court failed to make findings of fact. This
argument is without merit. When a trial court rules upon a motion for summary disposition pursuant to
MCR 2.116(C)(10), the court “is not permitted to assess credibility, or to determine facts.” Skinner v
Square D Co, 445 Mich 153, 161; 516 NW2d 475 (1994). “Instead, the court’s task is to review the
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record evidence, and all reasonable inferences therefrom, and decide whether a genuine issue of any
material fact exists to warrant a trial.” Id.
Defendant next argues that some of the evidence presented by plaintiffs was questionable or
contested. However, defendant presented no documentary evidence concerning count IV in response
to plaintiffs’ motion for summary disposition. A party opposing a motion for summary disposition
pursuant to MCR 2.116(C)(10) has the burden of showing that a genuine issue of disputed fact exists.
The existence of a disputed fact must be established by admissible evidence. Amorello v Monsanto
Corp, 186 Mich App 324, 329; 463 NW2d 487 (1990). The party opposing such a motion must
produce documentary evidence to set forth specific facts demonstrating that there is a genuine issue for
trial. Patterson v Kleiman, 447 Mich 429, 432; 526 NW2d 879 (1994). Defendant cannot now
complain that material facts were in dispute when he failed to produce any documentary evidence to
demonstrate those facts in response to plaintiffs’ motion.
Defendant also argues that plaintiffs relied on facts not set forth in their third amended complaint
and contends that the trial court should have required plaintiffs to plead these matters in a fourth
amendment. We disagree. A complaint must contain only those facts and specific allegations that are
“necessary reasonably to inform the adverse party of the nature of the claims the adverse party is called
on to defend.” MCR 2.111(B)(1). Count IV of plaintiffs’ complaint was sufficient to put defendant on
notice of plaintiffs’ allegation that, as operator of the Wint and Elliott-Sammons Wells, he had caused or
permitted the release of hazardous substances and had failed to respond to requests from plaintiffs and
the DNR to take the actions required by the Environmental Response Act.
Defendant next contends that the trial court improperly relied on factual findings made by the
DNR because, once the jurisdiction of the circuit court was invoked, the DNR was without authority to
make factual findings. Defendant offers no authority to support this argument. This Court will not
search for authority to sustain or reject a party’s position. Isagholian v Transamerica Ins Corp, 208
Mich App 9, 14; 527 NW2d 13 (1994). Moreover, defendant’s complaint that he has been placed in
the awkward position of being required to follow both the trial court’s findings and those of the DNR is
without merit. The trial court’s order merely requires defendant to perform actions required by the
Environmental Response Act to determine the nature and extent of contamination and to undertake
remediation required by the DNR.
Defendant also argues that some of plaintiffs’ documentary evidence, including the deposition of
a DNR geologist, presented only opinions and that the trial court apparently ignored the “quantity”
element in the statutory definition of environmental contamination. However, defendant’s own
environmental expert admitted that she found the presence of certain toxins above levels recommended
by the DNR. Moreover, defendant presented no documentary evidence to contradict that presented by
plaintiffs. Where the party opposing a motion for summary disposition pursuant to MCR 2.116(C)(10)
fails to present documentary evidence establishing the existence of a material factual dispute, the motion
is properly granted. Quinto v Cross & Peters Co, 451 Mich 358, 362-363; 547 NW2d 314 (1996).
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Defendant next argues that the trial court erred because it did not determine the origin of the
hazardous substances, and, therefore, the source remains an outstanding issue of fact. However,
defendant presented no evidence to the trial court that another source of contamination existed.
Therefore, this argument has no merit.
III
Defendants Ervin and Mary Richter contend that the trial court erred in granting summary
disposition on plaintiffs’ count alleging that the Elliott lease had expired on its own terms. Defendants
argue that plaintiffs’ actions in declaring the lease forfeited in 1987 and filing this lawsuit in 1990
constituted interference with their rights under the lease and excused them from further performance.
Alternatively, defendants argue that they had no available means to dispose of the gas after a local
processing plant closed in April 1989, and their performance under the lease was thus excused.
As explained in Toles v Maneikis, 162 Mich App 158, 164; 412 NW2d 263 (1987), “the oil
and gas lease form is more the result of evolution than of initial drafting.” An oil and gas lease “is not an
isolated or private agreement, drafted by uninformed neighbors to roughly express their understanding,
but is a technical contract, reflecting the development and present status of the law of oil and gas. . . .
The lease should be read not only according to its words, but in connection with the purpose of its
clauses.” Id.
Oil and gas leases are considered to be speculative in nature. The terms of the leases are to be
strictly construed in favor of the lessor. Boyer v Tucker & Baumgardner Corp, 143 Mich App 361,
364; 372 NW2d 555 (1985). Most leases provide for two distinct periods of duration: a definite term
for exploration, usually called the primary term, during which the lease may be kept alive by drilling
operations or the payment of delay rentals; and a second indistinct term, usually called the secondary
term, which typically endures as long as production in paying quantities continues. 38 Am Jur 2d, “Gas
and Oil,” § 206.
“Oil and gas leases are construed to promote production and development.” Michigan
Wisconsin Pipeline Co v Michigan Nat’l Bank, 118 Mich App 74, 85; 324 NW2d 541 (1982). Oil
and gas cannot be produced forever within the terms of an oil and gas lease. “[U]pon the halting of
production, the lease is terminated.” Redman v Shaw, 300 Mich 314, 319; 1 NW2d 555 (1942).
The Legislature “has recognized the impermanency of oil and gas leases and provided for a method of
the recording of the termination upon forfeiture.” Id. That method is currently provided in MCL
554.281; MSA 26.1161, which provides in pertinent part:
When any oil, gas or other mineral lease heretofore or hereafter given on land
situated in any county of Michigan and recorded therein shall become forfeited, it shall
be the duty of the lessee . . . within 30 days after the date of the forfeiture . . . to have
such lease surrendered in writing, such surrender to be signed by the party making the
same, his successors or assigns, witnessed and acknowledged and placed on record in
the county where the leased land is situated, without cost to the owner thereof:
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Provided, That if the said lessee, his successors or assigns shall fail or neglect to execute
and record such surrender within the time provided for, then the owner of said land may
at any time after forfeiture serve upon said lessee, his successors or assigns, in person,
or by registered letter, at his last known address . . . a notice in writing. . . .
And the owner of said land may after 30 days from the date of service,
registration or first publication of said notice, file with the register of deeds of the county
where said land is situated, an affidavit setting forth that the affiant is the owner of said
land; that the lessee, or his successors or assigns, has failed and neglected to comply
with the terms of said lease, reciting the facts constituting such failure; that the same has
been forfeited and is void. . . .
If the lessee, his successors or assigns, shall within 30 days after the filing of
such affidavit, give notice in writing to the register of deeds of the county where said
lands are located that said lease had not been forfeited and that said lessee, his
successors or assigns, still claim that said lease is still in full force and effect, then the
said affidavit shall not be recorded. . . .
The Elliott lease provided for a primary term of two years and allowed for a secondary term “if
lessee shall commence to drill within said primary term” for “as long thereafter as oil and gas, or either
of them, is produced by lessee from said land.” The parties do not dispute that production at the Elliott
Well ceased in April 1989 and had not resumed. Defendants argue, however, that the notices of
forfeiture plaintiffs filed with the register of deeds and served on defendants in November 1987
constituted interference with defendants’ rights under the lease that was sufficient to relieve them of their
obligation to produce or further develop minerals. Defendants responded to the notices in the matter
provided by the statute, depriving the notices of any affect on their rights as lessees. Therefore, the
notices filed by plaintiffs did not affect defendants’ rights or obligations under the Elliott lease.
Defendants also contend that the litigation instituted by plaintiffs constituted additional
interference. They cite the following from Williams & Meyers, Oil and Gas Law, § 808:
The constructive duty of cooperation applies as well to lessor as to lessee.
Thus, if lessor interferes with lessee’s efforts to discharge his implied obligations,
performance by the lessee may be excused. . . . [W]here lessee has already drilled and
is producing, does a cancellation suit prevent continued production? . . . [T]he answer is
probably yes. If the lessee continues to produce he may be subject to the claim that he
is a bad faith trespasser and hence liable for the full value of the oil or gas, with no set
off for costs of operation. At any rate, continued operation after suit is filed may put the
burden of showing good faith on the lessee, and this is an unwarranted burden imposed
on him by the lessor’s wrongful claim of forfeiture.
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Plaintiffs argue that the concept that litigation excuses a lessee’s performance originated in cases
that dealt strictly with lessees who were sued while in the process of drilling or reworking a well and is
not applied in cases where the lease has been extended to a secondary term. They cite an Oklahoma
opinion that distinguishes the two types of cases, holding that “the principle that all duties are suspended
during litigation comes from cases which deal strictly with lessees who were sued while in the process of
drilling or reworking a well.” Duerson v Mills, 648 P2d 1276, 1278 (1982). The Oklahoma court
noted that in the primary term of a lease, equitable considerations, such as the amount of the lessee’s
investment, present a compelling argument for suspending certain duties. However, the court found “a
substantial distinction” where the lease was in its secondary term.
Such a suit presents no compelling circumstances to excuse any of the lease terms. On
the contrary, if lessee’s duty to produce is legally suspended, pendente lite, it logically
follows he may not be compelled to produce at all. Such a corollary is unacceptable for
two reasons: (1) cessation of a producer could harm, if not “kill” the well; and, (2) such
a suit usually involves a marginal well. . . . The rule argued by [the lessee] would unfairly
create a “safe zone” of nonproduction during what is, as a practical matter, mandatory
litigation. . . . It unfairly gives the producer the advantage of litigation time during which
he need not show any return at all. [Id., 1278-1279.]
We find the logic of the Oklahoma court compelling and believe that the better view is that the a lessor’s
filing of a lawsuit to declare that an oil and gas lease has expired on its own terms during the lease’s
secondary term does not excuse the lessee’s performance under the lease.
Defendants also cite Michigan Wisconsin Pipeline Co, supra at 74, for its holding that when a
lessee acts as a reasonable and prudent operator, his nonperformance under the lease might be
excused. “Where a lessee-operator does not abandon production and takes reasonable steps to
market gas, resulting in substantial benefits to both it and the lessors, its conduct should be tested under
the reasonable and prudent operator standard.” Id. at 86. However, unlike the lessee in the Michigan
Wisconsin opinion, defendants totally ceased production and had not attempted to find alternative
means to manufacture and market their products. Therefore, they are not entitled to the excuse of
performance granted under the reasonable and prudent operator standard.
Finally, defendants argue, without citing authority, that the trial court lacked jurisdiction to order
the Elliott-Sammons Well plugged because this subject matter is within the jurisdiction of the Supervisor
of Wells. Again, this Court will not search for authority to sustain or reject a party’s position.
Isagholian, supra at 14.
Affirmed.
/s/Gary R. McDonald
/s/ Richard Allen Griffin
/s/ Richard A. Bandstra
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1
There were additional defendants who were fractional owners of the oil and gas i terests at issue.
n
These defendants, sometimes referred to in the parties’ pleadings as “the unlocatable defendants,” were
served process by newspaper publication and did not participate in the litigation.
2
The present appeal was filed before the effective date of the 1995 amendment to MCR 2.604(A).
3
The Environmental Response Act, MCL 299.601 et seq.; MSA 13.31(1) et seq., was repealed
effective March 30, 1995, after the trial court entered its final judgment in this case. The Legislature
amended the Environmental Response Act and recodified it within the Natural Resources and
Environmental Protection Act, MCL 324.101 et seq.; MSA 13A.101 et seq. On appeal, the parties
quote from both the superseded and recodified statute. As it applies to defendant, as operator of an oil
and gas facility at the time of an alleged release, the liability portion of the statute remains essentially the
same. When this action was filed and decided, the liability provision of the Environmental Response
Act, MCL 299.612(1); MSA 13.32(12)(1), provided in pertinent part:
(1) Notwithstanding any other provisions or rule of law and subject only to the
defenses set forth in sections 12a and 12b, if there is a release or threatened release
from a facility that causes response activity costs to be incurred, the following persons
shall be liable under this section:
(a) The owner or operator of the facility.
*****
(2) A person described in subsection (1) shall be liable for all of the following:
(a) All costs of response activity lawfully incurred by the state relating to the
selection and implementation of response activity under this act.
(b) Any other necessary costs of response activity incurred by any other person
consistent with rules relating to the selection and implementation of response activity
promulgated under this act.
(c) Damages for the full value of injury to, destruction of, or loss of natural
resources, including the reasonable costs of assessing the injury, destruction, or loss
resulting from the release.
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