ERWIN FRANK v. PHILLIP BROWN
Annotate this Case
Download PDF
RENDERED: JUNE 3, 2005; 2:00 p.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2003-CA-002515-MR
ERWIN FRANK
APPELLANT
APPEAL FROM WARREN CIRCUIT COURT
HONORABLE THOMAS R. LEWIS, JUDGE
ACTION NO. 99-CI-01294
v.
PHILLIP BROWN
APPELLEE
OPINION
AFFIRMING IN PART
REVERSING IN PART
AND REMANDING
** ** ** ** **
BEFORE:
BARBER AND SCHRODER, JUDGES; EMBERTON, SENIOR JUDGE.1
BARBER, JUDGE:
Appellant, Erwin Frank (Frank), appeals from the
decision of the Warren Circuit Court awarding fees for use of
gas and equipment for obtaining use of gas to Appellee, Phillip
Brown (Brown).
defense counsel.
Frank also appeals an attorney fee award to
1
The trial court’s ruling with regard to
Senior Judge Thomas D. Emberton sitting as Special Judge by assignment of
the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution
and KRS 21.580.
ownership of a personal use gas well is affirmed.
The remainder
of the court’s ruling is reversed, and the case is remanded.
Frank is the owner/operator of 200 oil wells in Warren
County, Kentucky.
The wells lie on various tracts of property
and rights to the oil and gas are agreed upon between the
landowners and Frank.
In August, 1979, Frank entered into a gas
and oil lease with Dorothy Wareham and her husband.
That
Agreement authorized him to produce oil from the property.
standard oil lease was recorded with the county clerk.
That
Two
additional “Standard Ky. 88 Oil and Gas Leases” contemplating
wells on other tracts of land were entered into between Wareham
and Frank in 1998.
Those wells produce oil.
Both those leases
were also recorded with the county clerk.
On December 11, 1997 Frank entered into a different
type of Gas Well Agreement with Dorothy Wareham.
That Agreement
was not a standard form, but was drawn up by an attorney on
behalf of the parties.
That Agreement was not related to the
other oil leases between the parties, but was a wholly separate
and different Agreement.
The terms of the Agreement allowed
Frank to operate one of the wells on the Wareham property for
the purpose of obtaining gas from the well to heat his personal
residence.
That well produces gas and a minimal amount of oil
which must be removed from the well periodically so that the
-2-
well will continue to produce gas.
That Agreement stated, in
pertinent part:
WHEREAS, Dorothy Wareham has a gas well
located on her property from which both
parties use gas for the purpose of heating
their respective residences; WHEREAS, both
parties desire to have a written statement
as to their agreement. NOW, THEREFORE, for
and in consideration of the mutual
covenants, the parties agree as follows (1)
Erwin Frank may utilize gas from the well
located on the property of Dorothy Wareham
for the purpose of heating his residence and
shall not be required to meter or pay for
said gas. (2) Erwin Frank shall maintain
the gas well, the pump, lines and all other
attendant devices utilized to deliver gas
from the well to the respective residences
of the parties at his sole and complete cost
and without any cost or expense whatsoever
to Dorothy Wareham. (3) Either party may
terminate this agreement by giving 30 days
written notice of his or her desire to
terminate same. Id.
In 1999 Wareham then decided to sell 60 acres of her
property, including the land on which the gas well used to heat
her home and Frank’s home was located.
She delivered a
handwritten document purporting to be a cancellation of the
personal use Gas Well Agreement, which had been entered into
between the parties in December, 1997.
Wareham delivered the
handwritten document to Frank in August, 1999.
This
cancellation was in accordance with the terms of the Agreement
between the parties, which permitted cancellation of the
Agreement upon thirty days written notice.
-3-
An auction for the Wareham property was conducted on
September 25, 1999.
At the time of sale the auctioneer
indicated that three oil wells on the property were under lease
to Frank.
The auctioneer stated “This tract has three oil wells
which Mrs. Wareham has sold to a neighbor [Frank].
In addition,
there is another oil well on the property that has been leased
and Mrs. Wareham receives 15% of the earnings.
She will
transfer her interest in this lease to the new owner of the
property.”
The auctioneer also testified that the property had
a gas well on it, which Wareham and a neighbor had used to heat
their homes.
The auctioneer notified all purchasers that
Wareham had provided written notice of termination of the
personal use gas lease to Frank.
The record contains an
affidavit from Dorothy Wareham, dated December 15, 1997 showing
that there were no other leased wells on the property.
In her
deposition testimony, Wareham was clear in differentiating the
agreement regarding the gas well used to heat her home and
Frank’s home and the oil wells leased by Frank for production.
She stated that she had terminated the free gas use lease, but
that Frank had other leases for the other wells, and that those
leases had not been terminated by her.
Appellee, Phillip Brown (Brown), was the successful
purchaser of the property.
The title opinion on the property,
which was received by Brown at the time of sale, indicated that
-4-
the property was subject to three oil and gas leases by Frank,
one dated August 11, 1979 and two dated April, 1998, which were
to continue “as long thereafter as either of them [oil or gas]
is produced.”
All three oil and gas leases are of record in the
Warren County Clerk’s Office.
The terminated personal use gas
agreement was not recorded and is not reflected in the title
opinion.
Frank has continuously operated and maintained the
wells for a number of years.
Since Brown’s purchase of the
property his royalty share of the oil sales has been held by the
company which purchases the oil.
There is no commercial value
to the gas produced by the well Frank and Wareham used to heat
their homes.
After purchasing the property, Brown obstructed
Frank’s right to the oil and gas from his three leased wells, as
well as his ongoing use of heating fuel from the well subject to
the Gas Lease Agreement.
damages.
Frank sought an injunction and
Brown counterclaimed for trespass.
A bench trial was
held, and the court ruled in favor of Brown on each issue.
At trial Wareham testified that Frank owned two oil
wells on the property, which were sold to him by her deceased
husband prior to 1997.
She also testified that the gas well,
which also produced some oil, was the only well actually leased
to Frank.
Wareham exhibited some confusion about whether Frank
owned or leased the oil wells subject to the filed and recorded
-5-
leases.
She appears to have believed that Frank owned those
wells outright.
Wareham was not confused as to Frank’s right to
continue to use those wells and testified that she knew he
exercised dominion and control over them.
Wareham testified
that she continued to receive royalties from the ongoing oil
production from the wells owned by Frank after she terminated
the separate gas lease agreement on the gas well.
The filed and
recorded lease agreements for the oil and gas wells expressly
provide that the leases shall continue as long as “oil or gas or
either of them is produced from said land by the lessee
[Frank].”
The filed and recorded lease documents do not provide
for termination of the lease by any other means.
The record
does not show that the leases on those wells were terminated in
accordance with law.
The leases remain valid.
The trial court ruled that the handwritten termination
letter terminated “the April 24, 1998 oil and gas lease.”
Frank
contends that the handwritten document did not serve to lawfully
terminate his interest in the gas well.
The court’s ruling with
regard to the gas well used to heat Frank and Wareham’s homes is
supported by the terms of the document, the written notice of
termination found in the record, and Mrs. Wareham’s testimony
before the trial court.
The trial court properly found that the
lease on the personal use gas well had been terminated by the
handwritten document.
-6-
Notwithstanding the limiting statement in its judgment
or the terms of the contracts at issue, the court then
erroneously ruled that the handwritten document terminated not
only Frank’s lease on the gas well (which was actually a
December, 1997 lease), but also Frank’s interest in the other
oil wells.
That ruling is unsupported in the record and not
supported by law.
Frank contends that the handwritten document did not
terminate his interest in the oil wells.
The document states,
in relevant part:
. . . As you have probably heard, I am
planning to sell all my property.
Therefore, I am giving you 30 days notice to
terminate our gas well agreement dated Dec.
11, 1997. The agreement will expire on
Sept. 12, 1999. I will provide a
termination agreement at that time.
The plain language of the handwritten document
purported to terminate only the gas lease agreement for the well
which provided personal gas to heat Frank’s home, as that well
was the only one covered in the Agreement of December 11, 1997.
The terms of the document were not sufficient to terminate the
leases of the other wells.
On appeal, Brown contends that the oil leases were
abandoned and that the leases properly terminated due to nonuse.
Frank testified before the trial court that the wells were
in production and that he worked on them and obtained oil from
-7-
them during the lease period.
A mere lapse of time and non-use
is insufficient to show abandonment of a well where production
or ongoing work is testified to.
Pro Gas Inc. v. Har-Ken Coal
Co., 883 S.W.2d 485, 488 (Ky. 1994).
Reasonable fairness
protects against cancellation of an oil or gas lease absent
clear and uncontroverted proof of abandonment of the wells.
Little v. Page, 810 S.W.2d 339, 340 (Ky. 1991), citing Reynolds
v. White Plains Oil and Gas Co., 199 Ky. 243, 250 S.W. 975 (Ky.
1923).
Production does not always require sale of the oil, but
can constitute repairs, improvements, or other reasonable use of
the well.
Greene v. Coffey, 689 S.W.2d 603, 605 (Ky.App. 1985).
The record does not support a finding that Frank abandoned the
wells or that the lease was properly terminated for non-use.
The record contains evidence showing Frank’s use, maintenance
and improvements of the wells, and Frank’s profits obtained
through such use.
It was clear error for the court to hold
otherwise.
The court also ruled that the “terms of sale” granted
Brown the right to all Frank’s oil and gas equipment on the
land.
The court ruled that this equipment was previously owned
by Wareham.
No evidence in the record supports that finding.
Photographs in the record show a great deal of equipment on the
property being used to extract the gas and oil.
Frank is the
only party who has used that equipment and the wells for a term
-8-
of more than twenty years.
The testimony offered by Frank shows
that he owned and installed that equipment.
Frank contends that
the court was in error in awarding all the oil and gas equipment
on the property to Brown.
A contract must be interpreted as
written and all reasonable terms in the contract must be
enforced.
Cline v. Allis-Chalmers Corp., 690 S.W.2d 764, 765
(Ky.App. 1985).
Where the property is sold at auction, the
purchasers have the right and the duty to rely on the
description of the property sold.
Presnell Const. Managers,
Inc. v. EH Const. LLC, 134 S.W.3d 575, 581 (Ky. 2004).
The
purchase deed and terms of auction did not contain the right to
purchase the equipment.
Finding that the equipment did not
belong to Frank is clearly erroneous.
For this reason, the
court’s ruling that Brown is the owner of that equipment is
reversed.
Frank argues that the court erred in awarding Brown
all “royalties” received by Frank beginning on the date the
complaint was filed.
Frank states that he receives no royalties
for the sale of oil, but has a working interest in the
production of the oil.
Profits or shares received by Frank due
to oil production from the leased wells are the property of
Frank pursuant to the terms of the leases.
It was clearly error
for the court to award any such funds to Brown.
If sufficient
proof is made, Brown may be entitled to any profit made on the
-9-
oil extracted from the gas well used to heat Frank and Wareham’s
homes, if such profits were received after the date of
termination of that particular lease.
The court did not
differentiate between the wells, hence the ruling as to any
profits owed Brown is reversed and remanded for determination.
Frank claims that the court was in error in awarding
Brown $4,800 for gas consumed by Frank at his personal
residence.
No evidence supporting the sum of that award other
than a statement that some homes in the area used that much
natural gas in a year.
Additionally, that sum was a resale
price rather than a wholesale price for gas used and cannot be
found analogous to personal use from a not-for-profit well.
In
the absence of any evidence supporting Brown’s claim for
reimbursement the guess made by Brown as to the value of the gas
which possibly could have been used by Frank is too speculative
upon which to base an award.
The award is reversed as being
unsupported by the record.
Frank argues that the court erred in awarding Brown
“all attorney fees and costs associated with defending this
action,” as no contract or statute authorized the award of such
fees.
Authority must be shown to support an award of attorney
fees.
Craig v. Keene, 32 S.W.3d 90, 91 (Ky.App. 2000).
Even
where a statute may potentially support an award of attorney
fees, the court must cite and rely on such authority in making
-10-
any award.
King v. Grecco, 111 S.W.3d 877, 883 (Ky.App. 2002).
The court’s award of fees was an abuse of discretion and as
such, is properly reversed.
190 (Ky.App. 2001).
Angel v. McKeehan, 63 S.W.3d 185,
The award of attorney fees is reversed.
We remand this case for entry of an opinion consistent
with the record before the trial court.
Brown is entitled to an
ownership interest in the single gas well previously used by
Frank and Wareham to heat their homes.
The other gas wells are
subject to the terms of Frank’s recorded leases, and Brown was
put on notice of those valid leases at the time of sale.
Brown
cannot now claim that he is the owner of those gas wells.
For
this reason, the trial court’s opinion is affirmed in part,
reversed in part, and remanded.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Phillip R. Grogan
Bowling Green, Kentucky
David F. Broderick
Bowling Green, Kentucky
-11-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
