Heath, D. v. Dellich, G. (memorandum)

Annotate this Case

Download PDF

J. A29013/16 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 DANIEL L. HEATH, Appellee v. GEORGE D. DELLICH AND MARY ANN DELLICH, Appellants : : : : : : : : : : IN THE SUPERIOR COURT OF PENNSYLVANIA No. 239 WDA 2016 Appeal from the Judgment February 8, 20161 In the Court of Common Pleas of Venango County Civil Division at No.: 848-2011 BEFORE: DUBOW, J., MOULTON, J., and MUSMANNO, J. MEMORANDUM BY DUBOW, J.: FILED DECEMBER 13, 2016 Appellants, George D. Dellich and Mary Ann Dellich, appeal from the February 8, 2016 Judgment entered after a bench trial in this oil and gas lease dispute. Upon review, we affirm. We adopt the facts as set forth by the trial court in its October 7, 2015 Findings of Fact pursuant to Pa.R.C.P. No. 1038. See Trial Court Opinion, 10/7/15, at 1-19. instant appeal. 1 We, therefore, reiterate only the facts relevant to the In 1982, Appellants, landowners of 59 acres in Venango Appellants purport to appeal from the January 28, 2016 Order denying their Post-Trial Motions. Appellants filed a Praecipe for entry of Judgment on February 8, 2016. See Pa.R.C.P. No. 227.4; Prime Medica Assocs. v. Valley Forge Ins., 970 A.2d 1149, 1154 n.6 (Pa. Super. 2009) (holding that Orders denying Post-Trial Motions are interlocutory and generally not appealable; rather, the subsequent Judgment is appealable). We have changed the caption accordingly. J. A29013/16 County, Pennsylvania, and the Peoples Natural Gas Company entered into an Oil and Gas Lease. The relevant portions of the lease provided as follows: 2. TERM. It is agreed that this lease shall remain in force for the term of five (5) years from April 2, 1983 and as long thereafter as the above described land, or any portion thereof or any other land pooled or unitized therewith as provided in paragraph 3 hereof is operated by the Lessee in the search for or production of oil or gas or as long as gas is being stored, held in storage, or withdrawn from the premises by the Lessee. Upon the drilling of a well upon the premises, or any portion thereof, or any other land pooled or unitized therewith, yielding no royalty, the Lessee may continue to hold the leased premises, upon the continued payment of the delay rental hereinafter provided for a further term of five (5) years after the expiration of the term above mentioned and as long thereafter as the land, or any portion thereof or any other land pooled or unitized therewith, is operated by the Lessee in the search for or production of oil or gas. * * * SHUT IN ROYALTY: If any well or wells, on the leasehold or acreage unitized therewith, are capable of producing gas and are shut-in and no gas is produced and there are no other production or drilling operations being conducted, or payments made under any other provision of this lease to maintain the lease in force, Lessee covenants and agrees to pay a royalty at the rate of [$29.50], quarterly in advance, beginning ninety (90) days from the date any well or wells are shut-in and each three months thereafter during the shut-in period. Oil and Gas Lease, 12/2/1982, at 1. In 1987, the Peoples Natural Gas Company pooled Appellants’ land with 17 other leases and 13 tracts of land, and drilled K. Greene #1 Well into Medina sand to a depth of 6,700 feet (“Well #1”). -2- J. A29013/16 In January 2000, Appellee acquired the Peoples Natural Gas Company’s rights under the original lease by Assignment and continued to operate the Well. In 2002, Well #1 ran into problems involving a salt bed embedded near the Well, which dramatically decreased the amount of gas produced. In 2005, due to similar salt bed issues, Well #1 collapsed. The Well stopped producing gas in April 2008. Under a provision of the original lease, if the Well yielded no royalty payments Appellee could extend the lease for 5 years by paying a “delay rental,” also referred to as a “shut-in royalty payment.” Beginning in February 2009, Appellee provided these payments every three months in the amount of $29.50, accompanied by letters to assuage Appellants’ concerns. Appellants cashed the checks until February 2011 when they began returning the checks. Appellee then placed the checks in escrow from and after that date until July 2011. In March 2010, the Pennsylvania Department of Environmental Protection (“DEP”) issued a Notice of Violation after an inspection indicated the Well was abandoned.2 Appellee contacted DEP in August 2010 to request additional time to bring the Well into compliance in order to conduct evaluation and testing. DEP granted him 90 additional days. In November 2 The trial court stated that the DEP characterized the well as abandoned “in compliance with its regulations” pertaining to non-producing wells that are not plugged. Trial Court Opinion, 10/7/15, at 26. -3- J. A29013/16 2010, Appellee filed an Application for Inactive Well Status, which DEP denied in December 2010. In February 2011, Appellee sought advice from Thomas Havranek (“Havranek”) regarding his options to repair the collapsed Well #1, and the two spoke about the project every 6-8 weeks. Havranek prepared a list of five options to fix the Well. DEP again inspected Well #1 in March 2011 and concluded that it was still abandoned. In May 2011, Appellee plugged Well #1. In June 2011, Appellants sent a letter to Appellee terminating the lease due to the lack of production and activity. On July 15, 2011, Appellee initiated the instant action by filing a Complaint to quiet title and for declaratory judgment. The trial court denied summary judgment. Also in July 2011, Appellee submitted an application to DEP for a sidetrack procedure.3 Although DEP granted Appellee’s application, Appellee abandoned the sidetrack in September 2011 after further consultations and endangered species concerns. Instead, in October 2011, Appellee applied for a permit to drill an alternate Well (“Well #2”), which DEP granted in 3 The sidetrack procedure involved plugging the existing vertical Well with cement above the problematic area, and then drilling laterally into the side of the existing Well from that point to a similar total depth “to correct the deficiencies in the existing [W]ell[.]” Trial Court Opinion, 10/7/15, at 8; Letter from Havranek to DEP, 7/8/11, at 1. -4- J. A29013/16 November 2011. Appellee drilled Well #2 in March 2012, and Well #2 began producing in November 2012.4 Following a bench trial conducted on September 10-12, 2015, the trial court rendered its written verdict in favor of Appellee on October 7, 2015, granting the declaratory judgment and confirming title with respect to the lease in Appellee. After the denial of their Post-Trial Motion, Appellants filed a timely Notice of Appeal. Appellants and the trial court complied with Pa.R.A.P. 1925. Appellants present four issues for our review: 1. Did the trial court err as a matter of law when it concluded the burden of proof was initially on the Appellants in both the Quiet Title Action and the Declaratory Judgment Action? 2. Did the trial court err as a matter of law or abuse its discretion by finding in favor of Appellee? 3. Did the trial court err as a matter of law when it determined that Appellee was tendering a valid shut-in payment? 4. Did the trial court err as a matter of law or abuse its discretion by utilizing an Exhibit that was not admitted into evidence? Appellants’ Brief at 4. Our standard of review in a declaratory judgment action “is limited to determining whether the trial court clearly abused its discretion or 4 Appellee expended approximately $400,000 to get Well #2 into production, as well as $300,000 for a compression facility completed in 2013 to create a market for gas from the Well. Trial Court Opinion, 10/7/15, at 8, 10, 25. -5- J. A29013/16 committed an error of law.” Peters v. Nat’l Interstate Ins. Co., 108 A.3d 38, 42 (Pa. Super. 2014). “We may not substitute our judgment for that of the trial court if the court’s determination is supported by the evidence.” Id. In reviewing a trial court’s decision in a non-jury trial, we are mindful of the following precepts: Our review in a non-jury case is limited to whether the findings of the trial court are supported by competent evidence and whether the trial court committed error in the application of law. We must grant the court’s findings of fact the same weight and effect as the verdict of a jury and, accordingly, may disturb the non-jury verdict only if the court’s findings are unsupported by competent evidence or the court committed legal error that affected the outcome of the trial. It is not the role of an appellate court to pass on the credibility of witnesses; hence we will not substitute our judgment for that of the factfinder. Thus, the test we apply is not whether we would have reached the same result on the evidence presented, but rather, after due consideration of the evidence which the trial court found credible, whether the trial court could have reasonably reached its conclusion. Kennedy v. Consol Energy Inc., 116 A.3d 626, 640 (Pa. Super. 2015) (citation and quotation marks omitted). “[A] lease is in the nature of a contract, and [it] is controlled by principles of contract law.” T.W. Phillips Gas and Oil Co. v. Jedlicka, 42 A.3d 261, 267 (Pa. 2012) (citation omitted). “[T]he object in interpreting instruments relating to oil and gas interests, like any written instrument, is to ascertain and effectuate the intention of the parties.” Szymanowski v. Brace, 987 A.2d 717, 720 (Pa. Super. 2009) (citation and quotation omitted). -6- J. A29013/16 A lease must be construed in accordance with the terms of the agreement as manifestly expressed, and “the accepted and plain meaning of the language used, rather than the silent intentions of the contracting parties, determines the construction to be given the agreement.” Jedlicka, supra at 267 (citations omitted). “This Court must construe the contract only as written and may not modify the plain meaning under the guise of interpretation.” Szymanowski, supra at 722 (citation omitted). “[A] party seeking to terminate a lease bears the burden of proof.” Jedlicka, supra at 267 (citation omitted). In Jedlicka, the Supreme Court of Pennsylvania held that “if a [W]ell consistently pays a profit, however small, over operating expenses, it will be deemed to have produced in paying [q]uantities.” Id. at 276. In that case, the lessor argued that “because there was a $40 loss in 1959, the subject [W]ells failed to produce in paying quantities, resulting in termination of the lease.” Id. The Jedlicka Court rejected this argument and affirmed the trial court’s finding that a one-year period in the context of a 80-year-old lease was not an appropriate time period for evaluating profitability. Id. In their first issue, Appellants aver that the trial court improperly placed the burden of proof on them as defendants in the underlying matter. Appellants’ Brief at 14. Appellants acknowledge that they could not locate any Pennsylvania oil and gas lease case, “where there was a challenge regarding the burden of the moving party[.]” -7- Appellants’ Brief at 15. J. A29013/16 Instead, Appellants cite several Ohio cases and mischaracterize the trial court’s actions and decision by arguing that “[t]he trial court seeks to shift this requirement to [Appellants], without first requiring a showing of prima facie title by [Appellee.]” Appellants’ Brief at 17. The trial court relied on our Supreme Court’s decision in Jedlicka, supra, and concluded “that once it is established that a [W]ell has been produced and that the lease has been in production, [] the burden then is on the landowner, and not the producer, to demonstrate that the lease is no longer in production.” Trial Court Opinion, 10/7/15, at 22. The trial court then concluded that Appellee satisfied this prima facie showing and that Appellants failed to meet their burden of proof. We agree with the trial court and conclude that the trial court properly applied the applicable burden of proof. In their second issue, Appellants aver that the trial court generally abused its discretion and erred as a matter of law when it ruled in favor of Appellee. Appellants chiefly contend that the trial court fundamentally misapplied the concept of good faith set out in Jedlicka, supra, which permits the trial court to examine economic determinations and business judgments when evaluating whether the leaseholder has exercised goodfaith efforts to maintain the lease. Appellants contend that Jedlicka applies only to determinations of “what constitutes production ‘in paying quantities’ sufficient to maintain a leasehold[]” where a Well has continuously -8- J. A29013/16 produced. Appellants’ Brief at 21. Appellants aver that, because Well #1 stopped producing, a different good-faith standard that did not examine economic determination and other business determinations is more appropriate. Appellants specifically direct our attention to the good faith standard set forth in Pemco Gas, Inc. v. Bernardi, 5 Pa. D. & C.3d 85 (Pa Com. Pl. Ct. 1977), and argue that the Armstrong County Court of Common Pleas properly took into account diligent actions and actual “operations [but] not [] economic decisions.” Appellants’ Brief at 24; see also Appellants’ Reply Brief at 2-3. Appellants believe applying this alternative standard would alter the legal conclusions in the instant case, and generally challenge the trial court’s findings of fact and conclusions of law. As an initial matter, the trial court properly relied on Jedlicka, supra, which constitutes binding precedent. Pemco, supra, a decision of a Court of Common Pleas, is not binding precedent for this Court or another Court of Common Pleas. Sysco Corp. v. FW Chocolatier, LLC, 85 A.3d 515, 520 n.2 (Pa. Super. 2014) (“It is well-settled that Court of Common Pleas decisions ‘are not binding precedent for this Court[,]’ … [but] may be considered for their persuasive authority.”); see also Castle Pre-Cast Superior Walls of Delaware, Inc. v. Strauss-Hammer, 610 A.2d 503, 505 (Pa. Super. 1992) (holding trial court decision from a different county did not constitute binding precedent). -9- J. A29013/16 Based on our review of the certified record, we conclude that the findings of the trial court are supported by competent evidence and the court did not err in its application of precedential law. As a result, we will not disturb the trial court’s reasonable conclusions. In their third issue, Appellants aver that the trial court improperly concluded that Appellee had provided valid “shut-in payments” between 2009 and 2011 to extend the oil and gas lease under the “Shut In Royalty” section. Appellants’ Brief at 33. They argue that “the [W]ell was not capable of producing gas after April 17, 2008[,]” and the shut-in payment provision could not apply because that provision of the lease states that the well must be capable of producing gas. Appellants’ Brief at 34. As quoted above, the original oil and gas Lease provided for Shut In Royalty payments. The trial court addressed this issue as follows: It was a bone of contention whether the payments were for “shut-in” royalty or for some other intention. [Appellee’s] contention [was that they were] for shut-in royalty and he so testified repeatedly. Defense counsel’s position is that such language flaunts the language of the lease. We conclude that [Appellee] made the payments in good faith in an effort to demonstrate to the lessees that he was fully intending to maintain the well in operation, which was the subject of the lease. Trial Court Opinion, 1/28/16, at 4. Appellants misread the relevant provision of the oil and gas lease in constructing their argument. Upon examining the terms of the lease and the trial court’s Opinions, the validity of the payments under the “Shut In - 10 - J. A29013/16 Royalty” section was not at issue. Rather, the issue centered on the “Terms” section of the lease, which examined whether Appellee operated the land “in the search for or production of oil or gas.” Oil and Gas Lease, 12/2/1982, at 1. Appellants also mischaracterize the trial court’s findings and conclusions. The trial court concluded that the payments made to Appellants constituted circumstantial evidence of Appellee’s good faith efforts to maintain the lease when examined in light of the totality of the circumstances, including the letters accompanying the payments attempting to assuage Appellants and Appellee’s good-faith efforts to get Well #1 running again. The trial court did not resolve the issue of whether the payments constituted valid “shut in royalty” payments. Moreover, the trial court pointed out that Appellants accepted the payments from February 2009 through February 2011. When they began returning all payments to Appellee, Appellee deposited these payments in escrow until July 2011. Trial Court Opinion, 10/7/15, at 7. The trial court could reasonably rely on these payments to Appellants, along with the letters and attempts at repairs, to support its conclusion that Appellee acted in good faith to maintain the lease under the “Terms” section of the lease. As a result, we will not disturb the trial court’s reasonable conclusions. In their fourth issue, Appellants aver that the trial court improperly relied on an exhibit that was not admitted into evidence at trial. - 11 - The J. A29013/16 evidence at issue is Exhibit 26, a letter Havranek sent to DEP in April 2011. The trial court acknowledged the letter in its timeline of events in its formal decision and findings of fact. See Trial Court Opinion, 10/7/15, at 18. Appellants’ argument has no merit. The trial court addressed Appellants’ challenge as follows: [Appellants] note[] that Exhibit 26 was never admitted into evidence; therefore, it was error for the trial court to rely upon the same. The discussion on the record as to Exhibit 26 is in the transcript Pages 281 to 291 and occurs during the testimony of Mr. Havranek. [Appellants’] counsel initially, as we discussed the admissibility of Exhibit 26, agreed it was admissible and did not object; however, once it was established that Exhibit 26, which was a transmittal letter to DEP, also contained enclosures and there was some dispute as to what the enclosures contained and also as to whether or not DEP even received the letter, counsel for the [Appellee] withdrew Exhibit 26 and Exhibit 26 was not received into evidence. [However,] [w]hen counsel for [Appellee] withdrew Exhibit 26 he said that he was satisfied that the record showed that the letter, which was dated April 17, 2011, was, in fact, sent and was mentioned to show activity and that he did not need to have in evidence the substance of the letter. We are treating the record as establishing that on April 17, 2011, a letter was sent from Havranek to DEP but the contents of the letter were not received into evidence. Whether this letter was sent or not is not very material to the overall disposition of the case. Trial Court Opinion, 1/28/16, at 46 (emphasis added). Our review of the record indicates that Appellant did not object to the admission of the fact of the existence of the letter. Appellants have waived this claim by failing to specifically object and present this argument to the trial court. See Pa.R.A.P. 302(a) (“Issues not raised in the lower court are waived and cannot be raised for the first time on appeal.”). - 12 - J. A29013/16 Moreover, we note that “[t]he admissibility of evidence is a matter addressed solely to the discretion of the trial court and may be reversed only upon a showing that the court abused its discretion.” Klein v. Aronchick, 85 A.3d 487, 491 (Pa. Super. 2014). “To constitute reversible error, an evidentiary ruling must not only be erroneous, but also harmful or prejudicial to the complaining party.” Id. Our review of the certified record confirms the trial court’s summary of events. While the trial court granted Appellants’ Motion to strike the contents of the letter and any attachments, the trial court admitted the testimony about the existence of the letter Havranek sent in April 2011. As a result, the trial court could properly reference the letter in its timeline based on Havranek’s actual testimony about the letter. We discern no abuse of discretion or error under these circumstances.5 As a result, Appellant’s fourth claim merits no relief. The parties are instructed to attach a copy of the trial court’s Opinions dated 10/7/15, 1/28/16, and 3/24/16, to all future filings. Order affirmed. 5 In addition, even if there had been error, Appellants suffered no prejudice or harm. As the trial court noted, the letter was inconsequential given the other evidence upon which the court relied. - 13 - J. A29013/16 Judgment Entered. Joseph D. Seletyn, Esq. Prothonotary Date: 12/13/2016 - 14 - Circulated 11/22/2016 03:44 PM DANIEL IN TH8 COURT OF COMMON PLEAS VENANGO COUNTY, PENNSYLVANIA HEATH, Plaintiff ,...., v .--,~ v. .-·-o ;·r r--c ::J :l: .. ... '-' _ ~ GEORGE DELLICH and MARY DELLICH, ~., . .. -.,r- CIV. Defendants NO. 848 - 20li··i:::; 0::-.;o~ ·.:'"·-·..: FINDINGS OF FACT ··.. ~- .: :-:-. . . ·-·1-, ~ ·:o i,) :.·,'. ::= We have Judge is acting for consideration as trier whether or not Borough of Barkeyville, terminated the gas consistent the nonjury of fact on che operations Venango with dispute of the relating Plaintiff, County, <:.) ... -; c wfiere t:fiis--::'::! trial in the Pennsylvania, the notice mailed to to should the be Plaintiff by the Defendant. This case arises and Mary Dellich, 9, 2011, oil July 15, hereinafter to Daniel and gas lease 2011, when the Health, Defendants Defendants, hereinafter was terminated. filed in this case, sent notice, on June the "Plaintiffu The Plaintiff, a Complaint in Quiet Title through pleadings George that the thereafter, on and Declaratory Judgment. The matter the Court in summary The case the parties testimony findings went judgment. was scheduled were able Summary for four to get and an additional of fact the their judgment days cases day to allow and was of addressed was denied. testimony; in with by however, two days for submitting of proposed and argument. 1 1236a Plaintiff's fact, counsel and defense counsel the commencement of the findings the also of fact submitted argument. has s ubmitted submitted proposed proposed tr.ial and then day before final All of the filings were findings of of fact at s upp Lemen t a r y submitted Drgument. findings of fact rebuttal findings Defense counsel o~ on the morning consistent with the direction of the Court. The Court Plaintiff, heard from six witnesses and one witness Premises are in the southern portion Gas was provided 635 acres. County, Venango County, very December On July 24, for six leases. The acreage ot Barkeyville, Borough dated and the Defendants. of the on behalf of the Defendants. of Venango The oil and gas lease, on behalf Pennsylvania is the close 1983, The pooling to Interstate 1982, 2, would be mostly which involved 80. People's a pooling agreement involves in Irwin with some activity about 633 to Township, in l3arkeyville Borough. The original the original drilled well was drilled within well was called to the Medina The Plaintiff, September Oil, and 16, 1992. in September the Kenneth sand approximately Mr. Heath, The of leases 1992, purchased two years Greene No. 6,700 1. the gas assiqned and It was feet deep. leases had been transfer.red Cabot of 1982, the on to Cabot leases to 2 1237a Ironwood, Inc., is a company owned en wh:i.ch t ind y by L!1e Plaintiff. On January 1st from Ironwood, Inc. The lease five years, inactive "Greene No. period, l,u after The last letter Plaintiff, The Mr. is called a consultant engaged new well was pipes the well assist the being dril.1.er Per the 24, and the No. 1, 13 the parties or April produced 17, during 2008. check to the Defendants from was sent in June of 2008. by the Plaintiff involved to assist and explained he was there was in drilling the for Plaintiff well Lhe clrcun~tances drilled, and Exhibit in 2003, and had not of the blocked explained to the premises in April witness Mr. Speedy 1994. collapsing with royalty how to cure the problem brought 19, of about Hea~h extended and the evidence, 72, Speedy was lease in March of 2000. Exbibit first Speedy and Mr. 1989. the well was not producing the relevant the for a period to repair the Ken Greene Well And by the pleadings the 30, on August with the well attempted concluded under Cabot, from August one year, there are issues assigned to himself. extending hereinafter the Plaintiff was inactive, status Plaintiff of 2000, (Greene in retrieving that at and gas, in deciding No. 1). he was some point, to use his the piping all under which was a collapse required Shawn Speedy. that of some expertise as the of the to was separated 3 1238a and dropped into the bottom of the well. This t erm is called "fishing". The Plaintiff called the D~fendant, cross-examination. wife Mr. had no specific had any from conflicts under issues the oil and we will independent thac driller. but concluded Dan Heath, testi.fied testimony a company called the Dellich, he and They that as on his had never Lht::!y wanted out gas lease. summarize. che oil and gas business. wells acknowledged with with him, The Plaintiff, and his Dellich George Mr. Oil, in question. which !ength, Heath is generally He has several other of the well Heath at substantial in oil and gas He owns and operates is a wholesale oil products company. At the time he first investigated purchasing Mr. it, Havranek. Mr. is and we will in New and gas Castle, be discuss.:..ng is an oil we.1..1.s and considered interested had been made Mr. Havranek produces many oil business Heath this well in the well and gas .i.n the area. Pennsylvania. engineer His place by and of And he did testify, Mr. Ilavranek more thoroughly in this opinion. The 1992, pounds He well had been drilled in that Mr. Heath purchased of pressure. testified the well 1987, the He paid $75,000 :i.s 6,700 well, and at the time, it was pcoducing in 1,700 for the well .:ind the lease. feet deep, that he had a tender 4 1239a for the well, Ben Hostetller, bad car accident The Rather, about well Mr. i question n is the well is on Mr. noted, totaling portion is about Initially it buyer. Mr. Heath Truck Corson, property, pooled, acres. and tt1ere as we have Of which, the when he took it over, not have infrastructure ran are already Plain~iff's Truck well was supposed Wash. Also, was to get the a line to Frank's and the Frank's Greene's property. 80 acres. because Barkeyville, 635 the well, did not on the Defendants' properties a bout ir1 a was involved his employment. and left five different Hostettler Wash, in gas service in question. gas east from And he negotiated the well, to connect and, the truck and the one well the arrangement Barkeyville Mr. consultant. lleath frank's Truck Wash needed a constant, E'rank's Truck has no public engaged At a pipeline was not sufficiently with that Mr. time to sell of Bill the Atlas well some was built t the o lines. with wash in the vicinity with Atlas therefore, to Atlas's The arrangement because two wells to a home, to Sr. Atlas Energy drilled run producing gas to a to provide the well was not utility Havranek the steady reliable, wa~h work supply and, out of gas ttierefore, ended. gas as an pressure did not service. engineering was below 500 pounds, and 5 1240a it was determined there was a 633-foot dome below the where the well was drilled. surface They attempted seemed to improve surmised the issues with the pressure the production line because malleable the cement Mr. Heath told production in 2005, to dissolve for that the water drilling, the salt becomes pouring to cure water down the casing pouring fresh casing of the line the From 2005, Mr. He was on how by DEP, However, when he applied November 15, 2010. And it status one other wells may not Heath be placed testified built a compress:i.on about to apply because and, the well's also they would on inactive station at tried is not use Apparently and creates caverns. he was attempting at for inactive status, to the well had it status very on on December is a DEP policy more and 22, been on .inactive that than one time. substantial Barkeyville, status. which was wc.1s refused apparently, that, it. to fix the well. the applicntion time, that for inactive was refused the does not protect as they now use air. Heath testified advised, 2010, today, to become malleable come up with a game plan of He said the technology were drilled salt was crushing attempted to pull the tubing, of the salt; water causes It That are salt caverns, and it facilitates us he became concerned the well water because there by the salt. some period. where fresh water down the line. such that if Mr. salt cost, the gas he is put 6 1241a into containers compress.ion conneccing pipeline they stat.i.on. lines sell to vehicles he compression t cost $300,000. in doing 7 million this, at the station with. He activated the gas well and the processing that they have and that, the gas He stated to the well between explained gas, and BTU heaters he had created the plant. He also running natural a market for gas from the well. The work on the compression Mr. Heath explained compression facility he had a difficult station completed becausP. was completed time getting in 2013. the he had to wa.i.t forever for parts. There 2011 letters from the Plaintiff checks 19, were 10 of $29.50 2009, tc the ~o. they were working up to February of 2009 and July where he sent The first letter, that Plaintiff then escrowed The Defendants accepted checks and returned them to the The royalty the checks, them he was having problems and then the Defendants the of February that it was not producing, to fix it. of 2011, fees". Dellichs 1 well, accepting in esc.r.ow. to the Defendants for "shut-in explai~ed with the Greene between February and that the checks stopped Plaintiff. and the Defendants' The money is checks are also in escrow from and after that date. As we have noted, notice of termination the Defendants, on June through 9th of 2011 counsel, (Exhibit No. sent a 3). 7 1242a On February engaged 16, 2011, as a consultant, evidence as Exhibit different fashion The one the existing there were other wells on how as to correct well; alternatives perhaps Ultimately to drill Greene 2. proposed the problem alle.r:natlve another such which is in Mr. Havranek with the to address production. was to drllJ. was to drill in the in such a existing as drilling Marcellus well; and Marcellus-type wells the Plaintiff were chose the first option, of Greene No. 1, and that over a space of four or five days which was well became Well No. 2 was permitted on November and was drilled a well as much as $2 million. a well alongside No. a memorandum, the deficiencies with the lateral expensive, who the Plaintiff In the letter, alternatives alongside wrote 16. well not producing. Tom Havranek, 21, 2011, in March of 2011. The Ken questions Greene well that its No. production, 2 continues at this to produce. time, Nobody is not in paying quantities. To drill and hydrofracture operating, the Mr. Heath Havranek, his as possible. the new well and get it Plaintiff expended testified that as he was object In order was about $400,000. to get a well to get the well consultj_ng into with Mr. production into production, as soon they had 8 1243a to apply for It a permit. takes DEP about 4 days 5 to issue a permit. In the course an environmental Rattlesnakes, clearance The attempt was, ssue i with but Mr. on the reasonable of applying endangererl Havranek of for issue the existing he characterized as, getting permits require permits because Based for the the really So Plaintiff opted the Marcellus Plaintiff (Exhibit of Mr. gas wells oil boom, demand, severa.l and he had to wait not The problem is one going at that time. Havranek, it was cheaper 16). well, company and very active for Union to come in at the time in the area. d r Ll.Le r s \'lle.ce in months on the new well certainly a drilling was There was a huge Marcellus and No. drilling it would he would in drilling drilling and what to drill to sidetrack getting to a new well because well. knows than had trouble oil a to be a consistently a nd assessment and drill since he was only of the drilling appear modern technology upon the estimates thing in he was going whereas, existing as nobody more co get a 1 or drill new well; approach, of the No. decision did not more of a sure than as to whether sidetracking under the ground. Massasauga he was able Greene to "sidetrack" successful ran inco as to the rattlesnakes a difficult require was that they t~me. the Plaintiff to cor.r.ect Black ce stified environmental period issue for the new well, very Drilling high to 9 1244a bring a drilling finally drilled rig in and drill the well. The well was ln 2012. The gas from Ken Greene 2 is now being delivered processing the station gas through in Barkeyville. the pipeline Plaintiff interest in buying last year and half because the gas. The evidence the bottom of the vast Marcellus production quantity boom. attempted to the Atlas line has .in the interim pu rcha se d Atlas Chevron to the to sell to Chevcon -- but Chevron adduced that has fallen ou~ of the of gas now available over the gas market because Gas prices presently had no of the arc extremely low. Mr. Heath did plug Greene No. directions with the of fishing the lost line out of the second well was about $50,000. 10, 2010, to discuss l. On November 18, show that he was actively Mr. Heath did Willy, on August concerning No. pursuing alternatives 1 or drilling testified he was having problems a new well. witt1 upon his consultation Willy of DEP, to the sand to Mr. 21, 2011, Mr. Heath's notes, which Greene Based write wich him the issues repairing and Mr. consistent of the DEP. The cost 2005. l, to when the well finally cone. is Exhibit on either Heath 1 beginning with Mr. Havranek, in Mr. Speedy, the casing collapse they attributed cone or the salt Greene No. Mr. Greene No. issues And quit producing that problem in April eY.tended up of 2008. 10 1245a - --~·----- Mr. Heath acknowledged receiving letter terminating che insists always has been to get the well his intent lease, the Defendant's in June of 2011, but attorney's he credibly back inco production. On cross-examination, February 19, 2009, Mr. Heath acknowledged at a deposition, he acknowledged paying shut-in royalties. Explained paying royalties, he did not shut-in whether he would be able dilemma was new well, modern It is noted 2010, there had not been the well, he was that time how or No. 1. The constant No. l or plug it and drill a near it. in February wherein The DEP's, a slip since April line, wa s dropped down point the line encountered crushed by the sand he was of DSP surmised we find, that contention abandoned was based on the fact that production 2011, that the time know at and March of 2011, that the well had been down technology, 1 had been abandoned. On May 10, at that DEP sent Heath notices May of 2010, Greene No. that to repair Greene to e i.z he r z epa i r Greene using that on the and the crush was already stated, the well the well is a test wire dropped to determine at what crushed casing, which the cement from protecting found at about 5,267 feet. preventing casing, which of 2008. was in the Medina sand would be the As we have at abouc 6,700 feet deep. 11 1246a Mr. Willy sent reports, on May 23rd of 2011 and May 24th of 2011. The permit 31, o drill t or alter a well was issued on August 2011. The Pennsylvania on the well, Massasagua Fish and Boat Commission notwithstanding Rattlesnack The parties of production gave the approval the issue of the endangered on August 25, essentially 2011. agreed that there was no capability between April of 2008 and when Greene No. on line in November of 2012. 2 came During cross-examination, Mr. Heath testified there may have been some production April of 2008, but whatever production occurred after after April of 2008 was not meaningfuJ. production $29.50 was to be paid to the lessors as shut-in royalty every three months. Greene No. Greene No. 1 was plugged on May 25, 2 was drilled and completed completion permit was filed July 12, production on and after November 2011. in March of 2012. 2012. The A well was in of 2012, see ~xhibits No. 18 and Z. Thomas Havranek Mr. Havranek engineer testified was not offered who is and has drilled very much on behalf as an expert; involved or supervised of the Plaintiff. in the the drilling however, oil he is an and gas industry of thousands of oil 12 1247a and gas wells. He is partner of the Plaintiff in other oil and gas wells. Mr. Mr. Havranek Heath's acknowledged attention 1. the problem Heath He explalned busy with his in about ~o the Greene No. that he did consult wi:h Mr. Green No. that that, own drilling to the salt ring in 2008 and the operation 2009, he surmised they caused it was with Heath probably in that location the well of he was very When discussing and that salt rings constant problem because he had brought in the firsc place and throughout company. with che well, l 1982 casing related were a to collapse. He acknowledged well going that during that period Mr. for a brief period by pouring He stated that he and Mr. beginning down kept the the line. in 2005. He discussed presented No. Heath conferred water Heath the five in writing options to Mr. Heath about every to resolve on February six weeks, the problems 16, 2011. he (Exhibit 16). At Mr. Heath's drill Greene No. direction, he did obtain the permits to 2. He also engaged determining where the Universal Well Service to assist blockage was on Greene No. in l. 13 1248a He acknowledged to schedule was very that drilling Heath had difficulty the new well because busy at that time drilling On cross-examination, letter which he prepared alternatives (Exhibit would require about Havranek had worked said would have taken No. to fix was called the well. sand well and drill is much deeper deepe~, Mr. at than a new well. other the DEP This approval gas wells then in testified. inunediate active, he well and that the area, even a Marcellus Oil He noted a barrel and gas production was extremely from OEP case that is because for $80 to $100 in this that he spent with approach was to plug time for drilling. region eight hours he concurred 2009 was a busy this forth his the a sidetrack drilling In this case, least in Barkeyville, Willy from that the about 1 was the first Plaintiff, Mr. Heath, that the better existing time wells. of work. G£eene not use what other that set on where there was a salt-collapsed producer did technique Plaintiff and getting permit 20 hours and industry acknowledged He said that the for the permits Mr. 16) a driller the drilling Marcellus Havranek foe the No. for him to prepare. applying Mr. finding at especially thal the the the Medina and even well. 2008 and that time was selling and the Marcellus in in the Utica play area. 14 1249a He established, chart, which is on the well, The defense engineer, called and qualified production; especially experience. Mr. Roach created scenario, Roach, with the blockage occurred. (objective the best-case in terms of within operator). should He have been 18 to 28 months -- the industry 2008 and a worst-case scenario the well of correcting as of April that the Plaintiff standards the blockage of when on or putting into production. He concluded that set forth on Exhibit the 16, to the Plaintiff completion, if done within have been done before recormnenda tions were consistent recormnended a reasonable opinion should Hav.r.anek, He notes period the DEP came on the site of a violation well of: Mr. with what at the time. to the Plaintiff the and gas 36 years prudent It was his opinion did not meet the standards the well back jn oil He has to the plugged well, or the new well drilled reasonableness a was of the opinion that the Plaintiff, and under both scenarios repaired 2008, who is a professional Roach as an expert due diligence a timeline 17, date was the last date jn Pennsylvania. Heath, in responding did not exercise that on April l. William Mr. C, shows that for Greene No. of production Mr. on Exhibit ac he would have that his of time, would and gave notice for nonproduction. have been completed, as In his the latest, in 2010. 15 1250a He told DEP permits 2009, for us that in 2007 and 2008 arid applications were nonconventional as the Marcellus wells, have the well either back drilled. Roach produced Exhibits especially what is 2008 and characterized 28 months and from April of 2008 to or have a new well explained timelines which are that Mr. Havranek's work was done in once he began it, and that the permitting and once Havranek began his work, was not unduly slow. acknowledged that he would that the salt bed, reason And Mr. proposed by Mr. Havranek is the option have recorrunended. He confirmed the probable He that the choice of drilling the new well versus the several options different which ls in production the opinion a timely fashion, other very busy, there were many Y and Z. He was of drilling, 2009, well. He told us he would allow Mr. and Roach He opined No. that is why the well casing collapsed. opined and improved when the Greene which is like plastic, that the technology today from what in drilling it was in is the early 1980s 1 was drilled. $400,000, the cost to drill Greene No. 2, was not unreasonable. The values the values values for gas were of gas in 2012, higher 2013, in 2008, 2009 and 2010. 2014, arc vastly below And the in 2008. 16 1251a We are operating by preponderance People's with of the following timeline, 633 assignment: to I.r.onwood we find December 2, I .July 2 '1, 1983 I December 31, leased from Dellich Gas which evidence: Pool agreement of leases, Cabot the acres recorded 1982 I ' 11962 I lease from Ironwood, Heath assigned Inc. j January I to 1, 2000 Heath DEP gives inactive status to well under Cabot August 30, 1998 August 19, 198'1 for five years Heath extended inactive the status f o.r one year 24, Per Exhibit with there are issues Greene 2003 ---· -·--·- No. 1 collapsing Pulling rig attempts to repair Ken Greene March of 2008 lease Greene No. 1 not producing, see Exh i.b i t; No. 4 r~pril 13 or 17, 2008 Last letter see Exhibit Letter with No. from Heath .royalty check to Defendants, June of 2008 22 to Dellich with Shut-in fees February 19, j 2009 Letter from Heath to Delli ch with Shut-in fees December I 28, __J 17 1252a I 2009 Letter from Heath co Delli ch with Shut-in I Letter from Heath Letter to Delli.ch fees fees wit.h Shut-in Febr.uary May 18, 2009 from Heath to Dell.i.ch wi.th ShuL-in fees May 4 I 8, 2010 2010 Letter from Heath to Dellich with Shut-in fees Ju1y 9, Letter from Heath with Shut-:i.n fees October 13, from Heath to Delli.ch with Shut-in fees December 31, Letter to Dellich ?.010 2010 2010 Letter from Heath to Delli ch with Shut-in Tom Havranek letter fees with five alternatives April 19 February I 2010 16 I 2011 Application to D!~P for inact.i.ve status November 15, 2010· Application denied, on inactive to put Greene No. status DEP wrote 90 days DEP, 1 December 12, 2010 letter to the Plaintiff giving him May 19, 2010 to remedy deficiencies noted .in its letter Havranek and Heath meet with Speedy regarding March of 2011 sidetrack well Letter to DE!? frorn Ha v.r a n e k , see Exhibit 26 April 17, 2011 1 plugged May 25, 2011 Notice of termination June 9, 2011 Greene No. .. 18 1253a Letter Complaint title - ---· from Heath to Dellich II .Ju l.y ----- in de c La r a t or y judgment and quiet 1, 20 l'! --·-· July 15, 2011 filed Greene No. 2 drilled by Union Drilling Greene No. 2 fracked and Greene No. Company March 15, 2012 I 2 in November 2012 production CONCLUSIONS OF LAW The matter first issue the Court is where lies has to address the burden of proof. as we resolve this The Plaintiff contend the burden of proof is by preponderance on the Both counsel have Defendant. followed, Phillips of would the evidence have cited, and to some extent Gas v. Jedlicka, 615 Pa. 199, 42 A3d 261 (2012). The Jedlicka case held that the party seeking the lease bears the burden of proof. the Defendant contended because the Jedlicka dealing with "production lease years, involve in some cases lease is extended counsel for would not apply cases similar to it are leases". counsel cited, s ituations for a specific that language case and the other Cases which the defense addresses, that At argument, to terminate term. and which where there is In some cases the term is t he an oil and gas term is five two or ten years, beyond the initial term Jedlicka and then the for a period in the 19 1254a habendum clause, so long which most commonly, as oil and gas Obviously, if of the lease, five years premises lease i no activity s t~rminates at-will. in for five the initial years, ''for period at the end and the lessee as in this case five is quantities." years, On the other so long as the production Jedlicka, in paying in this case is as a tenant of the term, then there which the is produced and of is on the hand, if at the end there is production, continues, the habendum clause has the lease continue. The defense counsel upon Pemco Gas v. Bernardi, which is a decision by the the issue this Court 5 D.&C.3d 85 out of Armstrong case, however, of whether beyond the initial more closely (Armstrong County, Co. rely 1977), which was decided the habendum clause a lease actively attempting termination or not of the initial the lease in quest.ion The the producer to produce where producer before the cont. lnued Pemco case also until right before of the lease, or not the involves and is extended consistent years, five faith effort to produce case, applicable. of the period issues on whether like the Jedlicka term of the lease involved beyond have late Judge House. The Pemco with would did not begin the and then there were had demonstrated lease moved into good the period term. 20 1255a The the Pemco language i n In this 1987, in lease does case, the nobody was producer tracks the market for the lease in language very the similar was to fracked that that well in September for inactive there was some which is the of well drilled 1987, but status. difficulty in then, This in finding a gas. habendum this disputes applied testimony The habendum quest~on. and apparently 1989, h~ve clause, case has been recited operative as five years language from of April the 2, 1983 and: "As long thereafter as the above described land or any portion thereof or any other land pooled or unitized therewith, as provided in Paragraph 3 hereof, is operated by the lessee in the search for or production of oil or gas or as long as gas is being stored, held in storage, or withdrawn from the premises by the lessee.n Exhibit 2. Apt in when this case is the additional a well has been drilled, the lessee may continue payment language that provides but the well yields no royalty, to hold the premises upon the continued of the delay rental or a further term of five years after the expiration of the term originally mentioned, would and as long thereafter as the land, be five years, portion the.r.eof or any is operated other land pooled or unitized by the lessee in sear.ch for or production which or any ther.ewith of oil or gas. 21 1256a There gas; is addi tJ.onal however, a storc:ige the parties the of oil or gas." common this clause for the We conclude, the burden by the language lessee This language and we construe to the s t o r aqe of case does not involve that of the lease in search appears, language however, as not being is "whether or production therefore, to be a Pennsylvania, ambiguous. that the Defendants' We conclude a well has been produced in production, for an oil and gas lease in of proof is in error. established and not agree that operative the land is operated been rel a ting issue. Therefore, fairly language contention on that once it is and that the lease has that the burden then j_s on the landowner, t he producer, to demonstrate that the lease is no longer in production. Pennsylvania cases have characterlzed interest that is determinable construe that expended the resources premises, is to mean Jedlicka, to produce Oil Co., 194 although quite ancient, construing Pa. 2~3, the lease 45 in Jedlicka A. 2nd states of oil relies 12l(Pa. on the to show The V. t here Forest Young Pennsylvania Pennsylvania that or gas." on Youna 1899). the law of question. has a well and produce for or production We (lessee) then has the burden pp 208-209, as a fee simple or subject to reversion. that once the producer that the lessor no longer "search lhls applies case, for a purely 22 1257a subjective in paying test to determine quantities" or, an oil or gas as here, of oil or gas." Our inquiry relevant acted wells period, on the lease Defendant's expert production was not timely, vast uncertainties, to determine the best product ion is whether Heath, during Heath's getting but Heath way in operating for or production obstacles, produced for or in good faith opines, "has "in search then, in search lease No. or As 2 into testified and substantial to restore well of gas. Greene credibly the the to lhe costs he incurred or replace the production of the well. Taking the language to its logical of the habendum clause conclusion, we conclude that the in in this case up to the time of termination, searching the premises. notice not Evidence of Plaintiff's to quit was relative in this case, subjective also shows conduct to Plaintiff's must notice of oil or gas on after the state of mind, a course of conduct. We apply from the Jedlicka case which and we consider the standard. Two quotes especially for or producing lease Defendant show that the lessee was this apt: "So long as the lessee is acting in good faith on business judgment, he is not bound to take any other party's, but may stand on his own. Every man who invests his money and labor in a business does it on the confidence he has in being able to conduct it in his own way. No Court has any power to impose a different judgment on him, howe ver erroneous L t may 23 1258a deem his to be. Its right to interfere does not arise until it has been shown clearly that he is not acting in good faith on his business judgment, but fraudulently, with intent to obtaj_n a dishonest advantage over the party to the contract. Nor is the lessee bound, in case of difference of judgment, to surrender his lease, even pro tanto, and allow the lessor to experiment. Lessees who have bound themselves by covenant to develop a tract, and have entered and produced oil, have a vested estate in the land, which cannot be taken away on any mere difference of judgment. "Colgan v. Forest Oil Co., 194 Pa. 234, 45 A. 119 (PA. 1899). Quoted in Jedlicka at 213-214. "In determining paying quantities, in accordance with the above standard, the trial court necessarily must take into consideration all matters which would influence a reasonable and prudent operator. Some of the factors are: The depletion of the reservoir and the price for which the lessee is able to sell his produce, the relative profitableness of other wells in the area, the operating and marketing costs of the lease, his net profit, the lease provisions, a reasonable period of time under the circumstances, and whether or not the lessee is holding the lease merely for speculative purposes." Jedlicka quoting Clifton v. Koontz, 325 S.W.2d 684, 691, (1959). Jedlicka, at 273. Pennsylvania analysis subject show gas the foregoing as a fee simple interest that is determinable to reversion. We construe has expended the resource producer produce cases have characterized on the premises, there by the is no longer the lessor search that to mean that once to pr.educe then or a well has the for or production the and burden to of oil and lessee. 24 1259a Taking that language conclude the Defendant along to its logical we must show that the lessee in this case, up till the time of notice of termination, for or producing conclusion, was not searching oil or gas. Discussion In balancing against Heath's the unrefuted extremely contended good faith operation testimony of Mr. Roach that Heath was slow in getting the well back to production, conclude it is not a question of industry standard reasonableness as to the time Heath took. we or even What is controlling is that a review of the time line and all the evidence presented to the Court, especially, huge amount of expenditures: $300,000 cost for the compression taking into account $400,000 for the new well, station, $75,000 for the original of the well, plus the cost of laying a pipeline Atlas line and the vast uncertainties over the period; produce the uncertainty at all, demonstrates Mr. Heath steadfastly and took action explanations fees, to to the relative to gas prices whether the new well would that, notwithstanding inexorably worked, the delay, expended money to get the well back into production. Our conclusion the shut-in and the is buttressed Plaintiff's by the consistent conferring payment with consultants, of his lessors as he sent shut-in fees, and his 25 1260a statement the and explanation in his letter of his problems with well. For example, Defendants, "Attempts dated have point." statemert been attempting faith, February been made, This timeliness evidence that he wavered restored especially persuaded The standard is not the in good the uncertainties in gas station, the payments Heath manipulating toward Defendants with or. We are by his constant attempt to assuage Other than the delay, that good faith and there is no for the lease. shut-in we on whether he would try to get the intent to put the well back "abandoned," to this that Heath had for the compression Heath exercised production compliance successful in finding drillers at the time of drilling, that stalling, not been states, to produce gas. conclude a contention expressly to rather whether the producer, the costs expended with 2009, from Heath clearly establishes into consideration difficulties lessors 19, but have effort, is attempting prices, a letter to repair the well. of the Taking 4, Exhibit and letters indicating on production. the lease, the well or acting the other lessors. its regulations, but at that point, that supports or was fraudulently DEP at one point, characterized and even his ( Exhib:i. t 4) . there is no evidence had abandoned the well the well before, in as the 26 1261a record is replete trying to get the repair i t was Greene No. him the opinion efficient, accepted the 1, that testimony the difficult production. clear indicating Heath that of issues As you Heath We therefore way to to the point when Mr. Havranek and probably more he was to try to that drilling another well would Mr. Havranek's that of the best listened his preference but at the less costly, was into production. credible, solving well into testimony, back as throughout get efforts well t he We accept, was with gave be more productive, he opinion. conclude that the verdict in this case should be in favor of the Plaintiff, which is to grant the declaratory lease, judgment in the Plaintiff. For purposes opinion of Pa. was supposed however, complexity our and confirm the title, at least as to the finding and We will enter an appropriate R.C.P. 1038(c), we acknowledge order. that the to be filed within seven days of the trial; j_s that this case presented required more than seven days extraordinary to write and print. Judge sab Cc: William J. Cisek, Esquire- gl 4.~ · Robert Coyer. Esquire /, ~ 'i31J-i.t.£.· . \ I/ 0 Y.· ~ "] (>.f.i.· .. 'T - ~'-il.(Cj) J 1262a Circulated 11/22/2016 03:44 PM DANIELL. HEATH, IN THE COURT OF COMMON PLEAS OF VENANGO COUNTY, PENNSYLVANIA Pla.int.iff .,,,.,,:-· va. GEORGE D. DELLICH and MARY ANN DELLICH, .. CIV. No. 848 - 2011 Defend.ants OPINION AND NOW, this 28th day of January, 2016, the Court has for consideration Defendant's Motion for Post-Trial Relief pursuant to Pa. R.C.P. 227.1 docketed October 13, 2015. The Court heard argument in this matter. submitted memorandum Both counsel and the Court has considered the briefs. The Court will deny the motion for Post-Trial Relief. Some of the issues raised on the Motion for Post-Trial Relief we conclude, however, deserve explanation by the Court. We are satisfied that the findings which we docketed on October 7, 2015, are consistent with the facts of the case generally and our conclusions of law, we conclude, are sound and the disposition docketed on October 7, 2015, shall remain the primary explanation for and the order of this Court. Counsel in the Post-Trial motions in Paragraph 10 recites that some of the findings of fact and conclusions of law are not supported by any evidence. the brief, Counsel references Page 17 and 18 of which is incorporated in the motion. On Page 18 of 1289a the brief there are numerous specific allegations that are not supported by the evidence. of findings We will deal with those issues seriatim: a. The number of leases in the pulling agreement really material. this b. is not We do not intend to spend any time on issue. Page 2 of the opinion does recite the well was drilled within two years, that is either error or a typo. recite at least one other time in the opinion well was drilled We that the in 1987 (See for example Page 4 of the findings) . c. The last letter with a royalty check from the plaintiff, reference d. Exhibit 72, was sent in June 2008. our "time line" Page 18. The allegation is that the Court time frame of Shawn Speedy's testimony that establish Shawn Speedy plaintiff of testimony involvement. met with Mr. Havranek the well with a "sidetrack" Volume the The notes of that there was credible testimony and the the concept of method (Notes II, Page 271). That there were five different the plaintiff's property consider rnischaracterized in March of 2011 to discuss remediating e. We properties is about 80 acres, pooled and we do not this point as material. 2 1290a f. Mr. Heath testified in two different places that he was advised by DEP to apply for inactive status. that testimony credible. We found (See Volume I of transcript Page 114 and Page 113, Line 6.) g. Page 115 Mr. Heath testified about gas going to a station which he has established and the gas is made ready to put into truck tractors. That testimony supports the Court's finding on the gas operations and the market which Mr. Heath creat€d for the gas from the relevant well. h. The evidence supports that checks were received by the Defendants as late as July of 2011. Mr. Dellich (Page 78 of Volume I of the transcript) admits receiving a check July of 2011 and Exhibit 4 also supports that inference. i. Evidence as to the fact that gas prices have been volatile is established through the testimony of Mr. Roach, Volume II, Page 366. j. Testimony of one witness did refer to the defect that was causing the collapse as a salt column and in another place referred to it as a sand sore or column. k. It was a bone of contention whether the payments were for "shut-in" royalty or for some other intention. Heath's contention it was for shut-in royalty and he so 3 1291a testified repeatedly. Defense counsel's position is that such language flaunts the language of the lease. We conclude that Heath made the payments in good faith in an effort to demonstrate to the lessees that he was fully intending to maintain the well in operation, which was the subject of the lease. 1. Mr. Havranek testified that they actively considered a "sidetrack" plan and that was the reason that Mr. Speedy was consulted. The testimony does not support that Mr. Havranek had worked a sidetrack method with other wells. To the extent that that is the finding, that is incorrect. Havranek consulted a driller who referred him to Speedy and Speedy was engaged because he apparently had some expertise with the "sidetrack" technique. m. The Capital Iron assignment occurred on December 31, 1962 is clearly a typographical error. on Page 17, which is our time line. That error is The Capital Iron assignment was recorded 1992. n. The letters to the Defendants from the Plaintiff are set forth in Exhibit 4. The rest of the issues raised as to errors in findings of fact are not material. The other issue which the Court needs to address is 4 1292a the issue as to Exhibit 26. Defendant notes that Exhibit 26 was never admitted into evidence; therefore, it was error for the trial court to rely upon the same. The discussion on the record as to Exhibit 26 is in the transcript Pages 281 to 291 and occurs during the testimony of Mr. Havranek. Defense counsel initially, as we discussed the admissibility of Exhibit 26, agreed it was admissible and did not object; however, once it was established that Exhibit 26, which was a transmittal letter to DEP, also contained.enclosures and there was some dispute as to what the enclosures contained and also as to whether or not DEP even received the letter, counsel for the Plaintiff withdrew Exhibit 26 and Exhibit 26 was not received into evidence. When counsel for the Plaintiff withdrew Exhibit 26 he said that he was satisfied that the record showed that the letter, which was dated April 17, 2011, was, in fact, sent and was mentioned to show activity and that he did not need to have in evidence the substance of the letter. We are treating the record as establishing that on April 17, 2011, a letter was sent from Havranek to DEP but the contents of the letter were not received into evidence. Whether this letter was sent or not is not very material to the overall disposition of the case. We confirm, therefore, that other than as noted above we are satisfied with the findings and the conclusions of law s 1293a docketed October 7, 2015. The Court will dismiss the Defendant's Motion for Post- Trial Relief. BY THE COORT, Judge 6 1294a Circulated 11/22/2016 03:44 PM IN THE COURT OF COMMON PLEAS OF VENANGO COUNTY, PENNSYLVANIA DANIEL HEATH, Plaintiff, crv. No. 848-2011 v. GEORGE DELLI CH and MARY DELLICH, Defendant. OPINION OF COURT AND NOW, thfr/)c/ day of March, 2016, the Court has before it Defendants' Concise Statement of Matters Complained of on Appeal. This Court is of the opinion that these issues raised in the Concise Statement have been adequately ad.dressed between the Findings of Fact and Conclusions of Law, filed on October 7, 2015, and the Opinion of Court, dated January 28, 2016, issued in response to Defendants' Motion for Post- Trial Relief. For this reason, the Court will stand by its reasoning as supplied in these documents, and no further opinion is necessary. BY THE COURT, H. WILLIAM WIIlTE, President J. Specially Presiding cc: William J. Cisek, Esq. Robert Coyer, Esq. 1299a

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.