gas lease the judgments are at odds with each other and with the terms of the lease they cannot coexist and the lease cut production properly with either judgment we are here today to ask the court to reverse to the  lease is unambiguous and that it provides the right to two consecutive identical five year terms to drill a well and to establish the police in each case remains in effect you have a fallback position that it is at least but if the court determines that the lease is ambiguous then the appropriate course of action would be to to remain and to both to both courts for further proceedings as i understand it you raised the usage case to the extent that we're talking about not treatises and one such is that those are those are admissible and fairly in the record for both cases regardless of whether they're all you introduce that in both cases you gave that primary term in the delay payment section now that this is a conventional oil and gas lease and like every other like almost every other modern oil and gas lease there are two phases there is a primary term for the purpose of drilling a well and then if the drawing is successful in moves into production and the secondary phase kicks in for as long as oil and gas is produced the if you if you look at the at the purpose of the extension provision and at the literal terms of the contract it becomes an established that the only reasonable construction is to for the court to determine that the second term must be on the same the same  terms and conditions as the first term but it says on the same terms and conditions but the lease has many terms and conditions freight and the delay payment i mean why did it have to why couldn't it have just said you can delay the commencement of drilling operations will be further delayed for periods of twelve months each well why can't they just put a period there w have to say during the primary term well there's no need to pay during the secondary term because you additional five years under the same terms and conditions contained in a lease so you look at the pattern of the the established primary term which is the payment of of an upfront bonus within twelve months of which the drilling must commence or must pay the mineral owners a prescribed fee and the same process that the clock starts running for another twelve months in the same process repeats itself at the end of the second third and fourth years of the lease well do you agree that one can certainly read this is saying that only applies to the primary term and the primary term above they say for a primary turn of five years yes but the but the but that is the that is the essence of the lease and  accommodate the practical realities of drawing in a new an unconventional development such as the utica shale and ohio so what we do is what you do then is you know to sara lee if there is if there is the whole reason for having extension is to allow further time to drill a well and the the same process necessarily would hop during that it would make it would not make sense your honor under the under the terms of the lease to have a to have a an extensive pretty five year extension period  but with only limited rights and opportunities there was then you could if then if you had just started the well you would have had the extension anyway what if the why didn't commenced if there'd been a welcome as within the five the first five years then if it was not in production and paragraph six of the kill its lease or paragraph seven of the group at least would provide you can continue until completion of the well and then well the relationships remain the same and you start at the mineral owner and the drawing company in the context of the economy when the context of the economy you've got to remember these leases went back to december twenty one two thousand and six  june fourteenth two thousand and seven that was in the very early days of the interest in horizontal drilling in the state of ohio and start over in pennsylvania and then geologists saw the same formations in ohio says that we should go explore there these leases were executed at a time when when very little was known when a lot less was not both sides of the equation less was known to all and owners a lot less was known to the to the oil companies here so so that's reflected in the market price the  the oil companies it was it was a much bigger risk at that time to make a stake and take a stake in ohio and the landowners had the commensurate side at risk over time as as as the as the utica lease in order to make a better lease with somebody else goes the market prices change i think that's the impetus for the litigation but remembering that the the central our company wants to keep it in place because it as  cheaper price than it would otherwise get when i remember that the central long term key benefit of this lease is the one eighth royalty when and if gas and oil are produced that the the whole the whole purpose of a from the from the oil companies perspective they need that amount of time because in order to develop a player like this as it's called in the oil industry a lot has to happen you have to have exploratory drilling geological geophysical surveys core samples seismic studies if you max will counsel two questions first of all did you provide notice and and and allow time for has to to rectify any payment era's as required by the terms of the lease before notice that the oil companies have not been given notice as required by that paragraph which says that if action has not been taken our money not paid or whatever then the landowner give notice and there are so many days to rectify it you are still your view is yours still whatever the interpretation about the primary term and i'll own that last and the repetition of the primary term whatever the result there is your contention is you're still entitle to notice and a period of time given to rectify the situation if it comes down to yes yes and if it does come down then what action is the oil company likely that they can as a result of all parties who had agreed and understood that for the extension provision to kick in all you needed was to pay the extension bonus but the judge in the kelly case will that no you have to pay also i the delay rental payment and that  with that the the the owners may may have a different view of that but now it did you raise the notice issue one appeal i know you raised to below is did you argue the court got that wrong on appeal it is not one of the main it is not one of the main parts of our brief no no the the main the main focus around it is it in there i mean did you appealing that ruling you know well you can tell me on rebuttal but i got one other question did you argue that below that under ohio law the least does not have to be ambiguous on its face to be able to it's a legal argument that unlike other types of leases where you need to have an ambiguity to be able to introduce a parole or extraneous or whatever type of evidence that in ohio you can introduce evidence of meaning in the industry even without having to find that the lease expiration of the terms of the lease as written and so it's a position that we did not we were not obligated to make a notice that he has you failed to make this delay rental payments at the end of year five  because under the terms of paragraph or your honor it specifically says that if they don't make the payment the lease terminates under its own terms and that's the difference that's the legal distinction as to why and notice is not required  carry out guessing at what the intention of this is it seems to me that if you got a notice regards you got a notice requirement they might response that your honour's there's a difference in this lease between a requirement something we're actually required to do and then the option to do something this lease really creates a series of one year contracts with this delay we're going to have to get if you don't give notice that's automatically going terminate the guest room because that's what paragraph or says where it is that i don't not to pay or forgot to pay because the way they set this up and listen i don't know isn't that terminations that notice provision doesn't turn on intent it turns on fact well but you'd be reading the contract to say that they their argument essentially this is a ten year primary term correct so that's the best they're organising but the but the reality is that they still have to make a choice the physical choice to pay the delay rental at the end of each year to get that next year and they also have another opt out in terms of the extension payment and there's even one additional one where they have the right to simply surrender are they can simply surrender they can walk away from any port or all of the lease premises at any time but you've got to give them notice if they haven't paid something you think they should update and that's what the paragraph says i don't know what the result of that would be but that is obviously a provision of the least desire and in case the oil company forgets or whatever to give them notice and realize that they're about to lose their lease case and the judge near you said yesterday you don't always have the facts you want to work with we actually have well ruin you read brown versus fall or in the defeat clause it's essentially set up the same they had a two year term in which to commence production if they fail to if they did that they had a secondary term of up to twenty five years in the house of print court said that there was a delay rental payment required both at the end of year one and at the end of your two so w go back to is essentially judge watson was right now i cited brown versus fall or in both the case and griffith griffith came first this was a dec actions your honour's it was coming up on the end of your five they were actually my neighbors  and i filed this to find out what does this say because it is so it is so poorly written and so i think even though brown vs fire was not cited by others either district court it really does provide the foundation legally for why the delay rental payment under paragraph or is due each and every year in addition to the extension payment if they're going to extend this lease for the second five year term then that that  extension payment create is simply the payment for the exercise of the option but now if you've got this this ten year primary term you've got a gap there's no delay around a payment according the way they interpret this the one thing i really do want to stress those who is in the best position to make sure that if a landowner my land owners are dairy farmers he's a water plant worker and mrs keller runs the dairy dream and st clair's will while an ice cream and sandwich shop very good food by the way and how are they going to know about trader usage it goes back one hundred years is not the industry especially in a situation like this where it is commonplace for the industry to send lan man out well in advance of when the drilling is actually going to happen whether or not this is actually speculation or a high laws if not before the court but they went and locked them up and then mason dixon transferred to market exploration l least you have the land man saying that he discussed the plan man if you read that affidavit closely your honor mr sires essentially says look it was my common practice these guys talked these are home solicitation contracts just like a fuller brush they knock on your door congratulations that's a question well but but the interpret about that that's good and it certainly can be but there goes to the intent the intent ultimately for both sides is the production of oil my point is simply as this is being drafted the industry has all of the experience they have all of the knowledge they have all the understanding of the terms of use that look this lease has not a single defined term could we not have cleared this all up by saying let's see at the at the expiration of the primary term will have the option to extend the primary term for an additional five years or in paragraph two or paragraph work that they did not have said that they'll pay during the primary term in any additional term that's not clear about what this primary term  that not complying with terms and obligations is different from not exercising your rights number one i would say that that provision is a general provision as opposed to paragraph four which is a very specific provision and and paragraph or specifically uses the term terminate so again i don't know how you can impose a duty upon the landowners to know when hass has decided to walk away from the lease or it has simply their computer has not generated the check there was suppose there's no way for us to know our order of the hat mean they can hire a lawyer and ask him what the reciprocal rights and our of the parties in the gag i mean maybe that they can't read the lease and understand it's hard for me to read the lease and understand what it means but i think and i think in all honesty that the court will tell us what the lease s right i mean you know the standard contract construction and we would normally construe a contract against the drafter right so if there's an ambiguity your honor i think my client should give me a way to get the better for the deputy on the notice record but but here's the thing you just got to give them a chance to do what you think they were supposed to do in the first place and you've got to give them notice of to say you're gone you're in default now and you've got a corrected or it will be over and i mean that i mean how more reasonable can you get them going to provision in the least like i think you're putting the onus on the landowners when the oil company has all of the knowledge all the expertise this is their fuel that  and four and that paragraph four is the specific provision in the contract it expresses very clearly that if a payment is not made the least terminates and  again brown versus fall or makes the distinction between a forfeiture i think the savings cause the way i read it really goes to as opposed to losing a lease under forfeiture that they're not going to lose the lease that way but if they if remember now mason dixon contractually obligated itself to make those payments and if they didn't then they said we're willing to see this least terminate what you're saying it would apply say if they if they messed up and  royalty payment say they paid it thirty days late right or ten days late or whatever it is so under that provision then they've made the payment they made the good faith effort which paid i'm just talking about a payment in general let's say they made say the delay rental payment ok so you're saying this would permit them to make a delay rental payment thirty days if they made it late and we're talking about i mean we would at that point let's assume for a moment we have we're not in court at that point right but if they if they make the payment but they are late then i could see them coming back and saying that look we made the good faith effort in a relatively timely way we should not in effect this operates as a forfeiture because we did exercise our rights we're talking about a situation where they never did exercise their rights well it's clear that they intended to break it's just a different understanding of belief think that's honest with all due respect i think that's an assumption on  on our ports at this point well i mean at some point doesn't does not the land owner because of the land at landowners only intent in this is to see oil well actually drilled will to come out and pay and to do it in as quick a fashion as possible and as safely as possible that's the one thing i want to make sure is clear while yes in two thousand and six it was five dollars an acre bonus payments or additional delay runnels now it's between seven and eight thousand obviously money is an issue but for dairy farmers all over  is for dairy farmers such as the gryphus and the care which is also cattle the use of the land in modern what i'll call modern leases currently says there are five six page a den domes which deal with everything from michael nation surfers restoration timber and losses no you've got to put a certain percentage in a certain amount of time or they lose the right so well well i hope not but i mean that that is the type so it's not just a financial consideration so i mean maybe the calls for a delay payment in year six oh did the judge just i was under the impression that the parties did not even argue that has had to make a delayed payment in the first year of the renewal it well it's actually the last year of the first five year right ok to get the next guy right the technical answer your honor is no i did not argue that shame on me frankly well if it was so clear then well but but if you look at the way i see the reason i say shame on me and i'm big on personal responsibility read brown vs follow it because it's had three pages and in both accounts and griffith motions for summary judgment and i put it in  that is the case that leads judge watson to the to follow the finding that he made now he didn't cite to that case but it's inescapable if you read that case that is the legal underpinning for given this and opportunity to take whatever steps they want to take you're in the period which the paragraph seventeen provides what is going to happen  while if the court if that disposes of the case then essentially house will just go along with the lease as they have and then they will either they will ask for the tolling as they have sort of been given and that will extend the lease well it's sort of a poison an opportunity to correct the default i hope i don't overstep by saying technically i settled this case ok i settled sixty of these cases with the exact same lease with hass they would not offer it to mr is the callouses in the gryphus because there are other landowners out about six thousand acres there's probably ten to fifteen i'm not sure of the exact notion they're represented by other counsel and it's those other folks out there that truly are waiting to see what this honorable co does now if you rule against us will has honor the settlement i have my doubts i mean they're good people we've actually got along quite well so i don't need to cast aspersions but they would have no legal requirement but this this case really in some ways your honour's this case really is going to go to those other landowners and whether or not the court gets to the point where when a landowner would be subject to a usage of trade construction of a lease because if that's the case as i argue they're then the intent of the land owner is never going to matter in an oil and gas lease ok but i thought the law i thought that under ohio law you can't use that unless the landowner knew it or has reason to and the argument was essentially look you entered an oil and gas lease therefore you knew you were in this specialty arena so we can hold you to this uses a trade if the uses a trade doesn't come in because they didn't know and you can look at the affidavits of the key is this really wasn't an issue in griffith then there is no way that this court would be able or any court would be able to say that the gr has had any advance knowledge of oil and gas leases what do you say there's no way there's enough a david from the land guy who says that it was discussed well again i don't think that actually raises the material question of fact because he can't say specifically he spoke with the callouses he just says i spoke to a lot of people this is what i would normally have it is there's there's habit evidence if somebody goes out and they say this is my stick this is what i do look though iran or just in terms of credibility look at judge watson's reconsideration opinion where there was a second affidavit that was submitted that judge watson found was inconsistent with his first so again i think you know they were trying to sort of raise the question of fact at that point time obviously if the court remand his back and we have a trial we'll we'll put him on the stand we'll see what he actually said thank you thank you so you are in response to your questions are never exactly now what happened on it was on september twenty four two thousand and thirteen judge marvel e issued his opinion order in the griffith case and that  provided at that point then submitted the declaration of professor low and ultimately the the two affidavits on the along with case law your honor for the proposition that that trade usage comes in regardless of whether there is or you want to that they are clear and the result is clear and so on but they're not clear to two judges who are not stupid and i have read that buying it i don't it's hard for me to see exactly the problem is with the drafting of the leases it's not with with the fact that they are so clear that judges are unable to see the clarity well tell you what brings it into clarity you want to know if you look at that prism through the focus of the under the same terms and conditions provision and that that defines the structure of your extension term because it says you can opt for an extension of an additional five years under the same terms and conditions contained in the leas so all that all that needs to be done is one of the terms and conditions look it's a plausible reading but it's not a compelled to reading and west to give it a backdro backdrop certainly helps the decision maker absolutely but your honor if you look at what happens if you give it any other reading though it it is it is the only reasonable construction because any other reading such as that the two distinguished judges in this case have at all i mean it's not i certainly hope they're not using the same lease i mean you'd think that the it would be a lot smarter to change it than to try to turn it into something it's it propels the oil company to insist on its reading of the lease that the judge is below didn't agree with what what do you did become an issue incidentally honorine in response to a question after the after after judge watson issued the surprise willing and in the case and we did we did file a motion for reconsideration on among other grounds lack of notice but providing for notices then that would then we are still we still lose the four additional years it within which to within which to continue to finish the the work at hand or do net or do nothing it is it is possible to that just the two were questions what do you do with the doctrine that i know you don't think it's ambiguous but that the ambiguous lease is construed against the drafter what do you do with that  but if it goes back on grounds of ambiguity for fact finding then at that point the doctrine ok and then once you get to the point where you can it uses that usage in the industry isn't there a corollary requirement that the less sort no that would be informed that what how do you see the was entered that in the case came up to the six or i just had a question for you in the i know that once again it is your contention i believe that reconcile what appears to be a contradiction in your say that the landowners did not dispute that has made all of the bonus and rental payments required by the terms of the lease and then you say that you argue that the landowners to to notice on that one thing it is has nothing to do with this this this appeal but just my own curiosity and i understand the notion of random assignment but was there ever an effort to try to get all of these cases that were related before the same judge do you take the position ok in the one case you attempted to extend is that correct in both  ok so in both cases you paid the extension payment and then which is the case where so it's the kellys case where the judge said that you also had to had understood and agreed prior to that time that that has made all necessary payments was not i don't know what you mean by understood and agreed because the stipulated there may be too strong there is no dispute that that hasn't had made all required payments the issue it was what is the effect of making those payments so it was not of a missing payment issue that was that was never an issue and the judge wasn't read at least differently and said so well if you more the extension buys is multiples of the of the rental and then why do they have to send you notice if it's not a breach of an obligation it's the failure to exercise a right i mean when you would if you don't make an extension payment you're not you're not preaching an obligation under the lease you're just not exercising the right under the lease right so why isn't council right that sure they have to tell you if you are preaching you're not paying you're in a position where you're going to forfeit you're not complying yet they have to say look we think you always money they can just say ok it's over but it's a little bit different when you have the right to particular context it would apply because there was a clear intent to exercise that right so it would have made it won't apply for instance if two years later you just don't send  pay but not enough and that's exactly what that what the notice provision is designed to avoid so that it doesn't become a federal court issue but if you had you paid for the extension so you could've gone in commenced operations but you're right we believe so yes i know so they didn't know ok under there is it you could have started drilling and not had to have paid an extension paid i mean a delay payment right yes so the delay payment becomes due at the end of the interesting thank you very much