in west virginia nearly every state in titles every party to a contract to expect and rely on the fact that the other party says that contract will live up to the terms of the contract if they want that contract to be enforced and what we're dealing with in th chesapeake was a company operating late there were the issue in the case is whether or not chesapeake had done enough or followed along with the terms of the agreement in such a fashion that the lease would extend beyond what they call the initial five your primary term in order to do that the the initial clause that the talks about these issues and how you stand at least beyond the primary turman into the secondary term is what they call the bend them cause and it's paragraph two in the lease agreement in this case talks about there being a five year operate in the search for and i believe in the context of using that language in the search for search would be searching the actual physical operations which require the action one of the issues in this case have to be physically  it is operating as and here to the question is whether or not it was operating at that time and so when you put oh well only adjacent property if the intent operations and production to be from the property at the end of the bend of the clause and the only way you get to being able to use the search that could be going on the other property is by effectively going through the pooling clause and meeting the requirements of what that clause required to allow you to connect your property to the property that is being called with ok now judge fairly said that there was substantial compliance with the requirements and what you're saying is that that's an equitable concept that doesn't come into play because your interpret a legal document sec rect yes it's our position that under mccall in the cases of west virginia when you're looking at the bend in clause you've got definite things that need to happen if those things don't happen the lease automatically term right so it's  right so the lease terminated our position is in two thousand and eleven when the five year window was up there's nothing equitable to reform at that point so you're not looking at an ex for late but is it is or at least a factual dispute as to whether or not your client acted reasonably in which did have some language about not unreasonably withholding your consent i think that there's a big factual question in this case as to whether or not just because they were going to move forward with well on that property and whether or not mr berger asked position of i don't want the row there was actually the reason why they they left the property in with somewhere else to make sure i understand so you're saying then that if we agree with you that he noticed once a requirement of the lease that dispute i do not believe it does in this case because that when we spoke to the land men in this case three depositions and their testimony is in the the record they really couldn't say anything about how for this process had gone on with her to the property there so so i think that there definitely is a factual question as to whether or not mr berger up did anything unreasonable in forcing his rights to site selection i think that's when the issues in this case is you know are companies these companies allowed to just do whatever they want to not object to the well at itself location he had an objection to where the road was going to be the chesapeake individuals told him that there would be environmental issues because there was a waterway or something along those where he wanted to go and they couldn't do it  here to his standard that he wanted the sign approval to be taken into account just say we'll do whatever we want and that was really the you know that's really the only evidence on that issue paints that sort of put that in his opinion did he know it was unreasonable he did put it in his opinion that it was unreasonable i think he reached too far in getting to that point without allowing fact finding on that issue to determine whether or not that was going to be the case now i think maybe judge bailey decided that it didn't matter whether or not that occurred as he agreed that the pooling notice actual property but the extent that you place a whale on adjacent property you give at least constructive notice by following that it is more to the subject property here and all of the indication is that the purpose is to effect the subject property why is that not operating in search of all of us and some property if that was the case there would be no need for the other pooling requirements to say this is what you have to do to be able to use put in the properties deal with something totally different but to extend that all you need to be doing is operating by the lessee inserts for gas etc those operations had not occurred by the time the end of the lease expired the well that the survey and then they this morning to the same survey put stakes in the ground why wasn't that enough to constitute the contractual provisions searching for oil gaps are you saying because they abandoned that and they and the requirement of searching is measured as of the date the police expires as of the date the lease expires you have to be in the search for gas having producing gas or being capable of producing gas and our position being you can only be capable of producing gas if there's actual well known property which that issue has not been addressed in west virginia but there are courts and that in the gas producing area that have said that same thing that lets you know if you don't have a well you can't be capable of producing gas that way but there are other cases to say a lot less part there are cases that say a lot less is required there's one case in west virginia one in case that talks about commencing operations i think the difference there being the commencement of operations versus operate in search of and actually applying the language of the lease agreement believe it is because this lease doesn't even use the word commands this lease uses operate in search of and our focus is on the word search using the word search as its general common dictionary definition it are something more physical than just paperwork it with respect to the extension of the lease subject to showing prejudice for your client in terms of the reason i argued that you didn't have to look at the harm is because santa performance should not even apply to harm is that they were then prevented from going out and reaching into the market again in negotiating a new agreement whether it be just because someone else for more beneficial terms to them the they would have appreciated to have now i think the fact that  agreement even if they're only trying to extend it for another year or so so i believe that the inference most favorable to us on that that piece of evidence would be that chesapeake itself knew that they had not done enough and could not do enough to extend this lease into that indefinite secondary search of well games i'm saying that the term operate in search requires the actual drilling of the property not just following the documents saying we're going to do this in the future operate in search of means actual completely different permit that was never intended to reach the bergdahl property even the well that ultimately did reach the bergdahl property up until october november right before the lease was set to expire was never intended to actually reach the bird property it was going to short stop short those operations would be sufficient but also i don't think you get into the perp a tory issue because we're not talking about the commencement of operations in this case like you would be informing or or henry the case the sign for how you're talking about actually operate in search of o it could not have been absolutely your honor i think that's a great place to be and i think when you're talking about this thing to back up and start with is that we're talking about an oil and gas leases it's a contract just like any other contract that might come before the court and so the place to start is the language of that contract so what it is lease a center is going to remain in effect until november of two thousand and eleven and as long thereafter as the premises shall be operated by the lassie in the search for oil or gas so we need to look at all of those words and operations has a very specific defined definition under west virginia law it comes from the fleming case and council is absolutely right that the fleming case what the lease said is that the lessee needed to commence operations for a test well within one year and so there's two important things from fleming there first it deals with operations just like our case dealt with operations but second what was required fleming wasn't just searching for oil and gas what was required in climbing was commencing operations for an actual well so what polite well i think informing you talked about commencing operations so commencing something here it talks about operated operating something the thing to take away from fleming is that it provides this core in exact definition of what operations is even apart from combat so in fleming the court that the lease was going to be extended this is the quote no matter how slight may have been the commencement of any portion of the work which was a necessary and indispensable part of the work required so that  word commencement and what comes after it in fleming is how west virginia defines operations any portion of the work which was a necessary and indispensable part of the work required so what was being done to meet that  definition property on the last day in november so there are a number of things that were taking place at that time on the property not on the pool or physically on the berghof property at first of all your honor there is no law that i am aware of on the way courts look at this is what is going on and is it a continuum or maybe there is nothing going on on the property they had had some or they had staked a well you grief actually there was nothing else going on that they sort of moved just applied for and received approval to case the age well the age well runs directly underneath the bergen property you cannot drill a well in west virginia until you have your casing approved by the west virginia department of environmental protection so that is relying on this argument that you're making now no i don't think the chile pretty much said this case is over because there was substantial compliance there was a notice and surely there was no notice but didn't really well that was going to be placed there and then he talked about mr berger also actions and whether or not that was reasonable the other thing i would say your honor is as this court is aware you can affirm based on any basis in the record and what we see in the record undisputed in the record prior to the expiration of the primary term there were actions taken necessary to drill a well which goes directly beneath the programming then are you were graining that there was no basis to employ equitable concepts such as substantial compliance case that deals with exactly the issues that we're looking at right now it's the eastern world what happened in eastern oil is that there was an oil and gas lease which required production in the primary charge a well was drilled in a primary term but due to a number of different factors one of which was less or interference the well did not produce in the primary term can start producing until after the primary term and so the court addressed kind of what happened the claim was the exact same the less or said you got to produce before the end of the primary term you didn't produce before the end of the primary term so the lease expires right but there are so you're saying that this is a similar case because the unless someone was rendering a property unable to be developed i'm not your honor because the supreme court of appeals in eastern well actually states its holding and says even if we disregard the interference the quote is even if you give me a page number that i cannot give you a page number i can lessee can be relieved from the gross injustice which a less sore seeks to inflict upon it and then the court answers its own question it says where there has been a substantial compliance with the contract and gross injustice would be inflicted  time when the lease doesn't make any kind of requirement like that all of the lease says is you've got a record and you've got to mail it doesn't say anything about when that merely needs to take place i mean you could reasonably read that to require that as a precondition pool or the reasonable in this context because it doesn't say that judge there's just simply nothing in the lease which says you have to record and you have to cool that you have to record and you have to mail prior to the expiration of the primary  got down this road a little bit because i think judge when you ask me about the injustice that would be here right and so one of the things we talk about is let's look at all the stuff that took place here not only did they go onto the berghoff property once they couldn't be on the bridge off property they went next door they got all the permit work they needed to do to build a path they constructed and physically built the pat they got all the permit work they needed to do for the well which goes underneath the bridge property all of that all of that took place prior to the end of the primaries or so if we want to talk about injustice what we're going to get you is all of this work done here and then because this mailing did not occur this second form of notice right because the provision says record which is constructive notice or mail which is actual notice because this second form of notice did not occur allegedly timely well i don't think they did agree to it in the contract just because i don't think i don't think that provision says that additional y what judges what does it require a contract require were guarding notice what the contract requires regarding notice is that you have to file and record the g p u that was done excuse me the declaration of called unit that was done and it was november fifteenth i think was about two weeks before the expiration of the primaries or it also says you have to mail the g p u the d p you was mailed and so that is our position on the things that have taken place here but i think even if we step away what the sup operation that was already producing oil i think there's two things your honor first of all the reason there was more kind of activity on the east eastern oil because the eastern oil court record the eastern oil lease required more  y says you have to produce our lease only says you have to be operations in the search for gas there that's one my point only mr lehman is that i don't think i don't see how you can argue these journalists totally controlling this case when the parties have a isn't really the issue whether the contract was satisfied absolutely that is the issue whether the contract was satisfied what the district court said is here or there was substantial performance of the contract the reason i'm talking about eastern oil is because it applies the doctrine of substantial performance to a claim that a lease has expired and so we see you know what counsel talked about in the end of his argument was substantial performance doesn't apply here equitable principles don't apply your none of that applies here but what we see in eastern ohio a case where the plaintiff said this lease expired at the end of its primary term is we see the supreme court of appeals apply the doctrine of substantial performance that's why eastern oil was important here not necessarily because of the facts or anything like that but the legal idea that the west virginia supreme me that you're just sort of saying as you know you should be down the court house looking at these things mail and doesn't really mean anything but it seems to me that it while it may not have been important to chesapeake or its predecessor was very important to the burka i think it would be hard in this specific case your honor to say it was important to the bronx because we have a record the birth also admission in their depositions that they didn't have any idea what anything in paragraph ten so the idea that they were somehow relying on this notice doesn't really hold water because they stated in their depositions we don't know what paragraph ten is we don't understand it so the idea that they could rely on something which they said we don't understand doesn't really hold up the other thing i would say is your honor pointed out is there is in fact constructive notice in this case and there was no dismay over again not prior to the expiration of the primary so tell me here when you talk about substantial performance in justice which of the parties have t i'm trying to remember the i believe that what happened in eastern oil is actually the lessee brought suit because the former a less or had signed a new lease and so i think that the and i'm not i'm not exactly sure they answer your question  district court decided this case on three bases operations on the property operations on property with which the berghoff property was pooled and mr berger actions i don't think you need to look at mr burke off actions to find one that there were operations on the property and two that there were operations on the property with which the berghoff property was poor but if we were to look at and suggest that the material to this case do we you see on the other hand it is the problem is mr berg also talked in his deposition about his background his training his education he has none of those things which would allow him to make any kind of judgment about whether or not there was an environmental issue with were just before and place the access on the other hand for example if we could look at the deposition of mr branch i imagine what we would find there is he talks about his background his education the things that allow him to set up a site for a while pat the things that allow him to know ok there's probably an issue here so it's not a answer your questions are yes it's absolutely possible to show that it was operated that's what i was talking about with all the permitting that's a place for the well that's underneath the property that was being operated and you don't need to show who yes you don't need to show me from an operational what worthy or were at the steps at that point to show that you were operating in search of a big upward insert hole so there's two different things that it's you that question your honor the first is the construction of the wm rogers well pat that pat was constructed on property next door but the it's well comes from that property next door makes its turn in comes directly onto the berghoff property so prior to the end of the primary term that pad was permitted they did all the various water searches they need to do it was level me why they could have gone under ground the burke of property point has to do with two separate things your honor it has to do with how we're going to allocate the royalties amongst everyone in the pool and it has to do with whether or not we're going to hold the lease on properties which are not physically drill if we imagine a pool to look like a square and let's say the wellbore starts from the very top it might run directly through the middle of the square or the wrecked right there could be properties on the side over here which are not what we trucks the well does not physically penetrate those properties however the idea is we're still pulling gas from those properties and so they're part of the unit the second part of cooling in addition to allocation of royalt this the because of the operations on the adjacent property that under your theory the case doesn't that effectively your third that that was sufficient to extend the lease does not affect the billing eliminate the requirements of the pooling provision i don't think you but they remain part of the unit for those properties you absolutely need a poor provision you don't you don't you don't believe that what your point is that the plaintiffs in this case had no understanding about the lease provision but you don't think that it's a reasonable understanding that before any activity occurred in that adjacent property that there had to be compliance with the pooling provisions in this case for this specific piece of property no judge i don't think that's required or worse to pull point at the pooling provision with regard to period to develop one of your you have to talk more slowly maybe an hour and simple english why does it matter in this case whether it was pulled or not if they could do it without pooling and they into the polling but in this instance the problem was you hadn't done enough and you say you have done enough because preparations in search is sufficient because it satisfies the the searching for  the other thing is what pulling allows us to do is in part be transparent show kind of this is what we're doing these are the operations that we're taking it's one of the reasons why it's recorded and why it's a matter of public record and we need that pool for everybody you know  like i said you need that pool for everybody who's involved outside of those wellbore tracks and so this poor shows them kind of what's going on what's happening thank you for your time saying that they were coming in from the adjacent property and they were conducting or planning an operation on the berghof properties because they were going to get in the underground why isn't that enough because i think the lease agreement only gives them to operate the right to operate my client's property if they're physically on my client's property or anything really what about the lease the benton clause requires them to operate the premises the unwilling gas law in most all oil and desperation states clear in west virginia that if the well is on your property the gas is being for a produce from your property you get it all no matter where that gas is coming from once you're drilling and operating gas from other properties you get into this idea of how do you calculate how do you allocate how do you determine the sharing of the royalties and mr as mr lehman said coolly relates to the sharing of these royalties that are coming so if you've got that well on the rogers property that matrons worst part of the berg property you're necessarily going to have to go into some calculation as to how you share how you allocate these royalties among the different properties which are being operate through the rogers well the pooling clause is how you get to that point if you haven't effectuated the pooling property properly you don't have the right to enter the borough of property from someone else's property where you're going to be sharing royalties with other landowners other men or owners who have not just paid in a rule of capture is something that has not been briefed in case it is an issue that's just come you could be on the separate property pulling an opening if you extend a land to the other piece of property and began operating by extracting oil or you in a search of it why do you need you would need point in pulling in west virginia is required there is no right of feeling under west virginia law in terms of you don't need polling so as i understood your your argument against this is not that the polling is required but that there was an item nuff to establish that was an up or being operated in search of oil from the separate i think my argument is both i think that in in this case the operations in search of both if you can show that if you if physical presence you don't have any case law that says that this contract doesn't say this you use this word search to go look at in a dictionary and try to go in that direction but that search you're using is use as a noun that's not used as a verb search forward and so searching can be done from the adjacent property well you pull or not that's true although you say it's not being done here because you're not actually operating yet so it's not enough because the leg is not being drilled nothing is actually happening there's always the risk that you have a dry well there's even a paragraph seven in this leads that talks about what happens if we drill this well and we don't find any gas for the nub of this  to search sufficient or do you actually have to be dreaming which is what your job is my position is you actually have to be drilling under search as it used in this lease agreement which is different from commencement of operations which could be perpetration under flemming very quickly eastern oil lots of differences between the eastern oil case in that case they actually found gas before the lease expired decided they were going to drill farther to try and get more gas that might be more profitable and the land owner did physically come to the drill site and physically stop the workers from completing that second well and then the second well was finished only within twelve hours when the lease would have expired so i think there's a big factual difference there between those cases so thank you very much for honors i appreciate the opportunity to be here today it's always an honor right thank you very much will come down creek counsel and then come back up on the bench and take our next case