[Cite as Bilbaran Farm, Inc. v. Bakerwell, Inc., 2013-Ohio-2487.]

COURT OF APPEALS 

KNOX COUNTY, OHIO 

FIFTH APPELLATE DISTRICT 

BILBARAN FARM, INC. : JUDGES: 

 : 

 : Hon. John W. Wise, P.J. 

 Plaintiff-Appellant : Hon. Patricia A. Delaney, J. 

 : Hon. Craig R. Baldwin, J. 

-vs- : 

 : Case No. 12-CA-21 

 : 

BAKERWELL, INC., ET AL. : 

 : 

 : 

 Defendants-Appellees : O P I N I O N

CHARACTER OF PROCEEDING: Appeal from the Knox County Court of 

Common Pleas, Case No. 12-QT-08-

0408 

JUDGMENT: AFFIRMED 

DATE OF JUDGMENT ENTRY: June 12, 2013 

APPEARANCES: 

For Plaintiff-Appellant: For Defendants-Appellees: 

 

WILLIAM PAUL BRINGMAN STEVEN J. SHROCK 

13 E. College Street CLINTON G. BAILEY 

Fredericktown, OH 43019-1192 P.O. Box 469 

 Mount Vernon, OH 43050 

 
Knox County, Case No.12-CA-21 2 

Delaney, J. 

{¶1} Plaintiff-Appellant Bilbaran Farm, Inc. appeals the October 25, 2012 

judgment entry of the Knox County Court of Common Pleas dismissing Bilbaran Farm, 

Inc.’s complaint. 

FACTS AND PROCEDURAL HISTORY 

{¶2} Plaintiff-Appellant Bilbaran Farm, Inc. entered into an oil and gas lease 

with Professional Petroleum Services, Inc. on May 12, 2003. The lease agreement 

granted Professional Petroleum Services “all of the oil and gas and the constituents of 

either, in and under the lands hereinafter described together with the exclusive right to 

drill and operate for, produce, and market oil and gas and their constituents, the right to 

lay pipeline to transport oil and gas and their constituents from the lands leased 

hereunder and other lands, the right to build and install such tanks, equipment and 

structures ancillary thereto to carry on operations for oil and gas, together with the right 

to enter thereon at all times and to occupy, possess and use so much of said premises 

as is necessary and convenient for all purposes described herein * * *.” 

{¶3} The lease agreement covered 275.67 acres owned by Bilbaran Farm 

located in Brown Township, Knox County, Ohio. The lease did not specify the amount 

of wells to be located on the property. The lease agreement contained a provision that 

if the operation for a well was not commenced on the premises within 12 months from 

the date of the lease, the lease would terminate as to both parties unless Professional 

Petroleum Services paid to Bilbaran Farm a certain sum of money. The payment would 

operate as a rental and deferral of commencement of operations. 
Knox County, Case No.12-CA-21 3 

{¶4} The lease agreement also provided: “This lease and all its terms, 

conditions and stipulations shall extend to and be binding on all heirs, successors and 

assigns of Lessor or Lessee. This lease contains all of the agreements and 

understandings of the Lessor and the Lessee respecting the subject matter hereof and 

no implied covenants or obligations, or verbal representations or promises, have been 

made or relied upon by Lessor or Lessee supplementing or modifying this lease or as 

an inducement thereto.” 

{¶5} On December 4, 2007, Professional Petroleum Services assigned its 

interest in the Bilbaran Farm oil and gas lease to Defendant-Appellee Bakerwell, Inc. 

Bakerwell, Inc. then assigned a percentage of its interest in the Bilbaran Farm oil and 

gas lease to Defendant-Appellee Crescent Oil & Gas, LLC. 

{¶6} On August 9, 2012, Bilbaran Farm filed a complaint in the Knox County 

Court of Common Pleas against Bakerwell, Inc. and Crescent Oil & Gas, LLC. The 

complaint was entitled, “Complaint to Quiet Title, Declaratory Judgment and Partial 

Cancellation of Oil and Gas Lease.” Attached to the complaint were four exhibits, 

including the oil and gas lease agreement, assignments, and deed to the Bilbaran Farm 

property. Bilbaran Farm alleged in its complaint: 

4. The grantee of said lease developed said real estate to the extent of 

drilling and completing three oil and gas wells into the Clinton formation 

under the surface of said described real estate before the assignments 

above referred to. 

5. Said wells are located in the Township of Brown in the County of Knox 

and in the State of Ohio. 
Knox County, Case No.12-CA-21 4 

* * * 

7. There has been no further development of the real estate subject to the 

lease although Plaintiff has made contact with the Defendants concerning 

the same and has received no response thereto. 

8. Defendants have breached their duty under said lease to develop the 

rest of the undeveloped portion of the lease and have thwarted the 

purpose of the lease and Plaintiff has been injured as a direct result of 

said breach. 

9. Defendants should not be able to prevent further development of the 

leased premises, if they have not and are not going to further develop said 

leased premises as it would be inequitable and unfair to Plaintiff for 

Defendant to be able to do so. 

10. The purpose of Plaintiff in granting said lease to the assignor thereof 

to Defendants was to have the leased premises fully developed for 

extraction of all oil and/or gas from said premises. 

11. If Defendants are not going to further develop the leased premises, it 

should be cancelled as to the undeveloped portion thereof, if Defendants 

do not voluntarily surrender the lease to Plaintiff as it pertains to the 

undeveloped portion of the premises so leased. 

WHEREFORE, Plaintiff demands that the undeveloped portion of the 

within oil and gas lease be declared void and forfeited with Plaintiff’s title 

to said real estate being quieted as to any of said undeveloped portion 

thereof with respect to any interest of defendants therein * * *. 
Knox County, Case No.12-CA-21 5 

{¶7} In lieu of filing an answer to the complaint, Bakerwell and Crescent Oil & 

Gas filed a Motion to Dismiss pursuant to Civ.R. 12(B)(6). The companies argued that 

Bilbaran Farm’s complaint failed to state a claim upon which relief could be granted 

because the terms of the lease agreement, upon which Bilbaran Farm’s complaint was 

based, did not contain any express or implied duty to further develop the land. Bilbaran 

Farm responded, arguing that Bakerwell and Crescent Oil & Gas have left undeveloped 

215.67 acres and have not extracted all the oil and gas from the property, as was 

granted by the oil and gas lease. 

{¶8} On October 25, 2012, the trial court granted the motion to dismiss by 

Bakerwell and Crescent Oil & Gas. It is from this decision Bilbaran Farm now appeals. 

ASSIGNMENT OF ERROR 

{¶9} Bilbaran Farm, Inc. raises one Assignment of Error: 

{¶10} “THE TRIAL COURT ERRED IN ITS JUDGMENT OF OCTOBER 25, 

2012 BY DISMISSING THE COMPLAINT IN THE TRIAL COURT FOR RELIEF TO 

QUIET TITLE, DECLARATORY JUDGMENT AND PARTIAL CANCELLATION OF OIL 

AND GAS LEASE. (DOCKET #1)” 

ANALYSIS 

{¶11} Bilbaran Farm argues the trial court erred in granting the motion to dismiss 

pursuant to Civ.R. 12(B)(6). We disagree. 

Standard of Review 

{¶12} A Civ.R. 12(B)(6) dismissal for failure to state a claim upon which relief 

can be granted is reviewed de novo since it involves a pure legal issue. Perrysburg 

Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5, citing 
Knox County, Case No.12-CA-21 6 

Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 2002-Ohio-2480, 768 N.E.2d 

1136, ¶ 4-5. 

{¶13} In order to affirm the trial court's dismissal for failure to state a claim, it 

must appear beyond doubt that appellant can prove no set of facts warranting the relief 

requested. State ex rel. Findlay Publishing Co. v. Schroeder, 76 Ohio St.3d 580, 581, 

669 N.E.2d 835 (1996), citing State ex rel. Seikbert v. Wilkinson, 69 Ohio St.3d 489, 

490, 633 N.E.2d 1128 (1994). In conducting this review, the court must presume all the 

factual allegations in the complaint are true and make all reasonable inferences in favor 

of the nonmovant. Id. 

{¶14} Where documents are attached or incorporated into the complaint, the 

face of the complaint to be evaluated includes those documents. See Civ.R. 10(C). 

“Material incorporated in a complaint may be considered part of the complaint for 

purposes of determining a Civ.R. 12(B)(6) motion to dismiss.” State ex rel. Crabtree v. 

Franklin Cty. Bd. of Health, 77 Ohio St.3d 247, 249, fn. 1, 673 N.E.2d 1281 (1997). “If 

the plaintiff decides to attach documents to his complaint, which he claims establish his 

case, such documents can be used to his detriment to dismiss the case if they along 

with the complaint itself establish a failure to state a claim.” Adlaka v. Giannini, 7th Dist. 

No. 05 MA 105, 2006-Ohio-4611, ¶ 34 citing Aleman v. Ohio Adult Parole Auth., 4th 

Dist. No. 94CA17, 1995 WL 257833 (Apr. 24, 1995). 

Oil and Gas Lease Agreement and the Duty to Further Develop 

{¶15} With respect to oil and gas leases, the Supreme Court of Ohio in Harris v. 

Ohio Oil Co., 57 Ohio St. 118, 129, 48 N.E. 502 (1897) stated: “The rights and remedies 

of the parties to an oil or gas lease must be determined by the terms of the written 
Knox County, Case No.12-CA-21 7 

instrument, and the law applicable to one form of lease may not be, and generally is not, 

applicable to another and different form. Such leases are contracts, and the terms of 

the contract with the law applicable to such terms must govern the rights and remedies 

of the parties.” Moore v. Adams, 5th Dist. No. 2007AP090066, 2008-Ohio-5953, ¶ 21. 

{¶16} The Supreme Court of Ohio has “long adhered to the general principal 

that absent express provisions to the contrary, a mineral lease includes an implied 

covenant to reasonably develop the land.” Ionno v. Glen-Gery Corp., 2 Ohio St.3d 131, 

132, 443 N.E.2d 504 (1983) citing Beer v. Griffith, 61 Ohio St.2d 119, 399 N.E.2d 1227 

(1980). The Court clarified: 

Certainly the only material inducement which influences a lessor to grant a 

lessee the power to exercise extensive rights upon his land is his 

expectation of receiving *** royalties based upon the amount of minerals 

derived from the land. *** Given the nature of these [royalties], there is 

manifestly an implied covenant on the part of the lessees that they will 

work the land with ordinary diligence, not simply for their own advantage 

and profit, but also so that the lessors may secure the actual consideration 

for the lease, i.e., the production of minerals and the payment of a royalty 

on the minerals mined. 

Bushman v. MFC Drilling Inc., 9th Dist. No. 2403-M, 1995 WL 434409 (July 19, 1995) 

citing Ionno at 133-134. 

{¶17} The claims Bilbaran Farm raises in its complaint is that while three wells 

are operating on the property, a portion of the property remains undeveloped, defeating 

the purpose of the lease. A similar factual scenario was raised in the case of Bushman 
Knox County, Case No.12-CA-21 8 

v. MFC Drilling Inc., 9th Dist. No. 2403-M, 1995 WL 434409 (July 19, 1995), appeal not 

accepted, 74 Ohio St.3d 1484, 657 N.E.2d 1377 (1995). In Bushman v. MFC Drilling 

Inc., Bushman and MFC Drilling, Inc. executed an oil and gas lease that gave MFC 

Drilling exclusive right to explore, drill, produce and market gas and oil found beneath 

the surface of a 27 acre tract of Bushman’s land. Id. at *1. MFC Drilling placed one 

well into operation; however, 17 acres of Bushman’s property remained undeveloped 

and Bushman collected no royalties on the undeveloped property. Bushman filed a 

complaint in the Medina Court of Common Pleas seeking damages for MFC Drilling’s 

breach of an implied covenant under the lease to develop Bushman’s property and for 

termination of the lease. Id. 

{¶18} The trial court granted summary judgment in favor of MFC Drilling based 

on the terms of the oil and gas lease. Id. Bushman appealed and the Ninth District 

Court of Appeals affirmed. As basis for the affirmance, the court of appeals considered 

the implied covenant to reasonably develop the land and the express terms of the 

Bushman oil and gas lease. The court stated: 

 While gas and oil leases contain an implied covenant requiring the 

lessee to reasonably develop the leased property, Ohio courts have 

consistently enforced express provisions in such leases that disclaim the 

implied covenant. Taylor v. MFC Drilling, Inc. (Feb. 27, 1995), Hocking 

App. No. 94CA14, unreported; Smith v. N.E. Natural Gas (Sept. 30, 1986), 

Tuscarawas App. No. 86AP030016, unreported; Holonko v. Collins (June 

29, 1988), Mahoning App. No. 87CA120, unreported. As stated by the 

Ohio Supreme Court in Harris, “[t]he implied covenant arises only when 
Knox County, Case No.12-CA-21 9 

the lease is silent on the subject.” Id. at 128. The gas and oil lease 

executed by Bushman and MFC contains the following language: 

 “It is mutually agreed that this instrument contains and expresses 

all of the agreements and understandings of the parties in regard to the 

subject matter thereof, and no implied covenant, agreement or obligation 

shall be read into this agreement or imposed upon the parties or either of 

them.” 

 Bushman argues that public policy prohibits a general disclaimer of 

the implied covenant to develop the leased property. In support of this 

position, Bushman points out that the gas and oil leases in Smith and 

Holonko contained provisions granting the lessee discretion to determine 

whether to commence drilling operations in addition to a general 

disclaimer of implied covenants. Bushman goes on to argue that the 

general disclaimer of implied covenants found in his lease agreement with 

MFC is ineffective in removing the implied covenant to reasonably develop 

in the absence of specific language addressing that covenant. We agree 

with the Taylor court, which held that a general disclaimer of implied 

covenants -- identical to the disclaimer contained in the lease agreement 

under review -- effectively disclaimed the implied covenant to reasonably 

develop the leased property. There is no authority, neither statutorily 

mandated nor judicially created, removing disclaimer of implied covenants 

in gas and oil leases from the operation of general contract law. Further, 

upon review of Bushman's arguments, we are unable to conclude that 
Knox County, Case No.12-CA-21 10 

public policy requires anything more than a general waiver of implied 

covenants. 

Id. at *2. 

{¶19} The Bushman decision is in accord with this Court’s decision in Smith v. 

North East Natural Gas Co., 5th Dist. No. 86 AP 030016, 1986 WL 11337 (Sept. 30, 

1986). The oil and gas lease in Smith contained a provision as to the enforceability of 

implied covenants: “It is mutually agreed that this instrument contains and expresses all 

of the agreements and understandings of the parties in regard to the subject matter 

thereof, and no implied covenant, agreement or obligation shall be read into this 

agreement or imposed upon the parties or either of them. (Emphasis added).” Id. at *1. 

{¶20} We held: 

 Judge Rutherford of this court in the Coshocton County Court of 

Appeals case, Lake v. Ohio Fuel Gas Co. (1965), 2 Ohio App.2d 227, 

stated at 231: 

 ... as stated by the Supreme Court of Ohio in the case of Harris v. 

Ohio Oil Co., 57 Ohio St. 118 at page 129 of the opinion: 

 “The rights and remedies of the parties to an oil or gas lease, must 

be determined by the terms of the written instrument, and the law 

applicable to one form of lease may not be, and generally is not, 

applicable to another in different form. Such leases are contracts, and the 

terms of the contract with the law applicable to such terms, must govern 

the rights and remedies of the parties.” 
Knox County, Case No.12-CA-21 11 

 We conclude that in the case at bar under the terms of the leasethe written contract of the parties-the trial court properly found that Lessee 

did not violate the express covenant to 1) pay royalties, or 2) to find oil or 

gas or their constituents on the premises in paying quantities in the 

judgment of the Lessee; nor did the Lessee violate any implied covenant 

since the express written language of the contract provided that “no 

implied covenant, agreement or obligation shall be read into this 

agreement or imposed upon the parties or either of them.” 

Smith, at *2. 

{¶21} In the present case, the oil and gas lease attached to Bilbaran Farm’s 

complaint contains the following provision: “This lease and all its terms, conditions and 

stipulations shall extend to and be binding on all heirs, successors and assigns of 

Lessor or Lessee. This lease contains all of the agreements and understandings of the 

Lessor and the Lessee respecting the subject matter hereof and no implied covenants 

or obligations, or verbal representations or promises, have been made or relied upon by 

Lessor or Lessee supplementing or modifying this lease or as an inducement thereto.” 

Based on the interpretation of Bushman and Smith, the language of this provision 

disclaims the implied covenant to reasonably develop the property. Bilbaran Farm 

argues the failure to further develop the property is unfair and inequitable. Similar to 

Bushman’s public policy argument, this is waived by the express disclaimer against an 

implied covenant to develop the property. As stated in Bushman, “[t]he mere fact that 

the terms of an executed contract turn out to be unfavorable to one of the parties does 

not override the fundamental concept in Ohio law that parties enjoy ‘freedom of contract’ 
Knox County, Case No.12-CA-21 12 

and are bound to the contractual relationship that they create. See Royal Indemn. Co: 

v. Baker Protective Services, Inc. (1986), 33 Ohio App.3d 184, 186.” Bushman v. MFC 

Drilling, 1995 WL 434409, at *3. 

{¶22} Upon our de novo review of the motion to dismiss, utilizing an analysis 

most favorable to the Bilbaran Farm, we find the authority of Bushman and Smith

demonstrates Bilbaran Farm can present no facts warranting relief. The trial court did 

not err in granting the motion to dismiss of Defendants-Appellees Bakerwell, Inc. and 

Crescent Oil & Gas, LLC. 

{¶23} The sole Assignment of Error of Plaintiff-Appellant Bilbaran Farm, Inc. is 

overruled. 

CONCLUSION 

{¶17} The judgment of the Knox County Court of Common Pleas is affirmed. 

By: Delaney, J., 

Wise, P.J., and 

Baldwin, J., concur. 

HON. PATRICIA A. DELANEY 

HON. JOHN W. WISE 

HON. CRAIG R. BALDWIN 

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