IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

William Eastham, et al., :

Plaintiffs, :

v. : Case No. 2:12-cv-615

 : JUDGE GREGORY L. FROST

Chesapeake Appalachia, LLC, Magistrate Judge Kemp

 :

Defendant.

OPINION AND ORDER

Plaintiffs in this case are lessors of oil and gas rights

associated with real property located in Jefferson County, Ohio. 

They have sued the Defendant, Chesapeake Appalachia, LLC

(“Chesapeake”), in this case to determine the legality of

Defendant’s attempt to extend the lease. Before the Court is

Plaintiffs’ Renewed Motion for Leave to File Amended Complaint

(Doc. No. 34).

I. BACKGROUND

On July 11, 2012, Plaintiffs filed a class action complaint

seeking declaratory judgment “to obtain a judicial determination

of the construction and/or validity of certain oil and gas

leases, and pursuant to Ohio Revised Code §5303.01 to quiet title

to the oil and gas rights associated with their real estate.” 

(Doc. No. 3 at ¶3.) According to the Complaint, “[i]n or about

April of 2007, the Plaintiffs entered into an oil and gas lease

with Great Lake Energy Partners, LLC, purporting to lease oil and

gas rights to Plaintiffs’ real property . . . .” (Id. at ¶8.) 

At some point later, “Defendant, Chesapeake Appalachia, LLC,

acquired, purchased and/or was assigned all rights, title and

interest to and in the oil and gas leases.” (Id. at ¶11.) The

initial term of the leases was for five years. Defendants argue

that the language of the leases conveys an option to extend them

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beyond their initial expiration date. Plaintiffs disagree. (Id.

at ¶¶12-19.) The original complaint sought a declaration that

the leases are no longer in effect. 

On July 18, 2012, Defendant answered the Complaint. On

October 22, 2012, the Court entered an order providing that

“[a]ny motion to amend the pleadings or to join parties shall be

filed by November 30, 2012.” The close of discovery was set for

March 31, 2013, and the deadline for summary judgment motions was

set for April 30, 2013. On April 18, 2013, Plaintiffs filed a

motion for leave to file amended complaint, which was denied

without prejudice. Plaintiffs refiled the motion on April 25,

2013. 

In their renewed motion for leave to amend the complaint,

Plaintiffs seek leave to make the following changes to their

complaint: (1) to omit their allegations seeking to pursue a

class action; (2) to add two defendants, Range Resources –

Appalachia, LLC (formerly known as Great Lakes Energy Partners,

LLC) (“Range Resources”) and Henry A. McGraw; (3) to add five new

counts titled as follows: slander of title, breach of covenant

of good faith and fair dealing, intentional / fraudulent

misrepresentation, negligent misrepresentation, and respondeat

superior; and (4) to seek monetary damages including punitive

damages. 

II. STANDARD

Generally, motions to amend pleadings are governed by Rule

15(a) of the Federal Rules of Civil Procedure. When the court

has issued a scheduling order setting a deadline for motions to

amend the pleadings, however, a subsequent motion for leave to

amend must first be analyzed under Rule 16(b) before determining

whether the motion satisfies Rule 15(a). Rule 16(b)(4) provides

that “[a] schedule may be modified only for good cause and with

the judge’s consent.” Fed. R. Civ. P. 16(b)(4). In considering

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the interplay of Rule 15(a) and Rule 16(b), the Court of Appeals

has decided that “[o]nce the scheduling order's deadline passes,

a plaintiff first must show good cause under Rule 16(b) for

failure earlier to seek leave to amend before a court will

consider whether amendment is proper under Rule 15(a).” Leary v.

Daeschner, 349 F.3d 888, 909 (6th Cir. 2003) (citation omitted). 

“[A] court choosing to modify the schedule upon a showing of good

cause, may do so only ‘if it cannot reasonably be met despite the

diligence of the party seeking the extension.’” Leary, 349 F.3d

at 906 (citing Fed.R.Civ.P. 16, 1983 advisory committee's notes;

and Inge v. Rock Financial Corp., 281 F.3d 613, 625 (6th Cir.

2002)). The Court of Appeals also requires courts to determine

“the potential prejudice to the nonmovant” before modifying the

scheduling order. Leary, 349 F.3d at 909. 

III. ANALYSIS

As an initial matter, Plaintiffs seek to amend their

complaint to withdraw their class action allegations. However,

the Court of Appeals has adopted “the view of the majority of the

circuits that Rule 23(e) applies in a precertification context

where putative class members are likely to be prejudiced.” Doe

v. Lexington-Fayette Urban Cnty. Gov't, 407 F.3d 755, 764 (6th

Cir. 2005). Rule 23(e) provides the following:

(e) Settlement, Voluntary Dismissal, or Compromise. The

claims, issues, or defenses of a certified class may be

settled, voluntarily dismissed, or compromised only

with the court's approval. The following procedures

apply to a proposed settlement, voluntary dismissal, or

compromise:

(1) The court must direct notice in a reasonable

manner to all class members who would be bound by the

proposal.

(2) If the proposal would bind class members, the

court may approve it only after a hearing and on

finding that it is fair, reasonable, and adequate.

(3) The parties seeking approval must file a

statement identifying any agreement made in connection

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with the proposal.

(4) If the class action was previously certified

under Rule 23(b)(3), the court may refuse to approve a

settlement unless it affords a new opportunity to

request exclusion to individual class members who had

an earlier opportunity to request exclusion but did not

do so.

(5) Any class member may object to the proposal if

it requires court approval under this subdivision (e);

the objection may be withdrawn only with the court's

approval.

Fed. R. Civ. P. 23. In accordance with Doe v. Lexington-Fayette

Urban Cnty. Gov't, the Court here must determine whether putative

class members are likely to be prejudiced by the dismissal of the

class action allegations. That may depend on how much publicity

the filing of the case has received, and whether absent class

members may have relied on the filing of this case as having

tolled the statute of limitations for their claim. See In re

Behr Dayton Thermal Products, LLC Litigation, No. 3:08-cv-326,

2012 WL 559913 (S.D. Ohio Feb. 21, 2012). The parties have not

addressed whether putative class members would be likely to be

prejudiced if Plaintiffs withdraw their class action allegations. 

Accordingly, Plaintiffs may not amend the complaint to withdraw

those allegations at this time. The Court will require further

briefing on the issue of whether putative class members are

likely to be prejudiced by the withdrawal of their class action

allegations. 

Turning to the proposed new counts, Plaintiffs first seek to

add a count for “Slander of Title” and a count for “Breach of

Covenant of Good Faith and Fair Dealing” against Defendant

Chesapeake. These counts both arise from allegations that

Defendant Chesapeake “unilaterally executed a Notice of

Extension” of the lease and recorded that extension without an

agreement, and “[a]s a direct and proximate result of [that

conduct] the Plaintiffs suffered a slander of their title to

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their oil, gas, and coalbed methane impairing their ability to

freely convey the same . . .” and other damages. (Doc. No. 34-1

at ¶¶38-39, 44-46.) Plaintiffs have not set forth any reason why

they could not have brought these claims at the time they filed

the initial complaint. Their only argument in support of adding

these two claims is that they “desire to amend their Complaint in

this case to affirmatively plead all legal theories on which they

may recover to avoid the expected future argument that their

theories were not pled in the Complaint.” (Doc. No. 34-2 at 6.) 

That argument fails to demonstrate good cause for modifying the

scheduling order to permit Plaintiffs to add these claims. 

The next two proposed new counts, “for

intentional/fraudulent misrepresentations” and “for negligent

misrepresentation,” are directed to the proposed new defendants. 

Plaintiffs allege that “on or before the time the Plaintiffs

entered into the Lease, Defendant, McGraw, made false

representations of material facts to the Plaintiffs, and

specifically stated to the Plaintiffs at the time the Lease was

negotiated and entered that the Lease was for a period of five

(5) years and that the Plaintiffs could renegotiate the Lease and

enter into a new lease at the end of the five (5) year period.” 

(Doc. No. 34-1 at ¶49.) Plaintiffs argue that they were unaware

of the facts underlying these claims until certain information

was revealed during the discovery process. (Doc. No. 34-2 at 2 &

4-5.) 

Regarding the newly revealed information, Plaintiffs allege

that when they filed their initial claims, they knew about the

representation made by the potential new defendants, but they did

not know that it was a misrepresentation. Specifically,

Plaintiffs allege that when they signed the Lease, Range

Resources, through its agent Henry A. McGraw, represented to them

that the term of the Lease was for five years and after that the

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parties could renegotiate the Lease. (Doc. No. 34-2 at 4-5.) 

Plaintiffs allege that at that time, and until very recently,

they believed that those representations were truthful. 

Accordingly, they did not bring claims against Range Resources or

Mr. McGraw, but merely against the successor in interest to Range

Resources, Defendant Chesapeake. Plaintiffs argue that on April

12, 2013, when Defendant produced a Declaration of Mark A. Acree,

a former Vice President of Land Acquisition for Range Resources,

that was when they first realized that Range Resources’ intent in

drafting the Lease was to permit “the lessee to extend the Lease

for an additional primary term by paying the same compensation as

paid for the Lease originally or to renew upon similar terms a

like lease.” (Doc. 34-2 at 4; Doc. 34-3 at ¶8.) 

Defendant counters that Plaintiffs knew or should have known

that Range Resources’ intent in drafting the Lease differed from

the alleged representation of its agent Henry McGraw based on the

language of the Lease. Specifically, Defendant points to

deposition transcripts in which Plaintiffs testified that

McGraw’s oral statements were not consistent with the language of

the lease. (Doc. No. 36 at 10-11.) Plaintiffs counter that, in

fact, Mr. McGraw’s statement was “in-line with the plain and

unambiguous language” of the Lease. (Doc. No. 40 at 4.) As a

result, Plaintiffs argue that they had no knowledge of any

misrepresentation until they read Mr. Acree’s affidavit. In

considering these competing arguments, it is important to

consider the elements of the claims at issue. 

A claim of negligent misrepresentation under Ohio law is

defined as follows:

One who, in the course of his business, profession or

employment, or in any other transaction in which he has

a pecuniary interest, supplies false information for

the guidance of others in their business transactions,

is subject to liability for pecuniary loss caused to

them by their justifiable reliance upon the

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information, if he fails to exercise reasonable care or

competence in obtaining or communicating the

information.

Ohio Police & Fire Pension Fund v. Standard & Poor's Fin. Servs.

LLC, 700 F.3d 829, 839-40 (6th Cir. 2012) (quoting Delman v. City

of Cleveland Heights, 41 Ohio St.3d 1, 534 N.E.2d 835, 838 (1989)

(emphasis omitted) (internal quotations and citations omitted)). 

The elements of a claim of fraudulent misrepresentation (which

are the same as for a claim of intentional misrepresentation in

Ohio) are the following: 

“(1) a representation or, when there is a duty to

disclose, a concealment of a fact; (2) which is

material to the transaction at hand; (3) made falsely,

with knowledge of its falsity, or with such utter

disregard as to whether it is true or false that

knowledge may be inferred; (4) with the intent of

misleading another into relying upon it; (5)

justifiable reliance on the representation or

concealment; and (6) an injury proximately caused by

that reliance.

Stuckey v. Online Res. Corp., 819 F. Supp. 2d 673, 682 (S.D. Ohio

2011) (citing Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 475,

700 N.E.2d 859 (Ohio 1998)); see also Scotts Co. v. Cent. Garden

& Pet Co., 403 F.3d 781, 789 (6th Cir. 2005) (quoting Williams,

83 Ohio St.3d at 475). Both of these claims require justifiable

reliance on the information or representation. 

Under Ohio law, when a written contract is “the final and

complete statement of the parties' agreement-when, that is, it is

a complete integration-the parol evidence rule prohibits the

parties from introducing extrinsic evidence of the terms of their

agreement.” Watkins & Son Pet Supplies v. Iams Co., 254 F.3d

607, 612 (6th Cir. 2001). The Court of Appeals explained that

the parol evidence rule is not actually an evidentiary rule but

rather a rule of substantive contract law that “does not operate

to prohibit proof of terms of the agreement; instead, it provides

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that parol terms are not terms of the agreement at all.” Id. at

612 (citing Galmish v. Cicchini, 90 Ohio St.3d 22, 27, 734 N.E.2d

782, 788-89 (Ohio 2000)). As a result, when a written contract

is integrated, “it is unreasonable as a matter of law to rely on

parol representations or promises within the scope of the

contract made prior to its execution.” Id. at 612 (citing

Bollinger, Inc. v. Mayerson, 116 Ohio App.3d 702, 712-13, 689

N.E.2d 62, 69 (Ct. App. Ohio 1996) (fraud); Harris v. Equilon

Enters., L.L.C., 107 F. Supp. 2d 921, 936 (S.D. Ohio 2000)

(promissory estoppel)). Even if, as the Court of Appeals noted

in a case applying Tennessee law, “there is no rule that a merger

clause makes reliance on oral representations unreasonable per se

so as to necessarily defeat a fraudulent inducement or promissory

fraud claim,” Shah v. Racetrac Petroleum Co., 338 F.3d 557, 568

(6th Cir. 2003), on the facts alleged here, it would have been

unreasonable as a matter of law for Plaintiffs to rely on parol

representations within the scope of the lease made prior to its

execution. 

Here the lease at issue is an integrated contract.1 To the

extent that Mr. McGraw’s statement was regarding a matter within

the scope of the Lease, which both parties acknowledge it was, it

was unreasonable for the Plaintiffs to rely on that statement. 

Accordingly, Plaintiffs have not made allegations that could

support their new claims regarding the representations of Mr.

McGraw. Further, to the extent that Mr. McGraw’s statement about

the Lease was “in-line with the plain and unambiguous language of

paragraph 19 and the parties’ intent,” (doc. no. 40 at 4), such a

1

 The lease provides, “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. . . .” (Doc. 33-1 at ¶21.)

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statement was not a misrepresentation but an accurate

representation of the Lease. Accordingly, whether Mr. McGraw’s

statement comports with the language of the Lease or contradicts

it, Plaintiffs have failed to allege facts supporting claims for

negligent or intentional misrepresentation, and any such

amendment would be futile. Plaintiffs have not demonstrated good

cause to amend their complaint to add those two counts. 

The last proposed additional claim is for respondeat

superior. However, that claim is only relevant if the Court

permits Plaintiffs to add the claims for negligent and/or

intentional misrepresentation. As a result, there is no good

cause to permit an amendment to add that claim. 

Plaintiffs argue that they have good cause to add the two

additional defendants because “[b]ased upon information recently

obtained in discovery, it appears that Range Resources -

Appalachia, LLC . . . is a necessary party to this lawsuit both

because it has an interest in the Lease, and also because of its

conduct in the original procurement of the Lease.” (Doc. No. 34-

2 at page 4 of 10.) Plaintiffs do not cite to the information

“recently obtained in discovery” that supports their assertion

that Range Resources has an interest in the Lease, so that

assertion fails to demonstrate good cause. Nor does Plaintiffs’

reply brief address Defendant’s assertion that there is no

evidence showing that Range Resources has a continuing and

current personal interest in the Lease. (Doc. No. 36 at 8; Doc.

No. 40.) Plaintiffs’ other assertion really turns on whether

they can add claims against the proposed new defendants for fraud

or negligent misrepresentation or whether they can hold the

proposed new defendants liable for the actions of other

defendants as a result of respondeat superior. For the reasons

discussed above, Plaintiffs have failed to demonstrate good cause

to amend the complaint to add those new claims against the

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proposed new defendants. 

In addition to the lack of good cause to permit the proposed

amendments, the proposed amendments to add defendants and claims

would certainly prejudice Defendant because the amendments would

change the case from a declaratory judgment action against one

defendant without any claim for damages to a case against

multiple defendants raising claims in tort and contract, and

seeking compensatory and punitive damages. Discovery would have

to be reopened and Defendant would need discovery regarding

damages, new Defendants, and might potentially need new expert

testimony to address damages. In addition, the witnesses who

have been deposed would likely have to be deposed again to

address the new issues raised by the new claims. Furthermore,

there would likely be new dispositive motions briefed. 

Plaintiffs argue that Defendant’s late disclosure of the Acree

Affidavit should weigh against any argument of prejudice, but in

light of the Court’s conclusion that the Acree Affidavit did not

provide good cause for amending the complaint, that argument is

without merit. Accordingly, permitting the proposed amendment is

likely to be very prejudicial to Defendant. 

IV. Conclusion and Order

For the reasons set forth above, the Court denies in part

and withholds judgment in part as to Plaintiffs’ Renewed Motion

for Leave to File Amended Complaint (#34). The Court defers

judgment on whether Plaintiffs may be permitted to withdraw the

class action allegations until after further briefing is

completed. Within 21 days of the date of this Order, Plaintiffs

are directed to file a brief addressing whether putative class

members are likely to be prejudiced by the dismissal of the class

action allegations. See Doe v. Lexington-Fayette Urban Cnty.

Gov't, 407 F.3d at 764. Defendants may respond within 14 days

thereafter. The remainder of Plaintiffs’ Renewed Motion for

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Leave to File Amended Complaint is denied. 

V. Procedure for Reconsideration

Any party may, within fourteen days after this Order is

filed, file and serve on the opposing party a motion for

reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.

I., F., 5. The motion must specifically designate the order or

part in question and the basis for any objection. Responses to

objections are due fourteen days after objections are filed and

replies by the objecting party are due seven days thereafter. 

The District Judge, upon consideration of the motion, shall set

aside any part of this Order found to be clearly erroneous or

contrary to law.

This order is in full force and effect, notwithstanding the

filing of any objections, unless stayed by the Magistrate Judge

or District Judge. S.D. Ohio L.R. 72.4. 

/s/ Terence P. Kemp 

United States Magistrate Judge

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