J-A04007-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 MARK BACHMANN, ELLEN M. BACHMANN, ROBERT GAZY, LINDA GAZY, DANIEL SMITH, DARRIN JAVORNICKY, PHILLIP ALLEN, DENNIS TUNNEY, RAND TUNNEY, WILLIAM THOMAS, CHRISTY THOMAS, REGIS ROHDE, MARJORIE ROHDE, JOSEPH MULSHIN, DEBORAH MULSHIN, RICHARD DADY, THOMAS DADY, SHIRLEY FRANKOSKY, RODNEY ZABISH, MICHAEL LEICHTY, GARY LEE STALEY, DAVID BACHNER, TOMMIE LOU BACHNER, WALLACE WOODHOUSE, DEBRA WOODHOUSE, PAUL SCHUMACHER, SUSAN SCHUMACHER, CHRISTOPHER MCGARY, FRANKLIN PLEIL, CITIZENS BANK OF PENNSYLVANIA, JEREMY LAZZARI, ERIN LAZZARI, AND MICHAEL GOETTLER, IN THE SUPERIOR COURT OF PENNSYLVANIA

Appellees

v. EQT PRODUCTION COMPANY, INC., Appellant No. 229 WDA 2014

Appeal from the Order January 8, 2014 In the Court of Common Pleas of Washington County

Civil Division at No(s): 2012-488

BEFORE: BOWES, WECHT, and STRASSBURGER, * JJ. MEMORANDUM BY BOWES, J.: FILED APRIL 14, 2015

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* Retired Senior Judge assigned to the Superior Cou rt.J-A04007-15

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EQT Production Company, Inc. (“EQT”) appeals from the January 8, 2014 order granting plaintiffs herein summary judgm ent. We reverse and

remand. On January 27, 2012, Mark and Ellen M. Bachmann ins tituted this action to quiet title, for ejectment, and for a dec laratory judgment against EQT. The Bachmanns sought a declaration that EQT, as successor in interest to Equitable Gas Company (“Equitable”), no longer o wned the oil and gas rights in their property located at 26 Rainey Road Extension, Eighty Four, Pennsylvania. The Bachmanns’ property consists of approximately fortynine acres and comprises a portion of a 133 acre pl ot of land subject to an oil and gas lease owned by EQT. EQT’s oil and gas rights derive from a February 28, 1940 sale by Jennie G. Myers to Equitable of the oil and gas rig hts to the 133 acres of land that she owned. In the February 28, 1940 docu ment, which was duly recorded, Equitable was granted the oil and gas rig hts to 133 acres for a period of one year from March 9, 1940, and thereaft er “as long after the commencement of operations as said land is operated for the exploration or production of gas or oil, or as gas or oil is found in paying quantities thereon . . . .” Lease, 2/28/40, at 2 (“Myers Lease.”). Th e document also provided for certain royalty payments. In this lawsuit, the Bachmanns claimed that the lea se was “void and of no legal effect, and has expired by its own terms” since EQT “produced no gas or oil under said Lease” and had made no royalt y payments required byJ-A04007-15

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that document. Complaint, 1/27/12, at ¶ 7. The co mplaint failed to aver that EQT did not conduct any operations for the exp loration or production of gas or oil. EQT filed an answer, new matter and co unterclaim, to which the Bachmanns responded. The Bachmanns filed a motion for summary judgment. Two days later, EQT filed a motion to either compel the join der of indispensable parties or, alternatively, for dismissal of the action. EQ T noted that the Bachmanns sought a declaration that the Myers Lease was void, the lease encompassed 133 acres of land, the land was subdivided, and oth er parties owned parcels that were subject to the lease. EQT set forth that any declaration that the Myers Lease was void would affect the royalty right s of all people currently owning part of the subdivided 133 acres, that the B achmanns had been supplied the names of all the owners of the subdivi ded plot, and that the Bachmanns neglected to join those parties as plaint iffs. EQT’s motion for joinder was granted, and thirty-one plaintiffs were added as additional plaintiffs in an amended complaint in quiet title, ejectment, and declaratory judgment. The amended complaint, which was filed on July 23, 2013, averred that no royalties were paid to any plaintiff and th at no gas was produced on land owned by any plaintiff. As with the first com plaint, the amended complaint failed to contain any averments that ther e were no operations conducted by EQT for the exploration or production of gas on the 133 acres.J-A04007-15

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On August 20, 2013, EQT filed an answer to the amen ded complaint, a new matter, and a counterclaim. It averred that th e Myers Lease remained valid and in full legal effect since the land subje ct to its terms had been “operated for the exploration or production of gas or oil” or, alternatively, that gas or oil had been found in paying quantities on the 133 acres. Answer, New Matter, and Counterclaim, 8/20/13, at ¶ 64. EQT further averred that the Bachmanns had not received royalti es since they had failed to notify EQT, as required by the terms of the leas e, that they purchased part of the original Myers land. In new matter and its counterclaim, EQT alleged that operations for the exploration and pro duction of natural gas commenced in 1941 on the Myers land and had continu ed since that time.

Id . at ¶¶ 79, 80, 94, 95. Before answering the new matter and counterclaim to the amended complaint, the Bachmanns, 1 on September 11, 2013, filed a motion for summary judgment. They set forth the following. A gas well known as API # 37-125-00713 was drilled on their property, and n o production from that

well occurred from December 2006 to December 2010. That well was the only one drilled on the 133 acres to support the le ase. During discovery, the Bachmanns had requested that EQT “designate the app ropriate person to

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1 After joining the additional thirty-one plaintiff s, the Bachmanns, who were still represented by the same lawyer, referred to t hose parties as et al . in their subsequent pleadings. Thus, we consider thes e filings as initiated primarily by the Bachmanns.J-A04007-15

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discuss operations and maintenance of API No. 37-12 5-00713,” and EQT designated Robert Gum. Supplement to Plaintiffs’ B rief in Support of Plaintiffs’ Motion for Summary Judgment Counterclai m, 11/8/13, at ¶ 3. At his deposition, Mr. Gum related that the only maint enance performed on that well was the placement of a meter on it in Nov ember 2010. In response to the Bachmanns’ request “to designate an appropriate representative of EQT to testify concerning product ion of the subject well [API No. 37-125-00713], EQT offered Debbi Dominguez .” Id . at 4. Ms. Dominguez stated that she was unaware of any activi ty, other than the placement of the meter, performed on the well. Ms. Dominguez also provided a production history for API No. 37-125-00 713. That history was

included in the record and indicated that the well in question produced no oil or gas from December 31, 2006, to December 1, 2010. Gas was produced from that well starting again in December 2010. 2 EQT responded to the September 11, 2013 motion for summary judgment filed by the Bachmanns. It noted that the motion was premature

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2 On appeal, Appellees incorrectly assert that EQT d esignated representatives for purposes of establishing produc tion and operations “on the Jenny Myers Lease from December 2006 through No vember 2010.” Appellees’ brief at 7. The motion for summary judg ment refutes this assertion and sets forth that the designated repres entatives were only familiar with operations and production relating to the well on the land. There is no indication in the record that either Mr . Gum or Ms. Dominguez were asked to be designated representatives as to o perations conducted for exploration of gas or as to operations conducted fo r the production of gas on the 133 parcel subject to the Myers Lease.J-A04007-15

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since the pleadings were not closed and that there was no documentation to support the factual averments contained therein. E QT also argued the Bachmanns failed to meet their burden of proof in s everal material respects. First, the motion discussed only actual gas and oil production, made no allegation that EQT failed to conduct operations fo r the exploration of gas, and made no averments that EQT did not perform oper ations for the production of gas. Finally, EQT noted that it had not had the opport unity to take necessary discovery regarding the thirty-one plaint iffs joined on July 29, 2013. EQT stated that it intended to take discover y from those new plaintiffs on various topics, including, but not li mited to, their receipt and acceptance of payments for the production of gas fr om EQT pursuant to the Myers Lease. On November 11, 2008, the Bachmanns r eplied to EQT’s counterclaim and new matter and submitted, in a sup plement, the necessary depositions and documents to support the factual av erments in their motion for summary judgment. This appeal followed the grant of the Bachmanns’ mo tion for summary judgment and the trial court’s declaration that the Myers Lease was no longer valid due to a lack of the production of gas for four years on the well drilled under the Myers Lease. EQT raises these a verments on appeal:

1. Whether the trial court erred in granting summar y judgment to the plaintiffs where the plaintiffs Mot ion for Summary Judgment was filed without evidentiary supp ort and before the pleadings were closed, and was granted b efore EQTJ-A04007-15

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had the opportunity to take discovery from the thir ty-one new plaintiffs added as parties by the plaintiffs' Amen ded Complaint; 2. Whether the trial court erred in granting summar y judgment to the plaintiffs where (a) the plaintiffs ' Motion for Summary Judgment was based on the lack of productio n of oil and/or gas from the leased premises, (b) the lease at issue remained in effect as long as operations were condu cted for the exploration and/or production of oil and/or gas or oil and/or gas was found in paying quantities and (c) issues of fa ct existed as to whether operations for the exploration and/or pr oduction of oil and/or gas were continuously conducted on the l eased premises. Appellant’s brief at 5. We agree with both of EQT’s contentions and therefo re reverse the grant of summary judgment in favor of the plaintiff s herein. Initially, we outline our standard and scope of review.

Our scope of review is plenary, and our standard of review is the same as that applied by the trial court. Our Supreme Court has stated the applicable standard of review as fol lows: An appellate court may reverse the entry of a summary judgment only where it finds that the lower court erred in c oncluding that the matter presented no genuine issue as to any mat erial fact and that it is clear that the moving party was enti tled to a judgment as a matter of law. In making this assessm ent, we view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genu ine issue of material fact must be resolved against the moving p arty. As our inquiry involves solely questions of law, our revie w is de novo. Thus, our responsibility as an appellate court is t o determine whether the record either establishes tha t the material facts are undisputed or contains insuffici ent evidence of facts to make out a prima facie cause of action, such that there is no issue to be decided by the fact-finder. If th ere is evidence that would allow a fact-finder to render a verdict in favor of the non-moving party, then summary judgment should be d enied.J-A04007-15

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Reinoso v. Heritage Warminster SPE LLC , 2015 WL 161934, 3 (Pa.Super. 2015) ( en banc ) (citation omitted). Where plaintiffs are granted summary judgment, it i s necessary for them prove that there was no genuine issue of mater ial fact regarding each element of their cause of action and that they are entitled to judgment as a

matter of law. Long v. Yingling , 700 A.2d 508, 514-15 (Pa.Super. 1997).

In Long , we reversed the grant of summary judgment in favo r of a defendant, and, on appeal, the plaintiff requested that summary judgment be granted to her. We outlined all the elements of her cause of action and noted that there was a genuine issue of material fa ct as to the existence of one of those elements. We thus denied plaintiff su mmary judgment. Herein, EQT answered the Bachmanns’ motion for summ ary judgment by pointing out that the evidence produced by the B achmanns failed to

establish that there was no issue of material fact regarding certain “facts essential to the cause of action” pled in the compl aint. Pa.R.C.P. 1035.3 (a)(2). Rule 1035.3 pertains to the burden of the responding party in the summary judgment setting and provides in pertinent part:

(a) Except as provided in subdivision (e), the adv erse party may not rest upon the mere allegations or den ials of the pleadings but must file a response within thirty da ys after service of the motion identifying

(1) one or more issues of fact arising from evidence in the record controverting the evidence cited in support of the motion or from a challenge to the credibility of one or more witnesses testifying in support of the motion, orJ-A04007-15

- 9 - (2) evidence in the record establishing the facts essential to the cause of action or defense which the motion cites as not having been produced. Pa.R.C.P. 1035.3(a) (emphasis added). EQT thus satisfied its burden, did not rest on its pleadings, and pointed out that the Bachmanns had not produced evidence th at there was no genuine issue of material fact as “to facts essenti al to the cause of action” in quiet title. Specifically, EQT noted that there wa s no indication that it failed to conduct operations for the exploration of gas an d did not conduct operations for the production of gas. In its answe r, new matter, and counterclaim, EQT specifically averred that it cond ucted such activities and

had not forfeited its lease. The trial court, echoing the Bachmanns’ arguments o n appeal, justified its ruling by indicating that, since there was no g enuine issue of material fact regarding the lack of production of gas and oil in paying quantities for four years on well API No. 37-125-00713, the lease was v oid. In light of the express language of the lease in question, we canno t agree that summary judgment can be premised on this evidence. Since t he Bachmanns sought to terminate the oil and gas lease in question, it was their burden of proof to establish that the lease was no longer in effect. T.W. Phillips Gas and Oil

Co. v. Jedlicka , 964 A.2d 13 (Pa.Super. 2008). EQT, as successor in interest to Equitable, continues to own the oil and gas rights to the 133 acre Myers parcel “as long after the commencement of ope rations as said land is operated for the exploration or production of gas or oil, or as gas or oilJ-A04007-15

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is found in paying quantities thereon . . .” Myers Lease (emphases added). This language is clear and unequivocal.

The Bachmanns and the trial court overlooked the em phasized language and focused solely upon the language regar ding production of gas or gas in paying quantities. Summary judgment was premised solely upon the lack of production of oil and gas from December 31, 2006 to December 1, 2010 on the well drilled on the acreage pursuant to the lease. The Bachmanns, as moving parties in a summary judgment setting, had to establish that there were no operations for the exp loration of gas or oil and no operations for the production of gas or oil. Wh ile the Bachmanns characterize it as burdensome to require them to pr ove these facts and to depose the other parties subject to the lease, we c annot change the pertinent law. It was their burden of proof to est ablish that the lease was void, and it was their burden of proof to establish that they were entitled to summary judgment. As expressly indicated in their motion for summary judgment, the Bachmanns asked for EQT to designate persons to dis cuss operations, maintenance, and production as to the well drilled under the lease

. Critically, their summary judgment motion failed to indicate that they requested EQT to designate the appropriate person t o discuss any operations related to exploration of gas on the 133 acres and to designate the appropriate person to discuss any operations relate d to the production of gas

on the 133 acres.J-A04007-15

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Nothing in this adjudication should be construed as holding that the lease remains valid. Our ruling herein is premised solely upon the premature nature of the request for summary judgmen t. The Bachmanns can cure the present deficits by demanding that EQT designate representatives to establish that it conducted oper ations for the exploration or production of gas. We simply cannot permit a sh ortcut approach as to the termination of an oil and gas lease. This lease do es not require actual gas production to remain effective, and summary judgmen t was premised solely on the lack of actual gas production. Since it complied with Pa.R.C.P. 1035.3(a)(2), EQT did not, contrary to the Bachmanns’ position on appeal, have to produce evidence of operations for the exploration of gas on the 133 acres or evid ence of operations for the production of gas on the acreage. See Appellees’ brief at 16-17. Appellees failed to secure the proper designated representati ves on those subject matters and focused solely upon the lack of product ion on the well drilled

under the lease.

It is clear that the Bachmanns failed to establish that there was no genuine issue of material fact that the Myers Lease was void under its express terms. Thus, summary judgment was improper ly entered. Order reversed. Case remanded. Jurisdiction relinq uished.J-A04007-15

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Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 4/14/2015