SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

534 

CA 12-02132 

PRESENT: SCUDDER, P.J., PERADOTTO, SCONIERS, VALENTINO, AND MARTOCHE, JJ. 

 

RICHARD L. GRAY, PLAINTIFF-APPELLANT,

V MEMORANDUM AND ORDER

TALISMAN ENERGY USA INC., DEFENDANT-RESPONDENT, 

ET AL., DEFENDANT. 

ROSSETTIE ROSETTIE & MARTINO LLP, CORNING (GABRIEL V. ROSSETTIE OF

COUNSEL), FOR PLAINTIFF-APPELLANT. 

THE WEST FIRM, PLLC, ALBANY (THOMAS S. WEST OF COUNSEL), FOR

DEFENDANT-RESPONDENT. 

 

Appeal from an order of the Supreme Court, Steuben County (Marianne

Furfure, A.J.), entered April 25, 2012. The order granted the motion of

defendant Talisman Energy USA Inc., to compel arbitration and stayed the

action. 

It is hereby ORDERED that the order so appealed from is unanimously

affirmed without costs.

Memorandum: On appeal from an order granting the motion of Talisman

Energy USA Inc. (defendant) to compel arbitration and to stay the action

pursuant to CPLR 7503 (a), plaintiff contends that the contractual

arbitration clause was nullified by the operation of General Obligations

Law § 15-304. We reject that contention.

In August 2000, plaintiff property owner entered into an oil and gas

lease (hereafter, lease) with defendant’s predecessor in interest. The

primary term of the lease was five years, with an option to renew. The

lease also permitted extension beyond its primary term if the lessee or

its assignee were engaged in operations on the leased property or “lands

pooled therewith” at the time of expiration of the primary term. As

relevant here, the lease contains an arbitration clause providing that

“[a]ny question concerning this lease or performance thereunder” shall be

submitted to arbitration. The lease further provided that, “[i]f this

lease becomes forfeited, terminated or expires, the lessee . . . is

required to provide a document canceling the lease as of record . . . If

the lessee . . . fails to cancel the lease, the current landowner may

compel a cancellation pursuant to section 15-304 of the General

Obligations Law.” In February 2005, plaintiff extended the primary term

of the lease for an additional three years, and defendant’s predecessor

in interest applied for a permit to drill a natural gas well on several

“pooled” properties, including plaintiff’s property. In August 2010,
-2- 534 

CA 12-02132 

plaintiff served defendant with a notice of termination of the lease,

asserting that the lease was terminated as of August 2005 because: (1)

the five-year primary term of the lease had expired on that date; (2) the

primary term was not extended by agreement between the parties to the

lease; and (3), as of that date, “no other circumstance causing extension

or continuation of the [l]ease was then in effect.” Defendant, however,

asserted that the lease term had not expired and that “the entire [l]ease

remains in full force and effect.”

Plaintiff thereafter commenced this action pursuant to RPAPL article

15 seeking, inter alia, “to compel the determination of claims to the

real property described herein,” and defendant moved to compel

arbitration under the lease and to stay the action. Supreme Court

properly granted the motion.

“Where parties have entered into an agreement containing a broad

arbitration provision, the question of whether the arbitration clause

governs a particular aspect of the controversy, as well as the

determination of the merits of the dispute, are matters within the

exclusive province of the arbitrator” (Remco Maintenance, LLC v CC Mgt. &

Consulting, Inc., 85 AD3d 477, 479-480 [internal quotation marks

omitted]). “Once it appears that there is, or is not[,] a reasonable

relationship between the subject matter of the dispute and the general

subject matter of the underlying contract, the court’s inquiry is ended. 

Penetrating definitive analysis of the scope of the agreement must be

left to the arbitrators whenever the parties have broadly agreed that any

dispute involving the interpretation and meaning of the agreement should

be submitted to arbitration” (Matter of Nationwide Gen. Ins. Co. v

Investors Ins. Co. of Am., 37 NY2d 91, 96; see General Mills v Steuben

Foods, 244 AD2d 868, 868). Thus, contrary to plaintiff’s contention, it

is not entitled to a judicial determination with respect to the continued

force and effect of the lease, i.e., “the ultimate issue in this case”

(Nationwide, 37 NY2d at 95), before submitting the matter to arbitration. 

With respect to plaintiff’s contention that the arbitration clause

is ambiguous because the lease also permits cancellation of the lease by

specific reference to General Obligations Law § 15-304, we note that

section 15-304 must be referenced in any oil, gas, or mineral lease, or

it will be incorporated by operation of General Obligations Law § 5-333

(1). We therefore cannot conclude that section 15-304 thereby renders

the arbitration clause ambiguous. Moreover, there was no need to include

a “survival provision” for the arbitration clause inasmuch as the parties

dispute the continuing effect of the lease, which, as noted, is the

ultimate issue for arbitration (see Remco, 85 AD3d at 479-480; General

Mills, 244 AD2d at 868). Contrary to plaintiff’s further contention, we

conclude that he “expressly waive[d]” the right to litigate issues

concerning the lease in a court of law because he signed a lease with a

clear and broad arbitration clause (see generally Williams v Progressive

Northeastern Ins. Co., 41 AD3d 1244, 1245, lv denied 9 NY3d 808) . 

Finally, we reject plaintiff’s characterization of General

Obligations Law § 15-304 as “a simple procedural means of cancelling the

Lease.” The purpose of that provision is to allow landowners to clear

the title of their real property when a lease has expired or has been
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CA 12-02132 

terminated or forfeited, not to cancel an existing lease (see § 15-304;

Attorney General’s Mem, Bill Jacket, L 1984, ch 565 at 8-9). The

parties’ disputes, including the threshold issue of whether the lease was

still in effect when plaintiff filed the notice of termination, must be

submitted to arbitration pursuant to the terms of the lease (see

Nationwide, 37 NY2d at 96; Remco, 85 AD3d at 479-480; General Mills, 244

AD2d at 868).

Entered: June 14, 2013 Frances E. Cafarell

Clerk of the Court