Opinion ID: 882219
Heading Depth: 1
Heading Rank: 2

Heading: Woods Petroleum Corporation.

Text: The District Court granted summary judgment in favor of Woods Petroleum Corporation on the grounds that all claims against it were barred by the statute of limitations. This action was brought on the 30th day of January 1986. The applicable statutes of limitations in this case are eight years for breach of the terms of a written contract, § 27-2-202(1), MCA, three years for allegations of negligence, § 27-2-204, MCA, and two years for damage to property, § 27-2-207, MCA. All parties agree that the eight year statute should apply to those counts alleging breaches of covenants arising out of an oil and gas lease. Therefore, it is clear that Sundheims' claims under such counts are barred. The leases executed between the Sundheims and Woods Petroleum were executed on May 11, 1967 and May 23, 1967. They were subject to a ten-year primary term. Therefore, by their express language, the leases expired in May of 1977, unless production of oil and gas continued after this date. The applicable provision that supports this conclusion reads: It is agreed that this lease shall remain in force for a term of ten years from date, and as long thereafter as oil or gas or either of them, is produced from said land by the lessee, its successors or assigns... It is undisputed that production ceased on the Sundheim No. 1 well in July of 1977. The well was abandoned and cemented, and Woods Petroleum performed no further activity on the well after this date. The Sundheims themselves stated, in their complaint, that the well was abandoned in July of 1977. Given these admissions, it is clear that the issue presented is a matter of law, and is properly resolved through summary judgment. Absent a reworking clause Montana law dictates that cessation of production by the lessee after the primary term automatically terminates the lease. Miami Oil Producers Inc. v. Larson (1983), 203 Mont. 225, 661 P.2d 1260. The primary terms in the Sundheim lease terminated in May of 1977. Production on the Sundheim leasehold ceased in July of 1977. According to Miami Oil, the lease automatically terminated on that date. Once the lease terminated, all obligations on Woods Petroleum's part also ended. The date for the beginning of the statute of limitations was in July of 1977. The Sundheims brought their lawsuit on January 30 of 1986. This date is outside of the eight year statute and all claims against Woods Petroleum are barred. Through a convoluted interpretation of the lease, the Sundheims attempt to extend the termination date to May of 1978. Through reliance upon this erroneous argument, they attempt to save their lawsuit against Woods from the statute of limitations. We do not find it necessary to fully evaluate this argument. The clear language of the lease speaks for itself. Next, the Sundheims argue that this Court should toll the statute of limitations on equitable principles. However, they have not come forward with any evidence or sufficient reason to delay its operation. The Sundheims have offered no proof of fraud or concealment on the part of Woods Petroleum. Carlson v. Ray Geophysical Division (1971), 156 Mont. 450, 481 P.2d 327. On the contrary, the Sundheims were well aware of their injury in 1977 when they stopped receiving royalty checks. Mr. Sundheim knew that the reason the royalty checks stopped was that production on the Sundheim No. 1 well ceased. The District Court's order dismissing Woods Petroleum is affirmed.