Court Opinion

ID: 2979004
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:36:15.695587+00
Date Added: 2024-06-11T11:44:15.157060
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 10a0236n.06

                                                                                        FILED
                                           No. 09-1158                               Apr 16, 2010
                                                                               LEONARD GREEN, Clerk
                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

OMIMEX ENERGY INC., ET AL.,                      )
                                                 )
       Plaintiffs-Appellants,                    )
                                                 )   ON APPEAL FROM THE UNITED
v.                                               )   STATES DISTRICT COURT FOR THE
                                                 )   WESTERN DISTRICT OF MICHIGAN
JOYCE G. BLOHM,                                  )
                                                 )
       Defendant-Appellee.                       )
                                                 )

Before: MOORE and COOK, Circuit Judges; LUDINGTON, District Judge.*

       LUDINGTON, District Judge. Defendant Joyce G. Blohm, and her now-deceased husband,

Homer, granted a mineral deed to the Miller Brothers Oil Corporation in 1983 for a term of twenty

years, or as long thereafter as gas or oil were “being produced” or “capable of being produced from

wells drilled during the 20 year term.” It is undisputed that no qualifying well was drilled on the

Blohms’ property during the twenty-year term. Nevertheless, Plaintiff Omimex Energy, the Miller

Brothers’ successor in interest, contends that later agreements between the parties modified the

condition such that a well drilled in 1980, which began producing in 2002, satisfies the modified

condition. Joyce Blohm contends the deed was never modified, and the plain language of the

condition was never satisfied.

       *
       The Honorable Thomas L. Ludington, United States District Judge for the Eastern District
of Michigan, sitting by designation.
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

       The district court initially denied Blohm’s motions to dismiss and for summary judgment,

concluding that later agreements demonstrated the parties’ understanding that the condition had been

satisfied. Op. & Order, Sept. 19, 2006. The district court reversed course one year later, however,

and granted Blohm’s second summary judgment motion based on the plain language of the

condition. Op. & Order, Nov. 15, 2007. The district court noted that Omimex had not advanced any

evidence to support its position beyond the deed itself and its interpretation of several ambiguous

agreements that were later entered into by the parties. Those agreements, the district court held, were

insufficient to demonstrate mutual assent to a modification of the deed. For the reasons stated

below, the district court’s decision will be affirmed.

                                                  I

       In the 1970s and early 1980s, oil and natural gas companies were beginning to purchase

mineral leases in western Michigan’s Oceana County, intending to exploit the extensive natural gas

reserves underlying the area’s forests and farmlands. The gas in Oceana County was “sour,”

meaning it was contaminated with toxic hydrogen sulfide, and needed to be “sweetened” before it

would be marketable. The sweetening process required transporting the sour gas by pipeline about

fifty miles north to a plant near Manistee. At the time of the transactions at issue in this case, the

pipeline had not been extended into southern Oceana County, and the natural gas in the area was not

marketable.

                                                 -2-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

       In 1981, Amoco renewed a mineral lease, originally granted in 1976, for the oil, gas, and

minerals underlying the Blohms’ 200-acre farm in Claybanks Township. The primary term of the

lease concluded on December 7, 1983, but the lease would be automatically extended if mineral

production took place on the land during the primary term. Amoco also held a lease on the minerals

underlying an adjacent property to the south, which was owned by the Blohms’ neighbors, the Foxes.

In 1980, Amoco drilled a well known as the Miller-Fox 1-11 on an eighty-acre parcel owned by the

Foxes’ that was adjacent to the Blohms’ farm. In early 1983, about a year before the 1981 lease

would expire, Amoco petitioned the Michigan Supervisor of Wells to establish a 160-acre “drilling

unit” for the Miller-Fox 1-11, which would include the southernmost eighty acres of the Blohms’

farm and the adjacent eighty-acre parcel of the Foxes’ property on which the Miller-Fox 1-11 had

been drilled.

       A “drilling unit” is “the maximum area that may be efficiently and economically drained by

1 well.” Mich. Comp. Laws § 324.61513(2). To limit “waste,” only one well may be drilled per

drilling unit. See Mich. Comp. Laws §§ 324.61501(q), .61502, .61513(3). Consequently, if the

Blohms’ southernmost eighty acres were pooled with the Foxes’ eighty-acre parcel into a single

drilling unit, the Blohms would be prohibited from drilling a well on the portion of their property

that was within the drilling unit.1

       1
        The land had previously been classified as two 80-acre drilling units pursuant to Special
Order 1-73(Mar. 1, 1973), available at http://michigan.gov/documents/
deq/ogs-oilandgas-spacing-1-73_258023_7.pdf, which set standardized drilling units for much of
northern and western Lower Michigan at 80 acres each.

                                               -3-
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Omimex Energy, Inc., et al. v. Blohm

       The Blohms, however, remained interested in developing a well on their own property, and

began negotiating development plans with the Miller Brothers Oil Corporation, who held a similar

interest, in late 1981. Blohm Aff. ¶ 7. On April 16, 1983, the Blohms agreed to terms with the

Miller Brothers, granting a mineral deed intended to facilitate development of a well on their farm.

The deed conveyed, subject to the existing Amoco lease, an undivided one-half interest in the

minerals underlying the Blohms’ farm2 to the Miller Brothers Oil Corporation “for a term of 20 years

or as long thereafter as oil, gas or other hydrocarbons are being produced or are capable of being

produced from wells drilled during the 20 year term.” The deed was signed two-days before the

Supervisor of Wells was scheduled to conduct a hearing on Amoco’s proposed drilling unit for the

Miller-Fox 1-11. It gave the Miller Brothers,3 who paid $250,000 for the deed and wanted to drill

a well on the Blohms’ farm, a significant interest in the supervisor’s decision.

       On April 18, 1983, the Supervisor of Wells for the State of Michigan held a hearing to

determine the appropriate drilling unit for the Miller-Fox 1-11. See Mich. Comp. Laws § 324.61507.

Homer Blohm and the Miller Brothers traveled to Lansing, along with the neighboring landowner,

Mr. Fox, to oppose the expanded drilling unit and the accompanying limitations on drilling. Blohm

Aff. ¶ 12. If adopted, the drilling unit would combine the minerals in the N 1/2 of the SW 1/4 of

Section 11, which the Blohms and Miller Brothers owned, with the minerals in S 1/2 of the SW 1/4

       2
        The deed provides the following legal description of the property “Section 11: N/2 of SW/4;
S/2 of NW/4; and NE/4 of NW/4.”
       3
         The phrase “Miller Brothers” is used to refer to the Miller Brothers Oil Corporation and
related entities.

                                                -4-
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Omimex Energy, Inc., et al. v. Blohm

of Section 11, which the Foxes owned, into a single 160-acre drilling unit serviced by the existing

Miller-Fox 1-11 well. Amoco held a mineral lease covering all the minerals in the unit and also

owned the well. In a May 9, 1983 opinion, the Supervisor granted Amoco’s request, ruling against

the Blohms and Miller Brothers. The Supervisor decided that the entire 160 acres in the southwest

quarter of Section 11 could be drained by the Miller-Fox 1-11, and drilling additional wells would

be a “waste.” Op. & Order of the Supervisor of Wells, No. (A) 6-3-83. The decision made it more

difficult for the Blohms and Miller Brothers to drill a well on the Blohms property, because it meant

that only 120 acres of the 200-acre farm remained available for drilling.

       Nevertheless, on May 13, 1983, four days after the Supervisor’s opinion was issued, the

Blohms and Miller Brothers signed an amended letter agreement, specifying that the Blohms had

been paid in full for the one-half mineral interest they deeded to the Miller Brothers. The Blohms

and Miller Brothers recorded the deed with the Oceana County Register of Deeds the same day. See

Aff. of Joyce Blohm ¶ 11; Mineral Deed. The deed granted the Miller Brothers an ownership interest

in the minerals, subject to the twenty-year production contingency and the 1981 lease to Amoco.

       Beginning in March 1984, the Miller Brothers and Blohms commenced efforts to terminate

the Amoco lease and remove the Blohms’ eighty-acre parcel from the Miller-Fox 1-11 drilling unit.

Blohm Aff. ¶¶ 16–17. First, on March 9, the Blohms leased the remaining mineral interests in their

property to the Miller Brothers for a primary term of one year, and as long thereafter as the Miller

Brothers engaged in drilling or mineral production on the land. The lease was signed despite

apparent ambiguity about whether the 1981 lease to Amoco was still effective. The primary term

                                                -5-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

of the 1981 lease had expired in December of 1983, but questions about whether its production

requirement had been satisfied by the pooling of the Blohm and Fox tracts into a single drilling unit

remained. Next, on March 12, the Blohms filed a declaration asserting that the terms of the 1981

Amoco lease had been broken, and as a result, Amoco’s leasehold interest had been forfeited.

Amoco disputed the Blohms’ declaration in a March 29 response. The March declarations were

followed by an August 21, 1984 lawsuit, in which the Blohms and Miller Brothers asserted that the

lease had expired. Complaint, Blohm v. Amoco Prod. Co., No. 84-2542 (Cir. Ct. Oceana County

Aug. 21, 1984). The lawsuit was filed by the Miller Brothers on behalf of the Blohms and the Miller

Brothers Oil Corporation, and asserted that the Amoco lease had expired following completion of

the primary term on December 7, 1983. Id. ¶ 6. Amoco, however, disagreed, asserting that the

combination of the Blohms’ southernmost eighty acres with the Foxes’ northernmost eighty acres

into the Miller-Fox 1-11 drilling unit constituted production of gas from the leased land and

automatically renewed the lease. Id. ¶ 7; Amoco Decl. (Mar. 29, 1984).

        The Miller Brothers and the Blohms were both named plaintiffs in the 1984 suit, as they each

owned an undivided one-half interest in the minerals underlying the Blohms farm. The case,

however, was prosecuted only by the Miller Brothers on both parties’ behalf. Pursuant to an

agreement dated February 15, 1985, the Miller Brothers agreed to pay all the expenses related to the

case, and the Blohms agreed to make themselves available to assist with the litigation. The Blohms

also agreed to extend the primary term of the 1984 lease to six months beyond the completion of the

suit.

                                                -6-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

        The suit was settled in October 1986.4 Stipulation and Order for Dismissal, Blohm v. Amoco

Prod. Co., No. 84-2542 (Cir. Ct. Oceana County Oct. 23, 1986). Although the precise terms of the

settlement are not disclosed in the stipulation for dismissal, Amoco conveyed all of its leasehold

interests in the Blohms’ property, the Foxes’ property, and several nearby properties to the Miller

Brothers in a quit claim deed dated October 7, 1986. The deed was conveyed “in consideration of

the sum of Ten Dollars ($10.00) and other good and valuable consideration paid by Miller

Brothers[.]” Pursuant to the 1986 deed, the Miller Brothers owned the Miller-Fox 1-11 well, and

a leasehold or fee interest in all the minerals underlying both the Blohm and Fox properties. At the

time the suit was terminated, the Blohms mineral interests were potentially subject to two leases: the

1984 lease to the Miller Brothers and the 1981 lease to Amoco. Although it is not clear from the

record if it was ever determined which lease was effective, the 1986 quit claim deed meant that the

Miller Brothers controlled both leases, and consequently the rights to the minerals underlying the

Blohms’ farm, regardless of which was effective. Importantly, by October of 1986, the Miller

Brothers no longer had an economic incentive to reverse the Supervisor’s pooling decision and drill

a well on the Blohms’ southernmost eighty-acres because a new well would only compete with the

existing well on the pooled tract of land, and the Miller Brothers controlled all the rights to that well.

        During the next fifteen years, the Miller Brothers and their successors entered into several

agreements with the Blohms, but a successful well was never drilled on the property. Among those

        4
         Joyce Blohm asserts in her affidavit that the Miller Brothers informed the Blohms that they
“lost the case.” Blohm Aff. ¶ 17. Although there may have been a decision adverse to the Blohms’
interest at some point, it is not part of the record in this case.

                                                   -7-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

agreements was a 1987 lease, which in effect renewed the 1981 and 1984 leases.5 Also in 1987, the

Miller Brothers, the Foxes, and the Blohms entered into a “Declaration of Pooling” (“1987 pooling

agreement”), which is a contractual agreement dividing the gas produced by the Miller-Fox 1-11 well

based on the mineral rights controlled by each party in the drilling unit. The 1987 pooling agreement

listed the names of the Foxes, Blohms, and Miller Brothers’ investors in its heading, and provided:

       WHEREAS, the above are the Owners of the following described Oil and Gas
       Leases:

               1. [lease to John T. Stoliker covering the Foxes’ eighty-acre parcel]

               2. Oil and Gas Lease Date March 9, 1984, recorded in Liber 841, Page 151,
               from Homer E. and Joyce G. Blohm, Lessors to Miller Brothers Oil
               Corporation, Lessee, covering N/2 of SW/4, S/2 of NW/4; and NE/4 of
               NW/4, Section 11, T13N, R18W, Oceana County,

               or own a mineral interest in the following lands:

                       Southwest Quarter (SW 1/4), Section 11, T13N-R18W, Oceana
                       County, Michigan[.]

               ...

       5
         The 1984 lease was terminated by agreement of the parties before the 1987 lease was
completed, potentially creating a gap between the 1984 lease and the 1987 lease. However, the
Miller Brothers had also purchased the 1981 lease from Amoco, which was potentially still valid
until the 1987 lease was agreed upon. The 1981 and 1984 leases covered the Blohms’ entire 200-
acre farm. The 1987 lease covered just the southernmost eighty acres that were part of the Miller-
Fox 1-11 drilling unit.

                                                -8-
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Omimex Energy, Inc., et al. v. Blohm

       NOW THEREFORE, The Parties hereto agree as follows:

       1.      All interest of the parties hereto in the [oil and gas] underlying [the Miller-
               Fox 1-11 drilling unit] are hereby pooled, consolidated and unitized into a
               single pooled unit for the operation for and the development and production
               of the [oil and gas from the drilling unit].

       2.      Any well drilled on any part of the [drilling unit] for the discovery and
               production of [oil and gas], whether now drilling or heretofore or hereafter
               drilled, and all operations with respect to any such well, shall be considered
               for all purposes, except the payment of royalty, to be a well drilled and
               operations conducted under the terms of each of the leases described above.

1987 Pooling Agreement at 1–2. The agreement was signed by the Blohms, Foxes, and various

parties representing the Miller Brothers, but it is not clear from the record exactly when the

agreement was completed, nor if it was ever recorded. Id.

       A later document, titled “Amendment to Declaration of Pooling,” was recorded by the

Oceana County Register of Deeds on May 24, 1989 (“1989 Amendment”). The 1989 Amendment

is also signed by the Blohms and a representative of Conoco, Inc., the successor to the Miller

Brothers’ interests in the Miller-Fox 1-11 drilling unit. The 1989 Amendment shows that Conoco

had acquired mineral lease interests in the Foxes’ eighty-acre parcel and the Blohms’ remaining half-

interest in their eighty-acre parcel, as well as the title to the half-interest the Blohms had deeded to

Miller Brothers in 1983. The 1989 Amendment also purports to substitute the 1987 lease for the

1984 lease in the 1987 pooling agreement, and to specifically add Conoco’s fee interest, arising from

the 1983 deed, to the pooling agreement. It provides that “it is deemed necessary and advisable, and

                                                  -9-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

is the desire of Conoco and the Parties to amend the Declaration of Pooling to pool and combine said

Leases and the fee mineral interest to form a unit for the proper development and operations of the

same for the production of oil and/or gas[.]”

        Although the 1987 Pooling agreement provides that any well located on the drilling unit,

including the Miller-Fox 1-11 well, shall satisfy drilling and production requirements in the various

“leases,” it does not specifically state that the Miller-Fox 1-11 shall satisfy the drilling requirement

in the 1983 deed. Similarly, the 1989 amendment specifically incorporates the deeded interest into

the pool, but it does not provide that the Miller-Fox 1-11 satisfies the drilling requirement in the

deed.

        Sometime in 2002, the pipeline to Manistee was completed and the Miller-Fox 1-11 began

operating. See Blohm Aff. ¶ 18. The Blohms received their first royalty checks from their one-

quarter interest in the Miller-Fox 1-11 drilling unit that year. Id. In the summer of 2002, Plaintiff

Omimex Energy acquired the Miller-Fox 1-11 well, and also acquired the 1983 deed. Omimex, like

their predecessors in interest, the Miller Brothers and Conoco, also had no incentive to drill on the

Blohms farm because it held a leasehold interest in the minerals underlying both farms. Drilling a

second well would be an unnecessary expense because it would simply compete with an operating

well Omimex owned.

        In 2002, near the time period when Omimex acquired its interests in the Blohm and Fox

properties and the operational Miller-Fox 1-11 well, it obtained a title opinion from Loomis, Ewert,

                                                 -10-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

Parsley, Davis & Gotting, concerning the deeded half interest originally conveyed by the Blohms to

the Miller Brothers in 1983. The title opinion urged Omimex to “confirm that the term mineral

interest was intended to be held by production from a well on lands other than lands covered by the

deed . . . . In this regard it is essential that you record a proper of [sic] Pooling Declaration for the

Miller-Fox # 1-11 Well prior to April 16, 2003.” Loomis Title Op., Oct. 10, 2002. Several similar

title opinions had been issued to Omimex and its predecessors in the years between the 1987 pooling

agreement and the expiration of the twenty-year term. See, e.g., Loomis Title Op., Dec. 26, 2001.

Omimex did not act on the recommendation of the title opinion, nor had any of its predecessors acted

on similar recommendations. A new declaration of pooling making clear that the drilling clause in

the 1983 deed was satisfied by the now-operational Miller-Fox 1-11 was never recorded.

        April 16, 2003 marked the 20-year anniversary of the 1983 deed, and the Blohms asserted

that the deeded one-half mineral interest in their farm had reverted back to them. Blohm Aff. ¶ 20.

Omimex, however, disagreed, and negotiations commenced concerning termination of the deed. Id.

¶ 22.

        On May 1, 2006 Omimex filed this suit, seeking a declaration of the parties’ respective

interests in regard to the 1983 deed, and a declaration “(i) that the Mineral Deed has been extended

as a result of certain events; and (ii) that Plaintiffs are the owners of the 100/200 oil and gas interest

in the property.” Op. & Order, Nov. 15, 2007. In November 2007, the Honorable Gordon J. Quist,

U.S. District Judge for the Western District of Michigan, granted summary judgment in favor of

Joyce Blohm, concluding that Omimex had not presented sufficient evidence to raise a genuine issue

                                                  -11-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

of fact as to whether the 1983 deed had been modified by subsequent agreements such that it did not

revert to the Blohms in 2003 due to the lack of a producing well on the Blohms’ property. Omimex

filed a timely notice of appeal.

                                                  II

       Omimex raises two arguments on appeal. First, it contends that the 1987 pooling agreement

and 1989 amendment actually modified the 1983 deed, and that the documents, taken together, show

the parties’ intention to override the condition to the extent that it required a well drilled “during”

the twenty-year term. Second, it contends that the district court’s reconsideration of its initial

opinion violates the law of the case doctrine.

                                                  A

       The district court’s decision to grant Blohm’s motion for summary judgment is reviewed de

novo. Bukowski v. City of Akron, 326 F.3d 702, 707 (6th Cir. 2003). Summary judgment is proper

if “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there

is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(c)(2). When making the determination, all facts and inferences drawn from

the evidence in the record must be viewed in the light most favorable to the nonmovant. Bukowski,
326 F.3d at 707 (quoting Ewolski v. City of Brunswick, 287 F.3d 492, 500 (6th Cir. 2002)).

                                                 -12-
No 09-1158
Omimex Energy, Inc., et al. v. Blohm

        Under Michigan law, an unambiguous deed or contract is interpreted according to the plain

meaning of its language. Taylor v. Taylor, 17 N.W.2d 745, 746 (Mich. 1945). Interpretation of an

unambiguous deed is a question of law. Port Huron Educ. Ass’n, MEA/NEA v. Port Huron Area

Sch. Dist., 550 N.W.2d 228, 237 (Mich. 1996). “If, however, there is an ambiguity, or if the deed[]

fail[s] to express the obvious intention of the parties . . . the courts will consider the situation, acts,

conduct[,] and dealings of the parties” in an effort to arrive at their intentions. Farabaugh v. Rhode,

9 N.W.2d 562, 565 (Mich. 1943). Still, the focus remains at all times on arriving at the intent of the

parties as expressed by the plain language of the whole instrument, and the “only purpose of the rules

of construction of conveyances is to enable the court to reach the probable intent of the parties when

it is not otherwise ascertainable.” See Mich. Dep’t of Natural Res. v. Carmody-Lahti Real Estate,

Inc., 699 N.W.2d 272, 279 (Mich. 2005) (quoting Purlo Corp. v. 3925 Woodward Ave., Inc., 67
N.W.2d 684, 686–87 (Mich. 1954) (citations omitted)). “[N]o language in the instrument may be

needlessly rejected as meaningless, but, if possible, all the language of a deed must be harmonized

and construed so as to make all of it meaningful . . . .” Id.

        Although Michigan courts have recognized that oil and gas leases, and by implication other

oil and gas contracts, are “technical contract[s]” to be read in accordance with the “purpose of [their]

clauses,” they will not ignore the plain language of the contract terms. Mich. Wis. Pipeline Co. v.

Mich. Nat’l Bank, 324 N.W.2d 541, 544 (Mich. Ct. App. 1982) (quoting J.J. Fagan & Co. v. Burns,

226 N.W. 653, 654 (Mich. 1929)). Accordingly, in construing a requirement that the lessee

“produce[]” oil or gas from the leased land in order to extend a lease term, the Michigan Court of

                                                   -13-
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Omimex Energy, Inc., et al. v. Blohm

Appeals held that production in paying quantities to the lessee is not required, but nor would “any”

production suffice. Id. at 544–45. Rather, the production level required to extend the lease was the

level an operator acting in a “reasonable and prudent manner” would ordinarily produce in like

circumstances. Id. at 545–46.

       Here, the 1983 deed is unambiguous; the intentions of its signors are clear from the face of

the document. The deed required that at least one well capable of producing oil or gas be drilled on

the Blohms’ farm or a parcel properly pooled with the Blohms’ farm during the twenty year term or

the deeded interest would revert to the grantors. No well was drilled during the twenty-year term.

Accordingly, the deeded interest reverted to the Blohms in 2003 unless the condition was modified

by a later agreement between the parties.

       This conclusion is supported both by the plain language of the deed and the circumstances

surrounding its execution. The timing of the conveyance makes clear that when the deed was

executed both parties believed a second well—a well drilled during the twenty-year term—was

required to extend the lease. The deed was conveyed shortly before the Miller-Fox 1-11 drilling unit

hearing in order to advance the mutual interest of the grantor and grantee in opposing the expanded

drilling unit. Indeed, both the Miller Brothers and the Blohms continued to oppose the expanded

drilling unit until October 1986. Before that time, both parties sought an opportunity to drill a well

on the Blohms property. After that time, the Miller Brothers held a controlling interest in the Miller-

Fox 1-11 and the incentive to drill a second well evaporated.

                                                 -14-
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Omimex Energy, Inc., et al. v. Blohm

       Omimex contends that the 1987 pooling agreement and the 1989 amendment to the pooling

agreement demonstrate the parties’ intent to modify the agreement. A party asserting that a condition

in a deed has been modified bears the burden of proving mutual assent to modification by clear and

convincing evidence. See Quality Prods. & Concepts Co. v. Nagel Precision, Inc., 666 N.W.2d 251,

257–58 (Mich. 2003).

       The 1987 pooling agreement and the 1989 amendment clearly pool the various fee interests

and lease interests—including the 1983 mineral deed—in the 160-acre drilling unit, and divide the

proceeds from the gas produced proportionately to the acreage controlled by each party. The 1987

agreement also provides that a well drilled or producing anywhere in the 160-acre unit “shall be

considered for all purposes . . . a well drilled and operations conducted under the terms of each of

the leases . . . .” 1987 agreement ¶ 2. Accordingly, the Miller-Fox 1-11 well satisfied, “for all

purposes,” any drilling requirements in each of the pooled leases. However, neither the 1987

agreement nor the 1989 amendment provide that the Miller-Fox 1-11 satisfies drilling conditions in

the pooled fee interests or that the parties intended to waive the requirement in the 1983 deed that

a well be drilled “during” the twenty-year term.

       While Plaintiffs’ argument concerning modification of the deed has some force, it is

ultimately unpersuasive because of its exclusive reliance on a single provision in the 1987

agreement. That provision alone cannot provide clear and unambiguous proof that the parties

mutually agreed to modify the condition. The Plaintiffs have not produced a single document that

explicitly memorializes the Blohms intent or belief that the Miller-Fox 1-11 well would satisfy the

                                                -15-
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Omimex Energy, Inc., et al. v. Blohm

drilling requirement in the 1983 deed. Nor have they produced an affidavit from one of the

signatories to the pooling agreements or 1989 amendment, explaining that the parties to the

agreements understood that the Miller-Fox 1-11 would satisfy the drilling requirement. Indeed,

Omimex obtained a title opinion in 2002, which emphasized the ambiguity concerning whether the

Miller-Fox 1-11 well satisfied the drilling requirement, and recommended an explicit modification

to the 1983 deed. Omimex did not act on the recommendation.

        Moreover, when the deed was negotiated in 1983, the Miller-Fox 1-11 had already been

completed and was ready for operation, pending extension of the sour gas pipeline. It is clear from

the language of the deed, as well as the surrounding circumstances, that both parties believed at least

one operational well would need to be drilled on the Blohms’ property in order to satisfy the deed’s

condition. Such a well was never drilled. Although settlement of the 1984 lawsuit and conveyance

of the 1986 quit claim deed from Amoco to the Miller Brothers dissolved the Miller Brothers’

economic incentive to drill a well on the Blohms property, it did not alter the Blohms’

circumstances. The record does not demonstrate that the Blohms voluntarily released the Miller

Brothers from their obligation to drill a well on the Blohms’ property, despite the fact that the Miller

Brothers and their successors had nearly seventeen years to negotiate such a release.

        Omimex has relied exclusively on a pair of ambiguous documents to support its contention

that the deed was modified. By contrast, Blohm has produced a clearly worded, unambiguous deed

and established that the original grantor and grantee intended for it to be enforced as written.

Because no well was drilled on the Blohms’ farm during the twenty-year term, the condition in the

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Omimex Energy, Inc., et al. v. Blohm

deed was not satisfied. Accordingly, the deeded mineral interest reverted to the grantors, the

Blohms, on April 16, 2003.

                                                   B

        Omimex next contends that the district court violated the law of the case doctrine when it

changed course and granted Blohm’s motion for summary judgment in 2007, notwithstanding a 2006

decision to the contrary. A district court’s application of the law of the case doctrine to that court’s

own rulings is reviewed for abuse of discretion because it is a “discretionary tool” meant to promote

judicial efficiency and not a limit on the court’s power. United States v. Todd, 920 F.2d 399, 403

(6th Cir. 1990). Pursuant to the doctrine, “a decision on an issue made by a court at one stage of a

case should be given effect in successive stages of the same litigation.” Id. (citing Christianson v.

Colt Indus. Operating Corp., 486 U.S. 800, 816 (1988)). A district court may disregard its own

earlier decision only under “extraordinary conditions” where some “cogent reason” makes that

decision inapplicable, such as if the prior decision was “clearly erroneous,” based on substantially

different evidence, or was followed by a contrary decision from a controlling authority. In re

Kenneth Allen Knight Trust, 303 F.3d 671, 677–78 (6th Cir. 2002) (citations and quotation marks

omitted); see also In re U.S. Steel Corp., 479 F.2d 489, 494 (6th Cir. 1973). Still, the doctrine is not

an “inexorable command,” and the decision to disregard an earlier ruling is left to the court’s “good

sense.” In re U.S. Steel Corp., 479 F.2d at 494.

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Omimex Energy, Inc., et al. v. Blohm

       The district court recognized that its decision to grant Blohm’s summary judgment motion

in 2007 was contrary to its earlier decision to deny Blohm’s motions to dismiss and for summary

judgment. Compare Op. & Order, Sept. 19, 2006, with Op. & Order, Nov. 15, 2007. The court

noted, however, that its first ruling was issued without the benefit of discovery, and that its

understanding of the case had changed as the evidence was better developed. At the earlier stage,

Omimex had presented sufficient evidence to defeat Blohm’s motions. After discovery, however,

the court reassessed whether the evidence presented justified a trial and concluded to the contrary.

       The district court’s decision was not an abuse of discretion. Nothing prevented the trial court

from reassessing the evidence, following discovery and additional briefing from the parties, and

concluding that the evidence provided to support Omimex’s position did not warrant a trial.

Particularly where the parties had presented complex arguments based on differing interpretations

of a series of documents, it was not unreasonable for the trial judge’s understanding to change. The

trial judge recognized that the law of the case doctrine was available as a “discretionary tool” that

could be employed to avoid revisiting the issue, but decided instead that “extraordinary

circumstances” merited reconsideration in this circumstance. See Todd, 920 F.2d at 403.

                                                 III

       The district court’s judgment that the mineral interest conveyed by the 1983 deed reverted

to the Blohms on April 16, 2003 is AFFIRMED.

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