Court Opinion

ID: 4031724
Source: CourtListenerOpinion
Date Created: 2016-09-07 14:04:05.995923+00
Date Added: 2024-06-11T14:08:32.440860
License: Public Domain

Cite as 2016 Ark. App. 376

                  ARKANSAS COURT OF APPEALS
                                         DIVISION III
                                        No. CV 15-1041

                                                  Opinion Delivered: September   7, 2016
PANHANDLE OIL AND GAS, INC.

                                 APPELLANT APPEAL FROM THE FAULKNER
                                           COUNTY CIRCUIT COURT
V.                                         [NO. 23CV-13-50]

BHP BILLITON PETROLEUM
(FAYETTEVILLE) LLC                                HONORABLE MIKE MURPHY,
                                                  JUDGE
                                    APPELLEE
                                                  DISMISSED WITHOUT PREJUDICE

                         RAYMOND R. ABRAMSON, Judge

        This appeal involves three dismissals of appellant Panhandle Oil and Gas’s

 (Panhandle) claims against appellee BHP Billiton Petroleum Fayetteville (BHP). Panhandle

 argues that the circuit court erred by granting two of the motions to dismiss pursuant to

 Arkansas Rule of Civil Procedure 12(b)(6) in an unexplained fashion; specifically

 contending that the circuit court did not explain why Panhandle’s pleadings were deficient.

 Panhandle also argues that the circuit court erred by dismissing its claims against BHP in its

 third amended complaint under Arkansas Rule of Civil Procedure 41(b). Before we reach

 the merits of Panhandle’s appeal, we must first address a jurisdictional issue.

        Rule 2(a)(1) of the Arkansas Rules of Appellate Procedure–Civil provides that an

 appeal may be taken only from a final judgment or decree entered by the trial court.

 Although the parties did not raise the issue, the question of whether an order is final and
                                 Cite as 2016 Ark. App. 376

subject to appeal is a jurisdictional question that the appellate court will raise on its own.

Kowalski v. Rose Drugs of Dardanelle, Inc., 2009 Ark. 524, 357 S.W.3d 482. The requirement

of a final judgment is the cornerstone of appellate jurisdiction; this court reviews only final

orders. Ark. R. App. P.–Civ (2)(a); Bayird v. Floyd, 2009 Ark. 455, 344 S.W.3d 80.

       The procedural history of this case is, at best, convoluted. However, the procedural

history is germane to the conclusion of this court and therefore is recited in some detail. In

recent years, Panhandle had acquired oil and gas rights in numerous tracts in the Fayetteville

shale play. In May 2005, Panhandle and separate defendant Chesapeake Exploration, LLC

(Chesapeake) entered into a written agreement (the “May 2005 Agreement”), which stated

that Chesapeake would provide wellbore proposals to Panhandle for oil and gas wells in

certain identified sections of land in Arkansas where Panhandle owns forty or more net

mineral acres and Chesapeake desires to drill a well. Upon receiving a wellbore proposal,

Panhandle would then decide if it wanted to participate in the well. Panhandle argues that

the obligations of Chesapeake (and its assigns) included two things: (1) submit a well

proposal in the event a well was to be drilled; and (2) in the event Panhandle elected to

participate in a well, execute a wellbore assignment of any “Retained Interest,” which was

a defined term. The contract was designed to allow Panhandle to participate in the

development of its minerals even though Panhandle would not drill the well itself.

       Beginning in 2009, Panhandle claims that it began experiencing significant delays in

receiving well proposals and other pertinent information. In an effort to remedy this,

Panhandle and Chesapeake entered into another agreement, which is referred to as “the

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August 2010 Agreement.” 1 On January 1, 2011, Chesapeake assigned its remaining interest

in the Panhandle Leases to BHP.

       On January 14, 2013, Panhandle filed suit against Chesapeake based on Chesapeake’s

alleged breaches of the May 2005 Agreement and also named BHP as a defendant. In its

first amended complaint, filed on June 21, 2013, Panhandle asserted causes of action against

BHP for breach of the May 2005 Agreement, specific performance of the same, an equitable

accounting, and unjust enrichment. 2

       On July 11, 2013, BHP moved to dismiss the first amended complaint’s cause of

action against it under Arkansas Rule of Civil Procedure 12(b)(6) for failure to adequately

state a claim. BHP argued that the first amended complaint sought to extend the May 2005

Agreement beyond its written terms, failed to allege sufficient facts—including an adequate

basis to support successor liability—and failed to allege claims for an equitable accounting

or unjust enrichment. After Panhandle responded on July 25, 2013, the circuit court heard

oral arguments on the issues raised in the motion and response. On October 31, 2013, the

circuit court dismissed BHP from the case.

       On November 21, 2013, Panhandle filed its second amended complaint, pursuant to

Rule 15(a) of the Arkansas Rules of Civil Procedure, asserting claims against both BHP and

       1
          Due to a mutual mistake of the parties to the August 2010 Agreement, eight leased
sections in which Panhandle owned forty or more net mineral acres were accidentally
omitted.
        2
          BHP was not a party to the May 2005 Agreement but was named as a defendant.
In its amended complaint, Panhandle notes that BHP purchased Chesapeake’s interest in the
Panhandle Leases (after intervening conveyances) on January 1, 2011. By doing so, they argue,
BHP assumed all of Chesapeake’s rights and obligations under both the May 2005 Agreement
and the August 2010 Agreement.

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defendant Chesapeake. The claims in the second amended complaint were nearly identical

to the claims made in the first amended complaint. The only changes were to include various

argumentative and conclusory allegations in response to BHP’s previous motion to dismiss

and to state new claims for reformation in which Panhandle specifically requested that the

terms of the May 2005 Agreement and the August 2010 Agreement be expanded in order

to impose new contractual obligations on BHP. 3 On December 23, 2013, BHP filed a

motion to dismiss Panhandle’s second amended complaint for the same reasons previously

argued to the circuit court. Panhandle filed a written response to the motion, and the court

held a hearing on February 24, 2014. On March 17, 2014, the circuit court granted BHP’s

motion to dismiss the second amended complaint because it failed to state facts upon which

relief could be granted as to BHP.

       On April 9, 2014, Panhandle filed its third amended complaint. On May 16, 2014,

BHP moved to dismiss or strike this third iteration of Panhandle’s claims against it because

Rule 41(b) of the Arkansas Rules of Civil Procedure directs that the circuit court’s second

order of dismissal should be deemed to operate as an adjudication on the merits and is a

dismissal with prejudice. Therefore, BHP argued that the circuit court was barred from

taking up Panhandle’s reasserted allegations. On June 5, 2014, Panhandle filed a response to

BHP’s motion; within its response was a request that the circuit court reconsider and vacate

the March 17, 2014 dismissal.

       Due to a unique scenario, a new circuit judge granted BHP’s motion in a letter

       3
           Panhandle has never alleged that BHP breached the August 2010 Agreement.

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opinion dated December 29, 2014. 4 In the letter opinion, the court also denied the request

for reconsideration of the dismissal of the second amended complaint that was included in

Panhandle’s response to the motion to dismiss the third amended complaint.

       On August 21, 2015, after a settlement, an agreed order of dismissal was entered

regarding Panhandle’s claims against Chesapeake. A notice of appeal filed on September

18, 2015, indicates that Panhandle is appealing the following orders: “(1) Order granting

motion to dismiss of Defendant, BHP Billiton Petroleum (Fayetteville) LLC (“BHP”) filed

on October 31, 2013; (2) Order Granting BHP’s Motion to Dismiss, filed on March 17,

2013; and (3) Letter Order dated December 29, 2014, denying Plaintiff’s motion to vacate

and dismissing Plaintiff’s Third Amended Complaint.”

       As noted above, the question of whether an order is final and appealable is

jurisdictional, and we are obligated to consider the issue on our own even if the parties do

not raise it. Advanced Envtl. Recycling Techs., Inc. v. Advanced Control Sols., Inc., 372 Ark. 286,

275 S.W.3d 162 (2008). We have previously held that a ruling is not the equivalent of a

written order for the purpose of determining finality on appeal; neither are letter opinions

       4
         Judge Mike Maggio was the original circuit judge on this case. One week after the
March 17, 2014 dismissal order, the Arkansas Supreme Court entered an order suspending
Judge Maggio from the bench. On July 14, 2014, the Chief Justice of the Arkansas Supreme
Court assigned Judge Rob Wyatt of the 11th Judicial Circuit West to hear the case, and the
attorneys were notified by the Faulkner County Circuit Clerk of the appointment. In an
order filed on August 19, 2014, Judge Wyatt set a motion hearing for Monday, September
22, 2014. Judge Mike Murphy, who had been elected to the 1st Division Circuit Court of
the 20th Judicial Circuit in May 2014, was appointed by Governor Mike Beebe in
September 2014 to fill the vacancy in the 2nd Division Circuit Court to finish out that term
through December 31, 2014. Therefore, on September 22, 2014, the Chief Justice
terminated Judge Wyatt’s assignment of the case. Judge Murphy held a hearing on the
motion to dismiss on December 10, 2014.

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that have not been incorporated into the judgment. See Clark v. Ark. Dep’t of Human Servs.,

2016 Ark. 286; Wilkinson v. Smith, 2012 Ark. App. 604. To give effect to an unincorporated

letter opinion would violate the requirement that a judgment or decree must be set out in

a separate document in order to be effective. Ark. R. Civ. P. 58. The decisions, opinions,

and findings of a court—including those expressed in a letter opinion—do not constitute a

judgment or decree; they merely form the basis upon which the judgment or decree is

subsequently to be rendered and are not conclusive unless incorporated in a judgment.

Thomas v. McElroy, 243 Ark. 465, 420 S.W.2d 530 (1967); Moses v. Dautartus, 53 Ark. App.
242, 922 S.W.2d 345 (1996); cf. T & S Machine Shop, Inc. v. KD Sales, 2009 Ark. App. 836,

372 S.W.3d 410.

       We hold that the December 29, 2014 letter opinion in this case does not constitute

a judgment or decree. It was merely the basis for a subsequent judgment or decree. In fact,

the letter opinion clearly contemplated the entry of a formal order and judgment and

directed BHP’s counsel to prepare it. No such order or judgment is found in the record or

addendum. Under these circumstances, we hold that the letter opinion dated December 29,

2014 is not a final judgment, and because our jurisdiction is therefore lacking, we dismiss

the appeal.

       Dismissed without prejudice.

       GRUBER and WHITEAKER, JJ., agree.

       Morgan Law Firm, P.A., by: M. Edward Morgan; and Fellers Snider Blankenship Bailey
& Tippens, P.C., by: Mark K. Stonecipher, pro hac vice, and C. Eric Shephard, pro hac vice,
for appellant.

       PPGMR Law, PLLC, by: Julie DeWoody Greathouse and Kimberly D. Logue, for
appellee.

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