Court Opinion

ID: 4227222
Source: CourtListenerOpinion
Date Created: 2017-12-08 21:21:20.640861+00
Date Added: 2024-06-11T14:42:51.231456
License: Public Domain

J-A27018-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

GREGORY A. NIVERTH AND MARY             :    IN THE SUPERIOR COURT OF
LOU NIVERTH, HUSBAND AND WIFE           :         PENNSYLVANIA
                                        :
                   Appellants           :
                                        :
                                        :
             v.                         :
                                        :
                                        :
EQUITRANS L.P.                          :
                                        :
                   Appellee             :    No. 400 WDA 2017

              Appeal from the Judgment Entered March 8, 2017
               In the Court of Common Pleas of Greene County
                    Civil Division at No(s): AD 848, 2013

BEFORE: BENDER, P.J.E., SHOGAN, J., and MUSMANNO, J.

MEMORANDUM BY SHOGAN, J.:                       FILED DECEMBER 08, 2017

      Appellants, Gregory A. Niverth and Mary Lou Niverth, husband and

wife (“the Niverths”), appeal from the judgment entered on March 8, 2017,

following the October 24, 2016 order granting Appellee’s, Equitrans, L.P.

(“Equitrans”), motion for nonsuit. After careful review, we affirm.

      The trial court set forth the relevant facts and procedural history of

this matter as follows:

           This matter involves an oil and gas lease entered into in
      1969 between Ellen C. Hoge, Mary R. Hoge, and Elizabeth S.
      Hoge with Equitable Gas Company (hereinafter “Hoge Lease”).
      [The Niverths] purchased the property in 1981 and became
      successors-in-interest to the Hoge Lease. The validity of the
      Hoge Lease was not in dispute by either party in this litigation.
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            On September 20, 2010, [the Niverths] executed a
      Memorandum of Oil and Gas Lease, as well as an Amendment
      and Ratification [(“the Amendment”)], with Equitrans …. These
      documents were recorded in the Office of the Recorder of Deeds
      of Greene County, Pennsylvania.          The purpose of this
      transaction, as evidenced by the language in both documents,
      was to: 1) ratify and agree that the Hoge Lease was still valid;
      2) make certain amendments and modifications to the Hoge
      Lease; 3) agree that the Lessee is not in violation of any terms
      or provisions of the Lease, including any royalty or rental
      payment terms thereof; and 4) ratify and affirm all the terms
      and provisions of the Hoge Lease to the extent that the terms
      were not changed, altered, or amended. [The Niverths] also
      executed an Order of Payment for the Amendment on
      September 20, 2010.

             The Hoge Lease provides for the royalty to be computed at
      1/8th  of the wholesale market value. The Memorandum and
      Ratification agreement signed by [the Niverths] on September
      20, 2010, did not address the computation of royalty as a
      separate category.

            On March 28, 2014, [the Niverths] filed an Amended
      Complaint. The Amended Complaint had four Counts---Count I,
      Breach of Contract, Count II, Breach of Contractual Duty of Good
      Faith, Count III, Fraud and Count IV, Declaratory Relief. On June
      6, 2014, the Court entered an order [sustaining Equitrans’
      preliminary objections and] dismissing Counts II, Breach of
      Contractual Duty of Good Faith, and III, Fraud, of the Amended
      Complaint.

            On October 24, 2016, a trial by jury was held in this
      matter. After [the Niverths] rested their case-in-chief, this Court
      granted [Equitrans’] Motion for compulsory nonsuit.

Trial Court Opinion, 5/11/17, at 3-4.

      The Niverths filed a timely post-trial motion for removal of nonsuit.

However, the trial court did not rule on the motion within the required 120

days, and on March 8, 2017, the Niverths filed a praecipe for entry of

judgment pursuant to Pa.R.C.P. No. 227.4(1)(b).       Judgment was entered,

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and this timely appeal followed.               Both the trial court and the Niverths

complied with Pa.R.A.P. 1925.

        On appeal, the Niverths raise the following issues for this Court’s

consideration:

        1. Did the trial court err by granting [Equitrans’] preliminary
           objections on the Niverths’ fraud claim?

        2. Did the trial court err as a matter of law in interpreting the
           written Amendment between the parties and failing to enter
           summary judgment in favor of the Niverths?

        3. Did the trial court deny the Niverths a fair trial by
           misinterpreting the written Amendment between the parties,
           excluding proper evidence offered by the Niverths at trial,
           failing to rule before trial whether [Equitrans’] expert would
           be prevented from testifying, and by failing to issue an
           unambiguous order concerning the court’s construction of the
           Amendment prior to trial?

        4. Did the trial court err by entering a non-suit at the conclusion
           of the Niverths’ case?

The Niverths’ Brief at 4.1

        In their first issue, the Niverths allege that because the averments

contained in the fraud count in their amended complaint were to be accepted

as true by the trial court, the trial court erred in sustaining the preliminary

objections.    The Niverths’ Brief at 39.          Specifically, the Niverths argue as

follows:

        the evidence adduced through discovery shows that there is at
        least a triable question of fact concerning whether [Equitrans]
____________________________________________

1   For ease of disposition, we have renumbered the Niverths’ issues.

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      fraudulently induced entry into the Amendment and/or caused
      the Niverths to execute the Amendment based upon the
      Niverths’ perceived significance of the removal of the post-
      production cost authorization language from the Amendment.

Id. Our standard of review for an order sustaining preliminary objections is

as follows:

      In reviewing a trial court’s grant of preliminary objections, the
      standard of review is de novo and the scope of review is plenary.
      The salient facts are derived solely from the complaint and
      pursuant to that standard of review, the court accepts all well-
      pleaded material facts in the complaint, and all inferences
      reasonably deduced therefrom must be accepted as true.

Martin v. Rite Aid of Pennsylvania, Inc., 80 A.3d 813, 814 (Pa. Super.

2013) (citation omitted).

      In determining whether the trial court properly sustained
      preliminary objections, the appellate court must examine the
      averments in the complaint, together with the documents and
      exhibits attached thereto, in order to evaluate the sufficiency of
      the facts averred. The impetus of our inquiry is to determine the
      legal sufficiency of the complaint and whether the pleading
      would permit recovery if ultimately proven. This Court will
      reverse the trial court’s decision regarding preliminary objections
      only where there has been an error of law or abuse of discretion.
      When sustaining the trial court’s ruling will result in the denial of
      claim or a dismissal of suit, preliminary objections will be
      sustained only where the case is free and clear of doubt.

Hill v. Slippery Rock Univ., 138 A.3d 673, 677 (Pa. Super. 2016) (citation

omitted).

      In their amended complaint, the Niverths alleged that Equitrans made

representations during the negotiations of the Amendment regarding post-

production costs but failed to adhere to those representations.        Amended

Complaint, 3/28/14, at ¶¶ 41-48. Equitrans filed preliminary objections to

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the amended complaint and a Memorandum in support of the preliminary

objections. In the memorandum, Equitrans averred that the Niverths’ fraud

claim was not sufficiently specific and was merely a restatement of their

breach-of-contract claim, which runs afoul of the gist of the action doctrine.

Memorandum in Support of Equitrans Preliminary Objections, 4/15/14, at ¶¶

4-5. Moreover, Equitrans pointed out that the Niverths’ amended complaint

contained unsubstantiated claims of negotiations and discussions regarding

royalty payments and promises made by Equitrans not to deduct post-

production costs. Id. at 5. However, Equitrans emphasized that the Hoge

Lease and the Amendment constituted the entire agreement between the

parties. Id. at 8.

         Pursuant to our standard of review, we must examine the averments

in the Niverths’ amended complaint together with the documents and

exhibits attached thereto. Hill, 138 A.3d at 677. The relevant attachments

to the Niverths’ amended complaint, the Amendment (Exhibit A), and the

Hoge Lease (Exhibit B), reveal that the Amendment unambiguously

referenced and ratified the Hoge Lease and delineated the duties of each

party.     The Amendment at 1.      In order for the Niverths’ fraud claim to

survive as pleaded, it requires a review of alleged representations made

during negotiations, which would constitute parol evidence.      Pennsylvania

law defines the parol evidence rule as:

         Where the parties, without any fraud or mistake, have
         deliberately put their engagements in writing, the law declares

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       the writing to be not only the best, but the only, evidence of
       their agreement. All preliminary negotiations, conversations and
       verbal agreements are merged in and superseded by the
       subsequent written contract ... and unless fraud, accident or
       mistake be averred, the writing constitutes the agreement
       between the parties, and its terms and agreements cannot be
       added to nor subtracted from by parol evidence.

DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 589 (Pa. Super. 2013)

(citations omitted).

       The Niverths make no assertion of error in the execution of the

Amendment itself;2 rather, their complaint relates only to the inducement to

enter into the Amendment. It is well settled that:

       while parol evidence may be introduced based on a party’s claim
       that there was a fraud in the execution of the contract, i.e., that
       a term was fraudulently omitted from the contract, parol
       evidence may not be admitted based on a claim that there was
       fraud in the inducement of the contract, i.e., that an opposing
       party made false representations that induced the complaining
       party to agree to the contract.

PNC Bank, Nat. Ass’n v. Bluestream Technology, Inc., 14 A.3d 831,

839 n.5 (Pa. Super. 2010) (citation omitted). Without parol evidence, the

____________________________________________

2 Additionally, we agree with the trial court’s conclusion that the Amendment
and the Hoge Lease are not ambiguous. Trial Court Opinion, 5/11/17, at 7.
Those documents, read together, clearly set forth the parameters of the
lease. It is well settled that parol evidence is not permitted to create
ambiguity when no ambiguity exists in the writing. Dahath Elec. Co. v.
Suburban Elec. Development Co., 2 A.2d 765, 768 (Pa. 1938).

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trial court was left with only the Niverths’ bald assertions, which were belied

by the documents attached to the pleading.3

       After review, we conclude that there was no error of law or abuse of

discretion in the trial court sustaining Equitrans’ preliminary objections to

the Niverths’ fraud claim. Accordingly, no relief is due.

       Next, the Niverths assert that the trial court erred in interpreting the

Amendment and in failing to enter summary judgment in favor of the

Niverths. We disagree.

       We review a trial court’s resolution of a motion for summary judgment

under the following scope and standard of review:

              [O]ur scope of review of a trial court’s order granting
              or denying summary judgment is plenary, and our
              standard of review is clear: the trial court’s order will
              be reversed only where it is established that the
              court committed an error of law or abused its
              discretion.

              Summary judgment is appropriate only when the
              record clearly shows that there is no genuine issue of
              material fact and that the moving party is entitled to
              judgment as a matter of law. The reviewing court
              must view the record in the light most favorable to
              the nonmoving party and resolve all doubts as to the
              existence of a genuine issue of material fact against
              the moving party. Only when the facts are so clear
              that reasonable minds could not differ can a trial
              court properly enter summary judgment.
____________________________________________

3 In addition to arguing for the admission of and reliance upon parol
evidence in their brief, the Niverths also attempted to present parol evidence
innumerable times at trial, and at each juncture the trial court sustained
Equitrans’ objection. See, e.g., N.T., 10/24/16, at 40, 41, 49, 50, and 51.

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     Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013)
     (quoting Cassel–Hess v. Hoffer, 44 A.3d 80, 84–85 (Pa.
     Super. 2012)). Moreover, “where the non-moving party bears
     the burden of proof on an issue, he may not merely rely on his
     pleadings or answers to survive summary judgment.” Krauss v.
     Trane U.S. Inc., 104 A.3d 556, 563 (Pa. Super. 2014) (citation
     omitted). “Failure of a non-moving party to adduce sufficient
     evidence on an issue essential to his case and on which he bears
     the burden of proof establishes the entitlement of the moving
     party to judgment as a matter of law.” Id.

Bayview Loan Servicing LLC v. Wicker, 163 A.3d 1039, 1043-1044 (Pa.

Super. 2017).

     In their motion for summary judgment, the Niverths argued that the

Amendment did not contain specific language regarding the royalties the

Niverths would receive from Equitrans. The Niverths’ Motion for Summary

Judgment, 12/7/15, at 14-15. However, as we have already discussed, the

trial court was reviewing not only the Amendment; it was required to review

the Amendment in conjunction with the Hoge Lease.

     It is a general rule of law in the Commonwealth that where a
     contract refers to and incorporates the provisions of another,
     both shall be construed together. It is well-settled that clauses in
     a contract should not be read as independent agreements
     thrown together without consideration of their combined effects.
     Terms in one section of the contract, therefore, should never be
     interpreted in a manner which nullifies other terms in the same
     agreement. Furthermore, the specific controls the general when
     interpreting a contract.

Southwestern Energy Production Co. v. Forest Resources, LLC, 83

A.3d 177, 187 (Pa. Super. 2013) (quoting Trombetta v. Raymond James

Financial Services, Inc., 907 A.2d 550, 560 (Pa. Super. 2006)).             The

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Niverths’ argument in their brief attempts to interject parol evidence into the

review.     The Niverths’ Brief at 38.         Similarly, the Niverths’ motion for

summary judgment, much like their argument concerning preliminary

objections, asked the trial court to accept claims of alleged representations

made during negotiations.          The Niverths’ Motion for Summary Judgment,

12/7/15, at 14-15. As noted earlier, parol evidence was not permitted,4 and

the trial court noted the prohibition of parol evidence in its order denying the

Niverths’ motion. Order, 3/30/16, at 2. The Niverths did not produce actual

evidence outside their pleadings that entitled them to relief because the

Amendment and the Hoge Lease spoke for themselves, and parol evidence

was not admitted.        Pursuant to our well-settled standard of review, we

discern no abuse of discretion or error of law.

        To the extent that the Niverths argue that the Amendment violated the

Guaranteed Minimum Royalty Act (“GMRA”), 58 P.S. § 33.3,5 Equitrans

argues that the issue is waived because the Niverths failed to raise it in their
____________________________________________

4   PNC Bank, Nat. Ass’n., 14 A.3d at 839 n.5.

5   The GMRA provides as follows:

        A lease or other such agreement conveying the right to remove
        or recover oil, natural gas or gas of any other designation from
        the lessor to the lessee shall not be valid if the lease does not
        guarantee the lessor at least one-eighth royalty of all oil, natural
        gas or gas of other designations removed or recovered from the
        subject real property.

58 P.S. § 33.3.

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amended complaint. Equitrans’ Brief at 32. However, we are satisfied that

the Niverths’ reference to the “statutory-minimum one-eighth royalty,”

Amended Complaint, 3/28/14, at ¶ 10, adequately references the GMRA.

Nevertheless, we discern no error or abuse of discretion in the trial court’s

denial of summary judgment on this basis as the Amendment and the Hoge

Lease, read together, provide for a 1/8th royalty to be paid to the Niverths.

The Amendment, at 1; The Hoge Lease, at 1-2. Accordingly, the denial of

summary judgment, based on the state of the record at the time the motion

was decided, was proper. To the extent that testimony from trial revealed

any impact on royalties paid under the GMRA, that issue is discussed in

greater detail below.

       In their third issue, the Niverths complain that the trial court a) denied

them a fair trial by misinterpreting the Amendment, b) improperly excluded

evidence, c) failed to rule before trial whether Equitrans’ expert would be

prevented from testifying, and d) failed to issue an unambiguous order

concerning the court’s construction of the Amendment prior to trial.       After

review, we conclude that no relief is due.

       In subparts a, b, and d,6 the Niverths once more endeavor to interject

parol evidence into their interpretation of the Amendment.        The Niverths’

____________________________________________

6 While most of the Niverths’ argument is focused on parol evidence, as
stated in their issue presented, they also allege that the trial court “fail[ed]
to issue an unambiguous order concerning the court’s construction of the
(Footnote Continued Next Page)

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Brief at 18-35. The Niverths provide citation and analysis of myriad cases

concerning the admissibility of parol evidence. However, in the case at bar,

the Niverths are arguing that parol evidence was necessary to establish that

there were misleading negotiations and that they were improperly, or

fraudulently, induced into the Amendment. Parol evidence is not permitted

for this purpose, and we have already concluded parol evidence was properly

prohibited. PNC Bank, Nat. Ass’n., 14 A.3d at 839 n.5.

      The Niverths also claim that the trial court failed to rule on their

motion in limine before the start of trial.       We conclude that the Niverths

failed to preserve this issue on appeal.

      The record reveals that prior to trial, the Niverths filed a motion in

limine to exclude the proposed testimony of Equitrans’ expert witness, Bruce

Kramer. However, the trial court did not rule on this motion before trial, and

the Niverths claim they were prejudiced by the trial court waiting until trial

to rule on this motion. The Niverths’ Brief at 36.
(Footnote Continued) _______________________

Amendment prior to trial.” The Niverths’ Brief at 4. However, in the
argument portion of their brief, the Niverths fail to develop any specific
argument regarding the alleged failure to “issue an unambiguous order.”
Accordingly, we are constrained to find this claim waived. See Butler v.
Illes, 747 A.2d 943, 944 (Pa. Super. 2000) (stating that when an issue is
not properly raised and developed in the brief, and when the brief is wholly
inadequate to present a specific issue for review, this Court will not consider
the merits thereof). To the extent that the Niverths may be assailing the
order ruling on their motion for summary judgment, the Niverths’ Brief at
19, we have already determined that the ruling on their summary judgment
motion was proper in light of the state of the record at the time it was
decided and that parol evidence was impermissible.

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      Equitrans points out that “if the trial court defers ruling on a motion in

limine until trial, the party that brought the motion must renew the objection

at trial or the issue will be deemed waived on appeal.” Equitrans’ Brief at 30

(citing Blumer v. Ford Motor Co., 20 A.3d 1222, 1232 (Pa. Super. 2011)).

After review, we conclude that the Niverths failed to renew their objection to

Mr. Kramer’s testimony, and therefore, this claim is waived.       Blumer, 20

A.3d at 1232. Moreover, had the Niverths renewed their objection, and had

this issue been properly preserved for appeal, we fail to see how there could

have been any prejudice; Mr. Kramer never testified. Therefore, there was

no testimony that the Niverths were prevented from rebutting, and the

Niverths’ claim of prejudice would be deemed meritless.

      Finally, the Niverths argue that the trial court erred by entering a

nonsuit at the conclusion of the Niverths’ case.    The Niverths’ Brief at 11.

Our standard of review is as follows:

      A nonsuit is proper only if the jury, viewing the evidence and all
      reasonable inferences arising from it in the light most favorable
      to the plaintiffs, could not reasonably conclude that the elements
      of the cause of action had been established. Furthermore, all
      conflicts in the evidence must be resolved in the plaintiffs’ favor.
      In reviewing the evidence presented we must keep in mind that
      a jury may not be permitted to reach a verdict based on mere
      conjecture or speculation. We will reverse only if the trial court
      abused its discretion or made an error of law.

Barnes v. Alcoa, Inc., 145 A.3d 730, 735 (Pa. Super. 2016) (quoting

Printed Image of York, Inc. v. Mifflin Press, Ltd., 133 A.3d 55, 59 (Pa.

Super. 2016)); see also Pa.R.C.P. 230.1(a)(1) (“In an action involving only

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one plaintiff and one defendant, the court, on oral motion of the defendant,

may enter a nonsuit on any and all causes of action if, at the close of the

plaintiff’s case on liability, the plaintiff has failed to establish a right to

relief.”).

       Here, the Niverths claim they presented evidence that revealed

Equitrans was making deductions from their royalties. The Niverths’ Brief at

11. Specifically, the Niverths aver that it was their understanding that they

would receive from Equitrans “an unreduced one-eighth (1/8th) royalty.” Id.

at 12. After careful review, we discern no error in the trial court granting

Equitrans’ motion for nonsuit.

       As noted, the GMRA provides that the lessor is to receive a statutory

minimum royalty of 1/8th of the oil or natural gas removed from their

property.    58 P.S. § 33.3.     Ultimately, the issue concerns how the 1/8th

royalty is calculated.

       In Kilmer v. Elexco Land Services, Inc., 990 A.2d 1147, 1149 (Pa.

2010), our Supreme Court discussed this calculation as follows:

       [T]he GMRA requires that leases guarantee the landowner-lessor
       “at least one-eighth royalty of all oil, natural gas or gas of other
       designations removed or recovered from the subject real
       property.” 58 P.S. § 33.[3] Although the critical term “royalty” is
       not defined by the statute, many leases in the Commonwealth,
       including the lease at issue before this Court, calculate the
       royalties as one-eighth of the sale price of the gas minus one-
       eighth of the post-production costs of bringing the gas to
       market. This calculation is called the “net-back method,” as its
       goal is to determine the value of the gas when it leaves the
       ground (hereinafter “at the wellhead”) by deducting from the

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        sales price the costs of getting the natural gas from the
        wellhead to the market.

Id. at 1149 (footnotes omitted) (emphasis added).

        The Niverths argue that allocation of post-production costs is not

permitted; however, the Supreme Court of Pennsylvania clearly held that a

lease that utilized the net-back method to allocate post-production costs for

purposes of calculating royalties did not violate GMRA. Kilmer, 990 A.2d at

1149.     Insofar as the Niverths argue that they did not agree to post-

production costs, there is no evidence that they objected to this calculation

when the Amendment was executed.         Morevoer, while we agree with the

Niverths that they were not parties to the Hoge Lease, by executing the

Amendment, they assented to and ratified the terms of the Hoge Lease. The

Amendment at 1.

        Here, there was no evidence of any terms that would require the

Niverths to surrender a portion of their contracted-for proceeds which would

diminish their payments below the statutory 1/8th royalty.       There is no

evidence that the amount received by the Niverths was less than 1/8th of the

sale price of the gas minus 1/8th of the post-production costs of bringing the

gas to market. This net-back method of calculation complies with Kilmer,

and the Niverths have failed to present any evidence that revealed Equitrans

was improperly making deductions from the Niverths’ royalties.        In fact,

Gregory Niverth testified that the Niverths were receiving 1/8 th of the

amount that Equitrans is paid at the wellhead.     N.T., 10/24/16, at 78-79.

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Once more, the Niverths are attempting to interject their “understanding” of

the Amendment. The Niverths’ Brief at 12. Simply stated, after reviewing

the record, the Niverths failed to show that the amount they received was

reduced in any impermissible fashion by Equitrans.         Accordingly, we agree

with the trial court that nonsuit was correctly granted.

      For the reasons set forth above, we conclude that the Niverths are

entitled to no relief. Accordingly, we affirm the judgment entered on March

8, 2017.

      Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/8/2017

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