Court Opinion

ID: 4084596
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:54:49.268813+00
Date Added: 2024-06-11T14:11:09.956931
License: Public Domain

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
                                 -3-                           534
                                                         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