Appeals court overturns ruling against energy companies

LISBON – In a 2-1 decision, the Seventh District Court of Appeals has overturned an earlier ruling in favor of the landowners and against two energy companies.

The New Hope Community Church along with a large group of property owners had filed the lawsuit in 2011 against Patriot Energy and Chesapeake Energy, claiming the leases for mineral rights under the properties had been unfairly transferred from Patriot to Chesapeake.

The energy companies had sought to send the dispute to arbitration, but Judge Richard David Reinbold Jr., who was called upon to handle the case in Columbiana County Common Pleas Court, had agreed with the property owners the arbitration would have been “unconscionable and therefore unenforceable.” Reinbold had insisted on the matter proceeding to trial before the appeal was filed.

Two out of three appeals court judges who looked at the decision disagreed. Judges Mary DeGenaro and Joseph J. Vukovich claimed there are two issues which must be proven as to whether arbitration can be ruled unconscionable and in this case the property owners failed to prove them both.

According to their ruling, the property owners had time to look over the leases before signing them, in some cases did not read them and failed to have attorneys look them over when they did not understand provisions in them. It was noted although a form contract was provided by Patriot Energy and used with each of the property owners, they were given the opportunity to propose modifications, which some did.

The dissenting judge, Cheryl L. Waite disagreed, ruling in her eyes both standards for unconscionability had been proven. She additionally wrote that until a decision is made as to whether the delayed payments on the leases had in fact nullified the leases, the other issues cannot be arbitrated.

The ruling will put the earlier ruling on hold and the case will be sent back to Common Pleas Court.

There, the visiting judge, Reinbold, will send the matter to arbitration. According to the ruling, the standard initial filing fee for arbitration in a $20 million claim is $13,800, which would be the responsibility of the property owners. Under a flexible fee schedule the filing fee would be about $4,500.