The Herald, Sharon, Pa.

April 7, 2013

Spurned landowners suit will be heard in local court

By Joe Pinchot
Herald Staff Writer

MERCER COUNTY — A lawsuit filed by five Mercer County landowners over a drilling company’s decision not to drill for gas has found a home after months of bouncing between state and federal courts.

A federal judge on Thursday remanded the case back to Mercer County Common Pleas Court.

The landowners claim Halcon Energy Properties reneged on contracts to lease their land for gas drilling, costing the plaintiffs both per acre fees and future royalities on the natural gas extracted from shale formations under their property through the process known as fracking.

The initial suit was filed Nov. 6 in U.S. District Court, Pittsburgh, by Jeffry S. Vodenichar of Butler; David M. King Jr. and Leigh V. King of Sandy Lake; and Joseph B. and Lauren E. Davis of Stoneboro, all of whom own land in New Vernon Township; against Halcon, which has leased property for gas and oil drilling.

The group, with additional plaintiffs Grove City Country Club of Pine Township and Richard Broadhead of Polk, who owns land in Sandy Lake Township, filed suit Feb. 22 in Mercer County Common Pleas Court against Halcon and Morascyzk and Polochak, Bridgeville, and Co-eXprise Inc., Wexford, firms that market landowners’ interests to oil and gas companies in return for a fee from the bonuses paid to property owners.

The same day, the initial defendants filed a motion to dismiss the federal suit.

On March 1, U.S. District Court Judge Arthur J. Schwab agreed to dismiss the initial suit due to the filing of the second suit in Mercer County, and that Mercer County has proper jurisdiction over the issues and the parties.

Eleven days later, Halcon had the Mercer County suit transferred to federal court on the basis of the amount of money at stake and Halcon’s incorporation in Delaware.

Parties then filed motions to remand the suit back to Mercer County or dismiss it. On Thursday, Schwab remanded the case to Mercer County because of the previous filing in federal court, and the addition of Morascyzk and Polochak and Co-eXprise as defendants.

The surviving suit, which seeks class-action status, alleges Halcon entered into contracts to lease up to 60,000 acres of oil and gas rights in Mercer County, the so-called “Mt. Jackson 4 - Stoneboro Group,” agreeing to pay $3,850 an acre and a royalty of 18.5 percent on the fossil fuels pulled from wells.

As part of the agreement with landowners, Halcon had no discretionary right to refuse to lease unless there was a problem with the property’s title or specified “other defect,” the suit said.

According to the plaintiffs, Halcon rejected a large number of leases without specifying reasons and, in many cases, without even doing title searches.

Halcon has flatly rejected the argument, saying it had “the absolute right to refuse to lease the plaintiffs’ properties.”

Halcon also alleged fraud in that Morascyzk and Polochak and Co-eXprise “modified one of the contractual documents in such a way that (landowners) were unable to lease their gas rights to Halcon.

Documents signed by the landowners were not drafted or approved by Halcon, Halcon said.

Also as a defense, Halcon is arguing that some landowners leased their properties to other exploration and production companies, resulting in them suffering no damages.

In a crossclaim against Morascyzk and Polochak and Co-eXprise, Halcon said those companies lied to landowners by promising that Halcon could only reject leases for title defects.

Morascyzk and Polochak and Co-eXprise “recruited and enlisted potential lessors it knew or should have known were ineligible” because of title defects and other factors, Halcon said.

Morascyzk and Polochak and Co-eXprise “misled” landowners and Halcon “in an attempt to recover additional ‘transaction fees,’” Halcon said.