Panhandle Oil & Gas, Inc. v. BHP Billiton Petroleum (Fayetteville) LLC , 2016 Ark. App. LEXIS 417 ( 2016 )

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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