Nau v. Stonebridge Operating Co. , 2019 Ohio 3647 ( 2019 )

[Cite as Nau v. Stonebridge Operating Co., 2019-Ohio-3647.]
IN THE COURT OF APPEALS OF OHIO
SEVENTH APPELLATE DISTRICT
NOBLE COUNTY
HERMAN AND BETTY NAU,
Plaintiffs-Appellees,
v.
STONEBRIDGE OPERATING COMPANY, LLC ET AL.,
Defendants-Appellants.
OPINION AND JUDGMENT ENTRY
Case No. 19 NO 0466
Civil Appeal from the
Court of Common Pleas of Noble County, Ohio
Case No. 213-0151
BEFORE:
David A. D’Apolito, Cheryl L. Waite, Carol Ann Robb, Judges.
JUDGMENT:
Affirmed.
Atty. Ethan Vessels, Fields, Dehmlow and Vessels, 309 Second Street, Marietta, Ohio
45750, and Atty. Andrew Lycans, Critchfield, Critchfield, and Johnston, 225 North
Market Street, P.O. Box 599, Wooster, Ohio 44691, for Plaintiffs-Appellees and
Atty. Daniel Corcoran, Theisen Brock, 424 Second Street, Marietta, Ohio 45750, for
Defendants-Appellants.
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Dated: September 6, 2019
D’APOLITO, J.
{¶1} Defendants-Appellants, Stonebridge Operating Company, LLC
(“Stonebridge”), Positron Energy Resources, Inc. (“Positron”), SEOR LLC (“SEOR”), and
W.H. Haas Family Ltd. (“Haas”)(collectively “Appellants”), appeal the decision of the
Noble County Court of Common Pleas entering summary judgment in favor of Plaintiffs-
Appellees, Herman and Betty Nau (“Naus”), and Intervening Plaintiff-Appellee, Siltstone
Resources, LLC (“Siltstone”)(collectively “Appellees”) in this action seeking a declaratory
judgment that an oil and gas lease expired under its own terms due to lack of production
in paying quantities. The oil and gas lease at issue contains a habendum clause with a
primary term of twenty years and a secondary term of indefinite duration, which continues
“so much longer thereafter as oil, gas, or their constituents are produced in paying
quantities, thereon, all of that certain tract of land * * *.”
{¶2} Appellants contend that Appellees failed to demonstrate a lack of production
in paying quantities with respect to the entire leasehold. Appellees counter that the
affidavit offered in support of Appellants’ opposition brief to the original motion for
summary judgment is defective, because the relevant portions of the affidavit are
predicated upon the affiant’s belief rather than his personal knowledge. Because the
record contains undisputed evidence that the leasehold contained only one well, and the
well did not produce any oil or gas for virtually six years, we affirm the entry of summary
judgment in favor of Appellees.
STANDARD OF REVIEW
{¶3} This appeal is from a trial court judgment resolving a motion for summary
judgment. An appellate court conducts a de novo review of a trial court’s decision to grant
summary judgment, using the same standards as the trial court set forth in Civ.R. 56(C).
Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102, 105, 671 N.E.2d 241 (1996). Before
summary judgment can be granted, the trial court must determine that: (1) no genuine
issue as to any material fact remains to be litigated, (2) the moving party is entitled to
judgment as a matter of law, (3) it appears from the evidence that reasonable minds can
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come to but one conclusion, and viewing the evidence most favorably in favor of the party
against whom the motion for summary judgment is made, the conclusion is adverse to
that party. Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 327, 364 N.E.2d 267 (1977).
Whether a fact is “material” depends on the substantive law of the claim being litigated.
Hoyt, Inc. v. Gordon & Assoc., Inc., 104 Ohio App. 3d 598, 603, 662 N.E.2d 1088 (8th
Dist.1995).
{¶4} “[T]he moving party bears the initial responsibility of informing the trial court
of the basis for the motion, and identifying those portions of the record which demonstrate
the absence of a genuine issue of fact on a material element of the nonmoving party’s
claim.” (Emphasis deleted.) Dresher v. Burt, 75 Ohio St. 3d 280, 296, 662 N.E.2d 264
(1996). If the moving party carries its burden, the nonmoving party has a reciprocal
burden of setting forth specific facts showing that there is a genuine issue for trial. Id. at
293. In other words, when presented with a properly supported motion for summary
judgment, the nonmoving party must produce some evidence to suggest that a
reasonable factfinder could rule in that party’s favor. Doe v. Skaggs, 7th Dist. Belmont
No. 18 BE 0005, 2018-Ohio-5402, ¶ 11. In resolving the motion, the court views the
evidence in a light most favorable to the nonmoving party. Temple, 50 Ohio St. 2d at 327.
{¶5} The evidentiary materials to support a motion for summary judgment are
listed in Civ.R. 56(C) and include the pleadings, depositions, answers to interrogatories,
written admissions, affidavits, transcripts of evidence, and written stipulations of fact that
have been filed in the case. The proper procedure for introducing evidentiary matter not
specifically authorized by Civ.R. 56(C) is to incorporate it by reference in a properly
framed affidavit pursuant to Civ.R. 56(E). Rhodes v. Sinclair, 7th Dist. Mahoning No. 08-
MA-23, 2012-Ohio-5848, ¶ 50.
{¶6} Civ.R. 56(E) requires that “sworn or certified copies of all papers referred to
in the affidavit be attached and is satisfied by attaching the papers to the affidavit, coupled
with a statement therein that such copies are true copies and reproductions.” Id., quoting
State ex rel. Corrigan v. Seminatore, 66 Ohio St. 2d 459, 467, 423 N.E.2d 105 (1981).
The referenced papers may also be “sworn or certified” by a certification contained within
the paper itself. Id. Unauthenticated documents which are not sworn, certified, or
authenticated by way of affidavit have no evidentiary value and may not be considered
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by the trial court in ruling on a motion for summary judgment. Id., see also Sintic v.
Cvelbar, 11th Dist. Lake No. 95-L-133, 1996 WL 649137 (July 5, 1996), *5.
FACTS AND PROCEDURAL HISTORY
{¶7} On May 7, 1993, Freda P. Noll (“Noll”) transferred 58 acres of property in
Sections 6 and 7 of Enoch Township in Noble County to the Naus, but reserved the
mineral rights in the subject property for a period of twenty years from the date of the
deed. The 58-acre tract was encumbered by an oil and gas lease, which covers 310
acres in Noble County, and was executed in 1940 by Noll’s predecessors-in-interest
(“Lease”). The Lease specifically states that it is inapplicable to ten acres surrounding a
gas well operated by Smithberger. Pursuant to the habendum clause, the primary term
of the Lease is twenty years and the secondary term is indefinite, continuing:
So much longer thereafter as oil, gas, or their constituents are produced in
paying quantities, thereon, all of that certain tract of land situate in Section
No. 7, Township of Enoch, County of Noble, and State of Ohio * *
*containing Three hundred and ten acres (310), more or less, being all the
land owned by Lessor in said Township * * *.
{¶8} On August 15, 2013, the Naus filed a complaint alleging that they own 58
acres located in Sections 6 and 7 of Enoch Township, Noble County, Ohio, which
“constitutes a portion of a 147-acre tract, which constitutes a portion of a 310-acre tract
held under the original lease.” (Compl. ¶ 2, 4.) The Naus further alleged that the Noll C.
and Baker C. Well #1 (“Baker #1”) was drilled in 1975 and was the only well “located on
the original 147-acre tract held by the subject lease.” (Compl. ¶ 9.) Positron is the
successor-in-interest to the lessee. Stonebridge is the well operator. They filed their
answer on September 17, 2013.
{¶9} On September 16, 2013 Positron and Stonebridge responded to the Nau’s
first set of interrogatories, requests for admissions, and requests for production of
documents (“discovery responses”). When asked to state the name and API number for
every well located on the property that is subject to this litigation that has produced oil or
gas, or both, Positron and Stonebridge responded, “Noll C and Baker C #1 API #:
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34121217790000 There may be other wells on the Lease.” (Emphasis added). When
asked to state the name and address of every person or entity that claims an interest in
the oil and gas lease that is the subject of this litigation, Positron and Stonebridge
responded, “N/A.” (Emphasis in original).
{¶10} In response to a series of interrogatories requesting production and sale
information for the well or wells on the subject lease property, Positron and Stonebridge
provided a copy of a Well Completion Report dated March 7, 2013, which documented
production from 1985 to 2011 for Baker #1 (“2013 Report”). According to the 2013 Report,
no gas was produced from 2000 to 2005. In response to a series of interrogatories
regarding gas production, Positron and Stonebridge conceded that no gas had been
produced from Baker #1 in 2000 through 2005. Finally, in response to a series of
interrogatories regarding the nonpayment of royalties from 2000 to 2012, Positron and
Stonebridge responded that royalties had been held in suspense.
{¶11} On October 4, 2013, the Naus filed their original summary judgment motion,
which was predicated upon the 2013 Report and the discovery responses. In both the
original Rule 56 motion and renewed motion before us in this appeal, Appellees assert
that Baker #1 was the only well on the 147-acre portion of the leasehold, rather than the
only well on the entire leasehold, and that Baker #1 produced no gas from 2000-2005.
{¶12} On February 24, 2014, Positron and Stonebridge filed a motion for
extension of time to file their response brief. On February 25, 2014, they were granted an
extension of fifteen days after a mediation to be scheduled in April was completed to file
their opposition brief.
{¶13} The Naus conveyed an undivided one-half interest in the mineral rights to
Siltstone on May 15, 2014. On October 7, 2014, Siltstone filed a motion to intervene
pursuant to Civ. R. 24. On October 7, 2014, the trial court entered a stipulated order
granting Siltstone’s motion to intervene.
{¶14} On February 25, 2016, roughly twenty-eight months after the original
summary judgment motion was filed, the trial court scheduled a non-oral hearing on the
motion for April 29, 2016. Positron and Stonebridge filed their opposition brief on April
28, 2016. That same day, Positron and Stonebridge filed ODNR locator maps for three
wells – the Baker #1, “C. & F. Noll #1,” and “Dimmerling 1,” and the discovery responses.
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The ODNR maps provide the location of the wells, but do not reflect the parameters of
the 310-acre leasehold. One of the wells may be the gas well operated by Smithberger
excepted from in the Lease, although it is not clear from the record.
{¶15} Several documents are attached to the discovery responses: (1) a “Master
Suspense List” dated September 10, 2013 for two wells identified as C113717 (from
200509 to 201303) and C113728 (from 200104 to 201206), which reflects a total net
revenue of $14,420.72 to Noll, whose reservation in the minerals terminated on May 7,
2013; (2) a series of invoices from various repair companies and vendors to Stonebridge
for repairs and parts for Baker #1 (identified on the invoices as “Baker/Noll” or “C113717”);
(3) unsigned annual “Returns of Oil and Gas Properties,” which reflect total tax
assessments paid by Stonebridge on behalf of Noll in the amounts of $175.70 in 2007;
$186.72 in 2008; $133.30 in 2009; $105.57 in 2010; $61.92 in 2011; and $42.01 in 2012
(page 2 mislabeled “2011”). The forms also reflect tax assessments paid by Stonebridge
on behalf of “B&N Coal” and “John W. Cushing”; (4) an employee incident report dated
November 17, 2009, which states that Mr. Nau approached a Stonebridge employee on
the previous day and demanded that a check be issued, otherwise Mr. Nau would make
the employee “shut [Baker #1] in.” According to the incident report, Mr. Nau admitted that
he had manually disabled Baker #1, and intended to continue to manually disable the
Well until he received a check; and (5) a bank statement and cancelled check, dated July
31, 2002, in the amount of $1,142.35 to the Naus as “Trustees of the Herman J. and Betty
Nau Living Trust, Freda P. Noll, Trustee of the Freda P. Noll Living Trust.”
{¶16} Positron and Stonebridge also filed the affidavit of Stonebridge’s manager,
Eddy Biehl on April 28, 2016. Biehl’s affidavit is written in the third person and based on
personal knowledge “except as noted.” In his affidavit, Biehl concedes that royalties are
due on Baker #1, and states that Stonebridge is “ready, willing, and able to pay [the]
royalties upon being provided proper documentation including a completed [Form] W-9,
which has previously been sought.” Next, Biehl avers that “[Baker #1] is capable of
producing in paying quantities when [Stonebridge] has been allowed to operate [it], but
that [Stonebridge employees] have found [Baker #1] to be shut-in on a number of
occasions not attributable to any act of any of [Stonebridge’s employees].” (Id. ¶ 3-4).
Biehl further avers that “[Baker #1] is capable of producing in paying quantities and will
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continue to pay in producing quantities if [Stonebridge] is allowed to operate [it].” (Id. ¶
6).
{¶17} The remainder of Biehl’s averments read:
7. Based upon public records it is believed there are other wells
operating and producing that may be in the 300 acre tract but he has
not seen certified title work to that effect.
8. That [Baker #1] is believed to have been the subject of a forfeiture
action or similar [sic] over alleged period of non-production.
Payments were made to [Appellees] as a part of that litigation as
noted in the 2002 check filed with [the trial court.] The bank
statements produced and filed with [the trial court] show this check
was cashed.
9. He believes but has not verified that this same 300 acre tract may be
subject to a lease of B&N Coal.
(Id. ¶ 7-9).
{¶18} In their opposition brief to the original motion for summary judgment,
Positron and Stonebridge argued that the Naus sought a “defacto partition,” because the
oil and gas lease covered 300 acres of land. (4/28/16 Opp. Br., p. 5). Positron and
Stonebridge further argued that necessary parties had not been joined, including SEOR
and Haas. Appellants cited the Biehl affidavit for the assertion that Haas, through SEOR,
appears to have the deep rights in the Lease, despite the fact that the affidavit does not
contain the foregoing averment. Positron and Stonebridge asserted that Appellees “bear
the burden of proof, but have remained silent as to other wells or those having interest in
the entire 300 acre tract.” Id. at 2. Positron and Stonebridge further asserted that
Northwood Energy had a producing well on an adjoining tract, and added “[i]t is believed
that B&N Coal is also operating a well in the vicinity but it has not been verified that it is
on [the Lease].” Id. at 2.
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{¶19} Positron and Stonebridge argued that nonproduction of the Well prior to
2002 had been the subject of a previous lawsuit, and the matter had been settled with a
monetary payment to Appellees, demonstrated by the check attached to the discovery
responses, which is not reflected in the 2013 report. Positron and Stonebridge further
argued that Appellees had been receiving gas for domestic use, and were owed more
than $14,000.00 in royalties that were being held in a suspense account because
Appellees failed to provide “the appropriate company required and tax law mandated
forms to allow payment.”
{¶20} Finally, Positron and Stonebridge asserted that they had invested financially
in Baker #1, citing the invoices for repair and replacement parts, which were attached to
their discovery responses. They cited the employee incident report to show that the Naus
were aware of the work performed and the continuing financial investment made by
Positron and Stonebridge in Baker #1.
{¶21} Because an adequate remedy at law was available – the payment of rents
and royalties – Positron and Stonebridge concluded that forfeiture should not be granted.
They cited the ODNR locator maps to demonstrate that there had been significant
production from Baker #1, Mr. Nau was responsible for periods that the Well was “shut
in,” and that a brief period of nonproduction prior to 2002 was the subject of a settlement
of a previous lawsuit. On May 19, 2016, Siltstone joined in the Naus’ motion for summary
judgment.
{¶22} During a status conference on August 1, 2018, the trial court ordered the
parties to mediation. The trial court further ordered Positron and Stonebridge to provide
the names of those persons or entities claimed to have an interest in the “deep rights”
together with the volume and page of the recorded instruments creating the interest.
Positron and Stonebridge were further ordered to provide “[t]he name and location of any
wells (other than the one in question) that are or were in existence on the leased
premises.” (8/7/18 J.E., p. 1).
{¶23} On September 5, 2018, Positron and Stonebridge filed documents
evidencing potential title in SEOR and Haas. They made no reference to additional wells
in the pleading, and did not rely on any of the documents filed on September 5, 2018 to
demonstrate the existence of additional wells on the leasehold. Appellees filed a response
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on September 17, 2018, in which they argued that Appellees failed to comply with the trial
court’s instructions regarding volume and page number.
{¶24} On September 19, 2018, the trial court summarily overruled the original
motion for summary judgment. SEOR and Hass were joined as parties pursuant to an
agreed order dated October 12, 2018. SEOR and Hass filed their answer on October 26,
2018.
{¶25} Appellees filed their renewed motion for summary judgment, which is the
subject of this appeal, on November 5, 2008. Appellants did not file an opposition brief
to the renewed motion for summary judgment. On December 11, 2018, the trial court
entered summary judgment in favor of Appellees and issued an order declaring
termination of the Lease in its entirety. The trial court predicated summary judgment on
“[Appellants’] admission of ceased production for a period of five years” and “the lack of
any memorandum opposing [the motion].” (12/11/19 J.E., p. 2-3). This timely appeal
followed.
ANALYSIS
ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN GRANTING PLAINTIFFS’-APPELLEES’
MOTION FOR SUMMARY JUDGMENT.
{¶26} Appellants’ sole assignment of error sets forth two alternate arguments,
which are addressed out of order for the purpose of clarity of analysis. First, Appellants
assert that the leasehold is indivisible and Appellees were required to show a lack of
production from the entire leasehold, not just the 147-acre portion, to terminate the lease.
Assuming arguendo that Appellees fulfilled their obligation at the initial stage of summary
judgment, Appellants argue in the alternative that they met their reciprocal obligation to
show that genuine issues of material fact precluded summary judgment. Id. at 5.
Appellants cite the Biehl affidavit and the documents attached to the discovery response
to demonstrate that summary judgment was granted in error.
{¶27} Oil and gas leases are contracts, and the terms of the contract, with the law
applicable to such terms, must govern the rights and remedies of the parties. Swallie v.
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Rousenberg, 190 Ohio App. 3d 473, 2010-Ohio-4573, 942 N.E.2d 1109, ¶ 61(7th Dist.),
Harris v. Ohio Oil Co., 57 Ohio St. 118, 129, 48 N.E. 502 (1987). The burden of proof with
respect to an oil and gas lease case is not controlled by substantive oil and gas law, but,
rather, by civil procedure. Pfalzgraf v. Miley, 2018-Ohio-2828, 116 N.E.3d 893, ¶ 32, (7th
Dist.) reconsideration denied, 7th Dist. Monroe No. 16 MO 0005, 2018-Ohio-3595, appeal
not allowed, 154 Ohio St. 3d 1443, 2018-Ohio-4962, 113 N.E.3d 552. The party who
asserts a claim in an oil and gas case carries the burden of proof, just as in any other civil
case. Id. at ¶ 45. As a consequence, Appellees must prove nonproduction in paying
quantities in this case.
{¶28} After the primary term of an oil and gas lease expires, the lease terminates
by the express terms of the contract and by operation of law, and revests the leased
estate in the lessor, if the conditions of the secondary term are not being met. Swallie v.
Rousenberg, 190 Ohio App. 3d 473, 2010-Ohio-4573, 942 N.E.2d 1109 (7th Dist.), ¶ 63.
Typically, the secondary term of the lease is conditioned on oil or gas being produced in
paying quantities. Dennison Bridge, Inc. v. Resource Energy, L.L.C., 2015-Ohio-4736,
50 N.E.3d 242, ¶ 21 (7th Dist.)
{¶29} Leased lands are generally considered indivisible. Neuhart v. TransAtlantic
Energy Corp., 2018-Ohio-4099, 121 N.E.3d 802, ¶ 11 (7th Dist.), reconsideration granted
in part, 7th Dist. Noble No. 17 NO 0449, 2018-Ohio-5115, ¶ 11, appeal not allowed, 155
Ohio St. 3d 1421, 2019-Ohio-1421, 120 N.E.3d 867, ¶ 11. In other words, a lease remains
in effect so as long as oil, gas and other minerals are being produced on any of the lands
described in the instrument. Bibler Bros. Timber Corp. v. Tojac Minerals, Inc., 281 Ark.
431, 434-35, 664 S.W.2d 472, 474 (1984).
{¶30} Accordingly, “in the absence of anything in the lease to indicate a contrary
intent, production on one tract will operate to perpetuate the lease as to all tracts
described therein and covered thereby.” Mathews v. Sun Oil Co., 425 S.W.2d 330, 333
(Tex.1968). One example of contrary intent is a “Pugh clause,” which allows land to
become divisible when the lease is held by production of less than the whole acreage.
Neuhart at ¶ 63. A Pugh clause allows the lease to terminate with respect to the
nonproducing acreage and remain in effect as to the producing acreage. Id.
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{¶31} The Lease at issue here does not contain a Pugh clause and Appellants do
not cite any language to establish an intent by the parties to the Lease to make the
leasehold interest divisible based on production. As a consequence, we find that
Appellees’ burden of proof on summary judgment was to demonstrate an absence of
material fact as to lack of production in paying quantities on the entire leasehold.
{¶32} Appellants argue that Appellees failed to carry their burden of proof because
the renewed summary judgment motion asserts no genuine issue of material fact
regarding non-production from 2000 to 2005 on the 147-acre portion of the leasehold,
rather than the entire 310-acre leasehold. Appellants appear to argue that the discovery
responses referred to the 147-acre portion of the 310-acre leasehold, rather than the
leasehold in its entirety.
{¶33} However, the trial court’s August 9, 2018 Judgment Entry ordered Positron
and Stonebridge to provide “[t]he name and location of any wells (other than the one in
question) that are or were in existence on the leased premises.” (8/7/18 J.E., p.
1)(Emphasis added). In other words, Positron and Stonebridge were ordered by the trial
court to identify all of the wells on the entire leasehold, not just the 147-acre portion.
Positron and Stonebridge did not identify any additional wells in their September 5, 2018
pleading.
{¶34} Positron, the successor-in-interest to the original lessee, was the party most
likely to have knowledge of the actual number of wells operating on the leasehold.
Stonebridge is the well operator. Because Positron and Stonebridge did not identify any
additional wells, we find that the undisputed evidence in the record establishes that Baker
#1 was the only well on the entire leasehold.
{¶35} Appellants advance a second argument, that the evidence offered in
support of their opposition brief to the original motion for summary judgment created
genuine issues of material fact. Appellants argue that they demonstrated the possible
existence of other wells on the leasehold, royalties from the relevant time period held in
a suspense account, and that nonproduction by Baker #1 was the subject of a prior
lawsuit.
{¶36} To the contrary, Appellants conceded in their discovery responses that
Baker #1 produced no oil or gas from 2000 to 2005, and the evidence offered in support
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of their opposition brief to the original motion for summary judgment does not create a
genuine issue of fact. First, the relevant portions of the Biehl affidavit relating to the
existence of wells on the leasehold and the prior litigation are predicated upon his belief,
rather than his personal knowledge. “Personal knowledge” is “‘[k]nowledge gained
through firsthand observation or experience, as distinguished from a belief based on what
someone else has said.’” Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio St. 3d 314,
2002-Ohio-2220, 767 N.E.2d 707, at ¶ 26, quoting Black’s Law Dictionary (7th
Ed.Rev.1999) 875. Personal knowledge does not depend on outside information or
hearsay. Residential Funding Co., L.L.C. v. Thorne, 6th Dist. Lucas No. L-09-1324, 2010-
Ohio-4271, at ¶ 64, Modon v. Cleveland (Dec. 22, 1999), 9th Dist. Medina No. 2945-M,
1999 WL 1260318, at *2.
{¶37} Ohio courts have held that personal knowledge may be inferred from the
contents of an affidavit, see Carter v. U-Haul Internatl., 10th Dist. Franklin No. 09AP–310,
2009-Ohio-5358, at ¶ 10; Flagstar Bank F.S.B. v. Diehl, 5th Dist. Ashland No. 09 COA
034, 2010-Ohio-2860, at ¶ 25. In this case, however, Biehl concedes that his averments
are based on belief rather than personal knowledge. Accordingly, the content of the Biehl
affidavit predicated upon his belief is insufficient to create genuine issues of material fact.
{¶38} We recognized in Potts v. Unglaciated Industries, Inc., 7th Dist. Monroe No.
15 MO 0003, 2016-Ohio-8559, 77 N.E.3d 415, that the failure to comply with Civ.R.
56(E)’s personal knowledge requirement is waived when the opposing parties do not
move to strike the affidavit or otherwise object to the affidavit in response to a request for
summary judgment. Id. at ¶ 73, citing Discover Bank v. Damico, 11th Dist. Lake No. 2011-
L-108, 2012-Ohio-3022, ¶ 14-15; see also Chase Bank USA, NA v. Lopez, 8th Dist.
Cuyahoga No. 91480, 2008-Ohio-6000, ¶ 16 (affidavit attached to a summary judgment
motion that did not meet the requirements of Civ.R. 56(E) cannot be raised for the first
time on appeal). Here, Biehl did not simply omit the language regarding personal
knowledge, but, instead, conceded that the relevant portions of his affidavit are based on
belief. For that reason, we decline to consider the content of the affidavit as a matter of
law.
{¶39} Next, although the documents attached to the discovery requests are not
authenticated, Ohio courts have held that items produced in discovery are implicitly
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authenticated by the act of production by the opposing party. See, e.g., Stumpff v. Harris,
2d Dist. Montgomery No. 26214, 2015-Ohio-1329, 31 N.E.3d 164, ¶ 35 (applying totality
of the circumstances surrounding the documents’ production, including, but not limited to,
the specificity of the discovery request, the nature of the documents, and the party
responding to the discovery request); Welch v. Bissell, N.D.Ohio No. 1:12CV3108, 2013
WL 6504679, *4 (Dec. 11, 2013) (video was properly authenticated by affidavit from
counsel that the video was produced by the opposing party during discovery); Churches
of Christ in Christian Union v. Evangelical Ben. Trust, S.D.Ohio No. C2:07CV1186, 2009
WL 2146095, *5 (July 15, 2009) (“Where a document is produced in discovery, ‘there [is]
sufficient circumstantial evidence to support its authenticity’ at trial.”) Further, in the
absence of an objection based on admissibility by the opposing party, a court of appeals
may consider unauthenticated documents in order to determine whether summary
judgment is appropriate. State ex rel. Gilmour Realty, Inc. v. Mayfield Hts., 122 Ohio
St.3d 260, 2009-Ohio-2871, 910 N.E.2d 455, ¶ 17, citing State ex rel. Spencer v. E.
Liverpool Planning Comm., 80 Ohio St. 3d 297, 301, 685 N.E.2d 1251 (1997).
{¶40} Turning to the documents attached to the discovery responses, the master
suspense list shows royalties held in suspense from Baker #1 from September of 2005
to March of 2013. The master suspense list only establishes production during four
months of the alleged six-year period of nonproduction. Next, the tax payments made
by Stonebridge from 2008 to 2012 on behalf of Noll establish assessments incurred well
after 2005. Further, to the extent the employee incident report documents that Mr. Nau
had manually disabled Baker #1 in the past, it provides no time frame. The encounter
occurred in November of 2009, roughly four years after the alleged period of
nonproduction at issue in this case. Finally, the bank statement and cancelled check,
dated July 31, 2002, establish a payment in the amount of $1,142.35 to the Naus as
“Trustees of the Herman J. and Betty Nau Living Trust, Freda P. Noll, Trustee of the Freda
P. Noll Living Trust,” but contain no explanation for the payment. Biehl avers that
nonproduction by Baker’s 1 was “believed” to be the subject of a forfeiture action.
{¶41} Having reviewed the Biehl affidavit and the documents attached to the
discovery responses, we find that Appellants failed to offer evidence regarding additional
wells on the leasehold or that Baker #1 produced oil and gas in paying quantities from
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2000 to September of 2005. In other words, the trial court did not err in concluding that
there was no genuine issue of material fact based on the evidence offered in support of
the opposition brief to the original motion for summary judgment.
CONCLUSION
{¶42} In summary, Appellees had the burden of proof to show a lack of production
in paying quantities on the entire leasehold in order to demonstrate the expiration of the
Lease on its own terms pursuant to the habendum clause. Despite the fact that the
renewed motion for summary judgment asserts no production in paying quantities from
2000 to 2005 on the 147-acre portion of the 310-acre leasehold, the undisputed facts in
the record establish that Baker #1 is the only well on the entire leasehold, and Baker #1
did not produce any oil and gas from 2002 to September of 2005. Accordingly, Appellants’
sole assignment of error has no merit, and the judgment entry of the trial court finding that
the Lease expired on its own terms due to lack of production in paying quantities is
affirmed.
Waite, P.J., concurs.
Robb, J., concurs.
Case No. 19 NO 0466
[Cite as Nau v. Stonebridge Operating Co., 2019-Ohio-3647.]
For the reasons stated in the Opinion rendered herein, the assignment of error
is overruled and it is the final judgment and order of this Court that the judgment of the
Court of Common Pleas of Noble County, Ohio, is affirmed. Costs to be taxed against
the Appellant.
A certified copy of this opinion and judgment entry shall constitute the mandate
in this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that
a certified copy be sent by the clerk to the trial court to carry this judgment into
execution.
NOTICE TO COUNSEL
This document constitutes a final judgment entry.