SWEPI, LP v. Wood, H. & B. ( 2019 )

J-A02040-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SWEPI, LP : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
HARVEY AND BOBBI JO WOOD :
:
Appellants : No. 508 MDA 2018
Appeal from the Order Entered March 2, 2018
In the Court of Common Pleas of Tioga County Civil Division at No(s):
59 Civil 2011
BEFORE: LAZARUS, J., DUBOW, J., and NICHOLS, J.
MEMORANDUM BY NICHOLS, J.: FILED APRIL 17, 2019
Appellants Harvey and Bobbi Jo Wood appeal from the order granting
Appellee SWEPI, LP’s motion to enforce settlement agreement. Appellants
argue that the parties did not agree on several material terms of the
settlement agreement, and they did not intend for the oral agreement to be
operative in the absence of an executed written agreement. We affirm.
The relevant facts and procedural history of this appeal are as follows.
This case began in 2011 when [Appellee] filed suit against
[Appellants] in a dispute involving a . . . gas lease and access to
[Appellants’] property. Through previous litigation, the case has
been appealed to the Superior Court on two prior occasions. In
the last appeal, the Superior Court overturned the court’s grant of
[Appellants’] Motion for Summary Judgment.[1] Upon remand, the
court scheduled the matter for trial. Jury selection was scheduled
to commence Tuesday, February 14, 2017. On Monday, [February
____________________________________________
1 See SWEPI LP v. Wood, 1945 MDA 2015 (Pa. Super. filed Sep. 7, 2016)
(unpublished mem.).
J-A02040-19
13th,] the court was informed the parties had reached a
settlement agreement and held a telephone conference on the
record with the parties’ respective counsel, Attorney Jeremy
Mercer for [Appellee] and Attorney Cassandra Blaney for
[Appellants]. During the telephone conference, counsel informed
the court the parties came to a settlement of not only this case
but also two other cases between the parties that were then
pending in the Tioga County Court of Common Pleas. The court
then canceled the trial set to begin the next day.
After the court canceled the scheduled trial, Attorney Mercer sent
Attorney Blaney a written agreement for [Appellants] to sign.
[Appellants], however, refused to execute the written settlement
agreement and retained new counsel. [Appellee] thereafter filed
a Motion to Enforce Settlement Agreement. The court held a
hearing on the motion over three days and took testimony from
[Appellant, Ms.] Bobbi Jo Wood, [Appellant, Mr.] Harvey Wood,
and Attorney . . . Blaney.
Trial Ct. Op., 5/25/18, at 1-2.
At the hearing on August 16, 2017, both parties submitted the relevant
emails documenting the negotiations between Attorneys Blaney and Mercer.
An email Attorney Mercer sent at 3:11 p.m. on Sunday, February 12, 2017,
indicated that the parties had reached a settlement pursuant to the following
terms:
● The parties will execute a Confidential Settlement
Agreement and Release that contains standard terms and
conditions, including confidentiality and a global release of
claims (but which release will exclude any claims
[Appellants] may have related to sick cows), and detail the
payment of xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (to be
paid within 45 days of execution of the settlement
agreement).[2] The scope of the release and the terms of
this document will be those found within the Confidential
Settlement Agreement and Release sent to you earlier this
year in connection with another matter, with the case-
____________________________________________
2 The parties redacted the amount of the payment.
-2-
J-A02040-19
specific references changed . . . to the matters being
resolved here.
● The parties will enter into a new Oil and Gas Lease for the
acreage covered by the November 21, 2000, Allegheny
Energy Development Corporation lease. That lease will be
the standard lease that [Appellee] is offering in the Tioga
County area, a copy of which was sent to you in January of
this year in connection with another matter. The “bonus”
payment will be $1200 per net acre and the royalty
percentage will be 12.5%.
● The parties will agree on terms for an addendum to be part
of the aforementioned new Oil and Gas Lease. You
explained that the terms your clients wants [sic] to have
included in the addendum are the same as those you
provided in January of this year in connection with another
matter. I explained that the land department would have
to review but those terms, save the two noted in the next
sentence, appear to [be] acceptable; final determination on
that, though, must come from the land department. The
Pugh Clause and the Shut-In Clause of that prior addendum
are not acceptable. The Pugh Clause will be removed
entirely. The Shut-In Clause will have terms added to it to
ensure that it [is] understood to operate prospectively only,
e.g., the five-year clock does not begin to run until the date
of the Oil and Gas Lease.
● The parties will execute a Ratification and Amendment for
which (i) ratifies the November 21, 2000 Allegheny Energy
Development Corporation lease and then (ii) amends that
lease by replacing it in whole with the terms of the
aforementioned Oil and Gas Lease, with Addendum as of the
date of the new Oil and Gas Lease.
● The parties will execute a Memorandum of Lease that can
be recorded evidencing the new Oil and Gas Lease should
[Appellee] desire to record that instead of the new Oil and
Gas Lease, with Addendum.
● Without limiting the breadth of the aforementioned global
release, the parties will dismiss with prejudice the following
cases pending in Tioga County, Pennsylvania, within 5
business days of the date of the execution of the
-3-
J-A02040-19
Confidential Settlement Agreement and Release: SWEPI LP
v. Harvey R. Wood and Bobbi Jo Wood, 59 CV 2011; Harvey
R. Wood and Bobbi Jo Wood v. SWEPI LP, 654 CV 2011; and
SWEPI LP v. Harvey R. Wood and Bobbi Jo Wood, 993 CV
2013.
● The parties will use good faith efforts to attempt to resolve
the issue of [Appellants’] alleged inability to access a portion
of their property in the Wood 626 Unit that is south of the
existing well pad.
Appellants’ Ex. 1 at 2-3; Appellee’s Ex. 5 at 2-3.
Attorney Blaney testified that she informed Mr. Wood about all aspects
of the proposed settlement on February 12th, immediately after receiving the
email from Attorney Mercer. After the conversation between Attorney Blaney
and Mr. Wood, Appellants authorized Attorney Blaney to accept the
settlement.
Attorney Blaney responded to Attorney Mercer’s email at 5:09 p.m. on
February 12th, providing additional language to the final paragraph
concerning the land access issue. Otherwise, all other terms were acceptable
to Appellants. See Appellants’ Ex. 1 at 2-3; Appellee’s Ex. 5 at 2-3.
Attorney Blaney also testified that Appellants changed course during a
meeting at her office in March 2017. At that time, Attorney Blaney expected
both Appellants to attend and sign the written settlement agreement.
However, Mr. Wood attended the meeting alone and expressed that he was
“very unhappy” with the terms of the agreement. N.T. Hr’g., 8/16/17, at 122.
Mr. Wood “did not complain about any of the specific terms being not what he
agreed to.” Id. Rather, he claimed that Attorney Blaney “threw him under
-4-
J-A02040-19
the bus,” and the agreement “was not what he was owed by [Appellee].” Id.
at 122-23.
During a subsequent telephone call, Attorney Blaney informed Mr. Wood
that Appellee would likely file a motion to enforce settlement agreement if
Appellants withheld their signatures. Mr. Wood responded that “he expected
that” Appellee would attempt to enforce the settlement agreement, but
Appellants “weren’t going to sign it and . . . they would take their chances” in
court. Id. at 124.
On March 2, 2018, the trial court entered an order granting Appellee’s
motion to enforce settlement agreement. Appellants timely filed a notice of
appeal and a court-ordered Pa.R.A.P. 1925(b) concise statement of errors
complained of on appeal. The court filed a responsive Rule 1925(a) opinion,
explaining that Attorney Blaney had authority to enter into the settlement
agreement, and the communications between Attorneys Blaney and Mercer
demonstrated the formation of a valid and enforceable settlement agreement.
Appellants now raise six issues for our review:
1. Whether the [trial] court erred by granting [Appellee’s] Motion
to Enforce Settlement given the facts and evidentiary testimony
presented to the [c]ourt[.]
2. Whether the [trial] court erred by finding that the parties
entered into an oral settlement agreement as there was no
meeting of the minds regarding the leasehold acreage and
consideration to be paid for the new oil and gas lease at the heart
of the asserted settlement[.]
3. Whether the [trial] court erred in enforcing the asserted oral
settlement agreement when [Appellants] had not seen or
-5-
J-A02040-19
reviewed the newly proposed Oil and Gas Lease prior to entering
into the asserted oral settlement[.]
4. Whether the [trial] court erred in enforcing the asserted oral
settlement agreement when [Appellants] had not seen or
reviewed the newly proposed Addendum to the Oil and Gas Lease
prior to entering into the asserted oral settlement[.]
[5]. Whether the [trial] court erred by finding that the parties
entered into an oral settlement agreement as there was no
meeting of the minds regarding numerous material terms of the
asserted oral settlement agreement, including no meeting of the
minds regarding the following material terms:
a. confidentiality requirements and potential punitive
remedies in the event of a breach of confidentiality;
b. a global release of other outstanding claims against
[Appellee]; and
c. an agreement to settle [Appellants’] land access issues to
provide [Appellants] access to their property in the area of
[Appellee’s] well pad.
6. Whether the [trial] court erred in upholding the asserted oral
settlement agreement when there was no intent for the oral
agreement to be operative in the absence of an executed written
agreement.
Appellants’ Brief at 4-5. Although Appellants’ brief lists six issues, they
actually present two distinct arguments in opposition to the order granting
Appellee’s motion to enforce settlement agreement.
First, Appellants contend that the parties to a settlement agreement
must come to a meeting of the minds on all terms in order for the agreement
to be enforceable. Id. at 25. Appellants insist that there was no meeting of
the minds on several material terms of its agreement with Appellee, including
(1) the amount of acreage Appellee would lease; (2) the amount of
-6-
J-A02040-19
compensation Appellee would pay; (3) the use of Appellee’s standard lease
form; (4) the addendum terms; (5) the confidentiality provision; (6) the global
release of Appellants remaining claims against Appellee; and (7) the resolution
of the land access issue. Id. at 26, 36, 40, 41, 45, 47. Because the parties
did not come to a meeting of the minds regarding these terms, Appellants
maintain that this Court must reverse the order granting enforcement. Id. at
47.
“The enforceability of settlement agreements is determined according
to principles of contract law. Because contract interpretation is a question of
law, this Court is not bound by the trial court’s interpretation.” Step Plan
Servs., Inc. v. Koresko, 12 A.3d 401, 408 (Pa. Super. 2010) (citation
omitted).
Our standard of review over questions of law is de novo and to
the extent necessary, the scope of our review is plenary as [the
appellate] court may review the entire record in making its
decision. With respect to factual conclusions, we may reverse the
trial court only if its findings of fact are predicated on an error of
law or are unsupported by competent evidence in the record.
Id. (citations and quotation marks omitted).
“There is a strong judicial policy in favor of voluntarily settling lawsuits.”
Felix v. Giuseppe Kitchens & Baths, Inc., 848 A.2d 943, 946 (Pa. Super.
2004) (citation omitted). “The primary reason that settlement is favored is
that it expedites the transfer of money into the hands of a complainant.
Further, settlement reduces the burden on and expense of maintaining
courts.” Id. (citations omitted).
-7-
J-A02040-19
In a settlement agreement, “[t]here is an offer (the settlement figure),
acceptance, and consideration (in exchange for the plaintiff terminating his
lawsuit, the defendant will pay the plaintiff the agreed upon sum).” Step Plan
Servs., 12 A.3d at 409 (citation omitted). “As with any contract, it is essential
to the enforceability of a settlement agreement that the minds of the parties
should meet upon all the terms, as well as the subject-matter, of the
agreement.” Mazzella v. Koken, 739 A.2d 531, 536 (Pa. 1999) (internal
quotation marks, citation, and brackets omitted).
“If parties agree upon essential terms and intend them to be binding, a
contract is formed even though they intend to adopt a formal document with
additional terms at a later date. The intent of the parties is a question of fact
which must be determined by the factfinder.” Compu Forms Control, Inc.
v. Altus Grp., Inc., 574 A.2d 618, 622 (Pa. Super. 1990) (internal quotation
marks and citations omitted). “A reviewing court must defer to the findings
of the trier of the facts if they are supported by the evidence.” Id. (citation
omitted).
Instantly, Attorney Blaney testified that she informed Mr. Wood about
all aspects of the proposed settlement on February 12, 2017:
We went down step-by-step what the agreement would entail. I
told [Mr. Wood] there would be a settlement agreement that was
four to five pages that outlined this, but here are the . . . basic
terms. That he was waiving all claims against [Appellee] except
for the sick cows in exchange for a . . . payment. That . . . meant
that all three lawsuits would be dismissed. That all of the back
royalties would be paid . . . within forty-five days of executing the
agreement, [Appellee] was holding [a] significant amount of
-8-
J-A02040-19
royalties[.] [T]hat there would be either in the agreement or in
the addendum a clause that while . . . neither side was admitting
fault, that we would ratify the old lease again so that there was a
lease that covered all the way through.
We talked about the need for the agreement to be confidential.
What that meant[:] that he couldn’t go to the newspaper, I
couldn’t respond to the calls that I had been getting from the
newspaper, he couldn’t talk about it in a coffee shop with friends,
but that he could discuss the financial terms with both an
accountant and an attorney as necessary. We discussed that
[Appellee] would resolve his ability to access this lower field south
of the pad. [Appellants’] preferred access was through a roadway
that crossed over the neighbor’s property and went to the pad.
He wanted to be able to cross that roadway and get to the lower
field. I told him that [Appellee] could not promise that that would
be the access without sending somebody out to see it; that we’d
make note that was their preferred access, but one way or another
we would figure out how he was going to access his field.
And that they would get a new lease; twelve hundred dollars per
acre, twelve-and-a-half percent royalty, payment on the lease
within forty-five calendar days not business operating days,
addendum, same as I had―I had discussed again that we’d
already used―I had already used these addendums and
negotiated them with [Attorney Mercer] very recently. And [we]
went through what addendums were there. Told them that there
would be no Pugh Clause[3] . . . . And I told [Mr. Wood] we could
go through the exact language of those addendums in detail on
Monday.
N.T. Hr’g, 8/16/17, at 101-02. Following this conversation, Appellants
authorized Attorney Blaney to accept the settlement. Id. at 104.
Our review of the record confirms that throughout the evidentiary
hearings, Attorney Blaney provided testimony demonstrating Appellants’
____________________________________________
3 A Pugh clause provides that “production from a unit including a portion of a
leased tract will maintain the lease in force as to all the lands covered by the
lease.” Fremaux v. Buie, 212 So. 2d 148, 149 n.1 (La. Ct. App. 1968)
(citations omitted).
-9-
J-A02040-19
awareness of the material terms of the settlement agreement. Appellee also
submitted exhibits, including Attorney Blaney’s phone records and the notes
she took contemporaneously during her telephone conversations with
Appellants, which supported Attorney Blaney’s testimony. See Appellee’s Ex.
3, 4.
To the extent Appellants rely on their own testimony that conflicted with
that of Attorney Blaney, the trial court specifically found Attorney Blaney
credible. See Trial Ct. Op. at 8. The record supports the court’s findings, and
we defer to those findings. See Compu Forms Control, 574 A.2d at 622.
Therefore, the court properly determined that the parties came to a meeting
of the minds for all material terms, and the settlement agreement was
enforceable. See Mazzella, 739 A.2d at 536.
In their second argument, Appellants contend that they “did not intend
to be bound by the terms of the oral settlement without the subsequent
memorialization and execution of the final settlement documents.”
Appellants’ Brief at 49. Appellants rely on Wilson v. Pennsy Coal Co., 112
A. 135, 136 (Pa. 1920), for the proposition that oral agreements are
enforceable only where it is “shown, by the acts or declarations of the parties,
that they intended the agreement to be operative before execution, and
without regard to the writing.”4 Id. at 48. “Without some affirmative action
demonstrating [Appellants’] intent to be bound by the asserted oral
____________________________________________
4Wilson involved an oral agreement to convey real estate, “where the lease
proposed would not have been valid without writing.” Wilson, 112 A. at 136.
- 10 -
J-A02040-19
agreement, the asserted agreement should be viewed only as an offer of
settlement and should not be enforced.” Id. at 50.
“Where a settlement agreement contains all of the requisites for a valid
contract, a court must enforce the terms of the agreement.” Step Plan
Servs., 12 A.3d at 409 (citation omitted). “This is true even if the terms of
the agreement are not yet formalized in writing. Pursuant to well-settled
Pennsylvania law, oral agreements to settle are enforceable without a writing.”
Id. (citation omitted); see also Shovel Transfer & Storage, Inc. v. Pa.
Liquor Control Bd., 739 A.2d 133, 138 (Pa. 1999) (reiterating that, “Where
the parties have agreed orally to all the terms of their contract, and a part of
the mutual understanding is that a written contract embodying these terms
shall be drawn and executed by the respective parties, such oral contract may
be enforced, though one of the parties thereafter refuses to execute the
written contract” (citation omitted)).
Instantly, the settlement agreement contained the requisites for a valid
contract, including an offer, acceptance, and consideration. See Step Plan
Servs., 12 A.3d at 409. More specifically, Appellee agreed to make a payment
to Appellants. In exchange, Appellants agreed to, among other things, a
global release of multiple claims against Appellee. The parties also agreed to
execute a new lease whereby Appellee would pay Appellants for the right to
extract natural resources from Appellants’ property.
Despite the fact that the parties did not immediately memorialize the
oral agreement in writing, their subsequent behavior demonstrated their
- 11 -
J-A02040-19
intent to be bound by the oral agreement. Attorneys Mercer and Blaney
participated in a conference with the court on February 13, 2017, confirming
that the parties had reached a settlement. See N.T. Settlement Conference,
2/13/17, at 2. Attorney Mercer indicated that he would be “providing a copy
of the settlement agreement . . . and release to Attorney Blaney” within the
next two days, and “all of the terms of the agreement will be fulfilled by the
end of this week.”5 Id. Further, counsel did not express any concern when
the court announced that it would cancel jury selection, which it had scheduled
for the next day. Id. at 4.
Based upon the foregoing, the oral settlement agreement was
enforceable in the absence of a formally executed writing. See Shovel
Transfer & Storage, 739 A.2d at 138; Step Plan Servs., 12 A.3d at 409.
Accordingly, we affirm the order granting Appellee’s motion to enforce
settlement agreement.
Order affirmed.
____________________________________________
5The trial court observed that, “Given the timing of the settlement agreement,
with trial to start in less than two days, it would have been difficult for the
parties to execute a written settlement agreement before trial.” Trial Ct. Op.
at 9.
- 12 -
J-A02040-19
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 04/17/2019
- 13 -