The Ohio shale boom started slowly when a few small companies quietly began acquiring mineral leases for as little as $25 per acre. This soon gave way to a full blown land rush in the fall of 2010. But as lease prices skyrocketed through the Fall of 2011, disillusioned lessors who signed before the peak of the market were the ones rushing – to the courthouse to file lawsuits to cancel their leases.
In order to gain leverage and legitimize their lawsuit, lessors frequently allege that their lease is “unconscionable” or they were fraudulently induced to sign it. “Exhibit A” to these lawsuits is often a technical error in the lease signing or a “fraudulent” statement made by a landman. There are exceptions, but many of these kinds of lawsuits have no legal basis.…
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As the demand for oil and gas rights along with other mineral rights continues to grow in Ohio, more disputes will almost certainly arise and end up in the courts. It is therefore important to keep an eye on such cases as the law governing such rights takes further shape. As a case in point, the Northern District of Ohio recently issued an interesting ruling in Binder v. Trinity OG Land Development and Exploration, LLC, No. 4:11-cv-02621, 2012 WL 1970239 (ND May 31, 2012), regarding commissions for the leasing of mineral rights, which may have impact oil and gas leasing practices.
The plaintiff in that case, Binder, alleged that he was a deal maker. In 2009, he entered into an oral agreement with the defendants to identify property owners in Northeast Ohio and Western Pennsylvania who might be willing to sell mineral rights. This agreement purportedly provided that Binder would receive from $50 to $200 for every acre of mineral rights the defendants leased or purchased from land owners whom Binder referred to them. According to Binder, the defendants obtained mineral rights to over 10,000 acres through his efforts. Binder calculated that, as a result, the defendants owed him at least $500,000.
Rather than pay Binder anywhere near that amount, the defendants sent him a check for $22,012.94. With it, the defendants included language stating that the check was full and final payment for any money they owed, suggesting that if Binder accepted and cashed the check, he …
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