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Hassebrock v. Deep Rock Energy Corp.

Court of Appeals of Illinois, Fifth District

March 31, 2015

DUANE HASSEBROCK and EVELYN HASSEBROCK, Plaintiffs-Appellants,
v.
DEEP ROCK ENERGY CORPORATION, Defendant-Appellee.

Rule 23 Order filed February 25, 2015

Motion to publish granted March 31, 2015

Appeal from the Circuit Court of Marion County, No. 11-L-47; the Hon. Michael D. McHaney, Judge, presiding.

Joseph A. Bartholomew and Stephanie A. Brauer, both of Cook, Ysursa, Bartholomew, Brauer & Shevlin, Ltd., of Belleville, for appellants.

George C. Lackey, of Lackey & Stevenson, P.C., of Centralia, for appellee.

JUSTICE SCHWARM delivered the judgment of the court, with opinion. Presiding Justice Cates and Justice Chapman concurred in the judgment and opinion.

OPINION

SCHWARM JUSTICE

¶ 1 BACKGROUND

¶ 2 In October 1999, the plaintiff, Duane Hassebrock, [1] and the defendant, Deep Rock Energy Corporation, as the owners of several Marion County oil and gas leases covering various tracts of land south of Stephen A. Forbes State Park (the Omega leases), entered into a letter agreement with Ceja Corporation (Ceja), an oil and gas exploration and development company headquartered in Tulsa, Oklahoma. Under the terms of the letter agreement, Ceja agreed to perform a seismic survey of the land covered by the Omega leases in exchange for a 25% working interest in the leases. The agreement further provided that should the results of the seismic survey warrant drilling and development on the Omega leases, Ceja would operate the wells, and the parties would enter into a separate agreement regarding Ceja's operations.

¶ 3 It is undisputed that the parties never entered into an operating agreement with respect to the Omega leases. It is further undisputed that the defendant later obtained numerous oil and gas leases to various tracts of land in and around Stephen A. Forbes State Park (the Forbes leases) and that the defendant and Ceja developed working oil wells pursuant to those leases, without the plaintiff

¶ 4 In May 2002, the plaintiff filed a "Notice of Claim of Interest" with the Marion County clerk and recorder of records (the notice). The notice alleged that the plaintiff had a claim of interest in the Forbes leases and specifically named the defendant and Ceja as parties to the notice. Further alleging that the plaintiff, the defendant, and Ceja had entered into a joint venture agreement with respect to the Omega leases and the Forbes leases (the venture agreement), the notice suggested that the defendant and Ceja had violated the terms of the venture agreement by not giving the plaintiff his proportional interest in the Forbes leases, as "was understood and agreed between all joint venture members."

¶ 5 In Marion County case number 02-MR-63, the defendant subsequently sued the plaintiff to remove the notice as a cloud on its title to the Forbes leases. The plaintiff, in turn, filed a counterclaim against the defendant seeking to enforce the alleged terms of the venture agreement.

¶ 6 On December 3, 2004, the plaintiff and the defendant entered into a settlement agreement resolving their respective disputes in No. 02-MR-63 (the settlement agreement). Pursuant to the terms of the settlement agreement, the plaintiff and the defendant released each other from all claims arising from the venture agreement, and the defendant gave the plaintiff $2.5 million. The plaintiff also assigned to the defendant all of his right, title, and interest in and to the Forbes leases, and the defendant assigned to the plaintiff a 1% carried working interest in the "oil produced and saved" from the leases. Notably, the defendant's assignment to the plaintiff did not require the defendant to directly pay the plaintiff on his 1% interest.

¶ 7 In February 2011, in the circuit court of St. Clair County, the plaintiff filed a complaint against the defendant alleging that it had breached the terms of the settlement agreement by failing to pay him for his entire 1% interest in the oil harvested from the Forbes leases. The plaintiff subsequently filed a first amended complaint alleging additional counts against Ceja for breaching the terms of the venture agreement.

¶ 8 In March 2011, the defendant and Ceja filed motions to transfer venue from St. Clair County to Marion County. In July 2011, the circuit court of St. Clair County granted the motions, and the cause was transferred to Marion County, where it was assigned case number 11-L-47.

¶ 9 In September 2011, arguing that the plaintiffs claims regarding the venture agreement were improperly joined with his claims regarding the settlement agreement, Ceja filed a motion to dismiss the counts against it and to dismiss it as a party in No. 11-L-47. At the same time, with respect to the plaintiff s claims against the defendant, the defendant filed a motion to dismiss the plaintiffs first amended complaint as improperly pled (see 735 ILCS 5/2-615 (West 2012)). In November 2011, finding that the plaintiffs attempted joinder of Ceja was improper under the circumstances, the trial court granted Ceja's motion to dismiss. The trial court also granted the defendant's motion to dismiss and granted the plaintiff leave to file a second amended complaint.

¶ 10 The plaintiff subsequently filed a second amended complaint that again combined his claims against the defendant and Ceja. In his second amended complaint, the plaintiff alleged, among other things, that in addition to failing to pay him for his entire 1% interest in the oil harvested from the Forbes leases, the defendant had also failed to pay him his entire 1% interest in the gas harvested from the leases. The defendant and Ceja again responded with motions to dismiss. In one of its motions, the defendant argued that the plaintiffs allegation that he was entitled to a 1% interest in the gas harvested from the Forbes leases should be stricken because under the terms of the settlement agreement, the plaintiff had never been given such an interest.

¶ 11 In February 2012, stating that the plaintiffs cause of action against the defendant was "separate and distincf from his cause of action against Ceja, the trial court entered an order striking all references to Ceja and the venture agreement from the plaintiffs second amended complaint. Noting that the defendant's assignment to the plaintiff did not include a working interest in any gas harvested from the Forbes leases, the court also struck the plaintiffs allegation that he was entitled to a 1% interest in any such gas.

¶ 12 The plaintiff subsequently filed a third amended complaint that again combined his claims against the defendant and Ceja. In response, the defendant and Ceja filed motions to dismiss the third amended complaint for failure to comply with the trial court's previous order. In June 2012, noting that-although the plaintiff's third amended complaint did not reallege that he was entitled to a 1% interest in the gas harvested from the Forbes leases-the complaint was "virtually identical" to his second, the trial court granted the motions to dismiss and ordered that the plaintiff's causes of action against the defendant and Ceja be severed. In September 2012, after denying the plaintiff's motion to reconsider, the trial court entered an order formally severing the causes of actions, and the plaintiff's case against Ceja was assigned case number 12-L-56.

ΒΆ 13 The plaintiff subsequently filed a fourth amended complaint against the defendant, realleging that the defendant had failed to pay him the full amounts owed him on his 1% interest in the oil produced from the Forbes leases. The defendant moved to dismiss the fourth amended complaint, asserting that under the terms of the settlement agreement, it was not responsible for paying the plaintiff any amounts due on his 1% interest. In October 2012, construing the defendant's motion to dismiss the plaintiff's fourth amended complaint as a motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2012)), the trial court entered an order stating that the plaintiff had failed to plead any facts supporting its conclusion that the defendant was required to pay the plaintiff "any sum of money regarding the one percent (1%) carried working interest." The court noted that the ...


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