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Hassebrock v. Ceja Corp.

Court of Appeals of Illinois, Fifth District

March 31, 2015

DUANE HASSEBROCK, Plaintiff-Appellant,
v.
CEJA CORPORATION, Defendant-Appellee

Motion to publish granted, March 31, 2015.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Rule 23 order Filed: February 25, 2015. Appeal from the Circuit Court of Marion County. No. 12-L-56. Honorable Michael D. McHaney, Judge, presiding.

For Appellant: Joseph A. Bartholomew, Stephanie A. Brauer, Cook, Ysursa, Bartholomew, Brauer & Shevlin, Ltd., Belleville, IL.

For Appellee: George C. Lackey, Joanne T. Stevenson, Lackey & Stevenson, P.C., Centralia, IL.

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

OPINION

Page 416

S. Gene Schwarm, Justice

[¶1] BACKGROUND

[¶2] In October 1999, Deep Rock Energy Corporation (Deep Rock) and the plaintiff, Duane Hassebrock, 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 (the letter agreement) with the defendant, Ceja Corporation, an oil and gas exploration and development company headquartered in Tulsa, Oklahoma. Under the terms of the letter agreement, the defendant agreed to perform a seismic survey of the land covered by the Omega leases in exchange for a 25% working interest in the Rule 23 order filed February 25, 2015; Motion to publish granted March 31, 2015. leases. The agreement further provided that should the results of the seismic survey warrant drilling and development on the Omega leases, the defendant would operate the wells, and the parties would enter into a separate agreement regarding the defendant's operations. The agreement gave the defendant 120 days after the completion of the seismic survey to submit a proposed operating agreement. The letter agreement stated that its terms would " remain in full force and effect for a term coextensive with any operating agreement."

[¶3] It is undisputed that the parties never entered into an operating agreement with respect to the Omega leases. It is further undisputed that Deep Rock 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 Deep Rock and the defendant 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 Deep Rock and the defendant as parties to the notice. Further alleging that the plaintiff, the defendant, and Deep Rock had entered into a joint venture agreement with respect to the Omega leases and the Forbes leases (the venture agreement), the notice suggested that Deep Rock and the defendant 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."

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[¶5] In Marion County case number 02-MR-63, Deep Rock 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 Deep Rock seeking to enforce the alleged terms of the venture agreement. In his pleadings, the plaintiff asserted, among other things, that the parties had " orally agreed" to acquire and develop the Forbes leases.

[¶6] In December 2004, the plaintiff and Deep Rock 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 Deep Rock released each other from all claims arising from the venture agreement, and Deep Rock gave the plaintiff $2.5 million. Deep Rock also assigned to the plaintiff a 1% carried working interest in the oil " produced and saved" from the Forbes leases, and the plaintiff assigned to Deep Rock all of his right, title, and interest in and to the leases. Pursuant to the terms of his assignment to Deep Rock, the plaintiff warranted that the assigned title to his interests in the Forbes leases was free and clear of all adverse claims, and he forever released and disclaimed all claims described in the notice. He further released and disclaimed " all claims, rights, titles[,] and interest in oil and gas leases in, off setting[,] or adjoining Steven [ sic ] Forbes State Park."

[¶7] In February 2011, in the circuit court of St. Clair County, the plaintiff filed a complaint against Deep Rock alleging that it had breached the terms of the settlement agreement. The plaintiff subsequently filed a first amended complaint alleging additional counts against the defendant for breaching the terms of the venture agreement.

[¶8] In March 2011, the defendant and Deep Rock 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 plaintiff's claims regarding the venture agreement were improperly joined with his claims regarding the settlement agreement, the defendant filed a motion to dismiss the counts against it and to dismiss it as a party in No. 11-L-47. In November 2011, finding that the plaintiff's attempted joinder of the defendant was improper under the circumstances, the trial court granted the defendant's motion to dismiss.

[¶10] The plaintiff subsequently filed a second amended complaint that again combined his claims against Deep Rock and the defendant. The defendant and Deep Rock responded with motions to dismiss the plaintiff's second amended complaint, noting that the complaint had failed to cure the defects that had resulted in the first complaint's dismissal. In February 2012, stating that the plaintiff's cause of action against Deep Rock was " separate and distinct" from his cause of action against the defendant, the trial court entered an order striking all references to the defendant and the venture agreement from the plaintiff's second amended complaint.

[¶11] The plaintiff subsequently filed a third amended complaint that again combined his claims against Deep Rock and the defendant. In response, the defendant and Deep Rock filed motions to dismiss the third amended complaint for failure to comply with the trial court's previous order. In June 2012, noting that the plaintiff's third amended complaint was " virtually identical" to his second, the trial court granted the motions to dismiss and ordered

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that the plaintiff's causes of action against the defendant and Deep Rock 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 the defendant was assigned case number 12-L-56.

[¶12] In No. 12-L-56, the plaintiff subsequently filed a " fourth amended complaint" against the defendant. The complaint alleged, among other things, that the defendant and Deep Rock had violated the terms of the venture agreement by " failing to share the benefits" of the developed Forbes leases. The complaint sought compensatory damages from the defendant as a result of the alleged violation.

[¶13] In October 2012, the defendant filed a motion to dismiss the plaintiff's fourth amended complaint as improperly pled (see 735 ILCS 5/2-615 (West 2012)). The trial court granted the defendant's motion in part, striking numerous portions of the complaint. A fifth amended complaint followed, which the defendant also moved to dismiss as improperly pled. In August 2013, the trial court granted the defendant's motion to dismiss the plaintiff's fifth amended complaint " in its entirety."

[¶14] In September 2013, the plaintiff filed a sixth amended complaint against the defendant. Consistent with his previous pleadings, the plaintiff's complaint sounded in breach of contract and breach of fiduciary duty. The complaint alleged that in 1999, the plaintiff, the defendant, and Deep Rock had orally agreed to acquire and develop the Forbes leases pursuant to the joint venture agreement, but he had ultimately been denied the opportunity to benefit from the leases. The plaintiff thus sought damages from the defendant for its failure to share with him the benefits of the Forbes leases.

[¶15] In October 2013, the defendant filed two motions to dismiss the plaintiff's sixth amended complaint pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2012)). In its first motion to dismiss, the defendant argued that the plaintiff's claims were barred by the five-year statute of limitations applicable to unwritten contracts. See 735 ILCS 5/2-619(a)(5) (West 2012) (allowing for dismissal where " the action was not commenced within the time limited by law" ). In its second motion, the defendant argued that the plaintiff's claims were barred by the terms of the release and the assignment that Deep Rock obtained pursuant to the settlement agreement. See 735 ILCS 5/2-619(a)(6) (West 2012) (allowing for dismissal where " the claim set forth in the plaintiff's pleading has been released, satisfied of record, or discharged in bankruptcy" ).

[¶16] In his responsive pleadings in opposition to the defendant's motions to dismiss, the plaintiff argued that because the defendant was not a named party to the release, it could not claim protection by its terms. The plaintiff also argued that the 10-year statute of limitations applicable to written agreements was applicable to his cause of action. He further suggested that the " continuing" nature of his " injury" rendered any statute-of-limitations argument " meritless." Notably, the plaintiff did not address or acknowledge the defendant's argument that his claims were barred by the assignment.

[¶17] In December 2013, the cause proceeded to a hearing on the defendant's motions to dismiss pursuant to section 2-619. Although the defendant argued all three grounds set forth in its motions as reasons to dismiss the plaintiff's cause of action, the plaintiff only directly addressed the arguments regarding the statute of limitations and the release.

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[¶18] The trial court subsequently entered an order granting the defendant's section 2-619 motions and dismissing the plaintiff's cause of action in the present case with prejudice. The court's order did not specify on which grounds the motions had been granted, but it did state that both " motions to dismiss [were] granted." In January 2014, the plaintiff filed a timely notice of appeal in the present case. In February 2014, the trial court entered an order granting partial summary judgment in favor of Deep Rock in No. 11-L-47. In the same order, the trial court stated, without elaboration, that it was recusing itself from all future proceedings in either case.

[¶19] DISCUSSION

[¶20] On appeal, the plaintiff argues that the trial court erred in granting the defendant's motions to dismiss because his claims against the defendant are not time-barred and because the defendant was not a named party to the release. He further argues that the defendant is judicially estopped from claiming that it is entitled to the benefits of the release. The plaintiff also suggests that it was improper for the ...


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