Oil and Gas Leases: Free Gas Clause Court Jurisdiction, Procedure and Review: Mootness Doctrine

摘要

This is a class action filed on behalf of over 2200 members asserting that OXY has breached their respective oil and gas leases all of which contain a free use of gas provision. Some 1900 class members are not currently being supplied free gas. During the pendency of the action OXY has provided the 300 members who do use gas for their homes with gas. Most of the leases require the lessee to provide the lessor with free gas for the principal dwelling house on the land. The clause also requires the lessor to make its own connection with the wellhead. In August 2007, OXY sends to extant free gas users a notice that the natural gas may contain high concentrations of hydrogen sulfate (H2S) which is a potentially hazardous substance. A second letter is also sent stating that OXY was planning to install compressors downstream of the wellhead which would have the effect of lowering gas pressure on the lines connecting to the homes. Plaintiffs then file this putative class action on behalf of all OXY lessors whose leases contain a free gas clause. In 2009. the court certifies the class. In this action, both parties move for summary judgment. The dispute centers around the 300 individuals who are currently getting gas. They argue that OXY owes them a duty to provide usable gas, meaning gas that is free of H2S and of sufficient pressure so that it will flow into their homes. A free gas clause is a covenant that runs with the land so as to bind subsequent parties. Applying various canons of construction, including the plain meaning canon, the court finds that the free gas clause language is unambiguous. The court agrees with the plaintiffs that defendant's covenant is to provide useable gas, free of cost. Held: affirmed in part and appeal dismissed in part as moot. Following the decision of the trial court, OXY sells all of its leasehold interests covered by the class action to Merit Hugoton, LP. Plaintiffs then move to have the appeal dismissed because OXY is no longer subject to the declaratory judgment having conveyed its interests in the leases to Merit. The court agrees that the mootness doctrine applies as to the appeal from the declaratory judgment action by OXY. OXY would not be impacted by the declaratory judgment action since it is no longer the covenantor obligated to provide useable and free gas to members of the class. While dismissing an appeal as moot normally leads to the vacating of the District Court judgment, the court has equitable power to not vacate the judgment in order to prevent the losing party from taking advantage of the changed set of facts. Thus, the court does not vacate the judgment and reviews the plaintiffs' appeal of the District Court's order denying its motion for attorneys' fees, expenses and an incentive award. Kansas follows the American Rule which normally does not allow for the recovery of attorney's fees in the absence of contractual or statutory language to the contrary. Here there is no such language. Thus, the District Court's finding that no attorneys' fees are to be awarded is upheld.