Court of Appeals Rules That Oil and Gas Company Has Ongoing Obligation to Restore Property Despite General Release of Damages in Surface Use Agreement

On April 11, 2022, the Fourth District Court of Appeals issued a major determination in Zimmerview Dairy Farms, LLC v. Protégé Power III LLC establishing {that a} normal launch of damages signed in reference to a pad web site floor use settlement didn’t launch the oil and gasoline firm from its ongoing obligations to remediate and restore harm to a landowner’s property. 

Within the Zimmerview case, Plaintiff Zimmerview Dairy Farms (“ZDF”) signed a floor use settlement with Defendant Protégé Power III LLC (“Protégé”) allowing Protégé to assemble and function a pad-site for Utica Shale wells on a portion of the ZDF farm. The settlement consisted of three paperwork: a recorded floor use settlement (favorable to Protégé); a confidential supplemental settlement (with phrases favorable to ZDF); and a harm launch beneath which ZDF launched Protégé from the anticipated damages already paid for by Protégé. This three-document construction is typical, particularly for pipelines easements, and one which many oil and gasoline corporations insist on. Usually, the harm launch is defined by landmen as an unimportant formality and that the corporate continues to be going to repair the land as required beneath the unrecorded settlement. Nonetheless, what a landman says, what an settlement says and what an organization does can differ dramatically.

In Zimmerview, Protégé proceeded to assemble and function its pad-site with out adequately remediating, restoring and reseeding the areas disturbed throughout development, together with the slopes of the pad-site. Over a number of years, Protégé’s failure to remediate resulted in vital topsoil harm, invasive weed infestations and ongoing erosion, which rendered giant parts of the ZDF farm unusable. Protégé refused to pay or repair the ZDF farm, claiming that the harm launch signed by ZDF launched Protégé from any obligation to remediate or pay for damages brought about to the ZDF farm. When ZDF filed go well with and received at trial, Protégé appealed.

On attraction, Protégé as soon as once more argued that ZDF had launched Protégé from all damages ensuing from development and operation of the pad-site together with damages from not remediating the ZDF farm. Despite the broad language of the discharge, nevertheless, the Court of Appeals rejected Protégé’s argument on the premise that the harm launch, signed when the floor use settlement was executed, couldn’t have been supposed to launch Protégé from damages that resulted from the continuing obligations and necessities Protégé had simply agreed to beneath the floor use settlement. Accordingly, the Fourth District affirmed the trial court docket judgment (and $800,000 verdict for damages) in opposition to Protégé. Given the widespread use (and abuse) of comparable harm releases by each operators and pipeline corporations, this determination is a welcome addition to Ohio caselaw and ought to help (and hopefully encourage) Ohio landowners to insist on producers and pipeline corporations assembly their development and remediation obligations.

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