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Jacobs v. CNG Transmission Corp.

United States District Court for the Western District of Pennsylvania
332 F. Supp. 2d 759 (W.D. Pa. 2004)


Facts

Darryl Jacobs and his wife (plaintiffs) acquired a lessor’s interest in an oil and gas lease. CNG Transmission Corporation (CNG) (defendant) was the lessee. The lease’s granting clause stated that the purpose of the lease was for oil and gas production, with a further purpose of allowing CNG to store gas on the leasehold. The habendum clause of the lease provided for a 10-year primary term and stated that the lease would remain in effect for as long thereafter as the leasehold “or any other land pooled or utilized therewith . . . [was] operated by [CNG] in search for or production of oil or gas or as long as gas [was] being stored, held in storage, or withdrawn from the premises by [CNG].” The lease did not contain a provision expressly stating whether the lease was severable or entire. CNG never drilled on or pooled the leasehold, but did store gas in the subsurface of the property. The plaintiffs brought suit against CNG in the Court of Common Pleas of Armstrong County, seeking cancellation of the lease based on, among other things, a claim that the production, pooling, and storage provisions in the lease were severable. CNG removed the action to federal district court and argued that the lease was indivisible. Both parties cross-moved for summary judgment on this issue and on other grounds.

Rule of Law

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Issue

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Holding and Reasoning (Cercone, J.)

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  • A "yes" or "no" answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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