STOCKPORT MOUNTAIN CORPORATION LLC v. NORCROSS WILDLIFE FOUNDATION

US District Court, M.D. Pennsylvania, No. 3:11cv514, March 1, 2012: Finding that conservation easement’s purposes and its prohibition on industrial or commercial uses of any kind are made ambiguous by uses allowed by the easement, and therefore the easement does not necessarily prohibit natural gas drilling, denies motion for summary judgment.

Plaintiff Stockport Mountain Corporation LLC (Stockport) purchased land known as Stockport Forest Preservation subject to a conservation easement held by defendant Norcross Wildlife Foundation (Norcross). Stockport asked Norcross to consent to a lease of the land’s subsurface mineral rights that would allow natural gas drilling. Norcross refused consent. Stockport sued in federal court. Both Stockport and Norcross asked the court to decide the matter immediately, based on the pleadings, without further evidence. (Stockport asked the court for a declaratory judgment that the conservation easement permits surface extraction of natural gas. Norcross counterclaimed that Stockport had failed to state a claim.) Each party basically claimed, for different reasons, that the Court could decide the matter at this stage by looking at the conservation easement.

The CE included the following provisions:

  • The purposes included, “conserving and protecting the Property from soil erosion, water pollution, development, fragmentation, and other occurrences which might interfere with the Property’s Conservation Values”.
  • The section of the CE listing uses “expressly prohibited” included “industrial or commercial uses of any kind … commercial mining … of any kind… depositing, dumping, abandoning, or release of any solid waste or debris, or liquid wastes or chemical substances on the Property [excepting certain fertilizers, herbicides and pesticides]… [and] new roads, except to provide low-impact temporary access to logging”, but allowed certain timbering activities.

Stockport contended that these provisions did not prohibit, nor did the parties to the conservation easement intend for its provisions to prohibit, natural gas exploration and drilling. Norcross asserted that a natural gas drilling lease is obviously inconsistent with the express prohibitions and purposes of the conservation easement. The Court held that it is too early in the litigation to reach the conclusions the parties wanted, that there are genuine issues of material fact, and denied both motions.

The Court said it would apply the substantive law of Pennsylvania in interpreting the conservation easement, but applied the federal rules as to issues of procedure.  Procedurally, to decide the motions the Court had to accept all factual allegations in Stockport’s complaint but did not have to accept legal conclusions or “unwarranted factual inferences”. Also, the Court said it would first look to the language of the CE to determine the intent of the parties to it, and where the language of the CE was unambiguous, the Court would enforce the express language of the CE as it embodies the intent of the parties.

The Court found that at this stage of the proceedings it was premature to say that the gas lease is clearly and unambiguously prohibited by the conservation easement. For example, in interpreting the easement’s purpose to protect the property from “occurrences which might interfere with the Property’s Conservation Values” the Court said that the Conservation Values “are not known at this time as they are not attached as an exhibit to the complaint” (which included the conservation easement as an exhibit). The Court also suggested that ambiguity was created by “the conservation easement’s express approval of many activities that are contrary to its purpose, such as allowing limited timbering, quarrying, ATV/snowmobile use and the construction of four residences.” The Court found it equally problematic that the easement’s “approval of certain commercial and industrial activities, combined with the fact that the terms ‘industrial’ and ‘commercial’ are not defined in the conservation easement, create an ambiguity … that reasonably requires discovery to resolve.”

Based on the ambiguities the Court perceived, it denied both parties’ motions, meaning that the case will proceed.

Memorandum of decision available at http://courtweb.pamd.uscourts.gov/courtwebsearch/pamd/m4RpYQ2RTz.pdf.

 

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