ROBERT L. BROWN, Justice.
On appeal, the appellant, Southwestern Energy Production Company ("Southwestern Energy"), asks this court to affirm the circuit court's order regarding Sections 8, 9, and 31; reverse the circuit court's order regarding Sections 4 and 5; and modify the order to begin the suspension of drilling obligations from the date of the filing of the complaint. On cross-appeal, the Elkinses ask this court to reverse the circuit court's order as to Sections 8 and 9 and affirm the order as to Sections 4 and 5. The Elkinses do not address the argument regarding the starting date of the suspension of the drilling operations. We affirm in part, reverse in part, and modify the circuit court's order.
The underlying facts in this case are undisputed. On September 30, 2004, appellees and cross-appellants, James Elkins and Ruby Elkins, husband and wife, entered into an Oil and Gas Lease Agreement with Schonwald Land, Inc. (Schonwald), which covered five sections of land in Conway County. The sections of land covered are identified as Sections 4, 5, 8, 9, and 31. The lease was subsequently assigned by Schonwald to Southwestern Energy. The lease term was two years with an option to extend the lease for an additional two years. The lease provision governing length of term is as follows:
On August 18, 2006, Southwestern Energy sent a letter and check to the Elkinses exercising its right under the lease to extend the lease term for an additional two years. On December 7, 2006, the first well was completed on Section 31. On June 11, 2007, a second well was completed on Section 31. On May 20, 2009, the first well was completed on Section 9. On May 21, 2009, a second well was completed on Section 9 that also developed acreage for drilling purposes in Section 8. This was the last well completed on any of the sections at issue in this case.
On August 28, 2009, the Elkinses mailed a letter to Southwestern Energy, demanding release from the lease of all acreage except Section 31. After a reply letter from Southwestern Energy that informed the Elkinses of the development on Sections 8 and 9, another letter, dated September 4, 2009, was mailed to Southwestern Energy, demanding release of all acreage except Sections 9 and 31.
On October 13, 2009, the Elkinses filed a complaint against Southwestern Energy and Schonwald to remove the cloud on the title to Sections 4, 5, and 8. In their complaint, they asserted causes of action for fraud, trespass on minerals, constructive fraud, breach of contract, or alternatively, unjust enrichment and promissory estoppel. Both parties filed motions for partial summary judgment with respect to Sections 4, 5, and 8.
The circuit court entered an order on April 7, 2010, and made the following findings:
After entering this order, the circuit court issued a Rule 54(b) certificate, finding that its interpretation of Arkansas Code Annotated section 15-73-201 was final, that the Elkinses' claim of fraud against Schonwald remained unresolved but was subsidiary to the issue of statutory interpretation, that the determination of the statutory-construction issue will directly impact and most likely lead to the resolution of any unresolved issues in this case, and that there is no just reason for delay of the entry of final judgment for all purposes.
This court reviews issues of statutory construction de novo. Ryan & Co. AR, Inc. v. Weiss, 371 Ark. 43, 45, 263 S.W.3d 489, 491 (2007). It is for this court to decide what a statute means, and we are not bound by the circuit court's interpretation. Id. The first rule in considering the meaning and effect of a statute is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. Miss. River Transmission Corp. v. Weiss, 347 Ark. 543, 550, 65 S.W.3d 867, 872-73 (2002). When the language of a statute is plain and unambiguous, there is no need to resort
A circuit court may grant summary judgment only when it is clear that there are no genuine issues of material fact to be litigated and that the party is entitled to judgment as a matter of law. Mitchell v. Lincoln, 366 Ark. 592, 596, 237 S.W.3d 455, 458 (2006). Once the moving party has established a prima facie case showing entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Id. at 597, 237 S.W.3d at 458. On appellate review, we determine if summary judgment was appropriate based on whether the evidentiary items presented by the moving party in support of its motion leave a material fact unanswered. Id. This court views the evidence in a light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party. Id. at 597, 237 S.W.3d at 459.
The primary issue in this case is the proper interpretation of Arkansas Code Annotated section 15-73-201, and more specifically, the interplay between subsections (a) and (b), which read as follows:
Ark.Code Ann. § 15-73-201(a), (b) (Repl. 2009).
This court recently interpreted subsections 15-73-201 (a) and (b) in Snowden v. JRE Investments, Inc., 2010 Ark. 276, 370 S.W.3d 215. The facts of the Snowden case are remarkably similar to the facts in the instant case. The Snowden case also involved an oil and gas lease that was extended by drilling operations and production. Snowden, 2010 Ark. 276, 370 S.W.3d 215. The Snowdens owned the mineral interest in approximately 1250 acres of land that they leased by agreement on February 11, 2005, for a term of three years. The lease contained an extension provision stating that the lease "shall remain in force for a primary term of three (3) years and as long thereafter as oil, gas or other hydrocarbons are produced from said leased premises or from lands pooled therewith." A separate provision provided:
The lease was assigned to Chesapeake on September 16, 2005.
Chesapeake began drilling a well in Section 29 of the land. Several days later, on February 13, 2008, Chesapeake filed an Affidavit of Drilling Operations and Lease Extension, which extended the lease. On March 29, 2008, the first well was completed on Section 29. The last well was completed on Section 29 on September 9, 2008. Before that date, however, the Snowdens filed a complaint against Chesapeake and its predecessor on May 19, 2008. After a response, the defendants moved for summary judgment based on the lease terms and Arkansas Code Annotated section 15-73-201. The Snowdens filed a cross-motion for summary judgment. The circuit court entered its order and found that Arkansas Code Annotated section 15-73-201 was not ambiguous; that, pursuant to that section, the lease continued to be in effect as to all sections for one year subsequent to August 23, 2008;
This court noted on appeal that the Snowdens' argument was whether the circuit court erred in interpreting Arkansas Code Annotated section 15-73-201.
Regarding the interpretation of section 15-73-201, this court said:
Id. at 9, 370 S.W.3d 215.
In the instant case, Southwestern Energy completed the two wells on Section 31 by June 11, 2007. That was well within the primary term of the lease, which expired September 30, 2008. The two wells on Section 9 were completed on May 20 and 21, 2009, which was within one year of the expiration of the primary term. The end of the primary term plus one year was September 30, 2009. Under this court's interpretation announced in Snowden, Southwestern Energy had until one year after the expiration of the primary term to commence drilling on the lands under the lease. Furthermore, as this court said in Snowden, Southwestern Energy had one additional year from the date it completed its last well — May 21, 2009 — to commence drilling on any section or pooling unit under the lease to continue to extend the lease to all leased lands, producing and non-producing, and prevent the operation of subsection (a), which would sever the lease as to non-producing sections or pooling units. Accordingly, the lease was extended for the entire leased area under section 15-73-201(b) by the timely commencement of drilling operations and the completion of a well on Section 9.
Other than urging this court to adopt a statutory interpretation of 15-73-201(b) that is different from what we announced in Snowden, the Elkinses argue that their lease is different from the one analyzed in Snowden and, therefore, Snowden should not control this case. Their argument is unconvincing. The Elkinses claim that drilling operations are defined differently in their lease than the lease in Snowden. While not exactly arguing why this distinction makes a difference in this court's interpretation and application of section 15-73-201, they are correct that there is a nominal difference between the two definitions. To reiterate, the lease in Snowden defined drilling operations as including, but not limited to,
Snowden, 2010 Ark. 276, 370 S.W.3d 215. The lease in the instant case defines drilling operations as including operations for the "drilling of a new well, the reworking, deepening or plugging back of a well or hole or other operations conducted in an effort to obtain or re-establish production of oil or gas; ..." The drilling operations definition in the Elkinses' lease is arguably more narrow than that in Snowden. That distinction, however, is to no avail because Southwestern Energy was clearly engaged in drilling operations (i.e. building and completing two new wells on Section 9)
We hold that this case falls squarely within our holding in Snowden and that Snowden is controlling. Southwestern Energy is entitled to develop all of the lands covered by the lease for one year after the expiration of the primary term, pursuant to Arkansas Code Annotated section 15-73-201(b). Furthermore, Southwestern Energy is entitled to continue developing all of the land under the lease for one year after the last well was completed.
Southwestern Energy, in addition, asks this court to modify the circuit court's order suspending its drilling obligations. The circuit court suspended Southwestern Energy's obligations as of the date of its order, April 22, 2010. Southwestern Energy maintains that the suspension should have begun the date the Elkinses filed their complaint, which was October 13, 2009. The Elkinses make no reply to this request by Southwestern Energy.
We agree with Southwestern Energy that the circuit court should have suspended Southwestern Energy's obligations as of the date the Elkinses filed their complaint, October 13, 2009. In Snowden, this court determined that, pursuant to the equitable principle enunciated in Winn v. Collins, 207 Ark. 946, 183 S.W.2d 593 (1944),
In the case at hand, the Elkinses attacked the validity of the lease by filing suit on October 13, 2009. Not to toll Southwestern Energy's obligation to drill as of that date would create an impossible dilemma for Southwestern Energy: either use the contested lands and potentially expose itself to more liability or refrain from using the lands and lose its investment and the one-year window granted under section 15-73-201 for development.
Based on our Snowden decision, we affirm the circuit court's order with regard to Sections 8, 9, and 31. However, under Snowden, we reverse the circuit court's order with regard to Sections 4 and 5. As a final point, we modify the circuit court's order to make the suspension of Southwestern Energy's drilling obligations effective as of October 13, 2009, when the Elkinses' complaint was filed.
Affirmed in part. Reversed in part. Order modified.
DANIELSON and WILLS, JJ., concur in part and dissent in part.
PAUL E. DANIELSON, Justice, concurring in part and dissenting in part.
Because I believe the majority misapplied Arkansas Code Annotated section 15-73-201 (Repl.2009) and should have affirmed the circuit court's finding that sections 4 and 5 were released from the lease agreement, I respectfully concur in part
The majority here and the opinion issued in Snowden both have the effect of eviscerating the severance intended by Ark.Code Ann. § 15-73-201(a), as there is always going to be drilling in the original section of land, here section 31. If this is not the proper legislative intent, which I do not believe it could be, I encourage the General Assembly to examine this statute and clarify its intent.
I do, however, agree with the portion of the majority opinion which holds that the circuit court should have suspended Southwestern Energy's drilling obligations as of the date the Elkinses filed their complaint and modifies the circuit court's order as to that effect.
For these reasons, I respectfully concur in part and dissent in part.
WILLS, J., joins.
ELANA CUNNINGHAM WILLS, Justice, concurring in part and dissenting in part.
Although I concur with the majority opinion insofar as it affirms the circuit court's order regarding Sections 8, 9, and 31, I respectfully dissent from the majority's decision to reverse the circuit court's conclusions with regard to Sections 4 and 5 for the reasons painstakingly detailed in Snowden v. J.R.E. Investments, 2010 Ark. 276, 370 S.W.3d 215 (Wills, J., dissenting). I would affirm the circuit court in all respects, save for modifying the stay of appellant Southwestern Energy's drilling obligation so as to begin on the date of the filing of the complaint.
DANIELSON, J., joins.