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Mar Oil Company v. Myron Korpan

October 20, 2011

MAR OIL COMPANY,
PLAINTIFF
v.
MYRON KORPAN, ET AL., DEFENDANTS



The opinion of the court was delivered by: James G. Carr Sr. United States District Judge

ORDER

Plaintiff MAR Oil Company is an oil and gas company that has explored potential oil and gas reserves in Northwest Ohio since 2000. Defendants are Myron Korpan, Ronald Brock, National Energy LLC, Gulflink LLC, Right of Way Land Services LLC, Imagine Mapping LLC, Chatham Holdings LLC, Solstice Energy LLC and Solstice Energy Partners LP. Korpan is a consultant who worked for plaintiff from 2000 through 2005, and began working with Brock and the associated exploration companies in 2008. Plaintiff claims Korpan, while in possession of its trade secrets, improperly shared those secrets with the other defendants.

Plaintiff asks that I issue a preliminary injunction ordering defendants to: 1) return MAR Oil's trade secrets and confidential and proprietary information; 2) cease and desist from disclosing or using in any manner any of MAR Oil's trade secrets or related confidential information; 3) cease and desist unfairly competing with MAR Oil; and 4) assign any and all leases acquired by them in the "Area of Mutual Interest," as defined infra. Plaintiff also seeks such other and further relief as I deem appropriate and just.

Jurisdiction exists under diversity. 28 U.S.C. § 1332.

Pending is plaintiff's motion for a preliminary injunction. [Doc. 7-1]. For the reasons discussed below, plaintiff's request is denied.

Background

Plaintiff and Korpan entered into a Consulting and Gross Overriding Royalty Interest ("GORI") Agreement on January 27, 2000. The agreement stated:

This area will also be treated as an area of mutual interest A.M.I. and Myron [Korpan] agrees that this is an area of non competition and may not pursue an exploration venture on his own or with any other party without the permission of Wayne Toole. Previous and future information on this area is to be held confidential. [Joint Ex. 2, at 1].

On July 2, 2002, Plaintiff and Korpan entered into a superseding Gross Overriding Royalty Agreement ("GORA"), incorporating the prior GORI Agreement but changing and further codifying some of the terms [Joint Ex. 1, at 1]. These changes related primarily to the scope of the Area of Mutual Interest ("AMI").The AMI is a designated land area in Northwest Ohio.

The GORA was effective as of the effective date of the earlier GORI Agreement.[Doc. 32-2, at 1]. Section twelve of the GORA creates a term limitation on the duration of the contract:

Notwithstanding anything herein elsewhere or to the contrary contained, any right of any party hereto to acquire any interest from any other party hereto shall cease, determine and be at an end not later than the end of five years from the effective date of this Agreement, being January 27, 2005, except as to any extension or renewal thereof and any new grant acquired in place thereof to the lands and/or leases by Grantor, or any extended period of time mutually agreed upon by the parties hereto and set forth by an amendment to this Agreement. [Doc. 32-2, at 9].

During the term of the GORA, plaintiff invested time and money -- over five million dollars between 2000 and 2010, with much of that during the GORA term -- in exploration, including the production of seismic readings. Plaintiff produced thirty-three miles of two-dimensional and two and a half square miles of three-dimensional seismic readings, and considers this information among its confidential trade secrets. Korpan had access to this material during his time consulting for plaintiff.

Plaintiff and Korpan did not extend the GORA past the January 27, 2005, date. Korpan continued, however, to work with plaintiff through a separate company, Gulf Link, LLC, until May, 2005. Gulf Link was not subject to the GORA. Plaintiff and Korpan continued to communicate sporadically after that relationship ended, speaking at least twenty to thirty times and exchanging at least twelve to fifteen e-mails in the years that followed.

Since the end of his contractual involvement with plaintiff in 2005, Korpan has retained certain materials relating to plaintiff's exploration for oil and gas reserves. These materials contain information about plaintiff's efforts, and include some of plaintiff's two and three-dimensional seismic readings. In total, Korpan has roughly seven bankers' boxes worth of information, which is now in the possession of defense counsel.

In 2008, Korpan began working with Brock and the Solstice defendants to lease land and explore for oil and gas reserves in Northwest Ohio; specifically, to lease and explore in the AMI that was the subject of the GORA. Plaintiff held a lease on what is referred to as "the Johnson property", and let that lease lapse. On November 22, 2010, after discovering defendants' subsequent lease on that land, plaintiff e-mailed Korpan to ask if the latter was involved in the other defendants' leasing and exploration efforts. That same day, Korpan confirmed his involvement with them.

Defendants have multiple leases within the previously designated AMI. Some border directly on plaintiff's leases.

Korpan has admitted to using one of the two-dimensional seismic maps to "jiggle" three lines on a map prepared for defendants' oil and gas exploration efforts. Plaintiff does not allege and defendants do not admit any further direct use of plaintiff's information in defendants' business. Defendants have also acquired their own seismic readings for use in their exploration efforts.

Following the above events, plaintiff filed the pending motion for preliminary injunction to restrain defendants' use of its trade secrets in their oil and gas exploration efforts.

Standard of Review

The purpose of a preliminary injunction is to "preserve the status quo." U.S. v. Edward Rose & Sons, 384 F.3d 258, 261 (6th Cir. 2004). The factors used in granting a preliminary injunction are "(1) the likelihood that the party seeking the preliminary injunction will succeed on the merits of the claim; (2) whether the party seeking the injunction will suffer irreparable harm without the grant of the extraordinary relief; (3) the probability that granting the injunction will cause substantial harm to others; and (4) whether the public interest is advanced by the issuance of the injunction." Washington ...


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