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Inc. v. Tuggle

Court of Appeals of Ohio, Fifth District, Stark

December 19, 2017

M3 PRODUCING, INC., ET AL Plaintiffs-Appellees
v.
MELISSA TUGGLE, ET AL Defendants-Appellants

         Civil appeal from the Stark County Court of Common Pleas, Case No.2015CV01678

          For Plaintiff-Appellant JAMES H. MCHUGH Tzangas, Plakas, Mannos, Ltd

          For Defendant-Appellee SCOTT M. ZURAKOWSKI JAMES M. WILLIAMS Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

          JUDGES: Hon. W Scott Gwin, P.J. Hon. Craig R. Baldwin, J. Hon. Earle E. Wise, J.

          OPINION

          BALDWIN, J.

         {¶1} Appellants Melissa Tuggle and SSS Oil and Gas, Inc. appeal the February 8, 2017 judgment entry of the Stark County Court of Common Pleas granting in part and denying in part their motion to enforce settlement agreement.

         Facts & Procedural History

         {¶2} KMFAD Oil and Gas, LLC ("KMFAD"), an oil and gas production company, was bequeathed to appellant Melissa Tuggle ("Tuggle") and her sister Carrie Anne Moore ("Moore") when their father died. Each sister's company was a 50% owner of KMFAD. Moore's company is appellee M3 Producing, Inc. ("M3") and Tuggle's company is appellant SSS Oil and Gas. The parties were unable to operate KMFAD cooperatively and continually disagreed about the management and running of KMFAD. Thus, on August 13, 2015, appellees filed a complaint against appellants for breach of fiduciary duty, accounting, unjust enrichment, and injunctive relief. Appellants filed an answer to the complaint. The parties then engaged in extensive motion practice and mediation, and ultimately arrived at a settlement. The parties reduced the settlement terms to writing and filed a consent entry of dismissal with prejudice on October 18, 2016. The trial court retained jurisdiction to enforce the terms of the settlement agreement.

         {¶3} The settlement agreement generally provides that appellants would relinquish their interest in KMFAD in exchange for appellees transferring certain wells owned by KMFAD, the NATCO and Medina wells, to appellants. Section 2.01 of the settlement agreement states that the purchase and sale agreement of the NATCO and Medina wells, shall be held in abeyance and not take effect until such time as the SSS Oil Parties, at the sole expense of the SSS Oil Parties, secure any and all permits and licensure as required by the State of Ohio, including, but not limited to the State of Ohio Department of Natural Resources ("ODNR"), and until such time as the SSS Oil Parties, at the sole expense of the SSS Parties, secure the industry security and bonding on all assets contained in the Purchase and Sale Agreement as further required by ODNR; however, said period of abeyance shall be no later than November 30, 2016 (the "Transition Period"). The KMFAD Parties shall timely tender any and all information or documentation as requested by the SSS Oil Parties for purposes of obtaining said required permits, licensure and industry security, provided said information and/or documentation is in the possession of the KMFAD Parties

         {¶4} Further, Section 2.09 of the settlement agreement provides that if the SSS Oil Parties failed to secure any and all permits and licensure as required by the State of Ohio, including, but not limited to ODNR, and/or in the event that the SSS Oil Parties fail to secure the required industry security on all assets contained in the Purchase and Sale Agreement, as required by §2.01 above, by the last date of the Transition Period, the Purchase and Sale agreement shall then become null and void on December 1, 2016, and KMFAD shall retain and maintain any and all interest in the NATCO/Crescent Brick Lease wells and the Homer Township/Medina County gas wells (and all well equipment).

         {¶5} On November 1, 2016, counsel for appellants sent an e-mail to counsel for appellees. The e-mail stated that appellants had satisfied the requirement for a bond and liability insurance and thus counsel believed "this satisfies the conditions precedent in order to execute the Purchase and Sale Agreement in order to formally transfer the wells." The e-mail also included several steps appellants' counsel believed were necessary to transfer the wells, including:

1. Finalize the Purchase and Sale Agreement - see latest version attached (please note that it remains subject to further changes, review and approval by my client);
2.Your client needs to sign the necessary Form ...

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