Can an Oil and Gas Lease be Rejected in Bankruptcy?

No. 740

Babst Calland, a Pittsburgh law firm with a substantial energy law practice, has posed a great question on their blog. Can a landowner reject an oil and gas lease as an executory contract under Section 365 of the Bankruptcy Code?

But why would a landowner want to do so? At the present time, owners of properties that have a traditional gas lease with a shallow well are unable to lease the Marcellus Shale gas. This is because these leases traditionally involved “all of the oil and gas”, even though no one contemplated a Marcellus well would be drilled at the time the lease was entered. If the lease could be rejected in Bankruptcy Court, or so the thinking goes, then the landowner would be free to contract for the richer bonuses and royalties that have become the hallmark of Marcellus leases.

In Pennsylvania, however, there is a problem with this strategy. An oil and gas lease is considered to be a conveyance of the oil and gas estate, subject to the reversion of whatever remains when the lease is terminated. However, no court has weighed in on the question yet. It is also conceivable that the answer could be different in other states where the Pennsylvania Rule that the mineral estate may be severed by lease from the fee is not followed.

Marcellus Shale has been a game changer in the marketplace and it promises to to be one in the law as well.

Category: Oil and Gas
Tags: Marcellus Shale

Is Occupy Wall Street the Next Tea Party?

No. 739

Occupy Wall Street opened a branch office on Grant Street last weekend. It is probably the first time tents have been pitched at this location since Captain James Grant gave Grant’s Hill its name.

Its a great country when a group of protestors against capitalism can pitch tents on land owned by the corporate heirs of Pittsburgh’s most famous family of bankers and industrialists and, in the name of free speech, they let it happen. Incidentally, Judge Thomas Mellon himself lived in a tent for a while as a child when his family migrated from Ireland. So, perhaps there is precedent.

What happens next? It wasn’t so long ago that I suggested in this blog that the fledgling Tea Party had the makings of a great political movement. And so it has come to pass. Could Occupy Wall Street become the next Tea Party? Or perhaps, just the next Coxey’s Army? Watch to see who folds up their tent when the weather turns. CLT

Category: News Commentary

May I Remind You That You Are Under Oath?

No. 738

As you may know, the bar results are in. That means that a new crop of lawyers will be sworn in. Many will take the oath en masse before the Supreme Court. But some, perhaps with urgent business before the court, will take it in a private ceremony. Judge Joseph Ridge, who became a good friend over the ensuing years, administered it to me in October of 1973, the year the world began.

Yes, Counsellor, it may have been a few years, so perhaps you have forgotten you took this oath. You had to, or you would never have been admitted into that lay priesthood we call the bar. To refresh your memory, here it is, as codified in 42 Purdon’s Section 2522.

§ 2522. Oath of office.

        Before entering upon the duties of his office, each attorney at law shall take and subscribe the following oath or affirmation before a person authorized to administer oaths:

            “I do solemnly swear (or affirm) that I will support, obey and defend the Constitution of the United States and the Constitution of this Commonwealth and that I will discharge the duties of my office with fidelity, as well to the court as to the client, that I will use no falsehood, nor delay the cause of any person for lucre or malice.”

   Any person refusing to take the oath or affirmation shall forfeit his office.

So, what’s all this about lucre? [ pronounced loo’-cur; as in 1 Timothy 3:3 — “not given to filthy lucre.” ]

The illustration above says it all.

CLT

Category: Practice of Law
Tags: filthy lucre > lawyer's oath of office

And Thereby Hangs a Tale.

No. 737

Once upon a time there was a Little City named Harrisburg that planned to hire one of the most prestigious law firms in the world, the feared Cravath, to handle its Chapter 9 Bankruptcy. The feared Cravath had a stable full of hungry, hungry dinosaurs in grey suits who looked fierce but were very, very expensive to feed.

Cravath’s fees — which ranged to a little less than $1,000 per hour for a T Rex, were too rich for the bankrupt Little City. So It looked around locally and received a lot of very affordable bids from Pennsylvania lawyers.

When the feared Cravath heard about the other bids, it swooped in with an offer that no one could refuse: $0.00 per hour. But there was a catch. The Little City would still have to pay costs. And the costs were very very rich indeed.

But, behold! The Little City didn’t hire the feared Cravath, T Rexes and all, even at the low, low price of $0.00. It hired a sole practitioner named Mark Schwartz from the Village of Bryn Mawr.

Mr. Schwartz was no ordinary lawyer. He had a lot of experience and the press clippings to prove it. The Little City liked the fact that he was willing to handle their case personally and on a full-time basis. It also liked the fact that Schwartz didn’t have any large hungry reptiles to feed. Yet Schwartz knew how to find help when he needed it.

Schwartz took charge of the case, filed it and . . .

They all lived happily ever after.

Three cheers for Schwartz! Three cheers for the little City!

CLT

Category: Bankruptcy, Legal Marketing
Tags: Harrisburg

Never Heard of Chapter 9 of the Bankruptcy Code? You Will.

HARRISBURG

Photo: Reuters

Yes, Harrisburg is about to make news. But not in a good way.

The City of Harrisburg filed today for protection under Chapter 9 of the Bankruptcy Code. That’s the chapter of the code that provides for reorganization for municipalities. The most famous one was Orange County, California.

The filing is in response to the City’s default on municipal bond payments for an incinerator project and has been anticipated for some time. Most Chapter 9 filings fail and there is talk that this one will too. Others worry that Chapter 9 filings have become a trend. Such filings are driven by creditor suits, which could lead to the garnishment of tax revenues earmarked for other purposes.

CLT

Category: Bankruptcy
Tags: Chapter 9 Bankruptcy > Harrisburg

Not Always As They Appear.

No. 735

You are looking at the marble counter at the Department of Court Records, Criminal Division, formerly known as the Clerk of Courts.

What do you see on the countertop?

It looks like a vase of flowers, doesn’t it? But its not. Its a container of pens for people to fill out summary appeal forms.

Each pen has a plastic flower taped to it. Think about it — this is the Criminal Division. How to keep people from pocketing the pens? That’s right.

CLT

Category: Criminal Law
Tags: Criminal Division > Department of Court Records

CEB Blog — Continuing Education of the Bar — added to Blogroll.

No. 734

I have been adding a number of blogs with practical information for lawyers [and others] to the blogroll on the left-hand margin of this blog. If you like the Lawyerist or Time Management Ninja, you are going to enjoy reading CEB Blog.

Here’s a sample contain sound advice about email mistakes commonly made during negotiations. For example, be very careful when you are tempted to hit the reply button on a string message. It is usually better to send a new message. The article tells you why.

CLT

Category: Legal Education

At a Time Like This . . .

No. 733

We hear it all of the time lately. How can you [insert something] at a time like this?

And exactly what time is it, this?

At a time like this, one tweet on Twitter read, when thing are so complex, perhaps we need to elect a moron.

It is a time not to raise taxes. Or a time not to spend money. Or a time not to invest in the stock market. Or a time not to do so many other things that will, for some reason, be okay in the rosy future.

Bunk! There is no such thing as a bad time. Every time is a time of opportunity. Discovering what the opportunity is — that’s the catch. But there will surely someday be a last time and a last opportunity. Don’t ever let someone tell you to postpone a worthy endeavor at a time like this.

CLT

Category: Personal Productivity

THE MONSTER THAT DEVOURED CLEVELAND AND OTHER BEDTIME STORIES.

No. 732

Security officers reported seeing a 5 foot alligator in Beaver Run Reservoir about a month ago but didn’t remember to report it. Big deal, only five feet long anyway.

The manager of the Westmoreland County Water and Sewer Authority, Chris Somebody, told the press that the Authority wasn’t going to worry about it, since it would just die in the winter. Problem solved.

Not quite. The Alligator set up a Facebook page to urge the public to rescue him. Within two hours, the alligator had 4,000 friends. It seems that everybody likes alligators.

More recently, a six foot alligator wars spotted walking along the beach. The Dalai Lama called for the rescue of the Alligator. Chris Somebody told the press that it would just have to die. He wasn’t paying security guards, whose job it was to guard the lake, to go looking for an Alligator.

Then, a seven and a half foot alligator was seen chomping on a goose swimming on the lake.

Okay, said Chris Somebody, if anybody wants to rescue an alligator, be my guest. The staff of Pittsburgh Zoo answered the call. Hundreds of members of the herpetological society joined in the search.

An eleven foot reptile was spotted swimming in the lake with a cat in its jaws. Alligators don’t grow to be eleven feet long, said a spokesman of the zoo. It must be a komodo dragon.

A horse was found dead by the lake. The tooth marks were too large for a komodo dragon, said an expert from Carnegie Museum, who joined the hunt. It must be a fifteen foot tyrannosaurus rex, said the expert.

Then it was sighted again by a group of movie producers, researching a possible film script. It was Godzilla, they all concurred and it had left the lake and was heading northeast toward Cleveland.

CLT

Category: Pittsburgh Legal Back Talk

Thank You Real Estate Agents

No. 731

Thanks to the great group of real estate agents that took the continuing professional education class I gave at CCAC North this past week. They asked plenty of great questions and added a great deal to the discussion.

I will be giving the class at least four more times in the Spring at each of the four suburban campuses and possibly at the Washington County campus, too. It will consist of 3 1/2 hours of landlord and tenant law and 3 1/2 hours of mortgage foreclosure and tax sale topics.

I will also be teaching a 3 hour continuing legal education seminar on preliminary objections at the four suburban campuses and possibly at the downtown branch this fall and spring.

CLT

Category: Civil Litigation, Legal Education, Real Estate

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Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

Pittsburgh Legal Back Talk

Legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus.

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