In a case pitting a Sullivan County, NY, homeowner against his property owners association (POA), a Sullivan Civil Supreme Court judge has permanently barred Cabot Oil & Gas Corp. from drilling in the residential subdivision, which is located in the Marcellus Shale.
Weiden Lake Property Owners Association Inc. had sought summary judgment to enforce its covenants against homeowner Jeff Klansky, who in 2008 granted Cabot exclusive rights "to explore for, drill for, produce and market oil, gas and other hydrocarbons" from his 66-acre lot in the residential subdivision, which is located in the town of Tusten on the Delaware River. To date Cabot had "taken no action to exercise their rights" under the five-year lease, according to court documents.
Cabot and Klansky had opposed the POA's motion. The covenant included in his deed prohibited only commercial fishing and boating uses on an adjacent community lake, according to Klansky. The court ruled that other protective covenants, which prohibit exploration and drilling, were attached to Klansky's deed through a prior deed to the property.
Justice James P. Gilpatric also refused to rescind the lease between Klansky and Houston-based Cabot, barring the company from recovering a $99,255 signing bonus it paid to Klansky for the rights to explore and drill under his property.
"The evidence clearly demonstrates that Cabot, a sophisticated business entity, made a calculated and knowing decision to enter into the lease, approve title and pay the signing bonus with full knowledge of the protective covenants and POA's position," Gilpatric wrote in his decision. "Therefore, it is not entitled to rescission of the lease under a mistake of law."