SALEM, Ohio — An appeal by David Yoskey, of Columbiana County, has been granted by the Seventh District Court of Appeals against two oil and gas companies.

Background

Yoskey filed suit against Eric Petroleum Corporation in the Columbiana County Common Pleas Court in 2012. He signed an oil and gas lease with Eric Petroleum on his 73 acres in 2009 that provided for $5 per acre as an annual delay rental, with a primary term of five years. In 2010, Eric Petroleum Corporation signed the deep well rights to a Chesapeake entity and retained the shallow well rights.

Yoskey said in his original lawsuit that he contemplated leasing with Chesapeake but Eric Petroleum Corporation’s landman talked him out of it by making misrepresentations.

The defendants, Eric Petroleum and Chesapeake, counterclaimed, seeking to extend the primary term of the lease because the lawsuit prevented them from exercising their rights under the lease.

Summary judgment granted

The Common Pleas Court granted a summary judgment in favor of Eric Petroleum Corporation and Chesapeake Energy Corporation, et. al. on the grounds that Yoskey didn’t return money he received from the defendants before filing a lawsuit against them.

The defendants insisted Yoskey had to chose between damages or rescission (the right to have a contract set aside if it has been entered into mistakenly, as a result of misrepresentation).

Yoskey chose to rescind the contract.

The defendants then contested the rescission was improper because there was no tender back, or repayment, of the delay rentals of $360 per year paid since 2009.

However, Yoskey told the court he was ready and willing to give the money back, then went ahead and returned the May 2012 check and rejected the 2013 check by refusing delivery.

Yoskey’s attorney, Michael Rossi, said it is their belief that as long as Yoskey was willing to give the money back, it would be up to the court to ensure it got returned.

But on Oct. 16, 2013, the trial court granted summary judgment for Eric Petroleum Corporation and Chesapeake on Yoskey’s three claims, which included two counts of fraud and quiet title and granted their request to move forward with the lease.

Money

The Columbiana County court concluded that Yoskey must give back the money as a condition before seeking to set aside the agreement based on fraudulent inducement. The court held that the repayment rule imposes an actual condition of repayment and it was insufficient to merely say he was ready and able to return the money paid.

Appeal

Yoskey appealed the case on the grounds that it was up to the court to return the money or ensure it got returned and the appeals court judges agreed.

The appeal judges stated the assignment of error has merit, as any tender back rule for rescinding a contract only requires an offer to return money paid under the contract.

The case will now go back to Columbiana County Common Pleas Court Judge Scott Washam for a decision on the alleged fraud and other issues in the case.

The attorney listed for the defendants did not return phone messages left for them.