United States District Court, W.D. Virginia, Abingdon Division
OPINION AND ORDER
P. Jones United States District Judge
Scott Sexton, H. David Gibson, Michael J. Finney, Abigail E.
Murchison, and Scott A. Stephenson, Gentry Locke, Roanoke,
Virginia, for Plaintiff and Counterclaim Defendants; Thomas
R. Scott, Jr., Benjamin A. Street, and Jason D. Gallagher,
Street Law Firm, LLP, Grundy, Virginia, for Defendant and
advance of trial, after briefing and oral argument, I
determine motions in limine and a motion for summary judgment
in this Virginia breach of contract action based upon the
court's diversity jurisdiction.
case has been tried before, and on that occasion I granted
judgment as a matter of law pursuant to Rule 50(a) in favor
of Knox Energy, LLC, and Consol Energy, Inc. (collectively,
“Consol”), the plaintiff and counterclaim
defendants. Knox Energy, LLC v. Gasco Drilling,
Inc., 54 F.Supp.3d 489, 501 (W.D. Va. 2014) (holding
that no reasonable jury could find that there was mutual
assent to the alleged contract). On appeal by defendant and
counterclaimant Gasco Drilling, Inc. (“Gasco”),
the court of appeals reversed, finding that, “[g]iven
this mix in the evidence . . . without weighing the evidence
or making credibility determinations, ” the issue of
mutual assent to the alleged contract was a matter for the
jury. Knox Energy, LLC v. Gasco Drilling,
Inc., 637 F. App'x 735, 739 (4th Cir. 2016)
opinion, the court of appeals recited the basic facts as
In 2008, Consol, a natural gas producer, and Gasco, a
drilling company, entered into a drilling agreement that
lasted for two years, or until Gasco completed its work.
Under the contract, Consol agreed to pay a
“standby” rate of $10, 800 per day, per drilling
rig, for time when Gasco was on site but not actively
drilling. While drilling, Gasco received an even higher fee.
Additionally, the 2008 agreement contained a special
“take-or-pay” provision, which guaranteed that
Gasco would make two rigs available for Consol whenever it
requested work. Whether or not Gasco was on site, it provided
that Consol would pay the standby rate for 328 days of each
twelve-month period. In May 2010, the parties amended the
agreement to release one of the rigs from the contract. The
remaining rig completed its work, and the contract
terminated, in July 2010.
The essential dispute in this case is whether Gasco and
Consol reinstated that 2008 contract in 2011. On June 6,
2011, Consol emailed Gasco a document titled “Addendum
to Contract Purchase Order.” Clyde Ratliff, Gasco's
CEO, signed the Addendum and returned it on June 14, 2011.
Consol returned the countersigned Addendum to Gasco on July
29, 2011. The Addendum stated that Gasco and Consol
“agree to modify the ‘term' provision of the
contract purchase order to read as follows:” that the
new “term of this agreement shall be for one year from
the date set forth above and shall be automatically extended
for one year terms unless either party gives written
notice” of termination at least thirty days before
renewal. The Addendum was “effective” on June 13,
2011. The “contract purchase order” referenced in
the Addendum was the 2008 drilling agreement, “PO No.
5600000439.” . . . .
For a year after signing this Addendum, Consol did not ask
Gasco to drill, and neither party communicated about the
Addendum. Then, in June 2012, Gasco sent Consol a $7, 084,
800 bill for 328 days of take-or-pay standby charges.
Contending that it had mistakenly signed the Addendum, Consol
refused to pay. Additionally, Consol filed this diversity
action for declaratory relief. In response, Gasco sent Consol
a second $7, 084, 800 invoice as liquidated damages for early
termination, and counter-sued for breach of contract.
Id. at 736-37. The court of appeals held that
“[i]f Gasco knew or should have known that Consol made
a mistake, we agree there was no mutual assent. But Gasco
presented sufficient evidence that, if credited, a reasonable
jury could have found in its favor.” Id. at
of “Date Set Forth Above” in Addendum.
fully executed Addendum contains the following language:
to Contract Purchase Order
Addendum to contract purchase order (“Addendum”)
is entered into effective this 13th day of
June, 2011, by and between Consol Energy,
Inc. and its affiliates (“Company”) and Gasco
Drilling, Inc. (“Contractor”).
Company and Contractor are parties to a contract purchase
order (PO No. 5600000439) (the “Contract
Purchase Order”); and Whereas, Company and Contractor
agree to modify the “Term” provision of the
Contract Purchase Order as provided herein.
intending to be legally bound, Company and Contractor agree
Company and Contractor agree to modify the “Term”
provision of the Contract Purchase Order to read as follows:
to Company's right to cancel this contract purchase order
as set forth below, the term of this agreement shall be for
one year from the date set forth above and shall be
automatically extended for one year terms unless either party
gives written notice to the other party of the termination of
the agreement at least thirty (30) days before the end of the
current one year term.
In witness whereof, the parties have caused their duly
authorized representatives to execute this agreement
intending it to be effective on the effective date.
(Countercl. Pl.'s Trial Ex. 11(b), ECF No. 264-25.)
Motion for Summary Judgment and Gasco's Second Motion in
Limine both involve the meaning of the words “one year
from the date set forth above” in the Addendum. Consol
contends that this language means that Gasco's purported
contract is impossible of performance, and thus
unenforceable, because it would extend a “term entirely
in the past.” (Mem. Supp. Mot. Summ. J. 15, ECF No.
331.) In its motion, Gasco calls this a
“hyper-technical legal interpretation” and argues
that there is no evidence that either party intended such a
result. (Mem. Supp. Second Mot. Limine ...