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STATE OF MICHIGAN
COURT OF APPEALS


JOHN A. BOTT, Plaintiff/Counterdefendant/ThirdParty Defendant-Appellant, v DAVID EMERSON BURGESS and SANDRA TREVENA BURGESS, Defendants/Counterplaintiffs/ThirdParty Plaintiffs-Appellees.

UNPUBLISHED September 19, 1997

No. 189729 Otsego Circuit Court LC No. 90-004670-CZ

Before: Corrigan, C.J., and Markey and Markman, JJ. PER CURIAM. Plaintiff John A. Bott appeals as of right from the order granting defendants' (also counterplaintiffs') motion for summary disposition under MCR 2.116(C)(10) on their breach of contract claim and awarding them $5,305,075.60 in damages and interest. We reverse and remand for trial. In 1990, plaintiff brought suit against defendants and others to quiet title to property that plaintiff acquired from defendants pursuant to a 1973 land contract. In connection with the existing oil and gas leases on the property, Paragraph 14 of the land contract provided: [A]ll monies derived subsequent hereto, from the leasing of oil, gas and mineral rights under leases presently existing on said premises, shall be divided on a 50-50 basis between Seller and Purchaser until the expiration of said leases; PROVIDED, however, that should oil, gas or mineral production be realized from said premises during the term of those leases now extent [sic], the monies received from said production shall be divided on a 50-50 basis between seller and purchaser until termination of production. In the event of non-production, all oil, gas and mineral rights shall vest in purchaser upon expiration of the primary term of said leases or release thereof.

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This paragraph was incorporated by reference into the warranty deed given to plaintiff by defendants when plaintiff paid off the land contract in January of 1975.1 In his original suit, plaintiff sought a declaratory judgment that the leases were invalid or had expired by their own terms and that the property was clear of any interests other than plaintiff's interest. Defendants then filed a countersuit in which they alleged that plaintiff breached the terms of the land contract by failing to pay defendants the fifty percent royalty from production and development of the gas and oil on the property. In March of 1992, plaintiff entered into a settlement agreement with the other defendants under which he agreed to ratify the mineral rights lease originally given by Dion and Grace A. Geraldine [the Geraldine lease].2 That lease covered approximately 440 of the 860 acre parcel3 plaintiff purchased from defendants and entitled the lessor to a one-eighth royalty interest in any oil, gas or minerals produced from the property. This one-eighth royalty interest is the only interest defendants had in the production proceeds generated under the Geraldine leases at the time plaintiff and defendant entered into the land contract at issue. Under the settlement agreement, plaintiff acquired the remaining seven eighths interest in the Geraldine lease and agreed to drill five additional wells within one year. That is, plaintiff made substantial investments independent of the interest in the Geraldine leases he purchased from defendants. On June 1, 1992, consistent with the terms of the settlement agreement, those parties other than defendants in the instant appeal also entered into a "unitization" agreement that pooled the interests of the parties in the property at issue with another parcel also owned by plaintiff. The 1040 acre unit created by the unitization agreement is referred to as the J. A. Bott Antrim field. The agreement provided that a well drilled anywhere in the unitization area was to be deemed a well drilled under the Geraldine lease. On November 12, 1992, defendants filed their first motion for summary disposition pursuant to MCR 2.116(C)(10), arguing that they were entitled to judgment as a matter of law on their breach of contract claim because, in ratifying the Geraldine lease, plaintiff confirmed and admitted that there were unexpired leases existing on the property in which defendants held a fifty percent interest under the land contract. Plaintiff argued that paragraph 14 of the land contract was ambiguous because the parties were unaware of the existence of the Geraldine lease at the time of the conveyance. The trial court found that there was no mutual mistake of fact and that defendants were entitled to fifty percent of the proceeds from the leasing and production under the Geraldine lease. That decision was affirmed by this Court in a memorandum opinion issued November 4, 1994, in which this Court stated that paragraph 14 of the land contract "clearly states that defendants are entitled to fifty percent of all monies derived from the leasing of oil, gas and mineral rights under the leases existing at the time of the signing of the land contract." Bott v Burgess, memorandum opinion of the Court of Appeals, issued November 4, 1994 (Docket No. 164216).4 On March 23, 1995, defendants again moved for summary disposition pursuant to MCR 2.116(C)(10), contending that there existed no genuine issue of material fact and that plaintiff had admitted the amount of damages in answers to interrogatories and requests for admissions. Defendants argued that they were entitled to fifty percent of 860/1040 of the proceeds from production prior to unitization on June 1, 1992, because the premises consisted of 860 acres of a 1040 acre oil and gas field, and the field was metered and produced as one unit. Proceeds from production received by

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plaintiff from February, 1991 through May, 1992 were $1,736,399.40. In addition, defendants asserted that they were entitled to fifty percent of all production after June 1, 1992, because under the unitization and settlement agreements, the Geraldine lease was now considered to be covering all the wells in the 1040 acre field. According to plaintiff's admissions, he had received approximately $4,068,446.91 in proceeds since June 1, 1992. Defendants also sought consequential damages for the loss of the tax credits that they would have been able to claim under IRC

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