Plaintiffs James and Betty Tonkovich own approximately 850 acres in Belmont County, Ohio. Plaintiffs belong to a group of landowners known as Belmont Leasing Group, which leases land for oil and gas exploration. In July 2011, Plaintiffs executed three oil and gas leases with Defendant, Gulfport Energy Corp. Defendant subsequently recorded the 3 leases in the Belmont Recorders Office. A dispute arose over failure to pay consideration under the leases, and Plaintiffs filed suit.
The complaint asserts claims for, among other things, for failure to pay consideration.
Plaintiffs seek declaratory judgment that the leases are void and therefore unenforceable. Both sides filed motions for Summary Judgment.
At issue in court is whether Defendant failed to pay consideration under the leases. The parties agree that Defendant never paid Plaintiff $1.00 per acre. Plaintiffs argue that the leases Plaintiffs signed were nothing more than offers by Plaintiffs, that Defendant could reject for any reason and that because consideration is essential to the formation of a contract, the nonpayment of consideration means that there was no lease. Defendant counters that although Ohio recognizes that a lease is a contract subject to traditional contract law, the state law also provide that nonpayment of nominal consideration does not void a lease.
Does Defendant’s failure to pay the nominal amount of $1 an acre void the lease at issue. How should the court rule and why? How did the court rule? Do you agree, and why or why not?