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Wednesday, March 21,2012

Attorneys spar in suit over oil/gas wells

By Jim Phillips
Photo Credits: Photo provided by Paul Kilzer.
Photo Caption: Oil wells on Paul Kilzer's property allegedly leak, spilling oil onto his land.

The attorneys in a bitter lawsuit over oil-and-gas wells on the land of an Amesville couple argued ferociously in court Monday over issues including who should get the money from sales of the wells' output, and whom to blame for an oil spill on the site last month.

Attorney Michael Nolan represents Jamie Metcalf, the Glouster woman who operates the nine wells. At a hearing, Nolan suggested to Athens County Common Pleas Judge Michael Ward that the two parties should enter mediation, because communication between them seems to have broken down.

Attorney Don Wirtshafter, however, who represents defendants Paul and Kerensa Kilzer, suggested the dispute between the parties is not just bad blood, but stems from legal issues that a judge or jury will have to decide.

"Right now I don't understand what could be mediated," Wirtshafter told the judge. "One side or the other wins here."

Nolan fired back that he's baffled as to how, exactly, Wirtshafter views the case.

"I just don't understand what Mr. Wirtshafter's position is going to be (if this case goes to trial)," he said.

If Wirtshafter is claiming that Metcalf's lease has completely lapsed and that the Kilzers now have a right to all the well equipment and all the oil and gas coming out of their property, Nolan added, "I need to tell him a little bit about the Ohio law."

Addressing Wirtshafter, Nolan questioned whether he actually believes that after a trial, a jury will find that the Kilzers have sole right to the wells and their output – a claim Nolan indicated he considers absurd.

"If that's what your hope is, tell me now," he urged.

Wirtshafter cheerfully complied, informing Nolan and the judge, "That exactly is our hope." If he's right in his reading of the legal issues, Wirtshafter added, "we win hands down" in a trial.

The lawsuit, filed in July of last year, is complicated. Essentially, however, the Kilzers claim that because the wells on their land were not producing for several years, the 10-year lease they had with Metcalf's former husband lapsed by its own terms. (Many drilling leases require the land to be kept in ongoing production to permit renewal of the lease.)

They also claim that they have owned the well equipment since they won it in a default judgment against another operator in Athens County Common Pleas Court in 2000.

Though they promptly turned around and leased the equipment to Metcalf's husband, they claim, it has belonged to them since their 2000 court victory. Therefore, they say, with the termination of their former lease, they now own the wells and everything that comes out of them.

This claim triggered a heated exchange between the attorneys, with Nolan suggesting it flouts Ohio law to suggest that the Kilzers own the well rigs.

"To say that that equipment is your clients' is wrong!" he told Wirshafter.

"That's outrageous, your honor," Wirtshafter told the judge.

The terms of the old lease gave the Kilzers a one-eighth share in the revenue from sale of the wells' output – an arrangement that Ward has continued in force while the suit is pending.

Jamie Metcalf took over the wells from her former husband. After the dispute arose, the Kilzers have alleged that Metcalf has on more than one occasion shut off the free natural gas to their home that they're supposed to receive. They also claim she has not operated or maintained the wells properly, leading to oil spillage and other problems. (The wells apparently produce both oil and natural gas.)

Metcalf, in turn, alleges the Kilzers have been tampering with the wells and causing the problems. In one case gas was shut off to meter a line, she claims, but all that the Kilzers needed to do was re-light the pilot lights in their home after it was turned back on.

The Kilzers "vehemently deny any sabotage of their wells," Wirtshafter said. He alleged that an oil spill that occurred in February was caused by Metcalf's adult son improperly operating the wells.

"That oil spill is exactly what my clients were worried about," he added. "(Metcalf) is operating (the wells) in a substandard way… She doesn't know what she's doing; it's obvious."

Nolan responded that he has a state regulatory official ready to testify that Metcalf is doing a fine job of operating the wells, and that it's Paul Kilzer who has been making adjustments on them that are improper and even dangerous.

He alleged that Kilzer has been making adjustments on a flow valve controlling natural gas, but doing it incorrectly. "Mr. Kilzer's turning it the wrong way," he claimed, creating a risk of fire or explosion at his home.

Judge Ward questioned why either party was handling the well equipment, rather than a professional service company. "Why does Ms. Metcalf need to be out there?" he asked. "Don't we have professionals that do this?"

Nolan responded that Metcalf is in fact the operator of the wells, and is trained to run and maintain them.

Earlier in the case, Ward ordered some money from the sale of oil to be escrowed. Wirtshafter has demanded in a motion that over $17,000 since brought in by the wells be added to the escrow fund, or that Metcalf at least have to account for how she spent it to upgrade and maintain the wells.

Nolan called it "completely unfair" to require Metcalf to come up with $17,000 that she has earned by putting the wells back into production, and has already spent. If the judge were to order her to pony up the money, he added, "I can tell you right now that she can't afford to do that."

Ward made some rulings in the case regarding discovery issues. There is a trial scheduled for July, though both sides have indicated they will seek summary judgment.


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