PANHANDLE OIL AND GAS, INC. APPELLANT
BHP BILLITON PETROLEUM (FAYETTEVILLE), LLC APPELLEE
FROM THE FAULKNER COUNTY CIRCUIT COURT [NO. 23CV-13-50]
HONORABLE MIKE MURPHY, JUDGE
Law Firm, P.A., by: M. Edward Morgan; and Fellers Snider
Blankenship Bailey & Tippens, P.C., by: Mark K.
Stonecipher and C. Eric Shephard, pro hac vice.
Law, PLLC, by: Julie DeWoody Greathouse and Kimberly D.
Logue, for appellee.
RAYMOND R. ABRAMSON, Judge
the second time this case is before us on appeal. In the
first appeal, our court dismissed for lack of a final order.
Panhandle Oil & Gas, Inc. v. BHP Billiton Petroleum
(Fayetteville) LLC, 2016 Ark.App. 376, 499 S.W.3d 667
(Panhandle I). We now have a final order; appellant
Panhandle Oil and Gas, Inc. (Panhandle), has again appealed
three dismissals of their claims against appellee BHP
Billiton Petroleum Fayetteville (BHP) from the Faulkner
County Circuit Court. On appeal, Panhandle argues that the
circuit court abused its discretion in granting two motions
to dismiss pursuant to Rule 12(b)(6) of the Arkansas Rules of
Civil Procedure and that the circuit court erred by
dismissing its claims against BHP in the third amended
complaint pursuant to Rule 41(b) of the Arkansas Rules of
Civil Procedure. For the following reasons, we affirm in
part, and reverse and remand in part.
court noted in Panhandle I, the procedural history
of this case is rather complex. We provided a recitation of
the facts in that opinion and do so again here. In May 2005,
Panhandle and separate defendant Chesapeake Exploration, LLC
(Chesapeake), entered into a written agreement (the May 2005
Agreement), which stated that Chesapeake would provide
wellbore proposals to Panhandle for oil and gas wells in
certain identified sections of land in Arkansas where
Panhandle owns forty or more net mineral acres and Chesapeake
desires to drill a well. Upon receiving a wellbore proposal,
Panhandle would then decide if it wanted to participate in
the well. Panhandle argues that the obligations of Chesapeake
(and its assigns) included two things: (1) submit a well
proposal in the event a well was to be drilled; and (2) in
the event Panhandle elected to participate in a well, execute
a wellbore assignment of any "Retained Interest, "
which was a defined term. The contract was designed to allow
Panhandle to participate in the development of its minerals
even though Panhandle itself would not drill the well.
claims that, beginning in 2009, it began experiencing
significant delays in receiving well proposals and other
pertinent information. In an effort to remedy this, Panhandle
and Chesapeake entered into another agreement, which is
referred to as "the August 2010 Agreement, " in
order to establish Panhandle as a record working-interest
owner in certain listed sections. On January 1, 2011,
Chesapeake assigned its remaining interest in the Panhandle
Leases to BHP. On January 14, 2013, Panhandle filed suit
against Chesapeake based on Chesapeake's alleged breaches
of the May 2005 Agreement and also named BHP as a defendant.
In its first amended complaint, filed on June 21, 2013,
Panhandle asserted causes of action against BHP for breach of
the May 2005 Agreement, specific performance of the same, an
equitable accounting, and unjust enrichment. On July 11, 2013,
BHP moved to dismiss the causes of action against it in the
first amended complaint under Rule 12(b)(6) of the Arkansas
Rules of Civil Procedure for failure to adequately state a
claim. BHP argued that the first amended complaint sought to
extend the May 2005 Agreement beyond its written terms,
failed to allege sufficient facts-including an adequate basis
to support successor liability-and failed to allege claims
for an equitable accounting or unjust enrichment. After
Panhandle responded on July 25, 2013, the circuit court heard
oral arguments on the issues raised in the motion and
response. On October 31, 2013, the circuit court dismissed
BHP from the case by stating, without further explanation,
that the Rule 12(b)(6) motion was granted.
November 21, 2013, Panhandle filed its second amended
complaint, pursuant to Rule 15(a) of the Arkansas Rules of
Civil Procedure, asserting claims against both BHP and
defendant Chesapeake. The claims in the second amended
complaint were nearly identical to the claims made in the
first amended complaint. The only changes were to include
various argumentative and conclusory allegations in response
to BHP's previous motion to dismiss and to state new
claims for reformation in which Panhandle specifically
requested that the terms of the May 2005 Agreement and the
August 2010 Agreement be expanded in order to impose new
contractual obligations on BHP. On December 23, 2013, BHP filed a
motion to dismiss Panhandle's second amended complaint
pursuant to Rule 12(b)(6) of the Arkansas Rules of Civil
Procedure for the same reasons previously argued to the
circuit court. Panhandle filed a written response to the
motion, and the circuit court held a hearing on February 24,
2014. On March 17, 2014, the circuit court, without further
explanation, granted BHP's motion to dismiss the second
amended complaint, finding it had failed to state facts upon
which relief could be granted as to BHP.
April 9, 2014, Panhandle filed its third amended complaint.
On May 16, 2014, BHP moved to dismiss or strike this third
iteration of Panhandle's claims against it because Rule
41(b) of the Arkansas Rules of Civil Procedure directs that
the circuit court's second order of dismissal should be
deemed as an adjudication on the merits, and consequently is
a dismissal with prejudice. Therefore, BHP argued, the
circuit court was barred from taking up Panhandle's
reasserted allegations. On June 5, 2014, Panhandle filed a
response to BHP's motion; within its response was a
request that the circuit court reconsider and vacate the
March 17, 2014 dismissal.
December 29, 2014, after the issue was briefed by both
parties, the circuit court, in a letter opinion, granted
BHP's motion and denied the request for reconsideration
of the dismissal of the second amended complaint that was
included in Panhandle's response to the motion to dismiss
the third amended complaint. After a settlement, Chesapeake
was dismissed in August 2015, and the circuit court entered
an order and judgment on September 26, 2016, reflecting the
contents of the December 29, 2014 letter opinion. This timely
appeal is now properly before our court.
Panhandle's notice of appeal filed September 29, 2016,
Panhandle appeals the two consecutive Rule 12(b)(6)
dismissals by former Judge Maggio of claims asserted against
BHP, and the Rule 41(b) dismissal by Judge Murphy, all of
which became ripe for postjudgment appeal after the
combination of Panhandle's dismissal of Chesapeake and
the order and judgment entered on September 26, 2016.
maintains that in order to properly dismiss its claims
against BHP under Rule 12(b)(6), Judge Maggio had to find
that Panhandle failed to (1) state general facts upon which
relief could have been granted against BHP or (2) include
specific facts pertaining to one or more of the elements of
one of its claims after accepting all facts contained in the
complaint as true and in the light most favorable to the
non-moving party. Bethel Baptist Church v. Church Mut.
Ins. Co., 54 Ark.App. 262, 265, 924 S.W.2d 494, 496
(1996). Both of the orders dismissing BHP pursuant to Rule
12(b)(6) provide that Panhandle "fail[ed] to state facts
upon which relief can be granted against BHP" but
provide no further explanation. The circuit court was not
specific in either order as to why or how the pleading was
inadequate, though we note this is not required when
dismissing a case pursuant to Rule 12(b)(6).
Standard of Review
court has often stated the standards to be applied in
reviewing a dismissal order under Rule 12(b)(6), and we look
to the four corners of the complaint. See Peck v.
Peck, 2016 Ark.App. 423, 502 S.W.3d 553. In reviewing a
circuit court's decision on a motion to dismiss under
Rule 12(b)(6), we treat the facts alleged in the complaint as
true and view them in the light most favorable to the
plaintiff. Neal v. Wilson, 316 Ark. 588, 873 S.W.2d
552 (1994); Gordon v. Planters & Merchants
Bancshares, Inc., 310 Ark. 11, 832 S.W.2d 492 (1992);
Battle v. Harris, 298 Ark. 241, 766 S.W.2d 431
(1989). In viewing the facts in the light ...