By Anya Tikka
MONTICELLO In a first of its kind judicial decision in Sullivan County, state Supreme Court Justice James P. Gilpatric ruled that not only is Cabot Oil & Gas prohibited from drilling for gas in the Weiden Lake Community, it also cannot claim back the $99,255 signing bonus it paid to the property owner, Jeff A. Klansky.
The case involved Weiden Lake Property Owners Association, Inc., plaintiff, against defendants Klansky and Cabot Oil. As part of the same case, the energy company made a claim to get its signing bonus back from Klansky.
Klansky purchased a 66-acre parcel in the 2,500-acre Town of Tusten subdivision in March 2007. In July 2008 he granted Houston-based Cabot exclusive rights to “explore for, drill for, produce and market oil, gas and other hydrocarbons” on his property for a period of five years.
Once the association found out about the lease, fears over both “both environmental and aesthetic” concerns caused it to take both Klansky and Cabot to court, according to Weiden counsel John V. Janusas of Rourke Fine & Janusas of Liberty.
Justice Gilpatric said in his ruling that “Here, the evidence clearly demonstrates that Cabot, a sophisticated business entity, made a calculated and knowing decision to enter into the lease, approve title and pay the signing bonus with full knowledge of the Protective Covenants and the [property owners association’s] position.”
According to the court records, internal e-mails indicated Cabot did know about the pre-existing property owners’ association covenant that prohibits any commercial use.
The property owners association has two provisions in a restrictive covenant that were relevant to the case: One restricting land use to single family residences and agricultural and recreational uses, and another prohibiting commercial fishing, fee-based boat launching and “any other commercial uses.”
Klansky and Cabot argued the second restriction related only to commercial fishing and boating, but Judge Gilpatric ruled that the ban on “any other commercial uses” must be construed “to mean all other commercial uses.”
Paragraph 13 of the lease addendum between Cabot and Klansky has a disclaimer by Klansky “as to the permitted uses of the property” and states that the payments made to Klansky under the lease are non-refundable. Justice Gilpatric decided in Klansky’s favor, and he got to keep the money.
Cabot’s lawyer, Steven Halperin of NYC was out of the office and unavailable for comment.
Klansky’s lawyer, Jeff Kaplan of Ellenville, said, “The one who really lost was Cabot Oil and Gas. It wasn’t like my client approached them, he was approached by Cabot.
“Klansky indicated the restrictions to Cabot, who went ahead… He protected himself by adding a clause that the signing bonus was unrefundable,” Kaplan added.
“I didn’t know there was gas there,” Klansky, said. “I was approached by Cabot in 2008, and I decided to take a chance Cabot [also] took a chance.
He added, “I love Weiden Lakes, and my family loves it. This is a second home, and I’d love to retire here.”
Klansky thinks he should be able to whatever he wants to do on his property, but claims there’s no bad blood between him and the association, and no hard feelings toward Cabot. He doesn’t think either way about fracking, claiming he’s a “busy businessman in New York.” He also declined to comment what he’s doing with the sign-on bonus of almost $100,000.
Weiden attorney John Janusas of Liberty said, “We had to sue both Cabot and Klansky, because they didn’t do anything” (in response to the resolution sent.) He explained energy landmen approached all the property owners in the community, someone notified the board, and they started watching the county clerk’s office to see who signed up.
All of the residents were sent copies of a board meeting resolution affirming that they cannot sign the leases and gas drilling is not allowed.
“Klansky’s lawyer added protective clauses for him, and he took the Cabot offer,” Janusas said. “It’s not like he’s guilty of anything. There’s no bad feelings toward him. It (suing) was the right thing to do, this is how you sort out things legally.
The decision was hailed by Damascus Citizens as as victory for environmentalists and concerned residents over the possible threat to water sources and the environment posed by the prospect of hydrofracking drilling.
However, the ruling is based on the covenants of a property owners association that explicitly ban any commercial use within its borders, so it’s not applicable to other landowners.
Information on the ruling came from Justia US Law.com, which reports on court rulings from all levels of the justice system.The court’s decision can be found on law.justia.com/cases/new-york/other-courts/2011/2011-51581.html .