Mineral Leases and Contract Length

I find that my students are very fond of posing hypothetical questions to me that touch upon unconscionability, even before we get to the doctrine, so I always love to see unconscionability cases in action.

This one, Roberts v. Unimin Corp., No. 1:15CV00071 JLH, from the Eastern District of Arkansas, involved a mineral lease that was entered into in 1961. Now, in 2015, the successors in interest are seeking to get out of the contract, arguing that it’s either terminable at will or unconscionable and also alleging that they are owed over $75,000 as a result of unjust enrichment. The court concluded that the plaintiffs alleged enough to survive a motion to dismiss.

The parties alleged that the lease was for an indefinite term and therefore terminable at will. The lease’s term was “as long thereafter as mining and/or mining operations are prosecuted.” The court stated it was “plausible” that this term was so indefinite as to render the lease terminable at will.

Turning to unconscionability, the court noted the fact that the lease was negotiated shortly after the death of the father to whom the land had belonged, with children who were still reeling from the death and had had no experience negotiating mineral leases. The children therefore relied upon the defendant’s predecessor-in-interest during the negotiation, according to the complaint, and that trust was taken advantage of by the insertion of a royalty price far below market value. This was enough to survive the motion to dismiss. I wonder if this case will continue and have further pleadings, because I’m curious as to how this unconscionability argument develops.