Finley v. Marathon Oil Company
United States Court of Appeals for the Seventh Circuit
75 F.3d 1225 (7th Cir. 1996)
The Finleys (plaintiffs) leased oil and gas rights to Marathon Oil (defendant), with the underlying oil formation extending onto adjacent land owned by the McCroskey heirs. The Finleys sued Marathon for breach of the implied covenant against drainage and for breach of fiduciary duty, presenting evidence that Marathon's water-injection extraction method had caused oil to migrate from the Finley leasehold onto the McCroskey land; Marathon countered with evidence that there was no recoverable oil in that part of the Finley leasehold to begin with. The district court ruled for Marathon on both claims, and the Finleys appealed.
Whether an oil and gas lease makes the lessee a fiduciary of the lessor in the absence of special circumstances.