SALEM, Ohio — The Ohio Supreme Court issued a series of landmark rulings in 14 pending cases Sept. 15.
These decisions confirmed that the 1989 version of the Ohio Dormant Minerals Act was not “self-executing” — a 5-2 decision by the court justices.
The decision means the 1989 Ohio DMA did not automatically allow mineral interests to be deemed abandoned and given to the surface owner.
Instead, a surface owner seeking to merge a severed mineral interest with the surface under the 1989 Act was required to begin a “quiet title action.”
What is a quiet title action? An action to quiet title is a lawsuit brought in a court having jurisdiction over property disputes, in order to establish a party’s title to real property, or personal property having a title.
Therefore “quiet” any challenges or claims to the title.
Surface owners were “required to bring a quiet title action” prior to 2006 in order to establish abandonment.
Surface owners asserting claims after June 30, 2006, must follow the notice and recording procedures contained in the 2006 Amendment to the Ohio DMA.
After June 30, 2006, a surface owner is required to follow the statutory notice and recording procedures enacted in 2006, says the court documentation.
Statutory notices require certified mail and publication.
“It means that some land owners may have thought they mineral rights and surface ownership had been rejoined, but they might be mistaken and will need to go through this more elaborate process to get them together,” said Leah Curtis, director of agricultural law at Ohio Farm Bureau.
If some one had separated the mineral rights years ago they didn’t automatically come back together, you would have to insert yourself to bring them together, Curtis said
In the lead case, Corban v. Chesapeake Exploration, the court concluded that the 1989 law was not self-executing and did not automatically transfer ownership of dormant mineral rights.
Attorneys Matt Warnock and Aaron Bruggeman of Bricker & Eckler LLP presented a webinar Sept. 16 on the rulings.
In these 14 cases, the surface owners can file a reconsideration motion within 10 days. But, these are generally not granted without obvious error in the decision, said Warnock
The Marketable Title Act plays a big role in the discussion as well.
It extinguished oil and gas rights by operation of law after 40 years from the effective date of title unless a saving event preserving the interest appeared in the chain of records regarding the title.
There are multiple types of saving events in which the holder records a notice claiming the interest, or the interest arose out of a title transaction which has been recorded subsequent to the effective date of the root of title.
Like most DMA cases, Corban involved a dispute over the ownership of the subsurface oil, gas and other minerals underlying approximately 164.48 acres of real property located in Harrison County, Ohio.
On July 2, 1959, The North American Coal Corporation conveyed the property by deed to Orelen H. Corban and Hans D. Corban but reserved to itself, and its successors and assigns, the rights to the oil, gas and other minerals underlying the property.
Between the date of the mineral severance and 2013, North American entered into several oil and gas leases, the most recent of which was signed in 2009.
There is currently one well in production under the most recent oil and gas lease.
In 2013, the surface owner filed a lawsuit in Harrison County Common Pleas Court against North American and a number of other entities attempting to quiet title the oil and gas mineral rights under the property.
At no time prior to the filing of the lawsuit did the surface owner of the property attempt to comply with the notice process in the 2006 version of the DMA.
The defendants subsequently removed the case to federal court and counterclaimed, records the court documents
Dueling motions for summary judgment were filed.
The federal district court, however, certified two questions of Ohio law to the Ohio Supreme Court:
- Whether the 1989 or the 2006 version of revised code should be applied to a quiet title action filed after 2006 that asserts that the right to the minerals vested in the surface owner as a result of abandonment prior to 2006; and
- Whether the payment of delay rental during the term of an oil and gas lease constituted a title transaction.
Some questions still linger, like can the mineral rights owner sue for trespassing or adverse rights of minerals? The answer depends on the facts of the case, said Warnock.
“The abandonments that were finalized, did they use certified mail, like required in the 2006 DMA? How far must one go to locate heirs? Local records, national ancestor research? These are questions left unanswered and could have lasting implications on things that have already been done or in the works,” said Bruggeman.
Walker v. Shondrick-Nau
In Walker v. Shondrick-Nau, the surface owner had initially attempted to use the provisions under the 2006 amendments to the Ohio DMA to declare the mineral interests under his property abandoned.
When the mineral interest owner filed an affidavit to preserve the estate, the surface owner filed a quiet title action in 2012, asserting that under the 1989 Ohio DMA, the mineral rights had merged with the surface when the grace period under the 1989 Act ended in 1992.
Applying the holding of Corban, the court held that the 2006 amendments applied to the surface owner’s claim to the mineral rights.
Under the 2006 amendments, the mineral owner’s claim to preserve his rights operated as a “saving event” sufficient to prevent the surface owner from declaring the mineral rights abandoned.
Albanese v. Batman
The primary issue in Albanese v. Batman was whether the filing of a will with the probate court and the county recorder’s office was a saving event sufficient to prevent the subject mineral estate from being deemed abandoned under the 1989 Act.
In applying Corban, the court held there was no automatic abandonment and vesting of the mineral interest in the surface owner under the 1989 Act.
Because the surface owners had not followed the notice requirements under the 2006 amendments, the mineral owners retained their interests.
Additional cases. Applying the holding in Corban, the court also decided Carney v. Shockley, Dahlgren v. Brown Farm Prop. LLC, Eisenbarth v. Reusser, Farnsworth v. Burkhart, Swartz v. Householder, Shannon v. Householder, Taylor v. Crosby, Thompson v. Custer, Tribett v. Shepherd, and Wendt v. Dickerson.
“As a result of these cases we will see more people with seperated rights seeking legal council in assisting to bring the rights back together, Curtis said. “Because they aren’t going to do so organically, but there may also be heirs that assert themselves.”
For more information on the ruling of these cases, visit www.shaleohio.com.
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