OHIO DORMANT MINERAL ACT
Supreme Court of Ohio
R. Jeffrey Pollock
Beth I. Gillin
McDonald Hopkins LLC
600 Superior Avenue
Cleveland, Ohio 44114
[email protected]
[email protected]
6th Law of Shale Plays Conference
September 10-11, 2015
Pittsburgh, Pennsylvania
{5607334:}
TABLE OF CONTENTS
SUMMARY OF THE PRIMARY ISSUES REGARDING THE DMA
BEFORE THE SUPREME COURT OF OHIO ............................................................................. 4
PROPOSITIONS OF LAW OF DMA CASES PENDING BEFORE
THE SUPREME COURT OF OHIO.............................................................................................. 8
SUMMARIES OF THE DMA CASES BEFORE
THE SUPREME COURT OF OHIO............................................................................................ 13
Dodd v. Croskey........................................................................................................................ 13
Supreme Court of Ohio Slip Opinion No. 2015-Ohio-2362
Chesapeake Exploration v. Buell.............................................................................................. 15
Supreme Court of Ohio, Case no. 2014-0067
Corban v. Chesapeake Exploration .......................................................................................... 18
Supreme Court of Ohio, Case no. 2014-0804
Walker v. Shondrick-Nau .......................................................................................................... 19
Supreme Court of Ohio, Case no. 2014-0803
Swartz v. Householder .............................................................................................................. 22
Supreme Court of Ohio, Case no. 2014-1208
Eisenbarth v. Reusser................................................................................................................ 23
Supreme Court of Ohio, Case no. 2014-1767
Dahlgren v. Brown Farm Properties, LLC............................................................................... 25
Supreme Court of Ohio, Case no. 2014-1655
Taylor v. Crosby........................................................................................................................ 26
Supreme Court of Ohio, Case no. 2014-1886
{5607334:}
2
Tribett v. Shepard...................................................................................................................... 27
Supreme Court of Ohio, Case no. 2014-1966
Farnsworth v. Burkhart ............................................................................................................ 28
Supreme Court of Ohio, Case no. 2014-1909
APPENDIX
1989 Ohio Dormant Mineral Act
2006 Ohio Dormant Mineral Act
{5607334:}
3
SUMMARY OF THE PRIMARY ISSUES REGARDING THE DMA
BEFORE THE SUPREME COURT OF OHIO
Ohio R.C. 5301.56, included as part of Ohio’s Marketable Title Act (R.C. 5301.47
through 5301.56) and commonly referred to as the Dormant Mineral Act (“DMA”), governs the
preservation and abandonment of mineral interests which have been severed from the surface
lands. The DMA provides generally that mineral interests may be preserved upon the occurrence
of certain events (referred to as “Savings Events”) enumerated at RC 5301.56(B)(3). Savings
Events “include: (i) the mineral interest has been the subject of a title transaction; (ii) actual
production from the mineral interests or lands pooled or unitized with those interests; (iii) the
usage of the mineral interests for underground storage; (iv) the issuance of a drilling permit to
the holder of the mineral interests; (v) the creation of a separate tax listing for the mineral
interests; and (vi) the filing of a claim by the holder of the mineral interests to preserve those
interests.
The DMA was originally enacted in 1989 and then substantially amended in 2006. The
original 1989 statute included no explicit provision requiring that a mineral holder be given
notice of a claim of abandonment by the surface owner. The 2006 amendments to the DMA (the
“2006 Amendments”) adopted explicit procedures which required notice by the surface owner to
a holder and clarified a specific right of and mechanism for the holder to preserve the mineral
interest.
The 1989 DMA preserves the interest of the mineral holder if the enumerated Savings
Events have occurred “within the preceding twenty (20) years.” R.C. 5301.56(B)(1)(c). The
1989 statute then states that if none of the enumerated Savings Events has occurred within that
time, the mineral interest “shall be deemed abandoned and vested in the owner of the surface . . .”
R.C. 5301.56(B)(1).
In 2006, the DMA was amended to establish a mechanism whereby the surface owner is
required to give notice to the mineral holder “by certified mail or, under certain circumstances,
by publication” of the intent to declare the mineral interest abandoned. R.C. 5301.56(E)(1). The
mineral holder then has the right to file a claim to preserve the mineral interest or an affidavit
that any of the Savings Events has occurred within the 20 years immediately preceding the date
on which notice was served or published. R.C. 5301.56(H)(1).
With the advent of the Utica shale play and the increased value of mineral interests in
eastern Ohio, the DMA has spawned substantial litigation. To date, the Supreme Court of Ohio
has decided only one case regarding the interpretation of this statute, Dodd v. Croskey, 2055Ohio-2362. Nine cases regarding the DMA are still pending in the Supreme Court of Ohio, with
six of those cases stayed pending the decision in one or more of the other major cases.
The primary issues before the Supreme Court of Ohio are summarized as follows:
1.
{5607334:}
Is the 1989 DMA Self-Executing?
4
Is the 1989 DMA self-executing such that the mineral interests are automatically
abandoned and vested with the surface estate if none of the Savings Events occurred within the
“preceding 20 years.”
The surface owners answer that question in the affirmative, arguing the plain language of
the statute. The surface owners assert that the 1989 DMA included a three year grace period
within which the mineral holder could have preserved their interests, thereby providing notice
and ample opportunity to preserve the mineral interest after the enactment of the statute. R.C.
5301.56(B)(2). The surface owners also assert that the procedural safeguards in the 2006
amendments are not applicable to protect mineral rights which had been previously abandoned
under the original 1989 DMA.
The mineral holders argue that the 1989 DMA contained ambiguities which were
resolved by the 2006 amendments. They argue that even if there were no Savings Events within
the “preceding 20 years,” the surface owner nonetheless was required under the 1989 DMA to
initiate an action to quiet title or for declaratory judgment before the mineral rights are
abandoned. They assert that the 2006 amendments clarified a procedure by which the surface
owner would provide notice and the mineral holder could preserve the mineral interest, even if
there had been no prior Savings Events.
This is the most significant issue regarding the DMA before the Supreme Court, with the
issue to be decided in Walker v. Shondrick-Nau, case no. 2014-0803.
2.
Is the 20 Year Period Fixed or “Rolling”?
The 1989 DMA provides that the mineral rights are deemed abandoned and vested in the
surface owner if none of the Savings Events have occurred “within the preceding 20 years . . .”
R.C. 5301.56(B)(1)(c). The statutory language raises the question – 20 years preceding what?
The surface owners argue that it is a “rolling” 20 year period which requires the mineral holder
to establish the Savings Event within 20 years preceding any date between the enactment of the
statute, March 22, 1989 (or within the statutory three year grace period) and June 30, 2006 (the
enactment of the 2006 amendments). Under this theory, a mineral holder would have to reestablish a Savings Event potentially on two different occasions – the earliest being 1969 (20
years prior to enactment) and then again 20 years later in 1989. Twenty years after 1989 would
take the date to 2009, three years after the enactment of the 2006 amendments. The 2006
amendments provide that the Savings Event must occur within 20 years preceding the date on
which the surface owner must give notice of intent to declare the mineral interest abandoned.
R.C. 5301.56(H)(1)(b).
The mineral holders argue that the mineral interest is not abandoned if any Savings Event
occurs on a one time basis within 20 years prior to the enactment of the 1989 DMA, within the
three year statutory grace period, or within 20 years prior to the date a complaint is filed.
3.
{5607334:}
Whether a Severed Oil and Gas Mineral Interest is the “Subject Of” any Title
Transaction Which Identifies the Recorded Document Creating that Interest, Even
if the Severed Mineral Interest is not Actually Transferred.
5
The most common of these Savings Events occurs if the “mineral interest has been the
subject of a title transaction” recorded or filed with the county recorder in the county where the
property is located. RC 5301.56(B)(3)(a) states in pertinent part as follows:
(B)
Any mineral interest held by any person, other than the owner of
the surface of the lands subject to the interest, shall be deemed abandoned and
vested in the owner of the surface of the lands subject to the interest if the
requirements established in division (E) of this section (the Notice of Intent) are
satisfied and none of the following applies:
(3)
Within the twenty years immediately preceding the date on which
notice is served or published under division (E) of this section, one or more of the
following has occurred:
(a)
The mineral interest has been the subject of a title transaction that
has been filed or recorded in the office of the county recorder of the county in
which the lands are located.
The term title transaction is defined in the Marketable Title Act to mean “any transaction
affecting title to any interest in land . . .” R.C. 5301.47(F). When inserting that definition into
the language in R.C. 5301.56(B)(3)(a), the Savings Event occurs when:
The mineral interest has been the subject of any transaction affecting title to any
interest in land.
The mineral holders argue that a transfer of the surface estate which specifically
references a prior severed oil and gas mineral interest constitutes a Savings Event based upon the
legislative history, principals of statutory construction, and referencing R.C. 5301.49 of the
Marketable Title Act. The surface owners argue that a severed oil/gas mineral interest is not the
subject of any title transaction involving only the surface estate, even if the transferring recorded
document makes specific reference to a prior oil/gas reservation. The surface owners argue that
a Savings Event occurs only in the event of a transfer or reservation of the oil/gas mineral
interest which itself is the subject of the transfer.
Many of the oil and gas producers and the State of Ohio have filed amicus briefs in the
pending cases, lining up on both sides of the issues.
The following parties have filed amicus briefs in support of the surface owners:






State of Ohio
Gulfport Energy Corporation
Paloma Resources, LLC
Protege Energy III, LLC
Jeffco Resources, Inc.
Murray Energy Corporation
{5607334:}
6
The following parties have filed amicus briefs in support of the mineral holders:




Bedway Land & Minerals Company
Ohio Oil and Gas Association
Chesapeake Exploration, L.L.C.
Eclipse Resources Corporation
{5607334:}
7
PROPOSITIONS OF LAW OF DMA CASES PENDING BEFORE
THE SUPREME COURT OF OHIO
Phillip Dodd et al. v. John Croskey et al.
Case Number 2013-1730
Proposition of law:
Ohio Rev. Code § 5301.56(8)(1) requires a showing by a party claiming the preservation of a
prior mineral interest of a "savings event" that occurred in the 20 years prior to the notice being
served and not a "savings event" after the date of the notice being served.
Question accepted sua sponte:
Does a transfer of the surface that specifically references the severed mineral interest qualify
as a "title transaction?"
Oral arguments were held on August 20, 2014. Opinion issued June 18, 2015.
Chesapeake Exploration, L.L.C. v. Kenneth Buell et al.
Case Number 2014-0067 (certified questions)
Certified questions of state law:
1.
Is the recorded lease of a severed subsurface mineral estate a title transaction under the
Ohio Dormant Mineral Act, Ohio Rev. Code§ 5301.56(B)(3)(a)?
2.
Is the expiration of a recorded lease and the reversion of the rights granted under that
lease a title transaction that restarts the 20-year forfeiture clock under the ODMA at the time of
the reversion?
Oral arguments were held on August 20, 2014.
{5607334:}
8
Hans Michael Corban v. Chesapeake Exploration, L.L.C., et al.
Case Number 2014-0804 (certified questions)
Certified questions of state law:
1.
Does the 2006 version or the 1989 version of the ODMA apply to claims asserted after
2006 alleging that the rights to oil, gas and other minerals automatically vested in the surface
land holder prior to the 2006 amendments as a result of abandonment?
2.
Is the payment of a delay rental during the primary term of an oil and gas lease a title
transaction and "savings event" under the ODMA?
Oral arguments were held on May 6, 2015.
Jon Walker, Jr. v. Patricia J. Shondrick-Nau, Executrix of the Estate of John R. Noon and
Successor Trustee of the John R. Noon Trust
Case Number 2014-0803
Propositions of law:
1
The 2006 version of the DMA is the only version of the DMA to be applied after June 30,
2006, the effective date of the amendments.
2.
To establish a mineral interest as "deemed abandoned" under the 1989 version of the
DMA, the surface owner must have taken some action to establish abandonment prior to June 30,
2006. In all cases where a surface owner failed to take such action, only the 2006 version of the
DMA can be used to obtain relief.
3.
To the extent the 1989 version of the DMA remains applicable, the 20-year look-back
period shall be calculated starting on the date a complaint is filed which first raises a claim under
the 1989 version of the DMA.
4.
For purposes of Ohio Rev. Code§ 5301.56(B)(3), a severed oil and gas mineral interest is
the "subject of" any title transaction which specifically identifies the recorded document creating
that interest by volume and page number, regardless of whether the severed mineral interest is
actually transferred or reserved.
5.
Irrespective of the savings events in Ohio Rev. Code§ 5301.56(B)(3), the limitations in
Ohio Rev. Code § 5301.49 can separately bar a claim under the DMA.
6.
The 2006 version of the DMA applies retroactively to severed mineral interests created
prior to its effective date.
Oral arguments were held June 23, 2015.
{5607334:}
9
Dan Swartz, et al. v. Jay Householder, et al.
Case Number 2014-1208
Propositions of law:
1.
The 1989 version of the Dormant Mineral Act does not apply after the effective date of
the 2006 version of the Dorman Mineral Act.
2.
In order for a mineral interest to vest under the 1989 version of the Dormant Mineral Act,
the surface owner must take some action in order to establish abandonment prior to the effective
date of the 2006 Dormant Mineral Act.
3.
The 2006 DMA operates retrospectively and applies to severed mineral interests created
before its effective date.
Leland Eisenbarth, et al. v. Dean Reusser, et al.
Case Number 2014-1767
Propositions of law:
1.
The 1989 version of DMA was prospective in nature and operated to have a severed oil
and gas interest "deemed abandoned and vested in the owner of the surface" if none of the
savings events enumerated in Ohio Rev. Code § 5301.56(B) occurred in the 20-year period
immediately preceding any date in which the 1989 DMA was in effect.
2.
Assuming, arguendo, that the 1989 DMA operated on a "fixed" 20-year look-back period
from the date of enactment, an oil and gas lease is not a "title transaction" within the meaning of
Ohio Rev. Code§ 5301.47(F) and Appellees' interest has nonetheless been abandoned.
Ronald Dahlgren, et al. v. Brown Farm Properties LLC, et al.
Case Number 2014-1655
Propositions of law:
1.
The 2006 amendment of Ohio's "dormant mineral" statute was remedial in nature and
intended to apply to facts occurring before its enactment. In suits filed after June 30, 2006 (the
effective date of the amendment), courts should apply the new version of the statute, rather than
the old version.
2.
Under the 1989 version of Ohio's "dormant mineral" statute, the 20-year dormancy period
is measured from the date suit was commenced to determine title to the minerals.
{5607334:}
10
Benjamin Taylor, et al. v. Donald Crosby, et al.
Case Number 2014-1886
Proposition of law:
1.
The 1989 DMA is prospective in nature and operates using a rolling application of the
phrase, “preceding twenty years.”
Vernon Tribett, et al. v. Barbara Shepherd, et al.
Case Number 2014-1966
Propositions of law:
1.
The 2006 version of the DMA is the only version of the DMA to be applied after June 30,
2006 (the effective date of said statute) because the 1989 version of the DMA was not selfexecuting.
2.
To establish a mineral interest as "deemed abandoned" under the 1989 version of the
DMA, the surface owner must have taken some action to establish abandonment prior to June 30,
2006. In all cases where a surface owner failed to take such action, only the 2006 version of the
DMA can be used to obtain relief.
3.
Interpreting the 1989 version of the DMA as "self-executing" violates the Ohio
Constitution.
a.
The 2006 version of the DMA is the only version of the DMA to be applied after
June 30, 2006, the effective date of said statute.
b.
Interpreting the 1989 version of the DMA as "self-executing" violates the Ohio
Constitution.
4.
A severed oil and gas mineral interest is the "subject of" any title transaction which
specifically identifies the recorded document creating that interest by volume and page
number.
5.
Irrespective of the savings events in Ohio Rev. Code § 5301.53(B)(3), the limitations in
Ohio Rev. Code§ 5301.49 can independently bar a claim under the DMA.
6.
If a Court applies the 1989 version of the DMA in a lawsuit filed after June 30, 2006, the
20-year look-back period shall be calculated starting on the date a complaint is filed
which first raises a claim under the 1989 version of the DMA.
7.
A claim brought under the 1989 version of the DMA must have been filed within 21
years of March 22, 1989 (or, at the very latest, March 22, 1992), or such claim is barred
by the statute of limitations in Ohio Rev. Code § 2305.04.
{5607334:}
11
Virgil Farnsworth, et al. v. James Burkhart, et al.
Case Number 2014-1909
Propositions of law:
1.
The 1989 version of the Ohio Rev. Code§ 5301.56, the Ohio Dormant Minerals Act
("Former DMA"), was prospective in nature, division (B} applies to any 20-year period that
elapses while the Former DMA was in effect.
2.
A Claim to Preserve filed and recorded under division H(l)(A) of the current version of
Ohio Rev. Code § 5301.56 ("Current DMA") does not have the same effect as a claim filed and
recorded under division B(3)(e) of the Current DMA.
{5607334:}
12
SUMMARIES OF THE DMA CASES BEFORE
THE SUPREME COURT OF OHIO
Dodd v. Croskey
Supreme Court of Ohio Slip Opinion No. 2015-Ohio-2362
This opinion was issued by the Supreme Court of Ohio on June 18, 2015. It is the first
and only case regarding the Ohio DMA decided to date by the Supreme Court. This case was on
appeal from the Seventh District Court of Appeals.
Plaintiffs/Appellants are the surface owners and Defendants/Appellees are the mineral
holders. In 1947, Samuel and Blanche Porter conveyed the property at issue in Harrison County,
Ohio to Consolidated Fuel Company and reserved all of the oil and gas mineral interest. As part
of the same transaction, the Porters also conveyed their undivided one-third interest in separate
tracts of land to Consolidated Fuel Company. The Warranty Deed conveying this one-third
interest contains the same reservation regarding the mineral interest. This reservation was also
contained in the deeds of all subsequent transfers of the surface rights, including the transfer to
the surface owner Plaintiffs/Appellants Phillip Dodd and Julie Bologna in August 2009.
The surface owners gave notice by publication on November 27, 2010 of their intent to
declare the mineral interest owned by Defendants/Appellees, the heirs of the Porters, abandoned.
On December 23, 2010 Defendant/Appellee John William Croskey timely filed a document
entitled “Affidavit Preserving Minerals” with the Harrison County Recorder in response to the
Dodd notice. Notwithstanding this affidavit, the surface owners filed an Affidavit of
Abandonment on December 27, 2010 with the Harrison County Recorder claiming that the
mineral interest owned by Defendants/Appellees had been abandoned.
In a unanimous decision, the Supreme Court ruled that under the 2006 amendments to the
statute, after an owner of surface land gives notice of his or her intent to declare the mineral
interest abandoned, the holder of the mineral rights can preserve their rights by timely filing an
affidavit with the county recorder. The affidavit must state the nature of the mineral interest, the
recording information upon which the claim is based, and that the mineral holder intends to
preserve the mineral interest. McDonald Hopkins represented a group of the mineral holders in
this case.
Most significantly, the Supreme Court determined that at least under the 2006
amendments to the DMA, the mineral holder can preserve his or her mineral interest upon the
timely filing of the affidavit even if there had been no prior Savings Events that would otherwise
have been required to preserve the mineral interest. The Supreme Court ruled that the affidavit
did not have to refer to a prior Savings Event, nor did the affidavit itself have to be filed in the 20
years preceding notice by the surface owner.
The Supreme Court specifically noted that it was not ruling on the issue of when to apply
the 1989 original version of the DMA and when to apply the 2006 version. These issues will be
determined in subsequent cases still pending before the Court.
{5607334:}
13
The 2006 amendments to the DMA established a procedural mechanism whereby the
surface owner must give notice by certified mail or by publication “if service cannot be
completed,” of the owner’s intent to declare the mineral interest abandoned. R.C. 5301.56(E)(1).
The holder then has 60 days after the date of service or publication to file a preservation claim or
an affidavit with the county recorder that he intends to preserve and not abandon the mineral
interest. R.C. 5301.56(H)(1).
Under the original 1989 DMA, as well as the 2006 amendments, one of the enumerated
Savings Events is the filing by the mineral holder of a preservation claim with the county
recorder. R.C. 5301.56(B)(3)(e). In Dodd, the surface owner argued that the preservation claim
was filed by the mineral holder after the notice of intent and not as a Savings Event within the 20
year period preceding the enactment of the 1989 DMA.
The Supreme Court strictly construed the plain language of the 2006 amendments, stating
that the statute clearly provides that, in response to a notice of intent to declare the mineral
interest abandoned, the holder can preserve the mineral interest by filing within sixty (60) days
either a preservation claim or an affidavit which identifies one of the Savings Events which had
occurred within the 20 years preceding the date of notice from the surface owner. R.C.
§5301.56(H)(1)(a)(b).
This case is significant because, at least under the 2006 amendments, the holder can
preserve the mineral rights by timely filing a claim of preservation after a notice of intent from a
surface owner to declare the mineral interest abandoned, even if there had been no prior Savings
Events.
The court had sua sponte accepted a cross appeal on the issue of whether the reservation
of a mineral interest referenced in a subsequent deed to the surface owner constituted a “title
transaction” and thus a Savings Event. R.C. 5301.56(B)(3)(a). The court declined to decide this
issue, determining that it was moot given the holding in the case. As a result, this issue remains
for a subsequent ruling as an assignment of error in two of the pending cases before the Supreme
Court of Ohio.
{5607334:}
14
Chesapeake Exploration v. Buell
Supreme Court of Ohio, Case no. 2014-0067
On March 26, 2014 the Supreme Court of Ohio agreed to answer two questions certified
by the United States District Court for the Southern District of Ohio as stated below. Oral
argument was held on August 14, 2014. The court has not yet issued an opinion.
Plaintiff/Petitioner North American Coal Royalty Company (“North American”) is the
record owner of the oil and gas rights beneath the property and the lessees of the oil and gas
rights are the other Plaintiffs/Petitioners. Defendants/Respondents Buell, et al. are the surface
landowners.
In 1943, the property at issue in Harrison County, Ohio was owned by the North
American Coal Corporation (“NA Coal”), which transferred the Property to the Powhatan
Mining Company (“Powhatan”) on or about January 30, 1943. In October 1958, Powhatan
transferred the surface rights to Clarence and Anna Belle Sedoris, but expressly excepted and
reserved the oil and gas rights by deed. Powhatan Mining merged into NA Coal in January
1959, and took ownership of the severed mineral interest at that time. The same reservations and
exceptions applied to all of the subsequent transfers of the surface estate, including the transfer
of the surface rights in 10.37 acres of the property to Defendants/Respondents Jeffrey and Janice
Elias in April 1995 and the transfer of the surface rights in 20.17 acres of the property to
Defendants/Respondents Ariel and Sunni Ordronneau in July 2011.
In November 2008, Bellaire Corporation f/k/a NA Coal transferred the severed mineral
estate, including the oil and gas rights, to Plaintiff/Petitioner North American Coal Royalty
Company by a quit claim deed. North American Coal then leased the severed oil and gas rights
to Mountaineer Natural Gas Company in January 2009. These severed oil and gas rights leases
were subsequently transferred and assigned to Plaintiffs/Petitioners Chesapeake Exploration,
L.L.C., CHK Utica, L.L.C., Larchmont Resources, L.L.C., Dale Pennsylvania Royalty, LP,
TOTAL E&P USA, INC. and Dale Property Services Penn., LP, which previously held an
interest in the oil and gas lease and assigned this interest to Plaintiff/Petitioner Dale
Pennsylvania.
I.
Is The Recorded Lease Of A Severed Subsurface Mineral Estate A Title Transaction
Under The Ohio Dormant Mineral Act, R.C. 5301.56(B)(3)(a)?
North American, the mineral owner, entered into recorded oil/gas leases in 1974 and
1984 which were then assigned in 1975 and 1984. North American and the mineral lessees
argue that a recorded oil/gas lease is a “title transaction” under the DMA and hence a Savings
Event timely filed within the 20 year period prior to 1989 as follows:
1.
The Marketable Title Act defines a “title transaction” as any transaction affecting
title to any interest in land, with enumerated examples (R.C. §5301.47(F)). The
examples are illustrative and not intended to exclude leases.
2.
Every court but one that has addressed the issue has concluded that an oil and gas
lease is a “title transaction” and therefore a Savings Event under the DMA.
{5607334:}
15
3.
The analysis under the DMA should not be determined based on how Ohio law
may have classified an oil and gas lease for other purposes. In Harris v. Ohio Oil
Co., 57 Ohio St.118 (1897) the court held that an oil and gas lease creates a fee
simple determinable interest, although that term was not explicitly stated. In Back
v. The Ohio Fuel Gas Co., 160 Ohio St. 81 (1953), the court reasoned that an
instrument similar to an oil/gas lease was akin to a license. Notwithstanding this
apparent divergence, the mineral holders/lessees assert that it is not necessary to
decide whether an oil/gas instrument conveys title to an interest in land or is a
license because the definition of a “title transaction” is so broad; namely, whether
the lease is “any transaction affecting title.” R.C. 5301.47(F).
4.
To find that an oil/gas lease does not maintain a mineral owner’s interest under
the DMA would be completely contrary to the activity the act seeks to encourage,
the development of minerals in Ohio.
5.
Ohio law characterizes an oil/gas lease as a fee simple determinable interest, thus
clearly establishing that the mineral interest was the subject of a “title
transaction.”
The surface owners argue that a recorded oil/gas lease is not a “title transaction” Savings
Event for the following reasons:
II.
1.
The definition of “title transaction” in R.C. 5301.47(F) does not enumerate oil/gas
leases.
2.
A separate statutory Savings Event preserves a mineral interest from
abandonment where there has been actual production or withdrawal of minerals
under enumerated circumstances, including “from the lands covered by a lease to
which the mineral interest is subject.” R.C. 5301.56 (B)(1)(c)(ii). They argue
that an executed lease by itself should not be the Savings Event, but instead actual
production from lands covered by a lease which did not occur in this case.
3.
An oil/gas lease is a license and therefore does not affect title.
Is The Expiration Of A Recorded Lease And The Reversion Of The Rights Granted
Under That Lease A Title Transaction That Restarts The 20 Year Forfeiture Clock Under
The DMA At The Time Of The Reversion?
The oil and gas reverted to North American in January, 1989 upon the expiration of the
primary lease term. If the reversion of the oil/gas rights to the lessor upon the termination of a
lease is a “title transaction” under the DMA, then the reversion in 1989 restarted the 20 year
clock, which ran until 2009, three years after the DMA was amended in 2006. The mineral
owners and lessees argued that the release of rights under an oil/gas lease qualifies as a title
transaction because it “affects title.” They argue that the expiration need not be recorded
because it occurs pursuant to the terms of the original recorded lease.
{5607334:}
16
The surface owners argue that:
1.
An expiration of an oil/gas lease should not be considered a “title transaction”
because it would create an unworkable system of verifying title in the oil/gas
industry and thus contrary to the intent of the DMA.
2.
The abandonment period is not tolled during the primary term of an oil/gas lease
and thus requires a subsequent Savings Event to preclude abandonment.
3.
The statutory Savings Event requires not only that the mineral interest is the
subject of a title transaction, but also that the title transaction has been filed or
recorded, R.C. 5301.56(B)(1)(c)(i). In this case, the reversion/expiration of the
lease was not recorded.
{5607334:}
17
Corban v. Chesapeake Exploration
Supreme Court of Ohio, Case no. 2014-0804
Petitioner/Plaintiff is the surface owner. Defendant/Respondent North American Coal
Royalty Company is the sole record owner of the oil, gas and mineral rights. The other
Defendants/Respondents are the lessees of the oil and gas rights.
In 1959,
Defendant/Respondent North American Coal Royalty Company’s (“North American”)
predecessor, North American Coal Corporation (“NA Coal”), conveyed the property at issue in
Harrison County, Ohio to the predecessors of Petitioner/Plaintiff Hans Michael Corban and
reserved the oil, gas and mineral rights for itself. NA Coal entered into an oil and gas lease
recorded in February 1984 and assigned this lease to Carless Resources, Inc. in May 1985.
beneath the property by virtue of an oil and gas lease from North American Coal Royalty
Company and subsequent assignments. This lease expired and the rights reverted to Bellaire
Corporation f/k/a NA Coal in 1989. In 2009, North American, Bellaire Corporation’s successor,
entered into an oil and gas lease with Mountaineer Natural Gas Company. The remaining
Defendants/Respondents Chesapeake Exploration, L.L.C., CHK Utica, L.L.C., Larchmont
Resources, L.L.C. Dale Pennsylvania Royalty, LP and TOTAL E&P USA, Inc. are the current
lessees of the 2009 lease.
The United States District Court for the Southern District of Ohio certified the following
two questions to the Supreme Court of Ohio:
1.
Does the 2006 version or the 1989 version of the DMA apply to claims asserted
after 2006 alleging that the rights to oil, gas, and other minerals automatically
vested in the surface land holder prior to the 2006 amendments as a result of
abandonment?
2.
Is the payment of a delay rental during the primary term of an oil and gas lease a
title transaction and “Savings Event” under the DMA?
On July 23, 2014 the court accepted the certified questions. Oral argument was held on
May 6, 2014. No decision has been issued.
The first question presents the same issues addressed in Walker v. Shondrick-Nau,
Supreme Court case no. 2014-0803, discussed more fully in the summary of that case.
The second issue is directly related to certified state law questions in Chesapeake
Exploration v. Buell, Supreme Court case no. 2014-0067, discussed more fully in the summary
of that case.
{5607334:}
18
Walker v. Shondrick-Nau
Supreme Court of Ohio, Case no. 2014-0803
Plaintiff/Appellee is the owner of the surface rights and Defendant/Appellant is the
holder of the mineral rights. In 1964, John Noon purchased the property at issue in Noble
County, Ohio. On July 26, 1965, Noon severed the mineral rights and created a separate mineral
estate by reserving the mineral rights to himself when he sold the surface rights on that date.
These mineral rights were reserved in the deeds conveying the surface rights in subsequent
transactions, including to Plaintiff/Appellee Jon Walker, Jr.
On December 2, 2011,
Defendant/Appellant sent a Notice of Abandonment of Mineral Interest to Noon. On January 10,
2012, Noon filed an Affidavit and Claim to Preserve Mineral Interest. Noon passed away after
the Complaint was filed and his daughter, Shondrick-Nau, in her capacity as the executrix of
Noon’s estate and successor trustee of Noon’s trust, was substituted as the Appellant in this case.
By Opinion dated April 3, 2014, the Seventh District Court of Appeals ruled in favor of
the surface owner on all issues, 2014-Ohio-1499, 2014 WL 1407942. The Court of Appeals held
that:
1.
A deed transferring the surface property which references a prior mineral
reservation does not constitute a “title transaction,” one of the enumerated
Savings Events. R.C. 5301.56(B)(1)(c)(i).
2.
The 1989 version of the DMA is self-executing. The original severance of the
mineral interest occurred in 1965 with no Savings Event thereafter. The mineral
estate became abandoned and merged with the surface in 1992, the end of the
three year grace period after the enactment of the 1989 DMA. Any preservation
claim filed pursuant to the 2006 statute was ineffective because the mineral
interest had already been abandoned.
This is the most significant and pivotal case regarding the DMA before the Supreme
Court, determining whether the 1989 version of the DMA was self-executing during the time it
was in effect prior to the enactment of the 2006 amendments to the statute, resulting in the
abandonment of mineral rights as a matter of law in the absence of a Savings Event during the 20
year period preceding the enactment of the statute.
The Appellant mineral holder asserts six propositions of law grouped generally into three
categories as follows:
I.
The 2006 Version Of The DMA Is The Only Version Of The Statute To Be Applied
After June 30, 2006, The Effective Date Of The Amendments.
II.
To Establish A Mineral Interest As “Deemed Abandoned” Under The 1989 Version Of
The DMA, The Surface Owner Must Have Taken Some Action To Establish
Abandonment Prior To June 30, 2006.
1.
{5607334:}
The 1989 DMA is ambiguous with respect to whether it was intended to be “selfexecuting,” specifically as it relates to the interpretation of the 20 year period
19
within which a Savings Event must occur and how the lapse would occur if there
were no Savings Events. The 2006 DMA amendments removed the ambiguity by
establishing a procedure for notice and recordation of abandonment or
preservation of the mineral interest.
III.
2.
The interpretation of the statute as self-executing frustrates the purpose of the
statute because it is not possible to ascertain from the record chain of title whether
some of the Savings Events actually occurred. Therefore, the 1989 DMA should
require a surface owner to commence a quiet title action or declaratory judgment
to establish abandonment after the expiration of the 20 year period during which
no Savings Event occurred.
3.
Under the self-executing theory of abandonment, the 1989 version of the DMA
results in a forfeiture of property and a loss of vested property rights in violation
of the Ohio Constitution.
4.
The 2006 amendments to the DMA eliminate the claimed ambiguity in the statute
by establishing procedural safeguards to the mineral holder and by requiring
record notice of either abandonment or preservation of the mineral interest.
The 20 Year Lookback Period Should Be Calculated Starting On The Date A Complaint
Is Filed Which First Raises A Claim Under The 1989 Version Of The DMA.
The 1989 statute provided for the lapse to occur if no specified Savings Events occurred
within “the preceding 20 years.” R.C. 5301.56(B)(1)(c). The question arises as to what this
means – 20 years preceding what date? The best course is to interpret the statute to require the
filing of a lawsuit to quiet title or a declaratory judgment with the 20 year lookback period under
the 1989 statute commencing on the date the action was filed.
IV.
For Purposes Of Establishing A Savings Event, A Severed Oil And Gas Mineral Interest
Is The “Subject Of” Any Title Transaction Which Specifically Identifies The Recorded
Document Creating That Interest, Regardless Of Whether The Severed Mineral Interest Is
Actually Transferred Or Reserved.
The most frequently litigated Savings Event is found in R.C. 5301.56(B)(3)(a). A
mineral holder will retain the rights if the mineral interest “has been the subject of” a recorded
title transaction during the relevant lookback period. The term title transaction is defined in the
Marketable Title Act to mean “any transaction affecting title to any interest in land . . .” R.C.
5301.47(F). When inserting that definition into the language in R.C. 5301.56(B)(3)(a), the
Savings Event occurs when:
The mineral interest has been the subject of any transaction affecting title
to any interest in land.
Interpreting the legislative history, applying principals of statutory construction, and referencing
R.C. 5301.49, a transfer of the surface which specifically references a prior severed oil and gas
mineral interest constitutes a Savings Event.
{5607334:}
20
The Appellee surface owner asserts the following arguments:
1.
The 1989 DMA is clear and unequivocal that a mineral interest is automatically
abandoned if a Savings Event has not occurred within the statutory 20 year
period. There is no requirement for the surface owner to commence any action to
establish abandonment.
2.
A “rolling” 20 year period of time should apply. The first analysis is to determine
whether there was a Savings Event within the 20 years preceding the effective
date of the statute, March 22, 1989. If there was no Savings Event, the interest
lapsed and was automatically abandoned. If there was some Savings Event within
that period, then the mineral interest can be preserved only if there has been a
subsequent Savings Event within 20 years thereafter. If no such subsequent
Savings Event occurred, the mineral interest is abandoned. In other words, the
mineral interest can be preserved only by successive Savings Events within every
20 year period.
3.
A severed oil/gas mineral interest is not the subject of any title transaction
involving only the surface estate, even if the transferring recorded document
makes specific reference to a prior oil/gas reservation.
{5607334:}
21
Swartz v. Householder
Supreme Court of Ohio, Case no. 2014-1208
Shannon v. Householder
Supreme Court of Ohio, Case no. 2014-1209
Appellants are the mineral holders. Appellees are the surface owners. In 1946, Elva and
Alma Lawrence, Chellissa and Walter Swickard, and Jetta and Arthur Householder transferred
the property at issue in Jefferson County, Ohio to Cleve and Marie Landis with a deed that
reserved all of the oil and gas mineral interest. Appellees Ernest and Shelda Shannon acquired
the surface rights to part of the property in 1976. Appellees Daniel and Donna Swartz
subsequently became surface owners of part of the property when they acquired title to the
property by Survivorship Deed dated April 2002 and recorded in May 2002. The Householder
Appellants are the heirs of Elva and Alma Lawrence, Chellissa and Walter Swickard, and Jetta
and Arthur Householder.
In December 2010, the Shannon surface owners published notice of their intent to declare
the mineral interest abandoned in a Jefferson County newspaper. In July 2011, the Swartz
surface owners published notice of their intent to declare the mineral interest abandoned in the
same newspaper. The mineral holders did not receive notice by certified mail of either notice.
The mineral holders filed claims to preserve the mineral interest with the Jefferson County
Recorder in July 2011 (in response to the Shannon notice) and August 2011 (in response to the
Swartz notice).
In an Opinion issued for both cases on June 2, 2014, the Seventh District Court of
Appeals held:
(1)
Relying on Walker, the 1989 DMA is self executing and results in automatic
abandonment of the mineral estate if no Savings Event has occurred in the 20 year
period preceding the enactment of the statute (or the statutory grace period). In
addition, the DMA is not unconstitutional.
2014-Ohio-2359, 12 N.E. 2d 1243.
On November 19, 2014, the Supreme Court accepted the appeal in both consolidated
cases and held the case and stayed briefing for the decision in Walker v. Shondrick-Nau.
{5607334:}
22
Eisenbarth v. Reusser
Supreme Court of Ohio, Case no. 2014-1767
This case is on appeal from the Seventh (7th) District Court of Appeals. The Appellant
surface owner appealed two of the three propositions of law from the Opinion of the Seventh
District Court of Appeals issued August 28, 2014, 2014-Ohio-3792, 18 N.E. 3d 477. The
Supreme Court accepted jurisdiction on March 11, 2015. Oral argument has not been set.
Plaintiffs/Appellants are the surface owners and Defendants/Appellees are the mineral
holders. In 1954, William Eisenbarth transferred two tracts of land in Monroe County to Paul
and Ida Eisenbarth. The deed reserved one-half of all minerals underlying the lands and all
rights to develop and remove those minerals. However, the right to lease the minerals was
expressly given to Paul and Ida Eisenbarth. William Eisenbarth then transferred his half of the
mineral estate to his other child Mildred Reusser by royalty deed. Paul and Ida then entered into
numerous oil and gas leases, the last being recorded in January, 1974. In 1989, Paul and Ida
Eisenbarth transferred the second tract of land to their son Keith in a deed stating that it was
subject to all reservations of record. When Paul Eisenbarth died, his interest in the first tract of
land was conveyed to Ida Eisenbarth by a Certificate of Transfer filed in 1990, which included
the 1954 deed’s language on the mineral reservation and the right to lease. When Ida died, a
Certificate of Transfer was filed in 1998, which transferred her interest in the first tract of land to
her sons Plaintiffs/Appellants Keith, Leland and Michael Eisenbarth and also included the
language from the 1954 deed.
Mildred Reusser died in 2002 and left her estate to Defendants/Appellees Dean Reusser,
Marilyn Ice, Wilda Fetty, Martha Maag (who died and left her interest to her husband Robert
Maag), Vernon Reusser, Paul Reusser, Davis Reusser and Dennis Reusser. In 2008, the surface
owners signed an oil and gas lease. In 2009, the surface owners published a notice of
abandonment of Mildred Reusser’s one-half interest in the minerals, and the mineral holders
responded with a claim to preserve. In 2012, the Eisenbarths signed an oil and gas lease with
another company and received a $766,250 signing bonus, half of which was being held in
escrow.
The issues on appeal to the Supreme Court are as follows:
I.
Whether A Recorded Oil And Gas Lease Is A “Title Transaction” Under The DMA.
In 1974, the surface owner entered into an oil/gas lease with respect to the entire mineral
estate, even though the original severance reserved 50% to the surface owner. The surface
owner retained the executive right to enter into a lease regarding the entire mineral estate. One
of the Savings Events is that the mineral interest “has been the subject of a title transaction.”
R.C. 5301.56(B)(1)(c)(i). The term “title transaction” is defined in the Marketable Title Act to
mean “any transaction affecting title to any interest in land . . .” Read together, the Savings
Event occurs when a “mineral interest has been the subject of any transaction affecting title to
any interest in land.”
The Seventh District Court of Appeals reviewed the case law and the issue of whether an
oil/gas lease is a license or a conveyance of the fee. But the court then determined that it did not
{5607334:}
23
have to reach that issue. The court held that a recorded oil/gas lease is an encumbrance on title
and falls within the definition of “any transaction affecting title to any interest in land.” The
Seventh District Court of Appeals held that the recorded oil/gas lease over the minerals sought to
be abandoned constituted a Savings Event.
II.
Whether The 20 Year Period Within Which A Savings Event Must Occur Must Be Prior
To The Enactment Of The 1989 Statute Or Within 20 Years Immediately Preceding Any
Date In Which The 1989 DMA Was In Effect.
This issue has been referred to as the “20 year rolling period.” The 1989 DMA states that
the mineral interest shall be deemed abandoned and vested in the owner of the surface if any of
the Savings Events had not occurred “within the preceding 20 years.” R.C. 5301.56(B)(1)(c).
The statute presents an apparent ambiguity because it is not clear how the starting date on which
the “preceding 20 years” is determined.
Surface owners argue that under the 1989 version of the DMA it should be 20 years
preceding any date in which the 1989 DMA was in effect. Under this analysis, the mineral
interest is deemed abandoned if the mineral holder did not take actions to effectuate a Savings
Event every 20 years preceding any date between March 22, 1989 (the enactment of the DMA)
and June 30, 2006 (the enactment of the DMA amendments). Under the facts in this case, the
oil/gas lease at issue was recorded in January, 1974 but not recorded again after that date. The
surface owner argued that, even if the 1974 oil/gas lease were a “title transaction,” the
preservation of the mineral interest expired when it was not renewed by January, 1994, 20 years
later. The mineral holder argued that the mineral interest is not abandoned if any Savings Event
occurs 20 years prior to the enactment of the 1989 DMA, March 22, 1989, or within the three
year grace period thereafter. R.C. §5301.56(B)(2).
The Seventh District Court of Appeals held that the 20 year lookback period is fixed and
not rolling. Therefore, assuming the 1989 version of the DMA governs, a mineral holder will
have preserved the mineral interest if any Savings Event has occurred at any time within the 20
years preceding March 22, 1989, even if no actions were taken at any time after that to renew or
re-establish a Savings Event.
{5607334:}
24
Dahlgren v. Brown Farm Properties, LLC
Supreme Court of Ohio, Case no. 2014-1655
Plaintiffs/Appellants are the mineral holders and Defendants/Appellees are the surface
landowners and developer. On February 16, 1949, Carl and Leora Dahlgren conveyed the
property at issue in Carroll County, Ohio to William Lewis Dunlap with a deed that severed the
subsurface title for oil and gas from the surface title for that property, as Leora Dahlgren
excepted and reserved the mineral rights. Leora Dahlgren did not convey these mineral rights to
anyone before her death on March 13, 1977, and her will and probate court orders vested her
mineral rights in her three children. Her daughter mistakenly filed the probate court Certificates
of Transfer with the Carroll County Probate Court rather than the Carroll County Recorder’s
Office. Thus, the reserved mineral rights were not the subject of any title transaction that anyone
recorded in the Carroll County Recorder’s Office between March 22, 1969 (20 years before the
effective date for the 1989 version of the Dormant Minerals Act) and September 17, 2009 (the
date when one of the Plaintiffs/Appellants first leased an oil and gas lease to a developer who
recorded the lease).
Each of the plaintiffs (Leora Dahlgren’s descendants and their spouses) leased his or her
oil and gas interests for the relevant properties to a developer who recorded those leases in the
Carroll County Recorder’s Office in 2009 or 2010. In March 2012, one of the surface
landowners sent the mineral holders and the leaseholder developer a “Notice of Owner’s Intent
to Declare the Abandonment of Mineral Interest” for part of the relevant properties. Within 60
days after the surface landowners sent this notice, five of the eight mineral holders filed claims
for their relevant mineral interests in the Carroll County Recorder’s Office.
The Court of Common Pleas for Carroll County issued an Opinion on November 5, 2013
authored by Judge Richard Markus, sitting by assignment, which held that the 1989 DMA
deemed the mineral owners rights abandoned if none of the Savings Events occurred within the
20 year period prior to the enactment of the statute or the statutory grace period. But the court
further held that this created an “inchoate right” and that it did not transfer ownership without
judicial confirmation or at least the opportunity for the mineral holder to contest their absence or
the effect of their absence. The court further found that the 2006 amendments governed and that
five of the eight plaintiff mineral holders timely filed preservation claims under the amended
statute, thus preserving their interest from abandonment.
Relying on its prior decision in Walker v. Shondrick-Nau, 2014-Ohio-1499, 2014 WL
1407942 and Schwartz v. Householder, 2014-Ohio-2359, 12 NE 2nd 1243, the Seventh District
Court of Appeals reversed in an Opinion issued September 14, 2014, 2014-Ohio-4001, 19 N.E.
3d 926. The Court of Appeals held that the 1989 DMA was indeed self-executing and that the
mineral holder retained no “inchoate” rights after the mineral estate was abandoned and vested
with the surface owner in the absence of Savings Events within the statutory 20 year period.
On March 11, 2015, the Supreme Court accepted the appeal and held the case for the
decisions in Walker v. Shondrick-Nau and Corbin v. Chesapeake Exploration, LLC. Pursuant to
that order, no briefing on the merits has been submitted.
{5607334:}
25
Taylor v. Crosby
Supreme Court of Ohio, Case no. 2014-1886
Plaintiffs/Appellants are the mineral holders and Defendants/Appellees are the owners of
the surface rights. On August 5, 1971, Benjamin Belt conveyed the property at issue in Belmont
County, Ohio to Eli and Virginia Bell with a deed that reserved a one-half interest in the oil and
gas underlying the property. On July 10, 1975, Belt entered into an oil and gas lease with United
Petroleum Corporation for his one-half interest. In July 1979, the Bells conveyed their entire
interest in the property to Defendants/Appellees Donald and Richard Crosby (wives are
Defendants/Appellees Tammy and Janis Crosby) (collectively the “Crosby Defendants”) subject
to Belt’s reservation of the one-half interest in the oil and gas. From 1979 to the present, the
Crosby Defendants have been the owners of the surface rights. Belt died in January 1993 and his
estate was not probated until May, 2011, at which time Belt’s one-half oil and gas interest in the
parcel was transferred via probate to his grandchildren, the Plaintiffs/Appellants.
On October 29, 2007, the Crosby Defendants leased the mineral rights to
Defendant/Appellee Reserve Energy Exploration (“Reserve”). Reserve assigned its interest in
the lease to Petroleum Corporation on May 15, 2008. On November 6, 2008, Reserve with the
consent of the Crosby Defendants, published a Notice of Abandonment in the local newspaper
regarding Belt’s one-half interest in the oil and gas. The Plaintiffs/Appellants did not take any
action and the Crosby Defendants recorded an Affidavit of Abandonment on December 19, 2008
stating that this one-half oil and gas interest had been abandoned.
On September 24, 2014, the Seventh District Court of Appeals issued an Opinion,
reaffirming its position expressed in Eisenbarth v. Royser that the 20 year period is a fixed look
back period preceding the enactment of the 1989 statute (or the statutory grace period) and not a
“rolling” look back period, 2014-Ohio-4433, 2014 Ohio App. LEXIS 4349.
On April 8, 2015, the Supreme Court accepted the appeal and then held the case and
stayed briefing for the decision in Walker v. Shondrick-Nau.
{5607334:}
26
Tribett v. Shepard
Supreme Court of Ohio, Case no. 2014-1966
Plaintiffs/Appellants are the surface owners and Defendants/Appellants are the purported
mineral owners. In 1962, Joseph, John and Keith Shepherd sold the surface rights and coal
interests they had in the property at issue in Belmont County, Ohio to Seaway Coal and reserved
all other mineral interests. This reservation was contained in the deeds of all subsequent
transfers of the surface rights and coal interests. In 1996 and 2006, Plaintiffs/Appellants Vernon
and Susan Tribett acquired the property at issue and became the surface owners. On September
29, 2011, the surface owners published a Notice of Abandonment of Mineral Interest in the local
newspaper and did not attempt service. On October 28, 2011, Defendants/Appellants Barbara
and Marion Shepherd, the purported mineral owners, filed an affidavit to preserve the mineral
interests that they allegedly inherited from Joseph, John and Keith Shepherd.
In an Opinion issued September 29, 2014, the Seventh District Court of Appeals held:
(1)
Relying on the prior opinion in Dodd v. Croskey (cross appeal accepted on this
issue sua sponte by the Ohio Supreme Court and then not decided) and Walker v.
Shondrick-Nau, the transfer of the surface lands with reference to a prior
reservation of mineral rights does not constitute a “title transaction” with respect
to the mineral interest under the DMA.
(2)
Relying upon the prior opinions in Walker and Schwartz v. Householder, 2004Ohio-2359, the 1989 DMA is self-executing and results in automatic
abandonment of the mineral estate if no Savings Event has occurred in the 20 year
preceding the enactment of the statute (or the statutory grace period). In addition,
the DMA is not unconstitutional.
(3)
Relying on its opinion in Eisenbarth v. Royser, 2014-Ohio-3792, the 20 year look
back period is fixed and not rolling.
2014-Ohio-4320, 20 N.E. 3d 365.
On April 29, 2015, the Supreme Court accepted the appeal and then held the case and
stayed briefing for the decision in Walker v. Shondrick-Nau.
{5607334:}
27
Farnsworth v. Burkhart
Supreme Court of Ohio, Case no. 2014-1909
Plaintiffs/Appellees are the surface owners and Defendants/Appellants are the mineral
owners. In 1980, Veronica Burkhart conveyed the property at issue in Monroe County, Ohio and
reserved the mineral rights. These mineral rights were reserved in the deeds in subsequent
transactions, including the 1988 deed that conveyed the property to Plaintiffs/Appellees Virgil
and Theresa Farnsworth. When Veronica Burkhart died in 1995, her mineral rights were
inherited by seven heirs, the Defendants/Appellants. However, Defendants/Appellants did not
apply for a Certificate of Transfer until February 2012 and the Certificate of Transfer was
recorded in the Monroe County Recorder’s Office on February 27, 2012. In the meantime, on
February 22, 2012, the surface owners generated a Notice of Abandonment, sending notice to the
mineral holders by certified mail, return receipt requested. On April 19, 2012, these mineral
holders recorded a claim to preserve their mineral interests. On April 23, 2012, the surface
owners recorded an affidavit of abandonment.
In an Opinion issued September 22, 2014, the Seventh District Court of Appeals held:
(1)
Relying on Walker, 1989 DMA is self-executing and results in automatic
abandonment of the mineral estate if no Savings Event has occurred in the 20 year
period preceding the enactment of the statute (or the statutory grace period). In
addition, the DMA is not unconstitutional.
(2)
Relying on its decision in Eisenbarth v. Reusser, 2014-Ohio-3792, the 20 year
look back period is fixed and not rolling. But the court then held that there was
no abandonment under the 1989 DMA because the mineral rights were not
severed until 1980.
(3)
Relying upon the prior Opinion in Dodd v. Croskey (cross appeal on this issue
accepted sua sponte by the Ohio Supreme Court and then not decided) and
Walker, the transfer of the surface lands with reference to a prior reservation of
mineral rights does not constitute a “title transaction” with respect to the mineral
interest under the DMA.
(4)
Relying upon the prior Opinion in Dodd v. Croskey, the preservation claim filed
by the mineral holder pursuant to the 2006 amendments in response to a notice
from the surface owner of its intent to declare the mineral interest abandoned was
sufficient to preserve the mineral interests, even in the absence of a Savings Event
having occurred in the preceding 20 years. This issue has now been decided by
the Supreme Court in Dodd v. Croskey, affirming the holding of the Seventh
District Court of Appeals on this issue.
2014-Ohio-4184, 21 N.E. 3d 577.
On April 29, 2015, the Supreme Court accepted the appeal, held the case, and stayed the
briefing for the decisions in Walker v. Shondrick-Nau and Dodd v. Croskey.
{5607334:}
28
APPENDIX