DWG Oil & Gas Acquisitions, LLC v. S. Country Farms, Inc.

• Decision Date: 19 January 2017
• Docket Number: No. 16-0069,16-0069
• Citation: 796 S.E.2d 201
• Court: West Virginia Supreme Court
• Parties: DWG OIL & GAS ACQUISITIONS, LLC, Plaintiff Below, Petitioner v. SOUTHERN COUNTRY FARMS, INC.; Harlan Kittle and Barbara Kittle; and LORI D. CARPENTER, Defendants Below, Respondents

796 S.E.2d 201

DWG OIL & GAS ACQUISITIONS, LLC, Plaintiff Below, Petitioner

v.SOUTHERN COUNTRY FARMS, INC.; Harlan Kittle and Barbara Kittle; and LORI D. CARPENTER, Defendants Below, Respondents

No. 16-0069

Supreme Court of Appeals of West Virginia.

Submitted: January 10, 2017

Filed: January 19, 2017

Bradley W. Stephens, Esq., Stephens Law Office, Morgantown, West Virginia, Kelly Mayhew, Esq., Kelly Mayhew, PLLC, Morgantown, West Virginia, Counsel for the Petitioner

Thomas E. White, Esq., White & Clyburn Law Offices, Moundsville, West Virginia, Counsel for Respondent, Southern Country Farms, Inc.

Justice Ketchum :

This declaratory judgment action is before this Court upon the appeal of the petitioner and plaintiff below, DWG Oil & Gas Acquisitions, LLC ("DWG"), from the December 28, 2015, order of the Circuit Court of Marshall County. As set forth in the order, the circuit court determined that the oil and gas underlying a parcel of land in Marshall County was conveyed to A. B. Campbell by deed dated June 5, 1913. A. B. Campbell is a predecessor in title of the respondents and defendants below, Southern Country Farms, Inc. ("Southern Country Farms"), Harlan and Barbara Kittle, and Lori D. Carpenter. As a result of the circuit court's ruling, title to the oil and gas is currently vested in the respondents, rather than DWG.¹

DWG contends that it is the current owner of the oil and gas underlying the parcel by virtue of a competing chain of title emanating from a deed executed by P. P. Campbell, Sr. ("Campbell, Sr."), on April 10, 1908.

The dispositive facts are not in dispute, and the issue before this Court is a question of law. Our review is, therefore, de novo . For the reasons stated herein, this Court is of the opinion that the circuit court correctly applied the law and that title to the oil and gas underlying the parcel is currently vested in the respondents. Accordingly, the December 28, 2015, order of the Circuit Court of Marshall County is affirmed.

I. Factual Background

DWG is a West Virginia limited liability company engaged in acquiring and leasing oil and gas interests. In the current matter, DWG embarked on efforts to purchase the oil and gas underlying a parcel of land in Franklin District, Marshall County, based on a title report indicating that the oil and gas was owned by the successors of the heirs of Campbell, Sr. However, according to the respondents, ownership of the oil and gas passed through a different route to the heirs of A. B. Campbell, through which the respondents claim title. The resolution of the conflict requires an analysis of three deeds made and recorded between 1908 and 1913. Campbell, Sr., was a party to each deed. For purposes of discussion, the deeds will be described as Campbell Deed # 1, Campbell Deed # 2, and Campbell Deed # 3.

Campbell Deed # 1

By deed made April 10, 1908, Campbell, Sr., conveyed to P. P. Campbell, Jr. ("Campbell, Jr."), real estate in Franklin District, Marshall County, which included a 146 acre tract and an adjacent 20 acre tract. The conveyances were set forth in the April 10, 1908, deed in separate paragraphs. A third paragraph in the deed stated: "Excepting therefrom Fifty acres on west side of the 146 acre tract also reserving therefrom all the coal oil and Gas with permission sell lease release and operate the same" [.]²

By separate deed, also made April 10, 1908, Campbell, Sr., conveyed to himself and A. B. Campbell, in trust for Laura C. McHenry, the fifty acres excepted from Campbell Deed # 1. The conveyance in trust for Laura C. McHenry stated:

Fifty acres of land being the South West Fifty Acres conveyed by the Deed made to P. P. Campbell Jr. this day and excepted there from, All the coal Oil and Gas with with the right to sell lease release and operate. The same is reserved to the first party, and the said first party hereby covenants with the said second parties that he will warrant generally the property here by conveyed.

Campbell Deed # 2

By deed made May 27, 1913, Campbell, Jr., conveyed back to Campbell, Sr., the same 146 acre tract and the adjacent 20 acre tract. The May 27, 1913, deed included the following provision:

The above described tracts or parcels of land are the same conveyed to said P. P. Campbell, Jr., by the said P. P. Campbell, Sr., by deed bearing date the 10^th day of April, 1908, of record in the office of the clerk of the county court of said Marshall county in Deed Book No. 124, page 444, reference being here made to said deed and record for a more particular description of the same: And the right, title and interest of the parties of the first part in and to said lands are conveyed subject to the exceptions and reservations set forth in said deed, reference being here made to said deed and record for more particular description of said exceptions and reservations

Campbell Deed # 3

Finally, by deed made June 5, 1913, Campbell, Sr., conveyed to A. B. Campbell the 146 acre parcel and the adjacent 20 acre parcel. The June 5, 1913, deed included the following provision:

The said tracts of land hereby conveyed being the same property conveyed to the said P. P. Campbell, Sr., by P. P. Campbell, Jr., and wife by deed dated the 27^th day of May, 1913, and duly of record in Deed Book No., 138, page 552, of Marshall County records. Subject, however, to all the reservations as contained in or referred to in said deed.³

As discussed herein, DWG maintains that, the conveyance to A. B. Campbell in Campbell Deed # 3 notwithstanding, title to the oil and gas remained vested in Campbell, Sr., until his death, intestate, in May 1922, at which time title passed to Campbell, Sr.'s heirs and ultimately to DWG. The respondents, however, contend that A. B. Campbell acquired both the surface and the underlying minerals by way of Campbell Deed # 3, through which the respondents assert title to the oil and gas.

II. Procedural Background

On February 21, 2014, DWG filed a complaint for declaratory judgment in the Circuit Court of Marshall County.⁴ The complaint alleged:

Under the valid chain of title to DWG's Interest (the "Valid Chain"), as of the execution and recording of Campbell Deed # 3, title to the oil and gas underlying the Subject Tract remained vested in Palemon P. Campbell, Sr., until his death, intestate, on May 1, 1922, at which time title to the Subject Oil and Gas passed, in proportionate shares, to ten heirs. DWG's Interest has been acquired from various heirs, successors, and assigns of these heirs of Palemon P. Campbell, Sr.—the parties holding valid title to interests in the Subject Oil and Gas.

DWG's complaint further alleged that, based on the respondent's assumption that Campbell Deed # 3 passed title to the oil and gas to A. B. Campbell, a company known as Gastar Exploration USA, Inc., improperly acquired oil and gas exploration and development rights to a portion of the Franklin District parcel through a spurious chain of title. However, the respondents asserted before the circuit court that Campbell Deed # 3 conveyed both the surface and the underlying minerals of the subject parcel to A. B. Campbell.

Following a hearing, the circuit court stated in a July 17, 2015, letter that judgment would be entered for the respondents. Accordingly, on December 28, 2015, the circuit court entered an order declaring that the oil and gas underlying the subject parcel in Franklin District, Marshall County, was conveyed along with the surface thereof to A. B. Campbell in Campbell Deed # 3. Consequently, inasmuch as A. B. Campbell is a predecessor in title of the respondents, title to the oil and gas is currently vested in the respondents, rather than DWG.

The circuit court based its ruling on two constructions of the following exception and reservation language set forth in Campbell Deed # 1: "Excepting therefrom Fifty acres on west side of the 146 acre tract also reserving therefrom all the coal oil and Gas with permission sell lease release and operate the same " (emphasis added).⁵ Regarding one construction, the circuit court determined that, if by that language, Campbell, Sr., retained the oil and gas, then his conveyance to Campbell, Jr., in Campbell Deed # 1 was of the surface only. Consequently, when Campbell, Jr., conveyed the surface back to him in Campbell Deed # 2, the surface and mineral interests merged. Thus, Campbell, Sr.'s, later conveyance to A. B. Campbell in Campbell Deed # 3 was in fee simple, since there was no clear severance of surface and minerals at that time.

The circuit court's alternative construction of the language set forth in Campbell Deed # 1 was that the exception and reservation of the oil and gas pertained solely to the fifty acres on the west side of the subject parcel. The circuit court noted that such a construction was corroborated by the simultaneous conveyance of the fifty acres in trust for Laura C. McHenry, with an oil and gas reservation. Therefore, subject to the fifty acre exception, Campbell, Sr., retained no oil and gas interest in the larger parcel consisting of the 146 acre tract and the 20 acre tract conveyed to Campbell, Jr., and ultimately to A. B. Campbell.

Under either construction by the circuit court, A. B. Campbell, the respondents' predecessor in title, acquired title to both the surface and the oil and gas in Campbell Deed # 3. Contesting title to the minerals, DWG appeals to this Court.

III. Standard of Review

Syllabus point 3 of Cox v. Amick , 195 W.Va. 608, 466 S.E.2d 459 (1995), holds: "A circuit court's entry of a declaratory judgment is reviewed de novo ." Accord , syl. pt. 1, Estate of Fussell v. Fortney , 229 W.Va. 622, 730 S.E.2d 405 (2012) ; syl. pt. 1, Flanagan v. Stalnaker , 216 W.Va. 436, 607 S.E.2d 765 (2004). In Cox , this Court observed that, because the purpose of a declaratory judgment action is to resolve legal questions, "a circuit court's ultimate resolution in a declaratory judgment action is reviewed de novo ; however, any determinations of fact made by the circuit court in...