Dodd v. Croskey

• Court: Ohio Supreme Court
• Writing for the Court: O'CONNOR, C.J.
• Citation: Dodd v. Croskey, 2015 OHIO 2362, 37 N.E.3d 147, 143 Ohio St.3d 293 (Ohio 2015)
• Decision Date: 18 June 2015
• Docket Number: No. 2013–1730.,2013–1730.
• Parties: DODD et al., Appellants and Cross–Appellees, v. CROSKEY et al., Appellees; Evans, Appellee and Cross–Appellant.

143 Ohio St.3d 293

37 N.E.3d 147

2015 Ohio 2362

DODD et al., Appellants and Cross–Appellees,

v.CROSKEY et al., Appellees; Evans, Appellee and Cross–Appellant.

No. 2013–1730.

Supreme Court of Ohio.

Submitted Oct. 7, 2014.

Decided June 18, 2015.

Crawford, Lowry & Associates, L.L.C., and G. Ian Crawford, Canton, for appellants and cross-appellees.

Rupert Beetham, for appellees John William Croskey, Mary E. Surrey, Roy Surrey, Emma Jane Croskey, Margaret Ann Turner, Mary Louise Morgan, Martha Beard, Lee Johnson, Edwin Johnson, JoAnn Zitko, David B. Porter, JoAnn C. Wesley, Cindy R. Weimer, Evart Dean Porter, Stuart Barry Porter, Brian Porter, Mary Elaine Porter, Kim Berry, Samuel G. Boak, Lorna Bower, Sandra Dodson, and Ian Resources, L.L.C.

McDonald Hopkins, L.L.C., R. Jeffrey Pollock, Cleveland, and Erin K. Walsh, for appellees Karen A. Chaney, Patty Hausman, Linda C. Boyd, and Terri Hocker.

Marquette D. Evans, Cincinnati, for appellee and cross-appellant Harriet C. Evans.

Baker, Dublikar, Beck, Wiley & Mathews and James F. Mathews, North Canton, for amicus curiae Jon D. Walker Jr.

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A., Gregory W. Watts, Matthew W. Onest, David E. Butz, Canton, and William G. Williams, for amici curiae Jeffco Resources, Inc., Mark and Kathy Rastetter, Douglas Henderson, Djuro and Vesna Kovacic, Brett and Kim Trissel, and Steven E. and Diane Cheshier.

Michael DeWine, Attorney General, Eric E. Murphy, State Solicitor, and Samuel C. Peterson, Deputy Solicitor, for amicus curiae state of Ohio.

Jackson Kelly, P.L.L.C., Clay K. Keller, and J. Alex Quay, Akron, for amicus curiae Chesapeake Exploration, L.L.C.

Bricker & Eckler, L.L.P., Matthew W. Warnock, Daniel C. Gibson, and Daniel E. Gerken, Columbus, for amici curiae Noon and Shepherd Mineral Interest Owners.

O'CONNOR, C.J.

{¶ 1} In this appeal, we address important aspects of Ohio's Dormant Mineral Act and its effect on the interaction between the rights of the owner of the surface lands and the rights of the holder of an interest in the minerals beneath the surface. Specifically, we resolve the question whether a mineral-interest holder's claim to preserve a mineral interest from being deemed abandoned in accordance with R.C. 5301.56(H)(1)(a) is sufficient to preserve that interest if the claim was filed after notice of the surface owner's intent to declare the mineral interest abandoned and outside the 20–year window immediately preceding that notice.

{¶ 2} We answer this question in the affirmative. Accordingly, we affirm the judgment of the Seventh District Court of Appeals.

RELEVANT BACKGROUND

{¶ 3} Oil and gas exploration in Ohio is hardly a new phenomenon. Oil was first discovered in Ohio in 1814. James C. Cissel, Oil and Gas Law in Ohio, Ohio Legislative Service Commission Staff Research Report No. 63, at 12 (1965). By the late 19th century, Ohio was the nation's leading oil producer. Id. Levels of production have not remained steady, however, and Ohio's oil industry has been marked by boom and bust periods. See id. at 13 (referring to a decline prior to the Morrow County oil boom in late 1963).

{¶ 4} Production of mineral resources has driven the development of energy law in Ohio. Indeed, an oil boom resulted in the General Assembly's enactment of Ohio's first major regulations of the oil and gas industry in 1965, which marked a dramatic shift from the simple conservation statutes that had existed before. Id. ; Lucas P. Baker, Forced into Fracking: Mandatory Pooling in Ohio, 42 Cap.U.L.Rev. 215, 221 (2014) ; J. Richard Emens & John S. Lowe, Ohio Oil and Gas Conservation Law—The First Ten Years (1965–1975), 37 Ohio St.L.J. 31, 33–35 (1976) ("Ohio, however, had only the most rudimentary conservation legislation prior to 1965").

{¶ 5} More recently, the natural gas boom in the Utica and Marcellus Shale regions has presented new challenges for Ohio law, including the interplay between statutes that govern the rights to the surface and to the minerals below. See Baker at 215, 227. The fact that farmland is now more valued for what lies beneath rather than what can be grown or raised above has heightened interest in who owns the land and, more specifically, who holds the mineral rights and the rights to make the potentially lucrative leases. See, e.g., Ray Paprocki, Cadiz Starts to Ride the Boom, Columbus Dispatch (May 7, 2012), available at http://www.dispatch.com/content/stories/insight/2012/05/06/1–cadiz–starts–to–ride–the–boom.html ("Some of the talk is about the out-of-state license plates spotted in town and the researchers clogging the Harrison County recorder's office, poring over land records").

{¶ 6} These inquiries can be difficult to sort out.

{¶ 7} Commonly, parcels of land in mineral-producing areas have mineral rights severed from the surface rights. Over time, the severed mineral interests are transferred and divided through business and familial transactions. As a result, it can be difficult, or even impossible, to find the owners of such severed mineral rights.

{¶ 8} To address this challenge, the General Assembly enacted the Dormant Mineral Act in 1989. Sub.S.B. No. 223, 142 Ohio Laws, Part I, 981. Codified at R.C. 5301.56, the act supplements the Marketable Title Act, R.C. 5301.47 et seq. , and provides a mechanism to reunite severed and abandoned mineral rights with the surface estate.

The Dormant Mineral Act

{¶ 9} To accomplish its purpose, the Dormant Mineral Act, as amended, establishes that a mineral interest held by someone other than the surface owner "shall be deemed abandoned and vested in the owner of the surface lands" if the statutory notice requirements are met and none of the following apply: (1) the mineral interest is in coal or coal-related, (2) the mineral interest is held by the United States, the state, or any other political body described by the statute, or (3) a saving event enumerated in the statute occurs within the 20 years immediately preceding the notice required by the Dormant Mineral Act. R.C. 5301.56(B).

{¶ 10} Under R.C. 5301.56(B)(3), there are six saving events that would render a mineral interest ineligible to be deemed abandoned if the event occurred in the 20 years preceding the required notice:

(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.

(b) There has been actual production or withdrawal of minerals by the holder from the lands, from lands covered by a lease to which the mineral interest is subject, from a mine a portion of which is located beneath the lands, or, in the case of oil or gas, from lands pooled, unitized, or included in unit operations * * *.

(c) The mineral interest has been used in underground gas storage operations by the holder.

(d) A drilling or mining permit has been issued to the holder * * *.

(e) A claim to preserve the mineral interest has been filed in accordance with division (C) of this section.

(f) In the case of a separated mineral interest, a separately listed tax parcel number has been created for the mineral interest in the county auditor's tax list and the county treasurer's duplicate tax list in the county in which the lands are located.

{¶ 11} This appeal addresses the effect of a claim to preserve filed under R.C. 5301.56(H) in the absence of an affidavit describing the occurrence of one of the saving events described in subsections (B)(3)(a) through (f).

Mineral–Rights Dispute

{¶ 12} By deed dated August 2009, appellants, Phillip Dodd and Julie Bologna, acquired the surface rights to certain land in Harrison County. The deed indicated that oil and gas rights underlying the surface property were not part of the conveyance as follows:

Excepting and reserving unto Samuel A. Porter and Blanche Long Porter all of the oil and gas in Warranty Deed to Consolidated Fuel Company filed for record May 27, 1947 in Volume 121, page 381, Deed Records for the 148.105 acre. (Note: No further transfers)

* * *

Excepting a one-third interest in the oil and gas to Samuel A. Porter and Blanche Long Porter in Warranty Deed filed for record may [sic] 27, 1947 in Volume 121, page 383, Deed Records.^[1]

{¶ 13} There is no dispute that the 2009 deed did not convey to appellants all of the mineral rights underlying their surface property, because of the exception in the deed. But after an oil and gas company contacted appellants about leasing the mineral rights to the land, appellants initiated procedures under the Dormant Mineral Act to have the mineral interests deemed abandoned and vested in them along with their surface ownership.

{¶ 14} On November 27, 2010, appellants published a notice of abandonment of the mineral interests underlying their property. The notice was published in the local newspaper, the Harrison News Herald, and was addressed to "Samuel A. Porter and Blanche Long Porter, their unknown successors and assigns."

{¶ 15} Two days later, appellee John William Croskey recorded a quitclaim deed for mineral interests underlying the property. That deed purported to transfer from John William Croskey to him and Anita M. Croskey, as trustees of the John William Croskey Revocable Trust, all the oil and gas rights underlying the surface property acquired by appellants through the 2009 deed.

{¶ 16} On December 23, 2010, John William Croskey filed and recorded a document entitled "Affidavit Preserving Minerals." The Croskey affidavit outlined a history of transactions affecting the mineral rights underlying appellants' surface property. And it identified 36 persons as "current owners of the minerals and oil and gas reserved by the deeds" set forth in the affidavit who "do not intend to abandon their rights to the mineral interest, but intend to preserve their rights."

{¶ 17} On February 9, 2011, appellants filed a declaratory-judgment action to quiet title to the oil and gas interests against Croskey and all the persons Croskey named in his...