Sheba v. Kautz
| Citation | 2017 Ohio 7699,97 N.E.3d 893 |
| Decision Date | 18 September 2017 |
| Docket Number | NO. 15 BE 0008,15 BE 0008 |
| Parties | George SHEBA et al., Plaintiffs–Appellees, v. Patricia L. KAUTZ et al., Defendants–Appellants. |
| Court | Ohio Court of Appeals |
Atty. Melanie Morgan Norris, Atty. Michelle Lee Dougherty, Atty. Timothy McKeen, Steptoe & Johnson PLLC, 1233 Main Street, Suite 3000, P.O. Box 751, Wheeling, West Virginia 26003–0751, for Plaintiffs–Appellees.
Atty David K. Schaffner, Schaffner Law Offices, Co., L.P.A., 132 Fair Avenue, NW, New Philadelphia, Ohio 44663, for Defendant–Appellant.
JUDGES: Hon. Carol Ann Robb, Hon. Gene Donofrio, Hon. Mary DeGenaro
{¶ 1} Defendants–Appellants Patricia Kautz, et al. appeal the decision of the Belmont County Common Pleas Court granting summary judgment in favor of Plaintiffs–Appellees George Sheba, et al. The trial court's decision finding the mineral interest was abandoned under the 1989 version of the Dormant Mineral Act cannot be upheld due to intervening precedent from the Ohio Supreme Court. However, the trial court alternatively held the grantor in an 1848 deed did not reserve oil and gas interests as the use of the term "mineral" in the reservation showed the intent of the parties to the deed was to reserve coal and other mined minerals, not migratory minerals.
{¶ 2} The grant of summary judgment is affirmed based upon: the Supreme Court's Detlor holding which found an 1890 deed did not transfer oil and gas interests when it transferred coal and other minerals; the age of the deed in this case which was executed over 40 years earlier than the deed in Detlor ; the language in the deed as to mining from adjacent property; and the lack of evidence suggesting the parties to the deed contemplated the inclusion of oil and gas as minerals in this Belmont County locality in 1848.
{¶ 3} In 1848, Thomas and Sophia Day (hereinafter Day) executed a deed transferring their Belmont County property to Christian Anshutz with the following reservation:
Said Day however expressly reserves to himself his heirs and assigns the sole and exclusive right to all the mineral & coal lying under the tract of land above described with the right & privilege to mine the same from his land on the East side thereof, excepting a parcel [11.5 poles wide on the South side] the said Anshutz and his heirs & assigns are to have in fee simple the entire mineral and coal privilege under the said last mentioned tract [re-describing the 11.5 pole strip] also the land above said coal & mineral—The meaning & interest of the above exception is to reserve the coal and mineral privileges under the whole of the above described tract of land, to the said Day his heirs & assigns excepting only [the 11.5 pole strip]; but the said Day his heirs & assigns are not to enter upon any part of the same to mine for said coal & mineral , but may enter [? 1 ] under only from his own land on the East and Northeast side thereof. To have and to hold the above tract of land with all the appurtenances thereof excepting as above exception * * *. (Emphasis added.)
{¶ 4} Mr. Sheba owns the property Day transferred in 1848 subject to the above reservation. On May 14, 2013, Mr. Sheba executed an oil and gas deed granting Ridgetop Resources, LLC an undivided interest in certain property, including 210 acres subject to the Day reservation. Mr. Sheba published a notice of abandonment of the Day mineral interest on July 24, 2013 and filed an affidavit of abandonment on September 3, 2013. An attorney for Mrs. Kautz and three other heirs of Day filed a claim to preserve the mineral interest on September 23, 2013.
{¶ 5} In October 2013, Mr. Sheba and Ridgetop Resources (hereinafter Appellee) filed a complaint against the four heirs (hereinafter Appellant). A second amended complaint added more defendants in May 2014. In seeking declaratory judgment and quiet title, the complaint set forth four claims: (1) the 1848 reservation did not reserve title to oil and gas under the property; (2) the oil and gas interest was abandoned under the 1989 version of the Dormant Mineral Act (DMA) due to the lack of a savings event; (3) the oil and gas interest was abandoned under the 2006 version of the DMA due to the lack of a savings event and the failure of the holder to file a claim to preserve within 60 days of the publication of the notice of abandonment; and (4) adverse possession of the oil and gas interest. As to the adverse possession claim, the complaint stated Mr. Sheba actively leased the oil and gas interest since 1976, including leases recorded in 1979, 2005, and 2011.
{¶ 6} Appellant filed an answer asserting the Days did reserve the oil and gas under the property, the 1989 version of the DMA was inapplicable and unconstitutional, the 2006 version of the DMA applied, the notice of abandonment was improper, a claim to preserve was filed, and adverse possession did not occur. A counterclaim was filed seeking quiet title and damages for trespassing and conversion.
{¶ 7} Appellee filed a motion for summary judgment on the first three counts arguing: the 1848 reservation did not include oil and gas; the mineral interest was automatically abandoned under the 1989 DMA; and the mineral interest was abandoned under the 2006 DMA. Appellant filed a memorandum in opposition, and Appellee filed a reply. The Ohio Attorney General intervened to support the constitutionality of the 1989 version of the DMA. On January 20, 2015, the trial court granted the Attorney General's motion for partial summary judgment and ruled the 1989 DMA was not unconstitutional.
{¶ 8} On January 26, 2015, the trial court granted summary judgment in favor of Appellee. As to the first claim, the trial court found the two references to "mining" in the 1848 reservation demonstrated the intent to reserve only coal and other minerals that are mined rather than migratory minerals such as oil and gas. The trial court quoted the following passage from the Ohio Supreme Court's 1898 Detlor case: "There is nothing to show that it was the intention of the parties that oil should be included in the word ‘minerals,’ and the easements granted, in connection with the mining right, are not applicable to producing oil, and show that oil was not intended to be included in the conveyance." Detlor v. Holland , 57 Ohio St. 492, 504, 49 N.E. 690, 693 (1898) ().
{¶ 9} As to the claim set forth under the 1989 DMA, the trial court concluded abandonment was automatic where no savings event occurred within the twenty-year look-back window, noting Appellant admitted there were no savings events. The court reiterated its prior decision finding the 1989 DMA was not unconstitutional. As to the claim set forth under the 2006 DMA, the trial court stated: "any discussion of RC. 5301.56, effective June 30, 2006 is moot in that any oil and gas interests which the Defendants may have claimed would have been abandoned as of March 22, 1992" under the 1989 DMA. Appellant filed a timely notice of appeal.
ASSIGNMENTS OF ERROR ONE & TWO: 1989 DMA
{¶ 10} Appellant's first two assignments of error provide:
{¶ 11} The Ohio Supreme Court ruled the 1989 DMA was not self-executing and did not result in automatic abandonment of a mineral interest. Albanese v. Batman , 148 Ohio St.3d 85, 2016-Ohio-5814, 68 N.E.3d 800 ¶ 17–18, citing Corban v. Chesapeake Exploration, L.L.C. , 149 Ohio St.3d 512, 2016-Ohio-5796, 76 N.E.3d 1089. Because the complaint seeking abandonment of the mineral interest was filed after the 2006 amendments to the Dormant Mineral Act, the Supreme Court's holding in Corban is dispositive of these assignments of error. See Albanese , 148 Ohio St.3d 85, 2016-Ohio-5814, 68 N.E.3d 800 at ¶ 16. In other words, at the time the 2013 complaint was filed, the 1989 DMA could no longer be applied. Consequently, both parties agree the trial court's decision finding the mineral interest was automatically abandoned under the 1989 DMA was erroneous and these assignments of error have merit.
{¶ 12} Appellant's third assignment of error contends:
"The trial court erred in finding that the language ‘all the minerals and coal’ in a reservation did not include Oil and Gas."
{¶ 13} The purpose of contract or deed construction is to discover and effectuate the intent of the parties, which is presumed to reside in the language they chose to use in their agreement. Graham v. Drydock Coal Co. , 76 Ohio St.3d 311, 313, 667 N.E.2d 949 (1996) (). "Extrinsic evidence is admissible to ascertain the intent of the parties when the contract is unclear or ambiguous, or when circumstances surrounding the agreement give the plain language special meaning ." (Emphasis added.) Id. , citing Shifrin v. Forest City Ent., Inc. , 64 Ohio St.3d 635, 638, 597 N.E.2d 499 (1992).
{¶ 14} The parties contest the trial court's application of the Ohio Supreme Court's holding in Detlor to this case. Appellant believes the trial court improperly focused on the deed's reference to "mining" to impute an intent to reserve only coal and minerals that are mined as opposed to migratory minerals such as oil and gas. Appellant relies on this court's Coldwell case, the Fourth District's Jividen and Wiseman cases, and the Fifth District's Hardesty case, which interpreted the phrase "other minerals" as conveying oil and gas (under the circumstances presented in those cases). Appellant focuses on the word "all" in the reservation clause "all the...
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