The Ohio Supreme Court has finally put to rest a long-standing debate about whether Ohio’s Marketable Title Act (MTA), Dormant Mineral Act (DMA), or both, may be applied to reunite severed mineral interests with the overlying surface estate. In a majority opinion decided Dec. 2, 2020, the court held that both acts may be independently applied to mineral estates. The court held, “The Marketable Title Act and the Dormant Mineral Act afford independent procedures, either of which may be used to effect the termination of a severed mineral interest, depending on the circumstances of the case and the time that has elapsed.” West v. Bode, 2020-Ohio-5473, ¶ 44.

Continue Reading Ohio Supreme Court holds that the Marketable Title Act and the Dormant Mineral Act both apply to severed oil and gas interests

Ohio landowners and holders of mineral interests should soon receive clarification regarding certain mineral rights. On Sept. 1, 2020, the Supreme Court of Ohio accepted Fonzi v. Brown for review, a case involving the Ohio Dormant Mineral Act (ODMA). Fonzi joins Gerrity v. Chervenak and West v. Bode, as the third major case on the court’s docket that raises questions about the ODMA and/or Marketable Title Act (MTA).

Continue Reading Supreme Court of Ohio to decide three cases regarding subsurface rights

The Ohio Supreme Court recently settled an open question under Ohio’s Marketable Title Act (MTA), determining that a reference to the type of interest created and to whom it was granted is all that is necessary under the MTA to preserve the interest. And interestingly, despite the existence of the Dormant Mineral Act (DMA), the Supreme Court applied the MTA to an oil and gas interest.

In Blackstone v. Moore, landowners filed a lawsuit against the owners of an oil and gas royalty interest underlying the landowners’ property, seeking to extinguish the interest under the MTA (Because the appellees (Kuhn heirs) had filed an affidavit to preserve their mineral interest within sixty days of receiving the Blackstones’ notice of intent to declare the mineral interest abandoned, there was no question that they had preserved their interests under the DMA). Created in 1915, the oil and gas royalty interest arose prior to the “root of title” (the last recorded title transaction before the preceding 40 years from when marketability is being determined) and therefore was subject to extinguishment under the MTA.


Continue Reading Reference to oil & gas royalty interest deemed sufficient under the Marketable Title Act

This week, the Ohio Supreme Court issued key decisions on its pending Dormant Mineral Act (DMA) cases. The Supreme Court Announcement itemized the various decisions released this morning, which were further detailed in Court News Ohio . Only three cases received full opinions: Corban v. Chesapeake Exploration, L.L.C., Walker v. Shondrick-Nau and Albanese v.

Last year we reported on the flood of appeals pouring in to the Ohio Supreme Court raising dozens of questions about the Ohio Dormant Mineral Act (DMA), which can be found at R.C. 5301.56. A year later we finally have a few answers and the surge of new DMA appeals seems to have subsided.

This blog post provides a comprehensive update on DMA cases that have been decided and which remain pending before the Ohio Supreme Court to date. Overall, two cases have been decided – Dodd v. Croskey and Chesapeake Exploration, L.L.C. v. Buell – and 13 cases presenting 39 questions of law have been accepted and remain pending. There are no pending DMA appeals that have not been accepted for review.


Continue Reading Ohio Supreme Court still mulling many questions about the Dormant Mineral Act

Litigation over Ohio’s Dormant Mineral Act, R.C. 5301.56, (DMA) began as a trickle in 2012 and turned into a flood in 2014 that continues to confound mineral title attorneys and challenge judges. Questions about the DMA have all but paralyzed oil and gas companies still looking to acquire and develop mineral leases. Now all eyes are on the Ohio Supreme Court for guidance on myriad questions regarding the validity and application of the statute. This post provides an update of DMA appeals and issues pending before the Ohio Supreme Court to date.

Though the Ohio Supreme Court hasn’t yet issued any decisions related to DMA, that is about to change. The court has accepted five DMA cases for review — all accepted in 2014. These five cases present a total of 15 questions of DMA law. Only two of these cases (Dodd and Buell) have been argued, at least in part (the question accepted sua sponte in Dodd was not argued). The other cases have yet to be scheduled for oral argument. In addition, six more cases present another 20 questions of law that have been appealed to the Ohio Supreme Court but are not yet accepted for review.

The overlap between many of the cases and issues highlights the hottest current DMA issues. However, this list of questions and issues is far from complete. In hindsight, we may find that the wave of DMA litigation crested in 2014, but experienced oil and gas attorneys expect litigation surrounding the Dormant Mineral Act will continue for years as landowners and courts wrestle with unique fact scenarios and title transactions. But for now, any definitive guidance from the Ohio Supreme Court would be helpful. Following are cases, issues and questions of law appealed to the Ohio Supreme Court to date:
Continue Reading The Dormant Mineral Act: Lots of questions, few answers

In Eastham v. Chesapeake Appalachia, L.L.C., 6th Cir. No. 13-4233, 2014 U.S. App. LEXIS 10531 (June 6, 2014), the Sixth Circuit court of appeals considered whether a provision in a 2007 oil and gas lease that granted Chesapeake the option to “extend or renew under similar terms a like lease” was ambiguous and whether it required Chesapeake to renegotiate the lease when it expired. The court held that the plain language of the lease allowed Chesapeake to “extend” the lease on the same terms. The decision contains insights about Ohio law and important lessons in contract drafting and interpretation.

Facts of the case

On April 9, 2007, William and Frostie Eastham signed an oil and gas lease with Great Lakes Energy Partners, LLC (“Great Lakes”) for their 49.066 acre parcel in Jefferson County, Ohio. The five-year primary term of the lease required Great Lakes to either drill a well or make delay rental payments to Mr. and Mrs. Eastham in the amount of $10.00 per acre per year until a well was drilled. The lease also provided that if the lease expired, Great Lakes would have the following option:

Upon the expiration of this lease and within sixty (60) days thereinafter, Lessor grants to Lessee an option to extend or renew under similar terms a like lease.

Sometime before the lease expired, Great Lakes assigned the lease to Chesapeake. There was apparently no dispute that the assignment was authorized by the lease and that all required delay rentals were timely paid throughout the primary term. Then, on March 14, 2012, about one month before the lease expired, Chesapeake recorded a notice of extension of the lease and sent a check for $490.66 (delay rentals for the first year of the extended five-year term) to Mr. and Mrs. Eastham along with a letter explaining that Chesapeake was exercising its option to extend the lease under the provision quoted above.
Continue Reading Sixth Circuit affirms Chesapeake’s right to “extend or renew” an oil and gas lease

The Ohio Supreme Court recently accepted a new group of civil cases; among them is Chesapeake Exploration, LLC v. Buell. In this case, the Supreme Court has agreed to answer the following two questions of Ohio law certified by United States District Judge Watson of the Southern District of Ohio in Case No. 2:12-cv-916:

  1. 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)?
  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?

Read the court’s certification order and preliminary memoranda.
Continue Reading Ohio Supreme Court accepts second Dormant Mineral Act case

An agreement to enter into an oil and gas lease is an enforceable contract in Ohio

Landowner enters into an agreement to sign an oil and gas lease, finds outs there may be a better deal elsewhere and tries to get out of the first deal. A federal court in Ohio says, “No, a deal is a deal.” Bruzzese v. Chesapeake Exploration, LLC, U.S. District Court for the Southern District of Ohio, Eastern Division (Feb. 13, 2014).

Background

A group of landowners in eastern Ohio had engaged attorneys to negotiate oil and gas leases on their collective behalves. They signed an Agreement to Accept Lease Offer from Chesapeake Exploration, LLC. About 75 members of the group later sued Chesapeake Exploration, LLC, claiming that the agreement was unenforceable. Chesapeake settled with all the landowners except Stephen and Elizabeth Albery.

The Alberys had printed out the agreement, filled in blanks, signed it and emailed it to the group attorneys on July 16, 2011. Immediately thereafter, Mrs. Albery’s sister told them that she had heard that other energy companies were making better offers to landowners. Under the apparent understanding that they could back out of the agreement because they believed they could still opt out of the landowners group, the Alberys sent a letter to counsel on July 24, 2011, stating that they wished to terminate the agreement.
Continue Reading An agreement to enter into an oil and gas lease is an enforceable contract in Ohio

In the previous three parts of this series (read part 1, part 2 and part 3), we reviewed the Ohio Marketable Title Act (MTA), its application to severed minerals, and the experience of neighboring states, all of which played a role in the development of the Ohio Dormant Minerals Act (DMA).

To summarize:

  • The MTA was enacted in 1961 to make land titles marketable, i.e., free of stale claims. It included a grace period and did not require notice before a chain of title was extinguished in favor of another.
  • The MTA generally applies to any property interest (presumably still including oil and gas interests) where no conveyance or claim to preserve has been filed during the past 40 years.
  • The MTA does not necessarily extinguish all old severed mineral interests, even those with a root of title more than 40 years old, because the severed interest may be a separate chain of title.
  • The Illinois DMA was found unconstitutional by the Illinois Supreme Court in 1980 as violating due process because it did not require severed mineral owners to be given notice and an opportunity to be heard.
  • Indiana’s Dormant Mineral Interests Act, Ind. Code §§ 32-5-11-1 through 32-5-11-8 (1976) — which includes a grace period, a 20-year use-it-or-lose-it attribute and no notice requirement — was held to be constitutional by the U.S. Supreme Court in 1982. Texaco, Inc. v. Short, 454 U.S. 516, 102 S. Ct. 781, 70 L. Ed. 2d 738, (1982)
  • Illinois enacted its Severed Mineral Interest Act, which is based on presumptive adverse possession and requires notice, in 1983.
  • Ohio’s lease forfeiture law requires notice and the filing of an affidavit. The law suspends the statutory determination when the lessee files an affidavit contesting the alleged forfeiture. The lessee’s filing must occur no more than 30 days after receiving notice.
  • The National Conference of Commissioners on Uniform State Laws approved the Uniform Dormant Interests Act in 1986.
    Continue Reading The Ohio Dormant Minerals Act: Part 4