(U IN THE COURT OF COMMON PLEAS MORGAN COUNTY, OHIO 29 DEC 0 AM II 33 William Wiseman, et al. H Plaintiffs, Case No. 08 CV 0145 V. Arthur Potts, et al. Judge D.W. Favreau Defendants. PLAINTIFFS MOTION FOR SUMMARY JUDGMENT Pursuant to Civ. R. 56, Plaintiffs respectfully move for summary judgment in their favor as to their claim to quiet title to the oil and gas rights in and to the real estate subject to this action. A Memorandum in Support of this Motion follows. / ii Jhæ K. Keller (00 19957) VORYS, SATER, SEYMOUR AND PEASE 52 East Gay Street I P.O. Box 1008 Columbus, Ohio 43216-1008 614-464-6389 (voice) 614-719-4794 (fax) Counsel for Plaintiffs MEMORANDUM IN SUPPORT I. Introduction This action concerns ownership of oil and gas mineral rights under a 107-acre farm in Deerfield Township of Morgan County, Ohio. It is undisputed that Plaintiffs own the surface and 2I3rds of the oil and gas rights. Defendants claim to own the remaining l/3 interest in the oil and gas rights under the property pursuant to a purported mineral severance in 1947.
There are several reasons why Defendants do not currently own any mineral rights under the subject property. This Motion, however, only addresses one of those reasons. Ohio Revised Code 5301.56 was enacted in 1989 and provides that if the owner of a purported severed oil and gas mineral interest failed to take any action with respect to that interest for a period of 20 years, the interest is deemed abandoned and vested in the surface owner. The facts applicable to this action establish that abandonment pursuant to R.C. 5301.56 occurred and that therefore Plaintiffs are entitled to summary judgment in their favor. If summary judgment is granted in favor of Plaintiffs on this issue, all remaining issues in this action become moot. II. ARGUMENT There are no disputes of material fact and summary judgment is appropriate. A. Defendants Claims Defendants claim to own an interest in the oil and gas under the subject Property pursuant to a reservation purportedly made in the deed from ma Potts to Mae Pellet and Georgia Nelson on October 4, 1947, recorded in Vol.90, Page 579. Plaintiffs deny that this deed gave rise to continuing interests in the oil and gas for several reasons, but, importantly for this Motion, even if one assumes that the reservation created the rights alleged by Defendants, those rights were abandoned pursuant to R.C. 5301.56. -2-
B. Ohio s Dormant Mineral Lapse Statute - R.C. 5301.56 In the 1980s the Ohio State Bar Association s Natural Resources Committee recognized a problem existed with old mineral severances throughout Eastern Ohio. In response, the Committee drafted and urged enactment of R.C. 5301.56. The essence of this statute was "use it or lose it." Similar mineral lapse statutes had been enacted in other states, and one example, from Indiana, was upheld by the United States Supreme Court in Texaco v. Short, 454 U.S. 516 (1982). Ohio s statute was enacted effective March 22, 1989 and a copy is attached hereto as Exhibit 1. Under this statute, the failure of the "holder" of the purportedly severed mineral interest to take any of certain listed actions with respect to the interest for a period of 20 years caused the interest to be deemed abandoned and automatically vested in the surface owner. Under R.C. 5301.56, the time period for examination was 20 years before the effective date of the statute, in other words from March 1969 through March 1989. Riddle v. Layman, 1995 WL 498812 (Ohio App. 5 Dist.), copy attached Exhibit 2. The statute provided that the interest would be abandoned unless one or more of the following events occurred with respect to the severed interest: 1. The mineral interest has been the subject of a recorded title transaction (5301.56(B)(1)(c)(i)); 2. There has been actual production (5301.56(B)(1)(c)(ii)); 3. The mineral interest has been used in underground storage of natural gas (5301.56(B)(1)(c)(iii)); R.C. 5301.56 was significantly amended in 2006. This instant case involves the application of the initial 1989 version, not the 2006 version of the statute. -3-
4. A drilling permit has been issued to the holder of the mineral interest (5301.56(B)(1 )(c)(iv)); 5. A claim to preserve the interest pursuant to 5301.56(C) has been recorded (5301.56(B)(1)(c)(v)); or 6. A separate tax parcel number has been created by the county taxing authorities (5301.56(B)(l )(c)(vi)). C. None Of The Saving Events Occurred Plaintiffs have obtained affidavits which establish that none of the "saving" events specifiedby R.C. 5301.56 occurred between 1969 and 1989 with respect to the allegedly severed mineral interests claimed by Defendants. 1. The mineral interest which Defendants claim to own was not conveyed, mortgaged or otherwise the subject of a recorded title transaction during the 20-year period from the beginning of 1969 through the end of 1989. See Affidavit of John Keller attached hereto as Exhibit 3. 2 2. Attached hereto as Exhibit 5 is an Affidavit of Scott Kell, the Deputy Chief of the Ohio Division of Mineral Resources Management, which states that there is no record of production of oil and gas from the subject real estate between the beginning of 1969 and the end of 1989. In addition, the Affidavit of Molly Lust (attached hereto as Exhibit 6) states that she is the daughter of the owner 2 During this period Plaintiffs predecessor in title, Thomas Bell, died and there was a certificate of transfer recorded leaving the fee to his four heirs, and then three of the heirs quitclaimed the fee to the fourth heir, Roberta Bell. An example of these instruments is attached as Exhibit 4. These conveyances refer (incorrectly) to Defendants predecessor s claimed severed interest as an exception, but inasmuch as the severed interest is neither affected by nor the subject of these instruments, they do not defeat the operation of R.C. 5301.56.
of this property from 1966 through 1995, and that there was to her knowledge no actual production nor did her mother receive royalties from production during this period. Further, attached as Exhibit 7 is the Affidavit of Russell Wiseman, who owns the adjacent farm, grew up near and regularly hunted and roamed the subject property, and states that during the period of time in question there was no evidence of active oil and gas production. This evidence establishes that there was no production of oil and gas for at least 20 years before the effective date of 5301.56. 3. The Affidavit of Scott Kell (Exhibit 5) establishes that the subject land has not been used for the underground storage of natural gas between the beginning of 1969 thorough 1989. 4, The Affidavit of Scott Kell (Exhibit 5) establishes that no drilling permits have been issued for the subject property between the beginning of 1969 through 1989. 5. The Affidavit of John Keller (Exhibit 3) establishes that no preserving notice pursuant to R.C. 5301.56(C) was recorded. 6. The Affidavit of Gary D. Woodward, the Morgan County Auditor (attached hereto as Exhibit 8) establishes that no separate tax parcel number for the alleged severed mineral interests claimed by Defendants has been created between the beginning of 1969 through 1989. -5 -
D. The Result As a result of the lack of any saving events between 1969 and 1989, any severed oil and gas interests which Defendants or their predecessor had are deemed abandoned and vested in the surface owners, now Plaintiffs. III. CONCLUSION Plaintiffs Motion for Summary Judgment is well taken and should be granted. Respectfully submitted, John- K. Keller (0019957) IORYS, SATER, SEYMOUR AND PEASE 52 East Gay Street / P.O. Box 1008 Columbus, Ohio 43216-1008 614-464-6389 (voice) 614-719-4794 (fax) Counsel for Plaintiffs CERTIFICATE OF SERVICE This is to certify that a true and exact copy of the foregoing was served by regular U.S. mail upon Counsel for Defendants, Steven P. Schnittke, 114 South High Street, New Lexington OH 43764-1301, this 7 day of December, 2009. 5ii K. Keller /- 12/0912009 730999
IN THE COURT OF COMMON PLEAS, MORGAN COUNTY, OHIO WILLIAM WISEMAN, et al 1 F 9 i 6C$ENO. 08-CV-0145 Plaintiffs MN ARTHUR POTTS, et al Defendants RESPONSE OF DEFENDANTS TO MOTION FOR SUMMARY JUDGMENT Defendants, Arthur Potts, Raymond Potts, Mollie Potts and Janet Sharkey, by and through their counsel submit the Response to the Motion for Summary Judgment filed by Plaintiff. Defendants state that there are grounds to deny a Summary Judgment. SCHNITTKE & SMITH Steven P. Schnittke (0025537) Attorney for Defendants Arthur Potts, et al 114 S. High St., P.O. Box 536 New Lexington, Ohio 43764 (740) 342-2033 Fax: (740) 342-5204 i
MEMORANDUM IN SUPPORT OF DEFENDANTS MOTION CONTRA I. INTRODUCTION: This action concerns ownership of oil and gas rights under 107 acres in Section 31 of Deerfield Township, Morgan County, Ohio. Plaintiffs claim ownership of the surface and 2/3 interest of the oil and gas rights. Defendants claim ownership of the remaining 1/3 interest in the oil and gas rights under said premises pursuant to a Quit Claim Deed on October 4, 1947, in Deed Volume 90, Page 541, (Exhibit 1), wherein ma Potts, deceased, mother of Defendants, and her husband, Samuel Potts, conveyed to Mae Pettet and George Nelson, her 1/3 in the surface, "excepting and reserving to the Grantor ma Potts, her heirs and assigns, all interest which she now owns in the oil, gas and other minerals in and underlying said premises". II. ARGUMENT: There is a dispute as to material fact and Summary Judgment is not appropriate herein. An affidavit by Linda L. Smith, Attorney, as to chain of title and non-abandonment argument attached as Exhibit 2. A. Plaintiff s Claims: Plaintiffs are asking for Summary Judgment under the 1989 law in ORC 5301.56, which provided if an owner of a severed oil and gas interest failed to take action with respect to that interest for a period of 20 years prior to 1989, the interest was deemed abandoned and vested in the surface owner. However, the statute provided that there were six (6) exemptions, any one of which would disallow such abandonment: These exemptions are as follows: 1. The mineral interest has been the subject of a recorded title transaction (5301.56 (B)( 1)(C)(1)); 2. There has been actual production (5301.56 (B)(1)(c)(ii)); 3. The mineral interest has been used in underground storage of natural gas (5301.56(B)(1)(c)(iii)); 4. A drilling permit has been issued to the holder of the mineral interest (5301,56(B)(1 )(c)(iv)); 5. A claim to preserve the interest pursuant to 5301.56(C) has been recorded (530 l.56(b)(l)(c)(v)); or 6. A separate tax parcel number has been created by the county taxing authorities (5301.5 6(B)(l)(c)(vi)).
A title transaction is defined in ORC 5301.47 (F) as "any transaction affecting title to any interest in land, including title by will or descent, title by tax deed or by trustee s, assignee s, guardian s, executor s, administrator s, or Sheriff s deed, or Decree of any Court as well as Warranty Deed, Quit Claim Deed or Mortgage. The Ohio Supreme Court addressed the issue whether a title transaction should only be in the specific chain of title as that of the marketable record title. In HEIFNER, et al v. BRADFORD, et a!, 4 Ohio St. 3d 49 (1983), the unanimous Court held that a title transaction may be part of an independent chain of title and that the recording of a "title transaction" under the Marketable Title Act is equivalent to filing a Notice of Claim during the 40 year period of said Act. See Exhibit 12. This is the same principle in this case. B. A Saving Event Occurred: Defendants attach hereto one (1) Certificate of Transfer and three (3) deeds, all of which occurred during the 20 year period (1969 to 1989) that Plaintiffs claim under the statute. These four (4) recorded title transactions were filed in 1972, which meet the events test under the statute. The title transaction included an exception to the 1/3 interest oil and gas mineral rights owned by ma Potts, Defendants mother. Said deeds are attached hereto as Exhibits 3, 4, 5 and 6, and each contain the following language: First Tract.... EXCEPTING the 1/3 interest in said lease of ma Potts, as recorded in Volume Deed, Page 112 of the records of Leases of Morgan County, Ohio. Second Tract... EXCEPTING 1/3 interest in oil, gas, and mineral
rights held by ma Potts. Despite Plaintiffs claim to the contrary these are recorded title transactions (4) and therefore this 1/3 oil and gas rights exception and reservation is exempted from the statute. Further, Plaintiff is correct that the First Tract should have stated that it was an exception and reservation of 1/3 of the oil and gas rights not just as to the lease of record. 2. The Affidavit of Scott Kell (Plaintiffs Exhibit 5) establishes that no drilling permits were issued for the subject property between 1969 and 1989. Defendants Exhibit 7, an Affidavit by Janet Sharkey, one of the Defendants, establishes that the well on Plaintiffs land is the same well produced under the oil and gas Lease dated January 23, 1895 and filed January 26, 1895 in Volume D, Page 112, Lease Records, Morgan County, Ohio. C. Result: 1. Because there is at least one (1) saving event, being the four (4) recorded transactions in Defendants Exhibits 3, 4, 5 and 6, the 1/3 interest in the oil and gas rights of Defendants cannot be deemed abandoned and does not vest in Plaintiffs. The cases cited in Plaintiffs Exhibit 2 and Defendants Exhibit 12 clearly reflect that these four conveyances are title transactions required under the statute to save Defendants 1/3 interest in the oil and gas rights. 2. Because there were several title transactions which bar abandonment, the 1989 statute is invalid as to Plaintiffs claim. The current statute (ORC 5301.53- Exhibit 11- effective June 30, 2006) requires Notice to the mineral interest holders, being Defendants herein. No such Notice was given to Defendants by Plaintiffs under the statute, which was enacted in part due to the taking of property without notice and due process.
III. CONCLUSION: Plaintiffs Motion for Summary Judgment is nor well taken and not granted. Respectfully submitted, SCHNIT KE &,MIT S even. chnittke (0025537) Attorney for Defendants Arthur Potts, et al 114 S. High St., P.O. Box 536 New Lexington, Ohio 43764 (740) 342-2033 Fax: (740) 342-5204 CERTIFICATE OF SERVICE I hereby certify that a copy of Defendants Motion Contra was served upon John K. Keller, Attorney for Plaintiffs at Vorys, Sater, Seymour and Peas, 5. Gay Street, P.O. Box 1008, Columbus, Ohio 43216-1008 by ordinary U.S. Mail on this day of February, 2010. Steven P. Schnittke (0025537) Attorney for Defendants
IN THE COURT OF COMMON PLEAS MORGAN COUNTY, OHIO William Wiseman, et al. Plaintiffs, : Case No. 08 CV 0145 V. Arthur Potts, et al. Judge D.W. Favreau Defendants. REPLY OF PLAINTIFFS IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT In reply to Defendants memorandum contra, Plaintiffs submit the following. Initially, the parties are in agreement that the focus of this motion is the 1989 law "which provided if an owner of a severed oil and gas interest failed to take action with respect to that interest for a period of 20 years prior to 1989, the interest was deemed abandoned and vested in the surface owner." (Page 1 Defendants Memorandum). Thus, the issue is whether any of the six enumerated saving events occurred in this case. Defendants argue that two savings events occurred. First, they claim in section B.2. of their Memorandum that the Affidavit of Defendant Janet Sharkey successful responds to the Scott Kell Affidavit which stated that no drilling permits were issued on the property between 1969 and 1989. Respectfully, Ms, Sharkey s Affidavit does not even attempt to establish that there was a drilling permit issued between 1969 and 1989. Simply put, Ms. Sharkey s Affidavit does not contest anything in Mr. Kell s affidavit. There is nothing in Ms. Sharkey s Affidavit which establishes any of the saving events under R.C. 1509.56.
The more significant argument advanced by Defendants is that the one Certificate of Transfer and three Deeds referenced by Defendants constitute a saving event pursuant to the portion of R.C. 5301.56, which lists as a saving event: 1. The mineral interest has been the subject of a recorded title transaction. (emphasis added) For the purposes of this motion, Plaintiffs assume that the four instruments are "title transactions." The question for this Court, however, is whether the severed mineral interest is "the subject of those instruments. Under the statute, it is not enough that a title transaction mentions the mineral interest; the statute expressly requires that the severed mineral interest must be "the subject of" the title transaction in order to be a saving event. A review of those four instruments makes it clear that the severed mineral interest is not, and was not intended to be, the subject of those instruments. Rather, those four instruments convey the remainder of the real estate first from the estate to the children, and then among the children. While the severed mineral interests here at issue are mentioned as exceptions in the property description, none of those instruments either create or convey the subject mineral interest, Hence, while mentioned, the severed mineral interest is not the subject of any of those instruments. The severed mineral interest is in fact excluded from the four instruments discussed by Defendants. This is evident by the fact that the Defendants, after the instant lawsuit was commenced, felt it was necessary to obtain a new Certificate of Transfer in 2007, expressly Note the statute says the mineral interest must be "the" subject, not "a" subject. This further suggests that the mineral interest must be the purpose of the instrument. Black s Law Dictionary, Ninth Edition, defines "subject" as "The matter of concern over which something is created <the subject of the statute>.also termed (in sense 2) subject matter." Clearly, the subject matter of, and reason for the creation of, these instruments was not the severed mineral interest.
conveying this alleged severed mineral interest from the estate to the Defendants (Defendants Exhibit 8). The mineral interest was clearly "the subject of" this 2007 instrument, but of course that was done long after the 1969 to 1989 time period at issue. If the 2007 instrument had been done during the applicable 20-year period, it would have been a saving event under 5301.56, but it was not. In her affidavit (Defendants Exhibit 2), Linda Smith opines that a title examiner would have been "on notice" of the severed mineral interest. Respectfully, while that opinion might have relevance with respect that an old interest has been cut off by virtue of the 40-year marketable title provision of R.C. 5301.49, it does not affect the Dormant Mineral Lapse procedure under R.C. 5301.56. Under the marketable title analysis, an old interest arising before the root of title is preserved if a subsequent instrument provides notice of the old interest, See, Toth v. Berks Title Ins. Co., 6 Ohio St. 3d 338 (1983) which states "Any interest or defect which is referred to specifically in a muniment... is not extinguished." (Id. At 341). "Referred to" is significantly different from "the subject of." The dormant mineral analysis is different because 5301.56 expressly provides that the severed mineral interest must be "the subject of" the subsequent instrument. Notice is not sufficient. From a policy standpoint, the thrust of the dormant mineral statute, 5301.56, is clearly "use it or lose it." Mineral interests are important and valuable and the state and county collect taxes from extraction of minerals. The statute provides that if not "used" during the 20-year period by either obtaining permits, actual production, conveyance of the interest, taxation of the interest, or the other specifically enumerated events, the severed interest lapses, is abandoned and is vested in the surface owner. This is exactly what happened here; the family didn t even care enough about this old severed interest to include it in the 1972 Certificate of
Transfer; nothing was done about this interest until the Plaintiffs acquired the property and desired to put the minerals under their property to some productive use. Finally, this is an issue appropriate for summary judgment. Resolution is a matter of law and there are no disputes of fact. Summary judgment in favor of Plaintiffs on the basis of 5301.56 is appropriate and should be granted. Respectfully submitted, )z JThn K. Keller (0019957) VORYS, SATER, SEYMOUR AND PEASE 52 East Gay Street! P.O. Box 1008 Columbus, Ohio 43216-1008 614-464-6389 (voice) 614-719-4794 (fax) Counsel for Plaintiffs CERTIFICATE OF SERVICE This is to certify that a true and exact copy of the foregoing was served by regular U.S. mail and fax upon Counsel for Defendants, Steven P. Schnittke, 114 South High Street, New Lexington OH 43764-1301, this 3 day of March, 2010. i 4hn K. Keller 3/03/2010 7897885
Al IN THE COURT OF COMMON PLEAS MORGAN COUNTY, OHIO William Wiseman, et a! ON PLAINTIFFS -vs- Case No. 08CV0145 Arthur Potts, et at DEFENDANTS : JOURNAL ENTRY This matter came before the court upon the Motion of the Plaintiffs for Summary Judgment in the above styled case. The court notes that this matter had previously been before the court and prior to the Plaintiffs having time to file their reply to Defendants Motion Contra for Summary Judgment, the court inadvertently denied Plaintiffs Motion for Summary Judgment prior to receiving Plaintiffs reply. Upon Motion of the Plaintiffs thereafter, the court sat aside its prior denial and allowed the parties to file such responses as were necessary for their side of the case. This matter is therefore before the court again on the Plaintiffs Motion for Summary Judgment. The court, based upon the pleadings and other evidence in the file and only thereon, finds that there is no genuine issue as to material fact and that the Motion of the
Plaintiffs for Summary Judgment quieting title to the oil and gas rights that are the subject of the Complaint should be and hereby is granted. The court orders that the title to the property that is the subject of the Complaint be quieted in the Plaintiffs and that the attorney for the Plaintiffs is further ordered to provide the court with a Journal Entry with the legal description of the property herein quieted sufficient for recording in the office of the Morgan County Recorder. SO ORDERED. /- D.W. F AVKEAU, JUDGE NOTICE TO CLERKS OFFICE: FINAL APPEALABLE ORDER This is a final appealable, order. For each party who is not in default, serve notice to the attorney for each party and to each party who represents him or her self by personal delivery or by regular mail service with a certificate of mailing, making notation of same upon the case docket.