Login | April 16, 2024
7th District reverses oil and gas abandonment case
TRACEY BLAIR
Legal News Reporter
Published: October 17, 2018
The 7th District Court of Appeals recently found a Belmont County trial court improperly denied a Texas couple’s heirs from attempting to get their share of oil and gas on a 20-acre property.
According to case summary, John and Helen Kirk reserved one-half of their minerals when they sold their Belmont County property in 1936. Helen died testate in 1965, leaving her estate to her five children. John died in 1987, leaving his estate to his children through a trust.
The Kirk heirs appealed the trial court’s decision granting summary judgment in favor of plaintiff Jefferis Real Estate Oil & Gas Holdings, LLC. Citing abandonment under the 2006 Dormant Mineral Act, the trial court also declared the plaintiff owns 100 percent of the minerals.
The trial court also found the heirs’ claim to preserve that was filed after service of the notice of abandonment was not valid because there was no record notice the Kirk heirs were successors or assignees of the mineral interest.
Both parties agreed the mineral interest was not specifically mentioned in either will, and that none of the estates listed it in an inventory or issued a certificate of transfer regarding the mineral interest.
In a 3-0 ruling, the appellate court ruled in favor of the defendants.
“Where the original record holder’s mineral interest was still owned at death, a person to whom the mineral interest passed through will or intestacy is entitled to file a claim to preserve and thwart abandonment of the mineral interest, in a case where the probate filings show the person filing a claim to preserve inherited a share of the record holder’s entire estate,” Presiding 7th District Judge Carol Ann Robb wrote. “The fact the mineral interest was not listed in the inventory of the estate or transferred via a probate courts’ certificate of title is not dispositive of the question of whether an heir to a deceased record holder can file a claim to preserve and prevent the mineral interest from being deemed abandoned under the DMA. The trial court’s judgment is reversed, and the case is remanded for further proceedings.”
In 2013, the plaintiff published two separate notices of abandonment in the newspaper, and filed an affidavit of abandonment in the Belmont County Recorder’s Office 58 days later. Under R.C. 5301.56(E)(2), an affidavit of abandonment must be filed between 30 and 60 days after the notice).
Next, a claim to preserve the mineral interest was filed in the recorder’s office by the defendants’ attorney on behalf of the heirs.
Less than four months later, the plaintiff filed a claim against the Kirk heirs, who had filed a claim to preserve and avoid the lower court’s declaration of abandonment. The complaint sought quiet title of the severed mineral interest and a declaratory judgment finding the mineral interest abandoned under either the 1989 or the 2006 DMA and extinguished under the Marketable Title Act.
The company also argued the claims were fraudulent and sought damages for slander of title.
The trial court originally granted judgment on the pleadings in favor of Jefferis, declaring they owned 100 percent of the minerals on the property. On appeal, the 7th District granted a stay pending an Ohio Supreme Court decision on the 1989 DMA.
The appellate court then reversed the judgment of abandonment under the 1989 DMA due to the Supreme Court’s ruling that the former version of the DMA was not self-executing and can no longer be used in lawsuits filed after the 2006 DMA was enacted (Jefferis Real Estate Oil & Gas Holdings, LLC v. Schnaffner Law Offices, LPA, 7th Dist. No. 14 BE 0019, 2017-Ohio-1013, 86 N.E.3d 966).
The appellate court remanded for further proceedings on the unaddressed claims, which included abandonment under the 2006 DMA and extinguishment under the Marketable Title Act.
In 2017, the trial grant granted summary judgment in favor of the plaintiff, declaring Jefferis owns 100 percent of the oil and gas on the property due to abandonment. The trial court also found the post-notice-of-abandonment claims to preserve filed under the 2006 DMA were invalid because they were not filed by a holder or a holder’s successor or assignee.
In the appellate court’s latest ruling, the case was remanded for further proceedings on the MTA extinguishment claim.
Appellate judges Gene Donofrio and Cheryl L. Waite concurred.
The case is cited Jefferis Real Estate Oil & Gas Holdings, L.L.C. v. Schaffner Law Offices, L.P.A., 2018-Ohio-3733.