Recent oil and gas decisions from Ohio’s Seventh District Court of Appeals
Blog Post
Ohio’s Seventh District Court of Appeals recently issued surprising decisions in two significant cases relating to the oil and gas industry. The following is an analysis of the unsettling portions of those cases and the impact of the court’s decisions.
Upon review, the Seventh District held that the trial court erred in finding that the MTA does not apply, citing the Ohio Supreme Court decision in Blackstone v. Moore. However, the court in Blackstone never addressed whether the MTA should apply after enactment of the DMA because that issue was not before the court. In fact, the dissent in Blackstone specifically acknowledged that the opinion “should not be read to implicitly hold that the more general Marketable Title Act continues to apply to mineral interests following the enactment of the Dormant Mineral Act.” While the Miller court was correct in recognizing that the Blackstone court held that royalty interests are subject to the MTA, that holding is not determinative of the general MTA vs. specific DMA applicability debate.
The debate over whether the general MTA continues to apply following the enactment of the specific DMA presents a question which is in need of resolution and certainty in Ohio. Unfortunately, the Seventh District’s decision in Miller did not address that issue despite it being perfectly situated for analysis.
The Miller decision contained another holding which was further discussed in the Seventh District’s decision published just a day later.
The MTA operates to extinguish certain severed mineral interests by stating that record marketable title “shall be taken by any person dealing with the land free and clear of all interests, claims, or charges whatsoever, the existence of which depends upon any act, transaction, event, or omission that occurred prior to the effective date of the root of title.” R.C. 5301.50. However, if the record chain of title consists of a specific reference to a mineral severance, then that interest will not be extinguished. On the other hand, a “general reference . . . to . . . interests created prior to the root of title shall not be sufficient to preserve them . . .” Thus, if a reference to a prior severance is sufficiently specific, it will not be extinguished, but if it is merely general, it will be.
In Soucik and Miller, the Seventh District held that because the root of title deed itself contained a reference to a prior severance, there was no need to conduct the specific versus general analysis. In support of its decision, the court cites to decisions in Holdren v. Mann, Chistman v. Wells, finding that those courts “focused on the existence of the reservation within the purported root of title, and did not undertake an examination as to whether the language was general or specific if it was contained within the root of title deed.” That is true, those courts did not conduct the general or specific analysis. However, the reason it was not necessary to conduct such an analysis in those cases is because those severances were created in the root of title deeds themselves. There is no question that if a root of title deed itself creates a severance, it cannot be extinguished. That is why the courts in Holdren and Christman did not need to conduct any further analysis. The debate is whether a root of title deed which contains a reference to a prior severance is general or specific. In both Soucik and Miller, the root of title deed contained a reference to a prior severance, they did not create the severance as in Holdren and Christman. Accordingly, an analysis of the general or specific nature of the references should have been undertaken.
Furthermore, the holdings in Soucik and Miller are directly contradictory to prior Ohio Supreme Court decisions. The Ohio Supreme Court’s decision in Blackstone, which Miller cites, involved a reference to a prior severance within the root of title deed. Thus, the Ohio Supreme has recognized that references to prior severances must be specific in order to avoid being extinguished, even if they are in the root of title deed itself. It does not appear the courts in Soucik and Miller followed that precedent.
The Seventh District has long been a haven for deep, analytical decisions regarding oil and gas issues which set the tone for the state. Hopefully these cases are merely outliers to that tradition.
Miller v. Mellott
Miller, the owner of the surface of the property in question, asserted that the Marketable Title Act (MTA) automatically extinguished a prior mineral severance. In considering Miller’s claims, the trial court conducted an analysis as to whether the general MTA continues to apply after enactment of the specific Dormant Mineral Act (DMA). The trial court held that the specific DMA alone applied to quiet title to a severed mineral interest.Upon review, the Seventh District held that the trial court erred in finding that the MTA does not apply, citing the Ohio Supreme Court decision in Blackstone v. Moore. However, the court in Blackstone never addressed whether the MTA should apply after enactment of the DMA because that issue was not before the court. In fact, the dissent in Blackstone specifically acknowledged that the opinion “should not be read to implicitly hold that the more general Marketable Title Act continues to apply to mineral interests following the enactment of the Dormant Mineral Act.” While the Miller court was correct in recognizing that the Blackstone court held that royalty interests are subject to the MTA, that holding is not determinative of the general MTA vs. specific DMA applicability debate.
The debate over whether the general MTA continues to apply following the enactment of the specific DMA presents a question which is in need of resolution and certainty in Ohio. Unfortunately, the Seventh District’s decision in Miller did not address that issue despite it being perfectly situated for analysis.
The Miller decision contained another holding which was further discussed in the Seventh District’s decision published just a day later.
Soucik v. Gulfport Energy Corporation
In both Soucik and Miller, the Seventh District considered whether the MTA applied to a mineral severance. In both cases, the court held that the MTA did not apply because the root of title contained a reference to a mineral severance.The MTA operates to extinguish certain severed mineral interests by stating that record marketable title “shall be taken by any person dealing with the land free and clear of all interests, claims, or charges whatsoever, the existence of which depends upon any act, transaction, event, or omission that occurred prior to the effective date of the root of title.” R.C. 5301.50. However, if the record chain of title consists of a specific reference to a mineral severance, then that interest will not be extinguished. On the other hand, a “general reference . . . to . . . interests created prior to the root of title shall not be sufficient to preserve them . . .” Thus, if a reference to a prior severance is sufficiently specific, it will not be extinguished, but if it is merely general, it will be.
In Soucik and Miller, the Seventh District held that because the root of title deed itself contained a reference to a prior severance, there was no need to conduct the specific versus general analysis. In support of its decision, the court cites to decisions in Holdren v. Mann, Chistman v. Wells, finding that those courts “focused on the existence of the reservation within the purported root of title, and did not undertake an examination as to whether the language was general or specific if it was contained within the root of title deed.” That is true, those courts did not conduct the general or specific analysis. However, the reason it was not necessary to conduct such an analysis in those cases is because those severances were created in the root of title deeds themselves. There is no question that if a root of title deed itself creates a severance, it cannot be extinguished. That is why the courts in Holdren and Christman did not need to conduct any further analysis. The debate is whether a root of title deed which contains a reference to a prior severance is general or specific. In both Soucik and Miller, the root of title deed contained a reference to a prior severance, they did not create the severance as in Holdren and Christman. Accordingly, an analysis of the general or specific nature of the references should have been undertaken.
Furthermore, the holdings in Soucik and Miller are directly contradictory to prior Ohio Supreme Court decisions. The Ohio Supreme Court’s decision in Blackstone, which Miller cites, involved a reference to a prior severance within the root of title deed. Thus, the Ohio Supreme has recognized that references to prior severances must be specific in order to avoid being extinguished, even if they are in the root of title deed itself. It does not appear the courts in Soucik and Miller followed that precedent.
The Seventh District has long been a haven for deep, analytical decisions regarding oil and gas issues which set the tone for the state. Hopefully these cases are merely outliers to that tradition.