United States: Ohio 7th District Court Of Appeals Provides Much Needed Clarity On Dormant Mineral Act

Last Updated: April 17 2014
Article by Steven Chadwick

On April 8, 2014, the Court of Appeals for the Seventh District of the State of Ohio issued its opinion in the matter of Walker v. Noon (2014-Ohio-1499). In Walker, the Court considered competing claims to a previously severed mineral estate between a surface owner, Jon Walker, Jr. ("Walker"), and the purported owner of the mineral estate underlying the Subject Land, John R. Noon ("Noon")

In finding that the severed mineral estate reverted back to the owner of the surface estate automatically under the 1989 version of Ohio's Dormant Mineral Act, O.R.C. §5301.56, et. seq. (the "1989 D.M.A."), the Court held that surface estate conveyances which merely reference a previously severed mineral estate do not qualify as title transactions for purposes of preserving that severed estate under the Dormant Mineral Act. The case also provides some clarity as to when the 1989 version of Ohio's Dormant Mineral Act may control in present-day disputes over severed mineral interests (as opposed to the Act, as amended in 2006).

By way of brief factual background, on July 26, 1965, Noon separately conveyed two tracts of land (the "Land"), reserving unto himself the mineral estate (including oil and gas) underlying the tracts. Between 1970 and 1977, the surface estate of the Land was conveyed three separate times, and each deed referenced Noon's prior reservation of the mineral estate.

In 2009, Walker acquired the surface estate of the Land. On December 2, 2011, Walker filed a Notice of Abandonment of Mineral Interests in compliance with the 2006 version of Ohio's Dormant Mineral Act ("2006 D.M.A."). Thereafter, Noon timely filed an Affidavit and Claim to Preserve Mineral Interest, as required under the 2006 D.M.A.

On April 27, 2012, Walker filed a Complaint for Declaratory Judgment with the Noble County Court of Common Pleas, seeking to quiet title as to the mineral estate. Walker claimed that the severed mineral estate had not been the subject of a title transaction or "title savings event" as required by the 1989 D.M.A. and, as such, the mineral estate reverted back to the surface estate on March 22, 1992. Conversely, Noon claimed that the mineral estate had not automatically revered back to the surface estate and his filing of an Affidavit and Claim to Preserve Mineral Interest in accordance with the 2006 D.M.A. preserved his ownership of the severed mineral estate.

Walker claimed ownership of the mineral estate, asserting that the previously severed mineral estate merged back into the surface estate on March 22, 1992, in accordance with the 1989 D.M.A., based on Noon's failure to preserve his mineral interest. In response, Noon claimed that his filing of the Affidavit and Claim to Preserve Mineral Interest under the 2006 D.M.A. effectively preserved his mineral interest.

The trial court granted summary judgment in favor of Walker, holding that the conveyances in 1970 or 1977 did not qualify as "title transactions" as to the mineral estate and any rights which Noon may have had in the mineral estate had been abandoned and merged into the surface estate on March 22, 1992.

Noon timely appealed the decision of the lower court to the Seventh District Court of Appeals. [Note: Noon passed away after filing his appeal. Noon's daughter, Patricia J. Shondrick-Nau, was substituted as Appellant in her capacity as Executrix of Decedent's estate (hereinafter "Appellant").]

In affirming the lower court's decision, the Court first considered whether the 1970 and 1977 conveyances of the surface estate qualified as title transactions for purposes of preserving the severed mineral estate. Appellant claimed that the conveyances should have preserved the severed interest under the 1989 D.M.A. because the 1989 D.M.A. required only that the mineral estate be part of any title transaction, not that the mineral estate be the subject of the title transaction. In Dodd v. Croskey, 2013-Ohio-4257, the Court held that mere reference to a prior mineral reservation within a deed did not make the reserved mineral interest the "subject of" that title transaction. The Court reasoned that, when applied to the instant matter, Dodd makes clear that the conveyances in 1970 and 1977 did not qualify as title transactions for preserving the severed mineral estate under the 1989 or 2006 versions of the Dormant Mineral Act.

The Court next considered Appellant's argument that the lower court had improperly applied the 1989 D.M.A. and should have instead applied the 2006 D.M.A. which was in effect at the time Walker's initially brought suit. In considering when to apply the 1989 or 2006 D.M.A., the Court first reviewed the language of the Act and determined that it was intended to be applied prospectively. Having so determined, the Court held that the 2006 D.M.A. had no effect on any "validation, cure, privilege, obligation or liability previously acquired." See, R.C. §1.58(A)(1)(2). The Court then confirmed that the 1989 D.M.A. required that any mineral interest which had not been the subject of a title transaction during the preceding twenty years (or within the subsequent three year grace period) to be deemed abandoned and vested in the surface owner as of March 22, 1992. Accordingly, the Court held that Appellant's interest in the severed mineral estate had automatically been deemed abandoned and reverted back to the surface estate owner on March 22, 1992.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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Steven Chadwick
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