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Court News Ohio

Belmont County Surface Owners Not Entitled to Mineral Rights Under Their Properties

Two surface property owners in Belmont County did not follow the notice requirements of the 2006 version of the Ohio Dormant Mineral Act (ODMA), and are not entitled to the oil and gas rights below, the Ohio Supreme Court ruled today.

Applying today’s ruling in Corban v. Chesapeake Exploration L.L.C.,the Supreme Court affirmed a Seventh District Court of Appeals’ decision that held Nile and Katheryn Batman retained the mineral rights under the property owned by Wayne Lipperman and the estate of James Albanese. In an opinion written by Justice Sharon L. Kennedy, the Court found that Lipperman and Albanese did not follow the 2006 ODMA’s requirement to serve notice to the Batmans before attempting to declare their mineral rights abandoned.

In separate lawsuits consolidated by the Supreme Court and titled Albanese v. Batman , Lipperman and Albanese argued the 1989 version of the ODMA applied to their ownership claims and that the Batmans had lost their mineral rights years before the 2006 version took effect. In a concurring opinion, Justice Paul E. Pfeifer agreed with the surface owners that the 1989 law was in effect and did control the matter, but maintained the Batmans had a valid claim to the mineral interests under the 1989 law.

Parties Have Competing Leases With Energy Companies
In 1952, Mayme Sulsberger died and left her mineral rights interests in Belmont County to her daughter Frances Batman. In 1981, Frances Batman completed an affidavit and notice of claim of interest in land that referenced the mineral interests she held. She recorded the affidavit with the Belmont County Recorder’s Office. She died soon after and, by the terms of her will, the mineral interests passed to her son, Nile Batman.

In 1989, eight years after his mother’s death, Nile Batman filed her will with both the Belmont County Probate Court and the recorder’s office.

Lipperman acquired 41 acres of Belmont County property and, in 2006, leased the oil and gas rights to Reserve Energy Exploration Company, which in 2008 assigned the lease to Equity Oil & Gas Funds, which then assigned its deep-oil and gas rights to a company now called PC Exploration.

Months after Lipperman’s deal with Reserve, the Batmans leased their oil and gas rights underneath Lipperman’s property to Reserve, which also assigned them to PC Exploration.

In the second case, the Albanese estate owns 104 acres in Belmont County, and Albanese leased their oil and gas rights in 2011 to Hess Ohio Developments. Three years earlier, the Batmans leased the mineral rights underneath the Albanese property to Mason Dixon Energy, which assigned them to Hess.

In January 2012, Albanese filed a quiet title action against the Batmans and the energy companies, and less than a month later, Lipperman did the same. Both sought to have the mineral interests held by the Batmans deemed abandoned and sought the cancellation of their oil and gas leases with the energy companies. Both maintained the 1989 version of the ODMA applied to their case and operated to merge the mineral rights with the surface rights because of a lack of activity by the Batmans.

The 1989 law states in part that “any mineral interest held by any person, other than the owner of the surface of the lands subject to the interest, shall be deemed abandoned and vested in the owner of the surface,” unless the mineral interests are related to coal, the interests are held by a government body, or one of several “saving events” were initiated by the mineral rights owners. One type of saving event in the law is when “the mineral interest has been the subject of a title transaction that has been filed or recorded in the office of the county recorder of the county in which the lands are located.” Another is a “claim to preserve the interest has been filed” with the county recorder’s office where the minerals are located.

The trial court found that the 1989 version of the ODMA applied to the matter and that it had a rolling 20-year look-back period in which a mineral rights owner must take some action to preserve their rights. Under the rolling look-back theory, the 1981 filing of the affidavit gave the Batmans 20 years from the date of filing to take further action. When the family filed her will in 1989, that reset the clock and gave the Batmans until 2009 before another other action was required.

Lipperman and Albanese appealed to the Seventh District, which found that the 20-year look-back period was fixed for a period of March 1969 through March 1989, and the legislature gave mineral rights owners an additional three years until March 1992 to preserve their mineral interests or lose them to the surface owners automatically. The Seventh District ruled the 1981 filing of the claim met the law’s requirement and the Batmans' mineral interests were preserved. The surface owners appealed to the Supreme Court, which agreed to hear the case.

New Version of Law Required Notice to Batmans
Justice Kennedy wrote that the Court’s ruling today in Corban applies to both cases and renders moot any arguments about whether the 1989 ODMA had a fixed or rolling look-back period for a mineral rights owner to conduct a saving event.

The Corban decision applies to all claims to quiet title in dormant mineral interests filed after 2006. The Court also found that 1989 version of the ODMA did not automatically merge the mineral and surface rights unless the surface owners took judicial action.

In quoting Corban, Justice Kennedy wrote “(b)ecause ‘deemed’ means only that the mineral interest is presumed abandoned, judicial action, typically by way of a quiet-title action, was required by the surface owner for a conclusive determination that the mineral interest was abandoned and vested in the surface owner. ”

The 2006 version of the ODMA, which is R.C. 5301.56, requires the surface owners to serve notice to the mineral rights owners that they intend to claim their mineral rights, and it gives the mineral rights owners time to respond. Justice Kennedy wrote that mineral rights cannot be deemed abandoned if the mineral-rights holders have not been provided notice.

Neither Lipperman nor Albanese complied with the notice and affidavit provisions found in R.C. 5301.56(E), she concluded. The Court affirmed the Seventh District’s ruling, albeit for different reasons, and determined that the Batmans preserved the mineral interests.

Chief Justice Maureen O’Connor and Justices Terrence O’Donnell, Judith Ann Lanzinger, and Judith L. French joined Justice Kennedy’s opinion.

Concurrence Sides with Seventh District
In his concurrence, Justice Pfeifer noted that he had dissented in Corban and maintained that the 1989 version of the ODMA applied in this case as well. He wrote that in his view the 1981 recording of the affidavit and the 1989 will filing were saving events that met the law’s requirements and there was therefore no reunification of the mineral rights.

Justice William M. O’Neill joined Justice Pfeifer’s concurrence.

2015-0120 and 2015-0121. Albanese v. Batman, Slip Opinion No. 2016-Ohio-5814.

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