Ohio’s Seventh District Court of Appeals recently issued a decision in Eisenbarth v. Reusser, 7th Dist. Monroe No. 13 MO 10 (Aug. 28, 2014) concerning the application of R.C. 5301.56, commonly known as the Ohio Dormant Mineral Act (the “DMA”). Specifically, the appellate court held:
- a recorded oil and gas lease constitutes a “title transaction,” which prevents abandonment of a severed mineral interest pursuant to the statute;
- the statute’s twenty-year look-back period is fixed to the twenty years preceding the effective date of the statute (March 22, 1989), plus the three-year grace period, and does not apply on a “rolling” basis to require preservation events to have occurred every twenty years; and
- a conveyance of the executive right to lease does not result in a conveyance of the right to receive a bonus payment.
With regard to the interpretation of the look back period, the court majority found that the statute’s use of the words “preceding twenty years” alone does not create a rolling look-back period, and is therefore “ambiguous as to whether the look-back period is anything but fixed.” The appellate court noted that the mention of successive claims to preserve under division (D)(1) of the statute does not necessarily provide that the look-back period was intended to apply on a rolling basis; rather, it may have been included as a reference to prior claims to preserve filed under the Marketable Title Act prior to the 1989 DMA. The court further noted that the legislature may have intended the 1989 DMA to have a limited twenty-year application because it planned to enact a new version of the statute to address the next twenty-year period, which it did by amending the statute in 2006.
Judge DeGenaro’s opinion concurred with the majority’s decision, but held that the 2006 DMA is the controlling version of the statute. Noting that this decision was her first opportunity to address the application of the statute, Judge DeGenaro provides a thorough analysis with regard to the purpose and intent of the DMA and its subsequent procedural amendments. Finding the trial court’s decision in Dahlgren v. Brown Farm Properties, L.L.C., Carroll C.P. No. 2013 CVH 274455, to be persuasive, the Judge reasoned that the 1989 DMA does not provide for automatic vesting of a severed mineral interest, but instead provides for an “inchoate interest,” contrary to the appellate court’s recent decisions in Walker v. Shondrick-Nau, 7th Dist. No. 13 NO 402, 2014-Ohio-1499 (Apr. 3, 2014), and Swartz v. Householder, 7th Dist. No. 13 JE 24, 2014-Ohio-2359 (June 2, 2014). Further the Judge reasoned that the 2006 version of the DMA, like the 1989 version, must be applied in a retrospective manner. Accordingly, the Judge held that, because Plaintiffs did not bring a claim until after the effective date of the amendments to the statute, the 2006 DMA controls. Judge DeGenaro also found that, in the alternative, that if the 1989 DMA does apply as provided by the majority’s decision, the statute provides for a rolling twenty-year look-back period.
The issue of whether the 1989 or 2006 version of the DMA governs quiet title actions filed after the enactment of the 2006 DMA is currently before the Supreme Court of Ohio. See Corban v. Chesapeake, Exploration, L.L.C., Case No. 2014-0804.
This article was authored by Alex Quay, Jackson Kelly PLLC. For more information on the author, see here.