Smith v. Collectors Triangle, Ltd. ( 2020 )

[Cite as Smith v. Collectors Triangle, Ltd., 2020-Ohio-6965.]
IN THE COURT OF APPEALS OF OHIO
SEVENTH APPELLATE DISTRICT
HARRISON COUNTY
PATRICIA CAROL SMITH et al.,
Plaintiffs-Appellants,
v.
COLLECTORS TRIANGLE, LTD. et al.,
Defendants-Appellees.
OPINION AND JUDGMENT ENTRY
Case No. 19 HA 0010
Appellees’ Application for Reconsideration and
Application for En Banc Consideration
BEFORE:
Cheryl L. Waite, Gene Donofrio, David A. D’Apolito, Judges.
JUDGMENT:
Denied.
Atty. Sara E. Fanning, Roetzel & Andress, LPA, 41 South High Street, Huntington Center,
21st Floor, Columbus, Ohio 43215 and Atty. Richard S. Mitchell, Roetzel & Andress,
LPA, 1375 East Ninth Street, One Cleveland Center, 10th Floor, Cleveland, Ohio 44114
and Atty. David J. Wigham and Atty. Emily K. Anglewicz, Roetzel & Andress, LPA, 222
South Main Street, Suite 400, Akron, Ohio 44308, for Plaintiffs-Appellants
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Atty. Andrew P. Lycans and Atty. Eric T. Michener, Critchfield, Critchfield & Johnston,
LTD, 225 North Market Street, P. O. Box 599, Wooster, Ohio 44691, for Defendants-
Appellees Collectors Triangle, Ltd.
Atty. Nathan D. Vaughn and Atty. Giuseppe Ionno, Kimble Company, 3596 S.R. 39 NW,
Dover, Ohio 44622, for Defendants-Appellees ESK ORI, LLC, GDK ORI, LLC, GWK ORI,
LLC, JEM ORI, LLC, KBK ORI, LLC, and RHDK Oil & Gas, LLC.
Atty. Kevin Colosimo, Atty. Christopher Rogers, and Atty. Daniel P. Craig, Frost Brown
Todd, LLC, Union Trust Building, 501 Grant street, Suite 800, Pittsburgh, Pennsylvania
15219, for Defendant-Appellee Ascent Resources-Utica, LLC.
Dated: December 31, 2020
PER CURIAM.
{¶1} Appellees Collectors Triangle, Ltd., Ascent Resources Utica LLC, ESK ORI
LLC, GDK ORI LLC, GWK ORI LLC, KBK ORI LLC, JEM ORI LLC, RHDK ORI LLC.
(collectively referred to as “Appellees”) seek reconsideration of our Opinion in Smith v.
Collectors Triangle, Ltd., 7th Dist. Harrison No. 19 HA 0010, 2020-Ohio-4823. Appellees
also seek en banc review of our determination that the 2006 General Warranty Deed did
not convey all of the rights in the oil and gas royalty interests of Appellants Patricia Carol
Smith, Catherine Finney, Agnes Worrell, and Doug Worrell’s (collectively referred to as
“Appellants”). Appellees contend that this holding conflicts with a case from this Court
that was subsequently released, Richards v. Hilligas, 7th Dist. Harrison No. 19 HA 0008,
2020-Ohio-4717. For the reasons provided, Appellees’ motion for reconsideration and
en banc consideration is denied.
{¶2} The standard for reviewing an application for reconsideration pursuant to
App.R. 26(A) is whether the application “calls to the attention of the court an obvious error
in its decision or raises an issue for consideration that was either not considered at all or
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was not fully considered by the court when it should have been.” Columbus v. Hodge, 37
Ohio App.3d 68, 523 N.E.2d 515 (10th Dist.1987), paragraph one of the syllabus.
An application for reconsideration is not designed for use in instances where
a party simply disagrees with the conclusions reached and the logic used
by an appellate court. App.R. 26 provides a mechanism by which a party
may prevent miscarriages of justice that could arise when an appellate court
makes an obvious error or renders an unsupportable decision under the
law.
State v. Owens, 112 Ohio App.3d 334, 336, 678 N.E.2d 956 (11th Dist.1996).
{¶3} Pursuant to App.R. 26(A)(2)(a),
Upon a determination that two or more decisions of the court on which they
sit are in conflict, a majority of the en banc court may order that an appeal
or other proceeding be considered en banc. The en banc court shall consist
of all fulltime judges of the appellate district who have not recused
themselves or otherwise been disqualified from the case. Consideration en
banc is not favored and will not be ordered unless necessary to secure or
maintain uniformity of decisions within the district on an issue that is
dispositive in the case in which the application is filed.
{¶4} This case presents a complicated factual and procedural history, detailed
within our Opinion as follows:
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The instant action involves property that was initially owned by Ross Harris.
The property includes two tracts of land: 103.75 acres and 63.7 acres. It
appears that this appeal involves only the 63.7 acre tract. On February 2,
1984, Harris entered into an oil and gas lease with Floyd Kimble. Kimble
drilled a well referred to as the “Harris Well” which began producing in 1987.
In addition to the royalties associated with the well, Kimble agreed to
provide the Harris house with free gas.
On January 21, 1988, Harris died intestate and his estate was divided
equally between his two children, Catherine Finney and Mildred I. Worrell.
According to Appellants, the parties orally agreed that Mildred and her
husband, Adrian, would receive the oil and gas royalties from the 63.7 acre
tract. It is unclear whether there was any agreement as to the remaining
103.75 acre tract.
On November 24, 1992, Mildred and Adrian conveyed their one-half interest
in the property to their three children (Robert, Ross, and Patricia) in equal
shares, retaining a life estate in a one-acre residence located on the 63.7
acre property. After these conveyances, Catherine owned a one-half
interest in the property, Robert Worrell owned a one-sixth interest, Ross
Worrell owned a one-sixth interest, and Patricia Smith owned a one-sixth
interest.
Sometime in 1997 a dispute arose between Catherine and the Worrell
children regarding who was responsible for the farming and maintenance of
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the property. The dispute led to a partition complaint filed on November 26,
1997.
1997 Partition Action
The partition complaint sought a division of the property among Catherine
and the Worrell children. The complaint also sought reservation of a life
estate in favor of Mildred and Adrian for a one-acre section of the property
where their existing house was situated. However, on February 6, 1998, a
motion for default judgment was filed against Mildred and Adrian, as they
had not filed an answer. The trial court granted this motion and entered
default judgment against Mildred and Adrian.
The court ultimately determined that the property could not be fairly divided
and ordered a sale of the property. On May 14, 1998, a Sheriff’s Deed
pertaining to the 63.7 acre tract was executed. Despite the fact that default
had been entered against Mildred and Adrian, the deed provided, in relevant
part:
EXCEPTING AND RESERVING UNTO Adrian Worrell and Mildred I.
Worrell a life estate in the residence situate on the above described
premises, being the tract consisting of 63 acres, 2 rods, and 37 perches, an
unsurveyed one (1) acre square surrounding the said residence, and
ingress to and egress from the said residence for and during the natural
lifetimes of Adrian Worrell and Mildred I. Worrell.
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FURTHER EXCEPTING AND RESERVING unto Adrian Worrell and
Mildred I. Worrell the right to receive all royalties payable under a certain oil
and gas lease and any extension or modification thereof, said lease being
recorded in Lease Volume 69, Page 79, Records of Harrison County, Ohio.
FURTHER EXCEPTING AND RESERVING unto Adrian Worrell and
Mildred I. Worrell the right to receive such gas as produced by the existing
well free of charge for use at their residence.
(6/13/19 Motion to Dismiss, Exh. A.)
The 63.7 acre property was sold to Appellee Collector’s Triangle in
accordance with the Sheriff’s Deed, and the deed was recorded by
Appellee.
2006 General Warranty Deed
On March 4, 2005, Mildred died. Shortly thereafter, Adrian moved into an
assisted living facility. Collector’s Triangle approached Patricia Worrell and
inquired whether the family would consider terminating Adrian’s life estate
in the one-acre property. On March 24, 2006, the life estate was terminated
through a general warranty deed. In relevant part, the deed stated:
KNOW ALL MEN BY THESE PRESENTS, Adrian Worrell, an unmarried
person, (the “Grantor”), for valuable consideration paid, grants, with general
warranty covenants, to Collector’s Triangle, Ltd., an Ohio limited liability
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company, whose tax mailing address is P.O. Box 473, Sugarcreek, Ohio
44681 (the “Grantee”), all of his interest in the real property described on
Exhibit A (the “Property”), being an estate for life in the residence located
on the Property as set forth in a certain Sheriff’s Deed in Partition recorded
in Official Record Volume 52, Page 163.
***
The Property is conveyed subject to, and there are excepted from the
general warranty covenants, the following:
1. All easements, leases, covenants, conditions and restrictions of record
***
GRANTOR ALSO CONVEYS TO GRANTEE, ITS SUCCESSORS AND
ASSIGNS, ALL OF GRANTOR’S RIGHT TO RECEIVE ROYALTIES AND
FREE GAS IN CONNECTION WITH A CERTAIN OIL AND GAS WELL
LOCATED ON THE PROPERTY AND DRILLED PURSUANT TO THE
LEASE RECORDED IN LEASE VOLUME 69, PAGE 79, IN THE
RECORDER’S OFFICE, HARRISON COUNTY, OHIO.
Sometime thereafter, Ascent began horizontal drilling, which resulted in
new production. Ascent paid royalties resulting from the new drilling to
Collector’s Triangle, and not to Appellants, which led to the instant action.
2019 Complaint
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On May 13, 2019, Appellants filed a complaint against Doug Worrell, Agnes
Worrell, Collector’s Triangle, ESK ORI LLC, GDK ORI LLC, KBK ORI LLC,
JEM ORI LLC, RHDK Oil and Gas LLC, and Ascent Resources - Utica LLC.
The complaint sought the following: a declaratory judgment that Appellants
own the royalty interests at issue and are entitled to receive those royalties;
quiet title; breach of contract (solely against Ascent); and conversion and
accounting (solely against Ascent.) On June 3, 2010, an answer was filed
on behalf of all defendants except Collector’s Triangle.
On June 13, 2019, Ascent filed a Civ.R. 12(B)(6) motion to dismiss the
complaint in its entirety. In this motion Ascent argued that any claim that
the Sheriff’s Deed vested certain rights in Mildred and Adrian is barred by
res judicata. Ascent also argued that Mildred and Adrian were strangers to
the Sheriff’s Deed, thus the deed could not reserve any interests in their
favor. Finally, Ascent argued that Adrian conveyed all of his interests in the
property through the 2006 General Warranty Deed. Collector’s Triangle
filed a motion to join the motion to dismiss.
On June 26, 2019, Appellants filed an amended complaint. The amended
complaint contained additional facts surrounding the oral agreement as to
a division of royalties between Mildred and Patricia, but did not add any new
legal claims.
On August 27, 2019, the trial court granted Ascent’s Civ.R. 12(B)(6) motion
to dismiss. The court determined that even if the 1998 Sheriff’s Deed
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properly reserved property and royalty interests in favor of Mildred and
Adrian, any claim to those interests was extinguished by the 2006 General
Warranty Deed. This timely appeal followed.
Smith, supra, ¶ 2-14
{¶5} Appellees now argue that we failed to consider there were two alleged oral
agreements in this case. According to Appellees, our Opinion addressed only the alleged
oral agreement between Patricia Smith and Mildred Worrell, where the parties agreed
that Mildred and her husband, Adrian, would receive the oil and gas royalties associated
with the property. Appellees contend the record discloses a second oral agreement,
between Mildred and Adrian and their children. Appellees explain that Mildred and Adrian
conveyed their interests in the property to their children through a 1992 General Warranty
Deed. At the time of the conveyance, there was an apparent agreement that Mildred and
Adrian would continue to receive the royalty interests even after signing all of their
interests in the property to their children. It is this alleged second oral agreement that
Appellees believe violates the statute of frauds.
{¶6} This matter came to us following a motion to dismiss granted in the trial
court, and so, is factually limited. Appellees are correct that it was not clear from the
limited record before us there may have been a second oral agreement. Appellants argue
that this second agreement was merely a continuation of the first oral agreement.
However, Appellees correctly point out that the first agreement was between Patricia and
Mildred, but the second agreement was between Mildred and Adrian and their children.
Thus, it constitutes a second, separate promise. Even accepting Appellees’ contention
as true, it does not affect our underlying decision.
Case No. 19 HA 0010
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{¶7} We remanded the matter to allow the trial court to determine whether the
1998 Sheriff’s Deed may be collaterally attacked. The alleged agreement is only pertinent
to the remand. It was unclear from the record provided to this Court whether the trial
court handling the partition proceedings was alerted to the fact that the deed reserved the
royalty interests in favor of Mildred and Adrian. If so, then the 1998 Sheriff’s Deed is part
of the court’s order and cannot be collaterally attacked by this second oral agreement or
in any other fashion.
{¶8} However, if the trial court finds that the 1998 Sheriff’s Deed was not a part
of the trial court’s order in the partition proceedings, then Appellees would be able to
argue that the second oral agreement violates the statute of frauds, and attack the
reservations contained within that deed.
{¶9} Appellees additionally argue that our Opinion conflicts with a subsequently
released case, Richards, supra. In Richards, we determined that the deed conveying the
surface rights to a property did not sufficiently reserve or except the corresponding royalty
interests. In accordance with established caselaw, we held that the royalty interests
automatically transferred with the surface rights. Id. at ¶ 32, citing Porterfield v. Bruner
Land Co., Inc., 7th Dist. Harrison No. 16 HA 0019, 2017-Ohio-9045.
{¶10} In Poterfield, on which Richards, supra, relies, a limited warranty deed
conveyed 160.987 acres of land. Id. at ¶ 2. The issue on appeal was whether the
language of the deed sufficiently reserved coal, oil, and gas rights. We determined the
language reserving these rights in favor of the “former grantors” was insufficient, as those
rights had not previously been reserved or excepted in any deed by the former grantor.
Due to this, the coal, oil, and gas rights transferred with the surface rights. Id. at ¶ 27.
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{¶11} Richards and the instant case are clearly distinguishable. In Richards there
was a clear intent to transfer the surface, but the deed lacked a specific exception or
reservation language regarding the oil and gas rights. Thus, the royalty interests followed
the surface rights just as in Porterfield.
{¶12} Importantly, this matter does not involve a transfer of surface rights. The
sole mention of a surface right conveyed in the 2006 General Warranty Deed involved
merely a life estate in a one acre portion of the total 63.7 acres tract, so there were no
surface rights granted for the royalty interests to follow. The intent of the 2006 General
Warranty Deed was to convey the one-acre life estate and the royalty interests pertaining
to the Harris Well to Collector’s Triangle. Because the instant case is factually
distinguishable and does not invoke any facts or the specific holding of Richards, the
cases are not in conflict and Appellees’ motion for en banc consideration pursuant to
App.R. 26(A)(2) is denied.
{¶13} Appellees also argue that our Opinion would operate to create a violation of
R.C. 5302.04. R.C. 5302.04 states: “In a conveyance of real estate or any interest
therein, all rights, easements, privileges, and appurtenances belonging to the granted
estate shall be included in the conveyance, unless the contrary is stated in the deed, and
it is unnecessary to enumerate or mention them either generally or specifically.”
{¶14} In our Opinion, we held that that the language used in the 2006 General
Warranty Deed sufficiently reserved all oil and gas rights beyond the Harris Well royalties.
That language stated:
GRANTOR ALSO CONVEYS TO GRANTEE, ITS SUCCESSORS AND
ASSIGNS, ALL OF GRANTOR’S RIGHT TO RECEIVE ROYALTIES AND
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FREE GAS IN CONNECTION WITH A CERTAIN OIL AND GAS WELL
LOCATED ON THE PROPERTY AND DRILLED PURSUANT TO THE
LEASE RECORDED IN LEASE VOLUME 69, PAGE 79, IN THE
RECORDER’S OFFICE, HARRISON COUNTY, OHIO.
Smith, supra, at ¶ 9.
{¶15} The language “in connection with a certain oil and gas well located on the
property” is sufficient. (Emphasis added.) It clearly limits the conveyance to one certain
well; the Harris Well. Contrary to Appellees’ claim, this is not an instance where general
language was used. The language clearly states that the rights being conveyed are
connected to “a certain oil and gas well located on the property,” and this language
sufficiently refers to the Harris Well.
{¶16} The deed does not require extrinsic evidence to show what has not been
conveyed. In Porterfield, we held that when a deed incorporates a prior instrument by
reference, that instrument becomes part of the contract. Id. at ¶ 39, citing Volovetz v.
Tremco Barrier Sols, Inc., 2016-Ohio-7707, 74 N.E.3d 743, ¶ 26 (10th Dist.). The
instruments must then be read together. Id.{¶17} Here, the 2006 General Warranty Deed incorporated the original oil and gas
lease by reference. Consequently, the 2006 General Warranty Deed and the oil and gas
lease must be read together. By its language the lease clearly is not limited to just one
certain well. It allows the entire property to be drilled and allows for oil and gas to be
removed from the entire property.
{¶18} R.C. 5302.04 provides that all rights will be conveyed unless the contrary is
stated in the deed. Here, the deed expressly limits the conveyance to the Harris Well.
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We must give effect to the words used in the deed and the parties only referred to the
rights associated with the Harris Well. If the Harris Well had not been sufficiently
referenced, Appellees would be correct and it would have been unnecessary to
specifically or generally enumerate each right involved within the conveyance.
{¶19} We remanded this matter for the trial court to determine whether the 1998
Sheriff’s Deed can be collaterally attacked. In the event that the trial court determines
that the deed was not part of the earlier judgment entry, Appellees retain the right to attack
that deed, and hence, the conveyance made through the 2006 General Warranty Deed.
Appellees’ motion for reconsideration pursuant to App.R. 26(A)(1) is also denied.
{¶20} For the reasons provided, Appellees’ motion for reconsideration and en
banc consideration is denied.
JUDGE CHERYL L. WAITE
JUDGE GENE DONOFRIO
JUDGE DAVID A. D’APOLITO
NOTICE TO COUNSEL
This document constitutes a final judgment entry.
Case No. 19 HA 0010