Coman v. Coman , 2016 Ohio 464 ( 2016 )

[Cite as Coman v. Coman, 2016-Ohio-464.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
CAROLYN COMAN, ) CASE NO. 15 MA 64
)
THIRD PARTY PLAINTIFF- )
APPELLANT, )
)
VS. ) OPINION
)
STEVEN COMAN, )
)
THIRD PARTY DEFENDANT- )
APPELLEE. )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Mahoning County, Ohio
Case No. 12CV666
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiff-Appellant: Atty. Daniel P. Thomas
DelBene, LaPolla & Thomas
155 Pine Avenue, N.E.
P.O. Box 353
Warren, Ohio 44482
For Defendant-Appellee: Atty. Matthew C. Giannini
1040 South Commons Place
Suite 200
Youngstown, Ohio 44514
JUDGES:
Hon. Carol Ann Robb
Hon. Gene Donofrio
Hon. Cheryl L. Waite
Dated: February 2, 2016
[Cite as Coman v. Coman, 2016-Ohio-464.]
ROBB, J.
{¶1} Plaintiff-Appellant Carolyn Coman appeals the decision of the
Mahoning County Common Pleas Court ruling in favor of Defendant-Appellee Steven
Coman. Appellant argues the court erred in failing to issue a declaratory judgment
finding that she is entitled to free gas for her dwelling under an oil and gas lease
signed by her grandparents in 1968. However, Appellant’s two acres were conveyed
by her grandparents to her parents in 1951, and thus, her acreage was not part of the
leasehold. She alternatively states the trial court should have found that her
grandparents intended her parents to have free gas for the dwelling she now owns
and should have applied broad equity principles of fairness to provide her with the
right to free gas under the lease. The trial court’s decision is supported by the
evidence. The judgment in favor of Appellee is affirmed.
STATEMENT OF THE CASE
{¶2} Appellant and Appellee are siblings. In 1948, the parties’ grandparents,
Lew and Ann Coman, purchased 137.68 acres in Berlin Township. (The deed
showed the transfer of three parcels containing 40.68, 35, and 62 acres.) There was
no dwelling on the property at the time. In 1951, the grandparents transferred two
acres of this property to the parties’ parents, Robert and Anabelle Coman, who built a
house on their property that same year.
{¶3} On November 19, 1968, the grandparents executed an oil and gas
lease in favor of Quaker State Oil Refining Corporation. The lease stated that it
covered two tracts of land totaling 220 acres “more or less.” The lease described
Tract #1 as consisting of 83 acres (in a Lot number that was not part of the 1948
purchase). The lease described Tract #2 as consisting of 137 acres and listed Lot
numbers that correspond to the parcels making up the 1948 purchase. The lease
provided in pertinent part: “Lessor shall have gas free of cost for use in the principal
dwelling on said land by making his own connections at his own risk and expense
with any producing gas well on the above described premises.”
{¶4} A gas well was drilled on the grandparents’ land in the mid-1970’s. In
1979, the grandparents transferred to Appellee 5.194 acres (from their 1948
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purchase). In 1980, the grandparents transferred their remaining 130 plus acres
(from the 1948 purchase) to Appellee but provided life estates in this property to their
children, Robert Coman (the parties’ father) and Frances Coman (the parties’ aunt).
(The parties’ aunt transferred her interest to Appellee as the remainderman in 1982,
and the parties’ father, joined by his wife, transferred his interest to Appellee in 1994).
{¶5} Appellee states that he connected a gas line from the well to his
dwelling in 1980. Later that year or in 1981, a separate gas line was connected to
the house of the parties’ parents. In 1995, the parents transferred their two-acre lot
and house to Appellant, who lived with them, reserving a life estate for the father who
died in 2006. (The parties’ mother died in 2008.) On June 25, 2010, Appellee
disconnected the gas line running to Appellant’s house.
{¶6} On October 11, 2013, Appellant filed a declaratory judgment action
against Appellee asking the court to rule that her house at 13996 Berlin Station Road
is the principal dwelling entitled to receive free gas under the 1968 oil and gas lease.
She pointed out that the house received free gas for twenty-nine years before
Appellee disconnected the gas line. She asked for damages as she converted her
appliances to electric and her furnace to propane and her expenses have increased
as a result. She attached the oil and gas lease and various deeds related to the
history of the property.1
{¶7} Appellee filed a counterclaim asserting Appellant’s claim was frivolous
and seeking sanctions and damages. Appellee then filed a motion for summary
judgment arguing that the lease and the chain of title shows the oil and gas lease is
inapplicable to the two acres owned by Appellant as their grandparents did not own
those two acres at the time they signed the lease. The motion suggested the gas line
was installed due to familial affection, not due to a lease obligation. He attached his
1 Appellant’s complaint was actually a third-party complaint filed after she was permitted to
intervene in an action wherein Steven and Linda Coman (as the sellers of property at 14020 Berlin
Station Road) filed suit against Deborah and Brian Benyo (the buyers of the property) and Title Works
Agency, L.L.C. That portion of the case was settled after a new deed was recorded to include the
language in the purchase agreement showing the sellers reserved the mineral rights, their rights under
an existing oil and gas lease, and an easement for a gas line from the well to the seller’s house at
14360 Berlin Station Road.
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own affidavit and documents showing the history of the property. He said he
personally excavated the gas line from the well on his property to his house in 1980
and installed a separate line to his parents’ house soon thereafter. He explained:
“since then the well resources have been considerably depleted. I have experienced
significant interruptions in the supply to my own dwelling and as a result I have been
forced to terminate the gas line to my sister’s dwelling on her adjacent property.”
{¶8} Appellant filed a response urging that the lease language granting the
right to free gas “for use at the principal dwelling” was a reference to her residence as
it was the only one in existence at the time the lease was executed. She pointed out
that the lease was expressly said to cover 137 acres, and her grandparents owned
137.68 acres before they transferred the two-acre parcel to her parents. She
alternatively asked the court to apply broad equitable principles of fairness. Appellant
attached an affidavit stating that the gas line was connected to her house by her
parents in 1981; she contested Appellee’s statement that he installed the line to her
house and said her father paid someone else to do the job. Appellant also provided
a May 18, 2010 letter from Appellee advising that he was going to disconnect her gas
line; she noted that the letter did not mention depletion issues and suggested his
motive for the disconnection was to retaliate for a certain action she took against him.
{¶9} On September 8, 2014, the trial court denied Appellee’s request for
summary judgment and set the case for trial. When the case was called for trial, the
parties said the evidence at trial would be the same as that presented in the
summary judgment stage and agreed to allow the court to decide the case based
upon the filings and exhibits in lieu of trial.
{¶10} On April 1, 2015, the trial court ruled in favor of Appellee and dismissed
Appellant’s complaint. The court found that the undisputed chain of title resolved the
case. The court concluded: although the oil and gas lease referred to 137 acres, the
lessor-grandparents did not own Appellant’s two acres in 1968 when they signed the
lease; the lessors could not encumber land they did not own; the leasehold never
included Appellant’s two acres, and thus, it was irrelevant that Appellant’s dwelling
existed in 1968 while the lessors had no dwelling on their acreage; the lease provides
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the “Lessor” is entitled to free gas; the owners of Appellant’s two acres were not the
lessors under the lease; and there was no indication the lessors ever lived in the
house on the two-acre parcel.
{¶11} Appellant filed the within appeal on April 27, 2015, after the parties
dismissed any pending claims and counterclaims with prejudice. Appellant raises
one assignment of error, setting forth a legal argument and an equitable argument
thereunder.
ASSIGNMENT OF ERROR
{¶12} Appellant’s sole assignment of error provides:
“The Trial Court’s decision in denying Appellant’s Complaint for Declaratory
Judgment and Damages constitutes reversible error.”
{¶13} As aforementioned, Appellant asked for a declaration that she was
entitled to free use of gas under the 1968 oil and gas lease as her house was the
“principal dwelling” referred to in the lease. A person interested under a written
contract or whose rights, status, or other legal relations are affected by a contract
may seek a declaration of their rights by asking a court to determine any question of
construction or validity arising under the instrument. R.C. 2721.03.
{¶14} Appellant points out that her residence was the only dwelling at the time
of the lease. She notes that she received free gas from 1981 until 2010 (although
Appellee began receiving free gas from his connection just prior to her connection).
Appellant claims the lease “explicitly” includes her two acres as her lot is contained in
Lot 29 of Tract 3. Appellant cites no case law to support her position that her
parents’ land was included in her grandparents’ oil and gas lease even though it was
transferred to the parents seventeen years prior to the grandparents’ signing of the
lease.
{¶15} In describing the leasehold property, the 1968 oil and gas lease
provides in pertinent part: “Tract #2 (137 acres, m/1, in Lots 25, 26 & 29, Tract 3,
Twp. 1, Range 5).” Contrary to Appellant’s suggestion, the lease does not explicitly
refer to her two acres merely because her land is part of Lot 29 in Tract 3. The
grandparents owned 73.68 acres in that territory at the time they signed the lease.
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Furthermore, the fact that the lease described Tract #2 as containing 137 acres
instead of 135.68 acres is not dispositive. This difference is small, and the total
amount of acreage in the lease is introduced and modified by the phrase “more or
less.”
{¶16} A contracting parties’ intent generally resides in the language the
parties chose to use in the agreement. Shifrin v. Forest City Ents., Inc., 64 Ohio
St.3d 635, 638, 597 N.E.2d 499 (1992). “Only when the language of a contract is
unclear or ambiguous, or when the circumstances surrounding the agreement invest
the language of the contract with a special meaning will extrinsic evidence be
considered in an effort to give effect to the parties' intentions.” Id. at syllabus. For a
third party to be an intended beneficiary under a contract, there must be evidence
that the contract was intended to directly benefit that third party, which will generally
be found in the language of the agreement. Huff v. FirstEnergy Corp., 130 Ohio
St.3d 196, 2011-Ohio-5083, 957 N.E.2d 3, ¶ 12.
{¶17} Appellee urges that since the original leasehold could not include
Appellant’s two-acre parcel, it is axiomatic that the oil and gas lease has no
application to Appellant’s interest in her acres. Appellee asserts that it is irrelevant
that there was no dwelling on the grandparents’ land, but there was a dwelling on the
land belonging to Appellant’s parents, at the time the grandparents executed the
1968 oil and gas lease.
{¶18} The chain of title controls what property is subject to the lease. See,
e.g., Petty v. Equitable Prod. & E. States Oil & Gas, Inc., 7th Dist. No. 05MA80,
2006-Ohio-887, ¶ 31, 34 (if the lessor did not own the 5.349 acre parcel at the time
they entered the lease, that parcel is not part of the leasehold tract and the dwelling
on that parcel could not be one of the three dwellings entitled to receive free gas
under the lease). “A free gas clause, limited to the principal dwelling, limits the right
to receive free gas to only one house on the leased premises.” Sethi v. Antonucci,
126 Ohio App.3d 382, 386, 710 N.E.2d 719 (7th Dist.1998). The question here is
which house has that right. Notably, the case at bar is not one involving a
subdivision of leased land after the lease is signed. Compare id. Rather, Appellant’s
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two acres were severed from the grandparents land long before the grandparents
signed the oil and gas lease.
{¶19} That is, the two-acre parcel had been deeded to Appellant’s parents in
1951. All of the Tract #2 land the grandparents owned at the time of the 1968 oil
and gas lease is now owned by Appellee. A gas well was drilled on the
grandparents’ land in the mid-1970’s. Appellee made the first connection to the well
in 1980 to his residence, which was located on the land owned by the grandparents
at the time of the 1968 lease. Although his parents subsequently connected their
house to the well, Appellee’s residence was the only one located on the leasehold
estate. As the trial court observed, the installation of a line to a house outside of the
leasehold does not change the terms of the lease, which covers only the property
owned by the lessors. See Petty, 7th Dist. No. 05MA80 at ¶ 3, 31, 34 (the fact that
one lessor ran a gas line to a dwelling on later-acquired property does not change the
lease terms which cover the property owned by the lessors at the time of the lease).
{¶20} As the grandparents did not own Appellant’s two-acre parcel at the time
of the 1968 oil and gas lease, the grandparents could not encumber the two-acre
parcel by signing a lease. The lease covered only land owned by the grandparents,
who signed the lease as the lessors. See Petty, 7th Dist. No. 05MA80 at ¶ 30-31
(although the right to free gas runs with the surface estate of the dwelling {unless
stated otherwise}, the focus must remain on the surface estate of the dwelling located
on the leasehold tract).
{¶21} Moreover, the lease specifically provides free gas to the “Lessor” for
use in the principal dwelling on the leasehold. Although Appellant’s parents promptly
built a house when they received the two acres in 1951, the 1968 lease covers land
owned by the lessors under the lease, and Appellant’s parents were not lessors. The
lease was signed only by the grandparents; they were the lessors entitled to free gas
under the lease for a dwelling on their land.
{¶22} Besides arguing the lease expressly includes her two acres and she is
legally entitled to free gas, Appellant alternatively urges that equity and fairness
support her position. Appellant states that when the rights of parties are clearly
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defined and established by law, the courts usually apply the maxim “equity follows
the law,” but where the parties’ rights are not so clearly delineated, the courts can
apply “broad equitable principles of fairness.” Citing Blackwell v. International Union,
United Auto Workers Local No. 1250, 21 Ohio App.3d 110, 112, 487 N.E.2d 334 (8th
Dist.1984). Appellant also quotes the maxim, “equity regards substance rather than
form,” and urges the intent of her grandparents is the substance and the lease is
merely the form. She mentions that equity can be invoked to grant relief from
mistake and cites case law providing that parol evidence cannot be used to vary the
express terms of an agreement except where reformation is sought in equity
(although she does not use the term reformation). See Blosser v. Enderlin, 113 Ohio
St. 121, 134, 148 N.E. 393 (1925).
{¶23} Factually, Appellant claims it was her grandparents’ intent to provide
her parents’ house with free gas under the oil and gas lease and the dwelling referred
to in the lease was meant to be the one on her parents’ two acres. She also
suggests her grandparents inadvertently failed to have her parents sign the lease.
Appellee responds that there is no evidence of mistake, urging that Appellant’s house
was connected to the well (after he connected his own house) due to familial
obligation, rather than legal obligation.2
{¶24} Initially, it should be noted that Appellant’s complaint sought a
declaration that her house was the principal dwelling entitled to receive free gas in
accordance with the oil and gas lease (and sought damages for the conversion of her
household from gas). An equity argument was briefly presented to the trial court in
her response to summary judgment, which was essentially submitted as her trial brief
with her evidence attached in lieu of trial. Appellant referred to “broad equitable
principles of fairness” and suggested it was unfair to disconnect her house from the
2 Appellee’s response focuses on arguing that the equitable doctrine of subrogation does not
apply here. The doctrine of subrogation “is for the relief of one who in the discharge of a secondary
liability pays an obligation upon which another is primarily liable * * *.” Smith v. Folsom, 80 Ohio St.
218, 229, 88 N.E. 546 (1909). However, Appellant does not set forth an argument sounding in
subrogation and appears to have cited Smith merely as a general example of how equity can permit
substance to prevail over form.
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well because her house received free gas for twenty-nine years. She did not express
a theory of mutual mistake of the parties to the lease. In fact, the gas company is
one of those parties to the lease; yet, they are not a party to this action.
{¶25} In any event, even assuming arguendo certain equitable principles were
available for consideration, the trial court’s decision as to which party had the right to
free gas under the oil and gas lease is supported by the evidence. This case was
submitted to the court on the filings in lieu of live trial testimony. Still, the trial court
weighs the factual evidence as the fact-finder just as it would in a case presented via
live testimony. See, e.g., Biesiada v. Ohio Soccer Assn. N., 8th Dist. No. 65880 (July
28, 1994) (reviewing whether the judgment was supported by some competent
credible evidence after the parties agreed to submit stipulated facts and exhibits to
the court in lieu of trial). The trial court occupied the best position to resolve any
remaining factual disputes and balance any applicable equities.
{¶26} A trial court has broad discretion in applying available equitable
doctrines to the facts of a particular case, and the court’s decision in such a case is
reviewed for an abuse of discretion. See, e.g., Joseph J. Freed and Assoc., Inc. v.
Cassinelli Apparel Corp., 23 Ohio St.3d 94, 96-97, 491 N.E.2d 1109 (1986) (applying
the abuse of discretion standard of review to the trial court's balancing of the equities
in a leasehold forfeiture case); Sandusky Properties v. Aveni, 15 Ohio St.3d 273,
275, 73 N.E.2d 798 (1984) (specific performance is controlled by the principles of
equity, and the standard of review is whether the trial court, sitting as a court of
equity, abused its discretion). See also Blackwell, 21 Ohio App.3d at 112 (speaking
of the trial court’s broad discretion in fashioning an equitable remedy).
{¶27} An abuse of discretion involves a decision that is unreasonable,
arbitrary, or unconscionable. See Sandusky Properties, 15 Ohio St.3d at 275. A
decision is unreasonable if there is no sound reasoning process that would support it.
AAAA Enterprises, Inc. v. River Place Community Urban Redevelopment Corp., 50
Ohio St.3d 157, 161, 553 N.E.2d 597 (1990) (most instances of an abuse of
discretion involve a decision that is unreasonable, rather than a decision that is
unconscionable or arbitrary). “It is not enough that the reviewing court, were it
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deciding the issue de novo, would not have found that reasoning process to be
persuasive, perhaps in view of countervailing reasoning processes that would
support a contrary result.” Id.{¶28} As only one dwelling is entitled to free gas, Appellant is, in effect,
seeking to have Appellee’s line disconnected. See Sethi, 126 Ohio App.3d at 386 (“A
free gas clause, limited to the principal dwelling, limits the right to receive free gas to
only one house on the leased premises.”). She is essentially stating that it is more
equitable to disconnect Appellee’s line than to disconnect her line. Appellee points
out that his residence was connected to the well first. More importantly, his house
sits on the land owned by the grandparents at the time they signed a lease over their
land while Appellant’s house does not. Any evidence allowing an inference of
mistake of the contracting parties or intent to benefit other property was not weighty.
The grandparents executed a 1951 transfer of two acres to the parents, who
immediately constructed their residence on the property. The deed for that
transaction was in the chain of title for the grandparents’ property, having been
recorded in 1951 and re-recorded in 1959. The transfer of the two acres was not
concealed in any manner from those dealing with the grandparents’ land in the future.
In 1968, the grandparents signed an oil and gas lease over their acreage, and the
lease was recorded.
{¶29} The lease language describing a tract of the grandparents’ land as
containing 137 acres “more or less” in Lots 25, 26, and 29, instead of precisely
135.68 acres, is not evidence requiring the conclusion that the grandparents and the
oil company intended to provide free gas to the parents’ dwelling located on land not
owned by the grandparents. Only the grandparents signed the lease. The lease
solely referred to the “lessor” as being a beneficiary of the contract and did not refer
to other parties. As the trial court pointed out, the grandparents did not live in the
parents’ dwelling.
{¶30} In summary, it is not uncommon for an oil and gas lease to provide free
gas to a dwelling on the leasehold tract even when there is not yet a dwelling on the
tract. The trial court exercised its discretion and reasonably concluded Appellant did
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not demonstrate an intent by the original contracting parties to benefit a third-party
owning land that the grandparents transferred seventeen years before entering the
lease. Therefore, this court holds the trial court’s decision was not unreasonable,
arbitrary, or unconscionable.
{¶31} In accordance, the trial court’s decision is affirmed.
Donofrio, P.J., concurs.
Waite, J., concurs.