Lower Valley Farm, L.L.C. v. Croskey , 2018 Ohio 1217 ( 2018 )

[Cite as Lower Valley Farm, L.L.C. v. Croskey, 2018-Ohio-1217.]
STATE OF OHIO, HARRISON COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
LOWER VALLEY FARM, LLC, )
)
PLAINTIFF-APPELLANT, )
) CASE NO. 16 HA 0013
V. )
) OPINION
JOHN WILLIAM CROSKEY, ET AL., )
)
DEFENDANTS-APPELLEES. )
CHARACTER OF PROCEEDINGS: Civil Appeal from Court of Common
Pleas of Harrison County, Ohio
Case No. CVH-2015-0006
JUDGMENT: Dismissed.
JUDGES:
Hon. Gene Donofrio
Hon. Cheryl L. Waite
Hon. Carol Ann Robb
Dated: March 28, 2018
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APPEARANCES:
For Plaintiff-Appellant Attorney Gregory W. Watts
Attorney Matthew W. Onest
Attorney David E. Butz
4775 Munson Street, N.W.
Canton, Ohio 44735-6963
For Defendants-Appellees Attorney R. Jeffrey Pollock
Attorney Erin K. Walsh
600 Superior Avenue, Suite 2100
Cleveland, Ohio 44114
Attorney A. Jenna Hokes
105 Jamison Avenue
Cadiz, Ohio 43907
Attorney Marquette D. Evans
602 Main Street, Suite 307
Cincinnati, Ohio 45202
Attorney Michael C. Bednar
4110 Sunset Boulevard
Steubenville, Ohio 43952
[Cite as Lower Valley Farm, L.L.C. v. Croskey, 2018-Ohio-1217.]
DONOFRIO, J.
{¶1} Plaintiff-appellant, Lower Valley Farm, L.L.C., appeals from a Harrison
County Common Pleas Court judgment denying its motion to enforce a settlement
agreement and another judgment granting summary judgment in favor of defendants-
appellees, George and Marilyn Monzula, on Lower Valley’s complaint for declaratory
judgment and to quiet title as to certain oil and gas rights.
{¶2} This case involves the oil and gas rights underlying 51.5 acres of
property located in the Section 16 Property in Harrison County. Appellees George
and Marilyn Monzula are the surface owners of these 51.5 acres (the Monzula
Property).
{¶3} Prior to 1962, the Pittsburgh Consolidation Coal Company owned the
surface of the Section 16 Property and the surface plus 1/3 of the oil and gas rights
underlying the Section 22 Property. The remaining oil and gas was subject to three
different deeds. The first deed was from Samuel and Blanche Porter conveying a 1/3
interest in the Section 16 Property and the Section 22 Property, in which they
reserved all of the oil and gas underlying the conveyed property (Porter Deed). The
second deed was from Emma Croskey conveying a 1/3 interest in the Section 16
Property and the Section 22 Property, in which she reserved all of the oil and gas
underlying the conveyed property (Croskey Deed). The third deed was from Eliza
Mae Corbley conveying a 1/3 interest in the Section 16 Property, in which she
reserved all of the oil and gas underlying the conveyed property (Corbley Deed).
There was also a deed from Eliza Mae and William Corbley, without any reservation
of oil and gas, conveying a 1/3 interest in the Section 22 Property.
{¶4} In 1962, Consolidation Coal Company (Consol), successor in interest to
the Pittsburgh Consolidation Coal Company, sold the surface rights of the Section 16
Property and the Section 22 Property to Edward Seleski (Consolidation Deed).
Consol reserved all oil and gas rights that it had, which was the 1/3 interest
underlying the Section 22 Property.
{¶5} Seleski died on February 25, 1999. In 2001, Consol conveyed its 1/3
interest in the oil and gas rights underlying the Section 22 Property to Seleski’s
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Estate (the Seleski Estate). The Seleski Estate then conveyed the Section 16
Property and the Section 22 Property to Michael and Cheryl Wilt (Wilt Deed). That
deed contained the following language:
It is the purpose and intent of the Grantor to sell, bargain and convey to
the Grantees herein all its right, title and interest in and to the subject
premises, which it owns by virtue of instruments recorded in Deed
Volume 148 Page 356 and Deed Volume 148 page 417, and Deed
Volume 161 Page 682, records of Harrison Co., Ohio, TOGETHER
WITH certain rights acquired by the Grantor by instrument recorded in
Official Record Volume __ Page __, Records of Harrison Co., Ohio.
The rights conveyed to the Grantor herein in the instrument in Official
Record Volume __ Page__ and being conveyed in this instrument are
only those pertaining to the surface of the subject premises. All other
rights not pertaining to surface mining and acquired by the Grantor in
the instrument recorded in Official Record Volume __ Page __ are
specifically excepted and reserved to the Grantor, its successors,
assigns and beneficiaries. The purpose and intent of this transfer is to
permit the usage of the surface for mining related purposes with the
consent of the Grantees herein.
However, it is the intent of the grantor to convey all coal,
minerals and mining rights to the premises that Edward L. Seleski
owned at the time of his death.
(Brief in opposition to Plaintiff’s Motion for Summary Judgment, Ex. E).
{¶6} On December 11, 2001, the Seleski Estate conveyed its 1/3 interest in
the oil and gas rights underlying the Section 22 Property to Lower Valley’s
predecessor in interest. By deed dated October 25, 2013, that 1/3 interest in the oil
and gas underlying the Section 22 Property was conveyed to Lower Valley. That 1/3
interest is not at issue in this appeal.
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{¶7} On December 23, 2010, John Croskey filed an Affidavit Preserving
Minerals to preserve the oil and gas underlying the Section 16 Property and the
Section 22 Property (Croskey Affidavit) on his behalf as well as on behalf of others
known as the Croskey Defendants. (Complaint Ex. 9).
{¶8} On November 24, 2014, Lower Valley filed a complaint against the
Monzulas, the Croskey Defendants, and others seeking a declaratory judgment and
to quiet title to certain oil and gas rights underlying property in Harrison County in its
name by virtue of the 1989 Ohio Dormant Mineral Act (ODMA). The Croskey
Defendants filed a counterclaim claiming title to the severed mineral interest as
successors to the original mineral interest holders.
{¶9} Lower Valley filed a motion for summary judgment. The Croskey
Defendants also filed a motion for summary judgment.
{¶10} Meanwhile, Lower Valley and the Monzulas attempted to settle their
claims. They reached a Settlement Agreement. Per the terms of the Settlement
Agreement, the parties would execute two quitclaim deeds. One of the quitclaim
deeds would convey from Lower Valley to the Monzulas any and all interest it had or
may claim to have in the oil and gas rights for two parcels, comprising approximately
26.355 acres. The other deed would convey from the Monzulas to Lower Valley any
and all interest they had or may claim to have in the oil and gas rights for another
parcel, comprising approximately 25.145 acres.
{¶11} On May 9, 2016, Lower Valley filed a motion to enforce the Settlement
Agreement against the Monzulas. It requested that the trial court order the Monzulas
to execute a quitclaim deed, which it asserted was all that was required to finalize the
Settlement Agreement. Lower Valley claimed that it had signed its quitclaim deed
and that the Monzulas were refusing to sign their quitclaim deed.
{¶12} The Monzulas field a response in opposition and a motion to vacate the
Settlement Agreement. They argued that Lower Valley’s attorney left out a key
portion of the deed conveying the property from the Seleski Estate to the Wilts. Once
they became aware of the additional language of the deed, the Monzulas no longer
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wished to proceed with the settlement.
{¶13} The trial court found that rescission of a contract may be awarded in the
interest of fairness even when a misrepresentation of fact is mistakenly made.
Therefore, the trial court granted the Monzulas’ motion to vacate the Settlement
Agreement and denied Lower Valley’s motion to enforce the Settlement Agreement.
{¶14} The trial court then granted Lower Valley’s summary judgment motion
in part and denied the Croskey Defendants’ summary judgment motion. It also
denied Lower Valley’s summary judgment motion as to the Monzulas. In so doing,
the trial court found that the 1989 ODMA applied to this case. It found that no
savings event occurred in the time permitted by the 1989 ODMA to preserve the
Croskey Defendants’ oil and gas interests. Therefore, the court found that at the time
of Seleski’s death on February 25, 1999, Seleski owned all of the surface rights in
question, all of the oil and gas underlying the Section 16 Property, and 2/3 of the oil
and gas underlying the Section 22 Property. It went on to find that on August 20,
2001, the Seleski Estate purchased the remaining 1/3 oil and gas interest underlying
the Section 22 Property. Also on August 20, 2001, the Seleski Estate conveyed to
the Wilts all of the property at issue and contained the language “all coal, mineral and
mining rights to the premises that Edward L. Seleski owned at the time of his death.”
The Seleski Estate did reserve a 1/3 oil and gas interest in the Section 22 Property.
The trial court then concluded that pursuant to the 1989 ODMA, Seleski owned all of
the remaining oil and gas at the time of his death and the Seleski Estate transferred
those interests to the Wilts on August 20, 2001.
{¶15} Lower Valley filed a timely notice of appeal on July 25, 2016, from the
judgment entry denying its motion to enforce the Settlement Agreement and from the
judgment entry denying its motion for summary judgment. The Croskey Defendants
also appealed. See Lower Valley Farm, LLC v. Croskey, et al., 7th Dist. Nos. 16-HA-
0010, 16-HA-0011, and 16-HA-0012, 2018-Ohio-814.
{¶16} Lower Valley now raises three assignments of error.
{¶17} Lower Valley’s first assignment of error states:
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THE TRIAL COURT ERRED WHEN IT FAILED TO CONDUCT
AN EVIDENTIARY [hearing] BEFORE DETERMINING WHETHER THE
SETTLEMENT AGREEMENT BETWEEN LOWER VALLEY AND THE
MONZULAS WAS ENFORCEABLE.
{¶18} Lower Valley’s second assignment of error states:
THE TRIAL COURT ERRED WHEN IT HELD THAT THE
SETTLEMENT AGREEMENT BETWEEN LOWER VALLEY AND THE
MONZULAS COULD BE RESCINDED BASED UPON A
MISREPRESENTATION OF FACT.
{¶19} Lower Valley’s third assignment of error states:
THE TRIAL COURT’S DECISION MUST BE REVERSED AND
REMANDED FOR FURTHER PROCEEDINGS IN LIGHT OF THE
OHIO COURT’S DECISION IN CORBAN V. CHESAPEAKE
EXPLORATION, L.L.C.
{¶20} Lower Valley’s assignments of error are moot given this Court’s
resolution of Lower Valley Farm v. Croskey, 2018-Ohio-814.
{¶21} In Corban v. Chesapeake Expl., L.L.C., 149 Ohio St. 3d 512, 2016-Ohio-
5796, 76 N.E.3d 1089, ¶ 26-28, the Ohio Supreme Court held that the 1989 Ohio
Dormant Mineral Act (ODMA) was not self-executing and did not automatically
transfer a mineral rights interest from the mineral rights holder to the surface owner
by operation of law. Instead, a surface owner seeking to merge those rights with the
surface estate under the 1989 ODMA was required to commence a quiet title action
seeking a decree that the dormant mineral interest was deemed abandoned. Id. at ¶
28.
{¶22} The 2006 ODMA provides that a dormant mineral interest “shall be
deemed abandoned and vested in the owner of the surface of the lands subject to
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the interest if the requirements established in division (E) of this section are satisfied.”
Id. at ¶ 29; R.C. 5301.56(B). The Court went on to hold:
Dormant mineral interests did not automatically pass by operation of
law to the surface owner pursuant to the 1989 law. Thus, as of June 30,
2006, any surface holder seeking to claim dormant mineral rights and
merge them with the surface estate is required to follow the statutory
notice and recording procedures enacted in 2006 by H.B. 288. These
procedures govern the manner by which mineral rights are deemed
abandoned and vested in the surface holder and apply equally to claims
that the mineral interests were abandoned prior to June 30, 2006.
Id. at ¶ 31.
{¶23} The Ohio Supreme Court reiterated its holding stating “the 2006 version
of the Dormant Mineral Act applies to all claims asserted after 2006 alleging that the
rights to oil, gas, and other minerals automatically vested in the owner of the surface
estate prior to the 2006 amendments.” Walker v. Shondrick-Nau, 149 Ohio St. 3d
282, 2016-Ohio-5793, 74 N.E.3d 427, ¶ 16, citing Corban at ¶ 2.
{¶24} Based on Corban, this Court in Croskey determined that the trial court
erred in applying the 1989 ODMA. Id. at ¶ 23. We held the 2006 ODMA governs this
case. Id. We went on to hold that given the application of the 2006 ODMA, the
Croskey Defendants are the owners of the oil and gas interest at issue. Id. at ¶¶ 26,
32.
{¶25} Lower Valley did not assert a claim under the 2006 ODMA. Likewise,
the Monzulas did not file a claim under the 2006 ODMA. Neither Lower Valley nor
the Monzulas have any claim to the oil and gas at issue here given the application of
the 2006 ODMA.
{¶26} For the reasons stated above, this appeal is dismissed as moot. Given
that the 2006 ODMA applies to this case and given this court’s ruling in Lower Valley
Farm v. Croskey, et al., 7th Dist. Nos. 01-HA-0010, 0011, 0012, 2018-Ohio-814,
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neither Lower Valley nor the Monzulas have any claim to the oil and gas rights at
issue in this case.
Waite, J., Concurs
Robb, P. J., Concurs