Client Alert: Ohio Supreme Court to Decide Applicability of Marketable Title Act to Mineral Interests

The Ohio Supreme Court will finally decide the issue of whether the Marketable Title Act (MTA) can operate independent of the Dormant Mineral Act (DMA), to extinguish previously severed mineral interests.

West v. Bode, 2019-Ohio-4092, on appeal from the Seventh District, involves competing claims of ownership to a previously severed royalty interest between the surface owners, claiming extinguishment of the royalty interest by operation of the Marketable Title Act, and the heirs of the royalty interest holders, arguing that the more specific provisions of the Dormant Mineral Act should exclusively govern such claims to “abandoned” mineral interests.

The Seventh District’s decision reversed the trial court’s grant of summary judgment to the royalty interest holders based exclusively upon an application of the Dormant Mineral Act to the interest at issue, finding that because the Marketable Title Act and Dormant Mineral Act, when read together, do not irreconcilably conflict, they therefore must be interpreted in such a manner as to allow the independent application of both statutes to the mineral interest at issue. In issuing its decision, the Seventh District points to its prior decisions finding that the Marketable Title Act is applicable to mineral interests, and the Ohio Supreme Court’s decision in Blackstone v. Moore, 2018-Ohio-4959. Noting that although the Supreme Court did not expressly state that the Marketable Title Act can independently apply, the Blackstone opinion included an analysis of the Marketable Title Act to the mineral interest at issue, while also acknowledging the statutory differences between the two statutes. Reading between the lines, the Seventh District’s opinion infers that these differences noted in Blackstone suggest that the Supreme Court believes the differences between the statutes are sufficient enough to allow the application of both to mineral interests because they do not “irreconcilably conflict.” To this end, the Seventh District’s opinion states: “[The MTA and DMA] are co-extensive alternatives whose applicability in a particular case depends on the time passed and the nature of the items existing in the pertinent records. Each applies to a particular situation independent of the other. If the claim is extinguishment under the MTA, then the 40-year provision and the tests applicable thereto apply; if the claim is abandonment under the DMA, those statutory procedures and the 20-year test of R.C. 5301.56 apply.”  

Accordingly, the Seventh District reversed the trial court’s decision, and has remanded the case for a determination as to whether the interest is extinguished under the Marketable Title Act. Due to the other unresolved issues concerning what the correct root-of-title instrument should be (assuming arguendo that the Marketable Title Act could operate to provide for extinguishment based upon the particular facts and title record), the trial court has been instructed to issue a decision concerning the particular facts of the case (pending the Supreme Court’s decision on whether the Marketable Title Act is, in fact, applicable).

The Supreme Court’s decision here will undoubtedly have a major impact on quiet title claims between surface owners and mineral interest holders, competing to establish their rights to valuable interests. Likewise, lessees, title companies, and producers should be following these developments closely as their leasehold assets and bargained-for rights to explore and develop oil and gas may be placed in jeopardy as a result.

Our oil & gas attorneys have extensive experience counseling surface owners, mineral interest holders, and lessees with oil and gas issues, and will continue to actively monitor this issue and provide advisory updates as prevailing case law on this subject continues to develop. As it currently stands, mineral interest holders should take caution and seek to preserve their interests from claims of extinguishment and/or abandonment under both the Dormant Mineral Act and Marketable Title Act.

Attorney Alex Quay is a Partner in Brouse McDowell’s Litigation and Real Estate Practice Groups. Alex has experience counseling clients in matters involving business and commercial litigation, real estate transactions, title insurance, construction, zoning, and disputes concerning ownership of oil, gas, and mineral rights. He can be reached by phone at (330) 434-4730, or by email at aquay@brouse.com.