In a dispute between two Belmont County landowners, and Nile and Kathryn Batman (“Batman”) over mineral rights they claim underneath the land, the Supreme Court of Ohio heard oral arguments yesterday in Mark Albanese, Executor of the Estate of James Albanese v. Nile Batman, et al., Case No. 2015-0120, and Wayne Lipperman, et al. v. Nile Batman, et al., Case No. 2015-0121

Case Background

The facts in these cases go back to 1925 when landowner, John A. Clark reserved claims of mineral interests in properties he sold in and around Belmont County, Ohio.  Mr. Clark who died in 1930, left the land to his wife and daughter, the mother of Frances Batman.  In the month before Frances Batman’s death in 1981, she filed an affidavit in Belmont County claiming mineral interest ownership in more than 100 properties spread throughout the county.  Frances Batman died in Nebraska and her estate was probated and settled in Nebraska. Her son, Nile Batman, filed an “Affidavit of Notice of Claim of Interest in Land” and a copy of Frances Batman’s will in Belmont County in April 1989 without any descriptions of the property, but only claiming she willed all her land interests to her son. 

As the executor of the estate of James Albanese III, Mark Albanese has title to 104 acres in Smith Township of which the Batmans claim a one-fourth interest in the mineral rights underneath the land.  In 2008, the Batmans entered into an oil and gas lease with Mason Dixon Energy and another with Reserve Energy in 2009 for the Albanese property.  In 2011, James Albanese entered into an oil and gas lease with Hess Ohio Development.  James Albanese died in May 2013 and in November 2013, his son, Mark Albanese filed a complaint to quiet title action against the Batmans and the drillers asking for a determination of ownership rights. 

At the center of the case was the interpretation of the will – the will did not exclude the mineral interest; therefore, the language effectively included the mineral interests. The Batmans argued that Ohio law created a “chain of title” from John Clark to Frances Batman with no requirement to specify the mineral rights in each of the wills of the family members passing down the property.  It was also noted that the landowners did not challenge the 1981 affidavit.  Summary judgment was granted to the Batmans and the energy companies by the Belmont County Common Pleas Court. 

Albanese appealed to the Seventh District Court of Appeals, which affirmed the trial court’s decision in favor of the Batmans.  Albanese argued the validity of the filing the will in 1989 as a way to preserve ownership rights.  The Seventh District ultimately concluded that the 1989 Ohio Dormant Mineral Act (“ODMA”) has a “fixed lookback period,” and under that theory, once the Batmans filed the 1981 affidavit, landowners could not use the ODMA to merge the oil and gas interest with the surface interest.  And, the 1989 recording of the will triggered a 20-year time period to preserve mineral rights, giving the Batmans until 2009 to sign oil and gas leases.  Furthermore, the court ruled the landowners would have to pursue other legal methods if they wanted to invalidate the Batmans’ ownership claims.

In the Lipperman case, the claim is the same as in Albanese.  Wayne Lipperman owns 41 acres in Pultney Township where the Batmans claimed a 50 percent ownership in the mineral interests underneath the property.  Lipperman entered into an oil and gas lease with Reserve Energy Exploration in April 2006 and the Batmans did the same with Reserve Energy in 2008.  Reserve assigned its lease to Equity Oil and Gas, and further assigned a portion of those rights to Phillips Exploration, which is now part of XTO Energy Inc. In February 2012, Lipperman filed to quiet title against the Batmans and the energy companies.  The trial court found for the Batmans, and the Seventh District affirmed the decision based on the same theory it used to side with the Batmans in the Albanese case.

An additional issue in the Lipperman case was whether the energy companies, Phillips Exploration and parent company XTO Energy, both of whom have argued on the behalf of the Batmans, had standing to participate in the case.  Lipperman argued that the companies have no standing to appear in the case because the validity of the leases between the oil companies and the Batmans is not disputed.  Furthermore, Lipperman argues that since this case is only seeking to validate the Batmans’ ownership of the mineral rights, the companies were not harmed because their leases remained valid.  It was also suggested by Lipperman that the companies ended their interest in the disputed land during the course of litigation.  Attorneys for XTO assert that they do have a standing because the determination of the case is not based on their present position but rather, it is based on what their standing was at the time Lipperman filed his complaint.

Both Albanese and Lipperman appealed to the Supreme Court.  The Court noted that it already has another case under consideration determining whether the Seventh District fixed lookback period is correct.  However, the Court agreed to hear Albanese’s and Lipperman’s arguments on whether the recording of the out-of-state will was a title transaction, which is one way a mineral rights’ owners can prove they haven’t abandoned their rights, and the surface rights owners can’t claim their mineral interest using the ODMA. 

Potential Impact on Ohio’s Oil and Gas Industry

These cases, like many before them dealing with the ODMA, will have an important impact on the oil and gas industry, and the outcome will be closely followed from landowners and energy companies alike.  However, unlike some of the previous ODMA cases pending before the Court, this case presented more fact-specific issues relevant to the parties, rather than broadly-applicable issues dealing with the statute itself.

Synopsis of Oral Argument

The Supreme Court of Ohio addressed the following certified questions from the United States District Court, Ninth District Court of Appeals:

  • Is the recording of an out-of-state will a title transaction that constitutes a savings act under the 1989 Ohio Dormant Minerals Act?
  • Can oil and gas companies with drilling rights participate in a case on behalf of an alleged mineral owner defending against claims by a landowner that the mineral rights were abandoned?

Oral Argument

Oral argument in these cases was unlike some of the previous cases dealing with the ODMA, as the Court was much more focused on the particularlized facts of these cases instead of broadly-applicable issues of interpretation of the ODMA.  That being the case, several of the Justices asked questions about the impact of certain interpretation decisions on the facts of this case.  For example, what the outcome would be if the Court held the 2006 version of the ODMA applied.  Or, whether the outcomes would be different if the Court ruled that the 1989 version of the ODMA is self-executing.  These questions, although not particularly relevant to the certified questions before the Court, may signal that the Court is in the midst of determining how it will answer some of these important interpretation questions that have been presented in other ODMA cases pending before the Court.

To view the oral arguments, following these links:

Albanese (http://www.ohiochannel.org/MediaLibrary/Media.aspx?fileId=147920)

Lipperman (http://www.ohiochannel.org/MediaLibrary/Media.aspx?fileId=147924)

Like all of the ODMA cases pending before the Court, the industry and landowners will keep a close eye on the outcome of these cases.