• Ohio Appellate Court Ruling Helps Ensure that Real Property Rights under Coal Severance Deeds Will Not be trumped by Private Oil and Gas Interests
  • May 28, 2009 | Author: Jeffrey A. Willis
  • Law Firm: Dinsmore & Shohl LLP - Columbus Office
  • Last year, the Ohio Supreme Court did not accept for review Appellants Charles and Beverly Datkuliak's ("Datkuliaks") appeal from the Seventh District Court of Appeals' decision in Am. Energy Corp. v. Datkuliak, 7th Dist. No. 07 MO 3, 2007-Ohio-7199. In doing so, the intent of the parties to a 1922 coal severance deed remained binding on successor parties in interest, instead of the consideration of irrelevant oil, gas, and farming interests across the state.

    The Datkuliak case involved a real property dispute originally filed in the Monroe County, Ohio Court of Common Pleas in which a gas well that supplied heat to several buildings owned by the Datkuliaks was in the path of, and interfered with, planned underground longwall coal mining of Appellees American Energy Corporation and Consolidated Land Company (collectively "AEC"). The 1922 coal severance deed that initially severed the coal estate from the surface estate included language conveying all of the coal to the grantee and included a waiver of liability to the surface estate for damages resulting from the mining of such coal. The coal severance deed also contained a reservation that the surface owner was permitted to drill through the coal seam to obtain its gas.

    Based on the well-settled rules of deed construction and the clear and unambiguous language of the coal severance deed, the trial court ordered the Datkuliaks to plug and cap the gas well at the Datkuliaks' expense to prevent any interference with AEC's mining and removal of all of its coal. Monroe County Trial Court Memorandum of Opinion and Final Order dated July 11, 2007, at 25-29. In particular, in ruling upon the parties' consolidated declaratory judgment actions, in addition to AEC's other causes of action, the trial court relied on well-settled principles of deed construction and reasoned that: (1) the pertinent deed language was clear and unambiguous; (2) the grantor of the coal estate conveyed the right to mine "all" of the coal; (3) the deed language "constitutes a complete and clear waiver" to the surface estate from any damages as a result of mining and removal of all of the coal; (4) this waiver does not conflict with the Dakuliaks' right to drill through the coal estate for gas; and (5) the Datkuliaks were interfering with AEC's right to mine all of the coal in the coal estate resulting in the sterilization of the coal. Id.

    On appeal to the Seventh District Court of Appeals, the Datkuliaks did not request a stay of the trial court's Opinion and Final Order pending appeal and, as such, the Datkuliaks were required to and did plug and cap the gas well prior to the appellate court's decision. Based on this fact and the fact that mining had already occurred through the plugged gas well, the Seventh District Court of Appeals upheld the trial court's decision and held that no justiciable issue existed and the appeal was rendered moot. Am. Energy Corp. v. Datkuliak, 7th Dist. No. 07 MO 3, 2007-Ohio-7199, at 23, 105. The appellate court further held that even if the Datkuliaks' appeal was not moot, the trial court's decision was without error. Id., at 86.

    The Ohio Oil and Gas Association, Southeastern Ohio Oil and Gas Association, and Ohio Farm Bureau Federation filed Amicus Curiae briefs discussing the potential impacts that the trial court and appellate court decisions may have on the oil, gas, and farming industries, including the potential impacts to over 268,000 oil and gas wells located in 76 of Ohio's 88 counties. In order to convince the Ohio Supreme Court to accept jurisdiction, the Datkuliaks and Amicus Curiae raised issues concerning these potential impacts in an attempt to create an issue of great public or general importance. AEC argued that the Datkuliak case was merely one of deed construction, including determining the intent of parties from the four corners of the deed, and should not involve consideration of these other interests. The Ohio Supreme Court's refusal to accept the Datkuliaks' appeal for review upheld well-settled law governing real property conveyances and deed construction versus the policy considerations of the oil, gas, and farming industries.

    The Datkuliak decisions will help ensure that the intent of parties to a relevant deed severing competing mineral estates will control even decades later, regardless of industry interests. Thus, successors in interest to these deeds (including residential purchasers and sellers, as well as commercial companies) can reasonably rely on the rights granted or reserved in the deed language in making either residential or multi-million dollar business decisions regarding their property and mineral interests. The real property successors in interest also can rest assured that their bundle of property rights will not be unlawfully undone by private interests.

    The Datkuliak precedent is important to the coal industry in Ohio, as well as in other states as persuasive authority. With the assistance of local counsel, attorneys John E. Jevicky, William M. Mattes, and Jeffrey A. Willis, who are part of Dinsmore & Shohl’s Natural Resources Practice Group, represented AEC's interests at the trial court level and through the appellate process. Dinsmore & Shohl’s Natural Resources Practice Group includes attorneys located in Ohio, Pennsylvania, West Virginia, and Kentucky who have significant experience representing entities with coal related interests throughout the country.