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“Reasonable Diligence” Under 2006 Ohio Dormant Mineral Act May Not Require Internet Search

By August 9, 2019Oil and Gas

By: Cody Smith, Emens & Wolper Law Firm

It’s likely you’ve heard of the Ohio Dormant Mineral Act. This statute provides a mechanism for surface owners to have severed mineral interests deemed abandoned after providing the severed mineral holders with notice of the opportunity to preserve their interests. Many surface owners went through this abandonment process in hopes of having the minerals vested back with the surface. One of the main issues being decided by Ohio courts is how much due diligence had to be done by the surface owners in their attempt to serve notice of the abandonment on the holders of the severed mineral interest.

In Gerrity v. Chervenak, 2019-Ohio-2687 (5th Dist.), the Court of Appeals for the Fifth District of Ohio (the “Fifth District”) affirmed a decision by the Common Pleas Court of Guernsey County, Ohio, holding that a surface owner attempting to utilize the 2006 version of the Ohio Dormant Mineral Act (“2006 DMA”), Ohio Revised Code § 5301.56, to declare a severed oil and gas mineral interest abandoned, need only exercise “reasonable diligence,” exclusive of online subscription services, when attempting to locate potential holders of the mineral interest to serve notice by certified mail.

This case involves property in Guernsey County which T.D. Farwell conveyed to Robert C. Shaefer in a 1961 Deed which contained a reservation of the oil and gas minerals to T.D. Farwell. In 1965, T.D. Farwell died, leaving the reserved oil and gas minerals to his daughter, Jane F. Richards, as evidenced by a recorded certificate of transfer. At the time the certificate of transfer was recorded, Richards was a resident of Cuyahoga County, Ohio; but, when she died in 1997, she was a resident of Florida.

After successive conveyances, the surface of the property was conveyed to the Chervenaks in 1999. In 2012, the Chervenaks attempted to serve Richards by certified mail at her last known address in Cuyahoga County (the address listed in the certificate of transfer). The service was returned undeliverable. After searching the real estate and probate records in both Guernsey County and Cuyahoga County, the Chervenaks failed to find any other address for Richards. So, they attempted notice by publication in Guernsey County and when no holder responded, claimed ownership of the oil and gas minerals.

Under the 2006 DMA, before a severed mineral interest is deemed abandoned and vested in the surface owner of the land, the surface owner must attempt notice by certified mail “to each holder or holder’s successors or assignees, at the last known address of each” of the surface owner’s intent to declare the mineral rights abandoned. If the certified mail fails, the surface owner “shall publish notice . . . in a newspaper of general circulation . . . [where the land] is located.” Timothy D. Gerrity, the sole heir of Richards, filed a lawsuit against the Chervenaks claiming that they failed to establish abandonment of the oil and gas minerals because the 2006 DMA requires surface owners to undertake “reasonable diligence” to locate the current addresses of holders of severed oil and gas minerals interests, which includes utilizing online search services such as ancestry.com. The Fifth District disagreed and held that “reasonable diligence” does not necessarily require online searches. Given the factual circumstances in this case wherein the surface owners had searched the probate and real estate records in both Guernsey County and Cuyahoga County, the Fifth District held that no internet search was necessary – the actions taken by the surface owners were reasonable. Thus, the Chervenaks were permitted to perfect their notice under the 2006 DMA by publication.

The Gerrity decision appears to be the third Ohio appellate decision to address the extent of the search a surface owner must conduct to locate holders of a severed mineral interest to meet the notice requirements in the 2006 DMA. However, Gerrity is the first decision from the Fifth District which adopts a “reasonable diligence” standard and it is the first in Ohio appellate decision which squarely addresses whether or not an internet search is required under the “reasonable diligence” standard.

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