McLaughlin v. CNX Gas Company, LLC

Filing 19

Memorandum, Opinion, and Order granting Defendant's Motion for judgment on the pleadings (Related Doc # 8 ); granting Defendant's Motion for leave (Related Doc # 9 ); denying as moot the interested party's Motion to intervene as a party. (Related Doc # 11 ); granting Plaintiff's Motion to supplement(Related Doc # 15 ); and granting Defendant's Motion to amend and dismiss their counterclaim (Related Doc # 17 ). Defendant shall file a notice within 7 days of whether it intends to pursue the remaining counterclaims in this matter. Judge John R. Adams on 12/13/13.(K,C)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
Nancy M. McLaughlin,
Plaintiff,
vs.
CNX Gas Company,
Defendant.

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CASE NO. 5:13CV1502
JUDGE JOHN R. ADAMS

MEMORANDUM OF OPINION
AND ORDER
(Resolves Docs. 8, 9, 11, 15, 17)

This matter comes before the Court on a motion for judgment on the pleadings filed by
Defendant CNX Gas Company (Doc. 8). Initially, the Court GRANTS Defendant’s motion to
supplement its motion for judgment on the pleadings (Doc. 9) as well as Plaintiff’s motion to
supplement her opposition (Doc. 15). Moreover, the Court GRANTS Defendant’s motion to
amend its affirmative defenses and dismiss their counterclaim (Doc. 17). Accordingly, the
motion to intervene (Doc. 11) is DENIED AS MOOT. The Court has been advised, having
considered the complaint, pleadings, and applicable law. The motion for judgment on the
pleadings (Doc. 8) is GRANTED.
I.

LEGAL STANDARD
Fed.R. Civ.P. 12(c) provides that “[a]fter the pleadings are closed -- but early enough not

to delay trial -- a party may move for judgment on the pleadings.” The standard for evaluating a
motion for judgment on the pleadings is the same as that applicable to a motion to dismiss under
Rule 12(b)(6) for failure to state a claim. Ziegler v. IBP Hog Market, Inc., 249 F.3d 509, 511-12
(6th Cir. 2001). The Sixth Circuit stated the standard for reviewing such a motion to dismiss in
Assn. of Cleveland Fire Fighters v. Cleveland, 502 F.3d 545 (6th Cir. 2007) as follows:

The Supreme Court has recently clarified the law with respect to what a plaintiff
must plead in order to survive a Rule 12(b)(6) motion. Bell Atl. Corp. v.
Twombly, 550 U.S. 544 (2007). The Court stated that “a plaintiff’s obligation to
provide the grounds of his entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Id. at 1964-65 (citations and quotation marks omitted). Additionally, the
Court emphasized that even though a complaint need not contain “detailed”
factual allegations, its “[f]actual allegations must be enough to raise a right to
relief above the speculative level on the assumption that all the allegations in the
complaint are true.” Id. (internal citation and quotation marks omitted). In so
holding, the Court disavowed the oft-quoted Rule 12(b)(6) standard of Conley v.
Gibson, 355 U.S. 41, 45-46 (1957) (recognizing “the accepted rule that a
complaint should not be dismissed for failure to state a claim unless it appears
beyond doubt that the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief”), characterizing that rule as one “best forgotten
as an incomplete, negative gloss on an accepted pleading standard.” Twombly,
550 U.S. at 563.
Id. at 548.
If an allegation is capable of more than one inference, this Court must construe it in the
plaintiff’s favor. Columbia Natural Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir. 1995)
(citing Allard v. Weitzman, 991 F.2d 1236, 1240 (6th Cir. 1993)). This Court may not grant a
Rule 12(b)(6) motion merely because it may not believe the plaintiff’s factual allegations. Id.
Although this is a liberal standard of review, the plaintiff still must do more than merely assert
bare legal conclusions. Id. Specifically, the complaint must contain “either direct or inferential
allegations respecting all the material elements to sustain a recovery under some viable legal
theory.”

Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988)

(quotations and emphasis omitted).
II. FACTS
The issue squarely before this Court is a rather narrow one. Plaintiff Nancy McLaughlin
seeks a declaration that certain mineral rights were abandoned under Ohio’s Dormant Mineral
Act (the “ODMA”) and therefore merged with her surface rights. In contrast, Defendant asserts

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that certain events took place that prevent application of the ODMA. Plaintiff does not dispute
that these events took place, but rather she claims that they do nothing to alter her conclusion that
the mineral rights were abandoned. As such, the Court is presented with a pure issue of law to
resolve this matter.
As general background, in 1957, Consolidation Coal Company acquired 143 acres of land
in Carroll County, Ohio inclusive of mineral rights to the property. In 1977, Consolidation
entered into an Option to Lease with Republic Steel Corporation related to oil and gas rights on
the lands acquired in 1957. In 1979, Republic exercised its option and leased the oil and gas
rights to this land. In 1985, Consolidation conveyed the land to Conoco, reserving its oil and gas
rights. In 1988, Conoco conveyed its rights to DuPont Energy Coal Holdings. On December 12,
1988, DuPont conveyed its interests to International Environmental Services, again noting the
reservation of oil and gas rights. On July 6, 1992, Kelt Resources, Inc. executed a Partial
Release of Oil and Gas Lease. In that document, Kelt released its rights to a portion of the oil
and gas lease entered into by Consolidation and Republic.
On May 25, 1994, Plaintiff and her late husband acquired the surface rights to the 143acre tract through a sheriff sale that was conducted based on the delinquent tax status of
International Environmental Services. On September 29, 2011, Consolidation conveyed the oil
and gas rights to Defendant CNX. On June 13, 2013, Plaintiff filed this action to quiet title,
alleging that the mineral rights merged with the surface rights no later than January 3, 2005
because following the 1985 severance, twenty years passed without a title transaction. With that
background in mind, the Court reviews the parties’ arguments.

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III. ANALYSIS
The Ohio Dormant Mineral Act (“ODMA”), as codified in Ohio Revised Code
(“O.R.C.”) § 5301.56, establishes a process by which mineral interests may be deemed
abandoned and to have vested to the owner of the surface rights.

Specifically, O.R.C. §

5301.56(B) provides in pertinent part as follows:
(B) Any mineral interest held by any person, other than the owner of the surface
of the lands subject to the interest, shall be deemed abandoned and vested in the
owner of the surface of the lands subject to the interest if the requirements
established in division (E) of this section are satisfied and none of the following
applies:
…
(3) Within the twenty years immediately preceding the date on which notice is
served or published under division (E) of this section, one or more of the
following has occurred:
(a) The mineral interest has been the subject of a title transaction that has been
filed or recorded in the office of the county recorder of the county in which the
lands are located.
While the parties agreed on the underlying facts, they sharply dispute the application of the
above provisions of the ODMA.
Plaintiff argues that the memorandum of lease relied upon by Defendant is nothing more
than a license and therefore cannot act in any manner to preserve rights under the ODMA. In
support, Plaintiff relies heavily on Back v. The Ohio Fuel Gas Co., 160 Ohio St. 81 (1953).
Plaintiff contends that Back makes clear that the lease at issue is nothing more than a license.
Plaintiff then asserts that because a license does not formally pass property, it cannot be found to
be a title transaction. The Court finds no merit in this assertion.
O.R.C. § 5301.47(F) provides:
(F) “Title transaction” means any transaction affecting title to any interest in land,
including title by will or descent, title by tax deed, or by trustee’s, assignee’s,
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guardian’s, executor’s, administrator’s, or sheriff’s deed, or decree of any court,
as well as warranty deed, quit claim deed, or mortgage.
As the above definition makes clear, title transaction means any transaction affecting title to any
interest in land. It is difficult for the Court to conceive of a broader definition than the one
chosen by Ohio law. By its plain language, the statute does not require a conveyance or transfer
of real property in order to constitute a title transaction. Rather, the statute simply requires a
transaction that affects title to any interest in the land.
Moreover, Plaintiff’s reliance on Wellington Resource Group LLC v. Beck Energy Corp.,
2013 WL 5311412 (S.D.Ohio Sept. 20, 2013) also does little to assist Plaintiff’s arguments. In
Wellington, the district court concluded: “In essence, this Court reaffirms its prior conclusion in
Frederick, where it stated that ‘Ohio courts, if given the opportunity to do so, would characterize
the property interests involved [here] as being like or similar to the interest recognized under
Oklahoma law,’ and common to many oil-producing states, and hold that oil and gas leases are
not a grant of real property.” Id. at *7. Plaintiff again incorrectly assumes that an actual transfer
of real property is required under the ODMA when the plain language of the statute requires far
less.
Even if this Court were to agree with the analysis in Wellington and ignore the contrary
conclusion reached by a member of this District in Binder v. Trinity OG Land Development and
Exploration, 2012 WL 1970239, at *3 (N.D. Ohio May 31, 2012), it would not aid Plaintiff’s
claim. Even if Defendant’s property interests through the lease are something less than a grant
of real property, those interests quite clearly still affect title to the mineral rights in the property.
As the lease itself was a title transaction, there can be no dispute that the release of rights under
that lease qualifies as a title transaction as well. Accordingly, Plaintiff’s claims must fail as a
matter of law.
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In reaching this conclusion, the Court is mindful of Plaintiff’s argument that Ohio’s
statute includes numerous specific items that qualify as title transactions and that oil and gas
leases are not among those listed transactions. However, the list is certainly not an exclusive list
and an oil and gas lease falls within the same category of documents listed within the statute.
Moreover, contrary to Plaintiff’s argument, including the oil and gas lease as a title transaction
would not render any portion of the ODMA superfluous. One savings event that includes “actual
production or withdrawal of minerals” is not made superfluous by the Court’s conclusion.
Herein, the original lease appears to have a term of fifty years. Thus, there are factual scenarios
that would allow the lease itself to operate as a savings event for twenty years, but thereafter only
actual production or a new title transaction would operate as a savings event. Accordingly, the
Court’s construction does not render any portion of the ODMA meaningless.
Finally, the Court rejects Plaintiff’s assertion that she acquired the mineral rights through
the sheriff sale of the surface rights. The Court agrees with Defendant – the sale could not have
included the mineral interests as they were not owned by the party delinquent in its taxes –
International Environmental Services. As the mineral interests were not owned by IES, they
could not have been subject to any tax lien or any sheriff sale. Accordingly, Plaintiff could not
have acquired them through such a transaction.

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IV.

CONCLUSION
Defendant’s motion for judgment on the pleadings is GRANTED. Defendant shall file a

notice within seven days of this order stating whether it intends to pursue the remaining
counterclaims in this matter.
IT IS SO ORDERED.

Date: December 13, 2013

/s/ John R. Adams
Judge John R. Adams
UNITED STATES DISTRICT COURT

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