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Ohio Supreme Court Rules on Notice Requirements under DMA

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

In Gerrity v. Chervenak, Slip Opinion No. 2020-Ohio-6705, the Ohio Supreme Court addressed the reach of the notice requirements the Dormant Mineral Act (“DMA”) imposes as prerequisites to deeming a severed mineral interest abandoned and vested in the owner of the surface of the land subject to the severed mineral interest. 

In Gerrity, the minerals to Guernsey County property (“Chervenak Property”) were severed in a 1961 deed.  A title search revealed the mineral rights were conveyed to Jane F. Richards by a certificate of transfer filed with the Guernsey County Recorder in 1965.  The certificate of transfer lists a Cleveland, Ohio address for Richards.  The Chervenak chain of title contains no other records regarding ownership of the severed mineral interest. 

Richards died in 1997, as a resident of Florida, survived by her son and sole heir, Timothy Gerrity, who claims to be the rightful owner of the severed mineral rights as a result of the probate of Richards’ estate in Florida.  No evidence of Richards’ death or of Gerrity’s inheritance of the mineral interest appear in the records filed with the Guernsey County Recorder. 

In 2012, Chervenak’s Affidavit of abandonment stated certified mail had been sent to Richards’ last known address in Cleveland, and returned, marked “Vacant – Unable to Forward,” so notice was served by publication to Richards, her unknown heirs, devisees, assigns.  Five years later in 2017, Gerrity filed this action claiming Chervenak’s use of the DMA was ineffective because the act’s notice requirement was not complied with. 

Before a severed mineral interest becomes vested in the owner of the surface, the DMA provides the surface owner shall “[s]erve notice by certified mail, return receipt requested, to each holder or each holder’s successors or assignees, at the last known address of each, of the owner’s intent to declare the mineral interest abandoned.  If service of notice cannot be completed to any holder, the owner shall publish notice of the owner’s intent to declare the mineral interest abandoned at least once in a newspaper of general circulation in each county in which the land that is subject to the interest is located.”  R.C. 5301.56(E)(1). 

A surface owner’s failure to satisfy the notice requirement precludes application of the DMA and renders unnecessary any further analysis. 

The Fifth District Court of Appeals held the surface owner complied with the notice provision by (1) sending certified mail to Richard’s last known address, (2) unsuccessfully searching Cuyahoga and Guernsey County records for further information, and (3) then publishing notice to Richards and her unknown heirs. 

In seeking reversal, Gerrity argued (1) the DMA requires a surface owner to identify and attempt service by certified mail on every holder, or (2) if it does not, the surface owner must use certain specified search methods designed to locate all holders to satisfy due process and the reasonable diligence requirement underlying the notice provision.

DMA IS NOT LIMITED TO CIRCUMSTANCES WHERE EVERY HOLDER HAS BEEN IDENTIFIED

The DMA broadly defines holder to include the record holder, and any person who derives the person’s rights from the record holder.  R.C. 5301.56(A)(1).  Gerrity qualified as a “holder.”  However, the Supreme Court found that a surface owner does not need to specifically identify by name every holder, because when the identity of a holder cannot be identified, identity of the holder for purposes of notice is not applicable under R.C. 5301.56(F)(1) (notice shall identify “each holder and the holder’s successors and assignees, as applicable), and publication is expressly permitted when service cannot be completed by certified mail – which is plainly the case when a holder cannot be identified. 

The Supreme Court noted the DMA was enacted to address the difficulty (and sometimes impossibility) of identifying the owners of severed mineral interests and to encourage reliance on record chains of title.  Construing the DMA as ineffective unless all severed mineral interest holders were identified “would negate the express legislative purpose of the act.  No matter the effort expended, a surface owner can never be certain that he has identified every successor and assignee of every holder who appears in the public record.  Limitation of the Dormant Mineral Act in the manner Gerrity proposes would lead to uncertainty and would open every reunification under the act to a later challenge—and perhaps undoing—by a previously unknown heir or assignee who did not appear in the public record.”

The Supreme Court held that the legislature did not intend service by certified mail to be mandatory, nor does it mandate an attempt at service by certified mail “when it is apparent that such service cannot be completed.”  The statue does not limit the situations in which service will be deemed incapable of completion, but rather, by its plain language operates “anytime” service of notice by certified mail “cannot be completed to any holder.”  This includes circumstances in which a holder’s identity or address is unknown.

SURFACE OWNER MUST USE REASONABLE DILIGENCE TO IDENTIFY AND LOCATE HOLDERS BUT WHAT CONSTITUTES REASONABLE DILIGENCE WILL VARY ON THE FACTS OF EACH CASE

First, the Supreme Court rejected Gerrity’s attempt to incorporate the service requirements under Civil Rule 4.4, which requires an affidavit of all efforts to locate a party to be served with notice of a lawsuit before service by publication can be granted by a court order.  The Court held the DMA does not implicate the jurisdictional concerns underlying Civil Rule 4.4 or R.C. 2703.24, and the legislature did not incorporate the requirements of either – or any similar requirements – into the DMA, and the Court may not do so by judicial fiat.

Second, the Court rejected Gerrity’s argument that a reasonable search should include the internet.  The Court stated, “The ever-changing quantum and quality of information available on the Internet, the inconsistent reliability of that information, and the variability of Internet-search results all weigh against a bright-line requirement for online searches, let alone a bright-line requirement that a surface owner consult any particular paid subscription services, to identify heirs to a severed mineral interest.”

Whether a party has exercised reasonable diligence will depend on the facts and circumstances of each case.  Without drawing a bright line, the Court provided guidance in the context of the facts before them.  The surface owner reviewed the chain of title, conducted a broader search of the public records from Guernsey County Recorder’s Office and Probate Court, and searched Cuyahoga County Recorder’s and Probate records, all without finding any indication Richards had died, had transferred the mineral interest, or had a more recent address.  The Supreme Court concluded the surface owner exercised reasonable diligence to identify holders of the severed interest.

The Court stated a surface owner must review the chain of title to the property at interest as a starting point.  In addition to property records in the county in which the land that is subject to the mineral interest is located, a reasonable search for holders of a severed mineral interest will generally also include a search of court records, including probate records, in that county.  “Review of public-property and court records in the county where the land subject to a severed mineral interest is located will generally establish a baseline of reasonable diligence in identifying the holder or holders of the severed mineral interest.  There may, however, be circumstances in which the surface owner’s independent knowledge or information revealed by the surface owner’s review of the public-property and court records would require the surface owner, in the exercise of reasonable diligence, to continue looking elsewhere to identify or locate a holder.  But whether that additional search is required will depend on the circumstance of each case, and it was not required in this case.”

Therefore, a surface owner is required to search the county records (recorder, probate, court) of the county in which the land is located, but not the internet, prior to providing notice of abandonment under the DMA.  Whether any further searching will be necessary will depend on the results of the county search or the surface owner’s independent knowledge.  Assuming those searches do not reveal any additional information (including that the holder has died, transferred the interest, or has a more recent address), it appears no further search is necessary, and the surface owner can proceed to send notice, including by publication (which the Court held raises no due-process concerns).

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

 
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