Long Point Energy, LLC v. Gulfport Energy Corp.

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LONG POINT ENERGY, LLC, Plaintiff, v. GULFPORT ENERGY CORPORATION, et al., Defendants.

No. 2:20-cv-4644

United States District Court, S.D. Ohio, Eastern Division

March 27, 2023

Kimberly A. Jolson, Magistrate Judge

OPINION AND ORDER

SARAH D. MORRISON, UNITED STATES DISTRICT JUDGE

This matter arises out of a dispute over the ownership of oil and gas rights underlying three tracts of land^[1] in Belmont County, Ohio (collectively, “the Property”). Plaintiff Long Point Energy, LLC filed suit against the surface owners of the Property (collectively “Perkins Defendants”^[2]) and several business entities that obtained oil and gas leases from those owners (collectively “Lessee Defendants”^[3]) seeking, among other things, to quiet title to the disputed oil and gas rights. Counterclaims and a crossclaim have been filed.

The following motions are before the Court:

• Perkins Defendants' Motion for Summary Judgment on Long Point'sClaims and their Counterclaims and Crossclaim (ECF No. 103);

• Lessee Defendants' Motion for Summary Judgment on Long Point's Claims and their Counterclaims (ECF No 104);

• Lessee Defendants' Motion for Summary Judgment on Perkins Defendants' Crossclaim (ECF No. 105);

• Long Point's Motion for Summary Judgment on their Claims and on the defendants' Counterclaims (ECF No 107);

• Lessee Defendants' Motion to Strike Arguments (ECF No. 129).

The motions, which are limited to issues of liability, are fully briefed and ripe for consideration.

I. SUMMARY OF ARGUMENTS

This dispute stems from certain actions taken by the Perkins Defendants to recapture and put to use oil and gas rights that had been unproductive since they were severed from the Property and reserved by Berta Freudiger in 1948 (the “Freudiger Reservations”).

Despite the actions taken by the Perkins Defendants, Long Point claims ownership of the Freudiger Reservations. More specifically, Long Point claims that, in 2019, it purchased from Ms. Freudiger's heirs full ownership of the oil and gas rights underlying the 165 Acre Tract and 29/36ths ownership of the oil and gas rights underlying the 80 Acre and the 118 Acre Tracts.

On the other hand, all of the defendants claim that the Perkins Defendants are the true owners of the oil and gas rights underlying the Property and that Lessee Defendants own valid oil and gas leaseholds for each tract. They argue that the Freudiger Reservations did not include the oil and gas rights underlying the 165 Acre Tract. They further claim that the Freudiger Reservations were abandoned by Ms. Freudiger's heirs and vested in the Perkins Defendants through operation of the Dormant Minerals Act (“DMA”) and/or a quiet title action several years before Long Point purchased them.

A. Succession of Interest in the Property

In 1948, Ms. Freudiger conveyed the 118 Acre Tract to Webster Perkins. (First Severance Deed, ECF No. 103-70.) That same year, she conveyed the 165 Acre and 80 Acre Tracts to Glenn and Ruth Perkins (Second Severance Deed, ECF No. 103-8.) Ms. Freudiger reserved certain oil and gas rights in each Severance Deed (i.e., the Freudiger Reservations). The surface rights and the reserved oil and gas rights for the Property then went through multiple transfers. Today, it is undisputed that the Perkins Defendants collectively own the surface rights and any unreserved subsurface rights for the Property; the dispute is over the oil and gas rights reserved by Ms. Freudiger.

In 1962, Ms. Freudiger died testate and left the residue of her estate (including the Freudiger Reservations) to her daughter Martha Estell Zigler.^[4] (ECF No. 99-11.) Following the deaths of Martha Zigler and one of her children, Ruth Kissinger and Gene Zigler each inherited a one-third interest and Delores Drabenstott, Paul Hershey, and Larry Hershey each inherited a one-ninth interest in the Freudiger Reservations (collectively “Freudiger Heirs”). (ECF Nos. 99-14 and 99-15.) In 2019, Long Point purchased the Freudiger Heirs' interest in the Freudiger Reservations for $40,000 via quit claim deed. (Long Point Deeds, ECF No. 107-1, Exhibits A-1 through A-5; Long Point Answers to Lessee Defendants' Interrogatories, ECF No. 104-8, No. 9.) The last of Long Point's deeds was recorded on September 27, 2019, and each was backdated to February 26, 2013. (Id.)

B. Abandonment Procedures and Remora Conveyances

Many years before Long Point purchased the Freudiger Reservations, the Perkins Defendants learned of the Freudiger Reservations and hired title attorney Richard Yoss to attempt to reclaim the severed oil and gas interests. (Yoss Dep., ECF No. 99, p. 61.) Following a title search performed by Yoss, the Perkins Defendants initiated abandonment procedures under the DMA.^[5] The DMA requires notice of an abandonment claim to mineral rights holders by certified mail; if certified mail is not possible, then notice by publication is sufficient. Ohio. Rev. Code § 5301.56. After a public records search in Belmont County, Yoss was unable to locate addresses for Berta Freudiger or information about any potential heirs. (Id. at 331-32.) On June 9, 2011, the Perkins Defendants served notice of their abandonment claim in the Times Leader Newspaper (the local newspaper in Belmont County). (Notice by Publication, ECF No. 103-15.)

Shortly after notice was published, L.D. Jenkins informed several of the Freudiger Heirs about the Perkins Defendants' abandonment claim and represented that, if the Heirs conveyed a portion of their oil and gas rights to him, he would assist them in preserving those rights. (Larry Hershey Decl., ECF No. 103-43; Ruth Kissinger Decl., ECF No. 103-44; Gene Zigler Decl., ECF No. 103-45.). On August 5, 2011, three of the Freudiger Heirs (Gene Zigler, Ruth Kissinger, and Larry Hershey) conveyed to the Remora Parties^[6] one-fourth of their ownership interests in the oil and gas underlying the 80 Acre and 118 Acre Tracts. (Remora Deeds, ECF No. 99-41.)

On August 8, 2011, sixty days after the Perkins Defendants' publication, William R. Parr recorded an “Affidavit; Claim to Preserve Mineral Interests and Oil and Gas Rights Interests,” wherein he identified himself as the President of Willow Point Corporation and sought to preserve the Remora Parties' ownership of the oil and gas rights underlying the 80 Acre and 118 Acre Tracts. (Claim to Preserve, ECF No. 103-16.)

Yoss concluded that Parr's Claim to Preserve was not valid under the DMA.

So, on August 29, 2011, he recorded a Notice of Failure to File to conclude the abandonment procedures; that notice referenced the Claim to Preserve and stated, “William R. Parr, affiant who signed the above Affidavit, is not a holder pursuant to [Ohio Revised Code §] 5301.56, and this Affidavit is therefore a nullity.” (Notice of Failure to File, ECF No. 17.)

C. Belmont County Litigation

On October 7, 2011, the Perkins Defendants filed a state court action against the Remora Parties seeking a declaration that the severed oil and gas rights underlying the 80 Acre and 118 Acre Tracts were abandoned under the DMA and to quiet title to those properties. (Belmont County Court of Common Pleas Case No. 11-cv-400, ECF No. 103-18.) The parties to that suit entered into an Agreed Judgment, wherein the Remora Parties withdrew the ownership claims asserted in the Claim to Preserve. (Agreed Judgment Entry, ECF No. 103-20.) Also in the Agreed Judgment, the trial court held that the Freudiger Reservations were abandoned under the DMA and that the Perkins Defendants were the fee simple owners of both the surface rights and the underlying oil and gas rights for the 80 Acre and 118 Acre Tracts. (Id.) The court ordered the clerk of courts to record the Agreed Judgment and note the recordation in the margins of the Claim to Preserve and the First and Second Severance Deeds (the instruments that created the Freudiger Reservations). (Id.) The Agreed Judgment was recorded on August 10, 2012.

D. Oil and Gas Leaseholds and Drilling Operations

On May 24, 2013, Rice Drilling obtained an oil and gas lease from the Perkins Defendants for the 80 Acre Tract, the 118 Acre Tract, and the 163.5 Acre Subdivision. (ECF No. 1-3, Exh. W.) On May 28, 2013, Rice Drilling obtained an identical oil and gas lease for the 1.15 Acre Subdivision. (ECF No. 1-3, Exh. X.) A Memorandum of Lease was recorded for each. (ECF No. 103-38, 103-39.)

Following a curative title search to confirm its interest, (ECF No. 103-23, 103-24), Rice Drilling assigned 51.84% of its interest in the oil and gas leases to Gulfport Corporation. (ECF Nos. 103-25, 103-26, 103-27, 103-28.) From 2014 until 2015, fourteen oil wells were constructed on the Property. (ECF No. 104-15.) The wells began producing in 2016. (ECF No. 103-74.)

E. Long Point Files this Action

In September 2020, less than a year after it recorded its final deed, Long Point filed the instant suit seeking over $24 million dollars in damages. (Long Point Initial Disclosures, ECF No. 104-11.) It brought the following claims against all of the defendants:

• Counts I and II-Declaratory Judgment and Quiet Title (165 Acre Tract)

• Counts III and IV-Declaratory Judgment and Quiet Title (80 Acre and 118 Acre Tracts) • Count IX-Accounting of Rents and Profits (All Tracts)

• Count X-Unjust Enrichment and Equitable Disgorgement (All Tracts) Against Lessee Defendants only, Long Point brought the following claims:

• Count V-Trespass (All Tracts)

• Count VI-Conversion (All Tracts)

• Counts VII and VIII-Waste (All Tracts)

In response, Perkins Defendants brought the following counterclaims:^[7]

• Count I-Declaratory Judgment (165 Acre Tract)

• Count II-Declaratory Judgment pursuant to the Marketable Title Act (“MTA”) (165 Acre Tract)

• Count V-Declaratory Judgment pursuant to the Dormant

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