Title: French v. Ascent Resources-Utica, LLC

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
French v. Ascent Resources-Utica, L.L.C., Slip Opinion No. 2022-Ohio-869.] 
 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in an 
advance sheet of the Ohio Official Reports.  Readers are requested to 
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 
South Front Street, Columbus, Ohio 43215, of any typographical or other 
formal errors in the opinion, in order that corrections may be made before 
the opinion is published. 
 
 
SLIP OPINION NO. 2022-OHIO-869 
FRENCH ET AL., APPELLANTS, v. ASCENT RESOURCES-UTICA, L.L.C., 
APPELLEE. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as French v. Ascent Resources-Utica, L.L.C., Slip Opinion No. 
2022-Ohio-869.] 
Property law—Contracts—R.C. 2711.01(B)(1)—An action seeking a determination 
that an oil and gas lease has expired by its own terms is a controversy 
involving the title to or the possession of real estate and, under R.C. 
2711.01(B)(1), is not subject to arbitration—Court of appeals’ judgment 
reversed and cause remanded. 
(No. 2021-0166—Submitted January 26, 2022—Decided March 24, 2022.) 
APPEAL from the Court of Appeals for Jefferson County, 
No. 19 JE 0015, 2020-Ohio-4719. 
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SUPREME COURT OF OHIO 
 
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KENNEDY, J. 
{¶ 1} This discretionary appeal from a judgment of the Seventh District 
Court of Appeals presents a single question: is an action seeking a determination 
that an oil and gas lease has expired by its own terms a controversy “involving the 
title to or the possession of real estate” so that the action is exempt from arbitration 
under R.C. 2711.01(B)(1)? 
{¶ 2} The answer to that question is yes.  An oil and gas lease grants the 
lessee a property interest in real estate that affects the title to the land and permits 
the lessee to physically occupy the land to the extent reasonably necessary to the 
production of oil and gas—i.e., the lessee acquires the right to enter the property 
and construct wells, buildings, telephone lines, pipelines, powerlines, and roads.  
And once an oil and gas lease expires under its own terms, the property interest 
granted under the lease reverts to the lessor by operation of law and the lessee no 
longer has any right to occupy the land.  Consequently, an action seeking a 
determination that an oil and gas lease has expired is a controversy involving the 
title to or the possession of real estate and, under R.C. 2711.01(B)(1), the action is 
not subject to arbitration. 
{¶ 3} Because the trial court correctly declined to stay the action at issue in 
this case pending arbitration, we reverse the contrary judgment of the court of 
appeals and remand the matter to the trial court for further proceedings consistent 
with this opinion. 
I.  Facts and Procedural History 
{¶ 4} Appellants, Michael P. French, Karen L. French, Thomas E. 
Sutherland, Cynthia L. Sutherland, John D. Sutherland (trustee of the Sutherland 
Family Revocable Trust), and Lloyd D. and Mary Ann Boyd (trustees of the Lloyd 
and Mary Ann Boyd Irrevocable Trust) (collectively, “French”), are the joint 
owners of a tract of land in Smithfield Township known as the “Sutherland Farm.”  
Appellee, Ascent Resources-Utica, L.L.C., acquired leases to the oil and gas rights 
January Term, 2022 
 
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to the property.  The leases permitted the lessee to physically occupy the land and 
granted it the rights to construct wells and buildings, to erect telephone lines, 
pipelines, and powerlines, and to build roads.  The leases had a primary term of five 
years and a secondary term for “as long thereafter as oil or gas * * * or either of 
them, is produced from said land by the Lessee, its successors and assigns.”  They 
also provided that the primary term could be extended under the following 
circumstances: 
 
If at the expiration of the primary term, oil or gas is not being 
produced on the leased premises or on acreage pooled therewith, but 
Lessee is engaged in drilling, deepening, plugging back or 
reworking operations thereon or shall have completed a dry hole 
thereon within ninety (90) days prior to the end of the primary term, 
this lease shall remain in force so long as operations on said well, or 
for the drilling, deepening, plugging back, or reworking of any 
additional well, are prosecuted with no cessation of more than ninety 
(90) consecutive days and, if they result in the production of oil or 
gas, so long thereafter as oil or gas is produced from the leased 
premises, or upon acreage pooled therewith. 
 
As subsequently amended, the leases further stated:  
 
Commencement of operations shall be defined as Lessee 
having secured a drilling permit from the State and further entering 
upon the herein described premises with equipment necessary to 
build any access road(s) for drilling of a well subsequently followed 
by a drilling rig for the spudding of the well to be drilled, and the 
commencement and completion of the drilling of a well. 
SUPREME COURT OF OHIO 
 
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{¶ 5} The amended leases also purported to require arbitration: “Any 
questions concerning th[e] lease or performance there under shall be ascertained 
and determined by three disinterested arbitrators * * * and the award of such 
collective group shall be final and conclusive.” 
{¶ 6} French brought an action for declaratory judgment in the Jefferson 
County Court of Common Pleas, alleging that the oil and gas leases had terminated 
because Ascent failed to produce oil or gas or to commence drilling operations 
within the terms of the lease.  Ascent answered French’s complaint and 
counterclaimed for a declaration that the leases had not expired.  It alleged that it 
had obtained permits to drill wells on the land and had begun constructing them 
before the expiration of the leases, and it alleged that it began drilling and producing 
oil or gas thereafter. 
{¶ 7} Ascent subsequently moved to stay the action pending arbitration.  
The trial court denied the request for a stay, concluding that French’s claims 
involved the title to or the possession of real property and therefore were exempt 
from arbitration pursuant to R.C. 2711.01(B)(1). 
{¶ 8} The Seventh District reversed, reasoning that “even though oil and 
gas leases create an interest in real estate, they are not issues concerning title to or 
possession of real estate.  There is no dispute that [French holds] title to the 
Sutherland Farm.  There is also no indication that [French’s] title to or possession 
of the Sutherland Farm is at stake regardless of how this action is resolved.”  2020-
Ohio-4719, ¶ 24.  The appellate court concluded that R.C. 2711.01(B)(1) did not 
preclude arbitration of the controversy, and it remanded the matter to the trial court 
for it to decide whether Ascent had lost its right to arbitrate the controversy by 
failing to timely assert that right.  Id. at ¶ 26-29. 
{¶ 9} We accepted French’s appeal to review a single proposition of law: 
 
January Term, 2022 
 
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Whether R.C. 2711.01(B)(1), which excepts controversies 
involving title to or possession of real estate from arbitration, is 
applicable to declaratory judgment actions in which a landowner 
seeks a declaration that title in the landowner’s oil and gas estate has 
reverted to said landowner because an oil and gas lease has expired 
by its own terms due to the lessee’s failure to satisfy certain 
conditions in the lease. 
 
See 162 Ohio St.3d 1437, 2021-Ohio-1399, 166 N.E.3d 1254. 
{¶ 10} The sole issue in this appeal, then, is whether an action seeking a 
determination that an oil and gas lease has expired involves “the title to or the 
possession of real estate” within the meaning of R.C. 2711.01(B)(1). 
II.  Law and Analysis 
A.  Standard of Review 
{¶ 11} “The interpretation of a statute is a question of law that [this court] 
reviews de novo.”  Stewart v. Vivian, 151 Ohio St.3d 574, 2017-Ohio-7526, 91 
N.E.3d 716, ¶ 23. 
B.  Statutory Construction 
{¶ 12} In order to resolve the issue before this court, we return to a familiar 
place: statutory interpretation.  As we explained long ago, “[t]he question is not 
what did the general assembly intend to enact, but what is the meaning of that which 
it did enact.”  Slingluff v. Weaver, 66 Ohio St. 621, 64 N.E. 574 (1902), paragraph 
two of the syllabus.  Moreover, “[a]n unambiguous statute is to be applied, not 
interpreted.”  Sears v. Weimer, 143 Ohio St. 312, 55 N.E.2d 413 (1944), paragraph 
five of the syllabus. 
C.  R.C. 2711.01 
{¶ 13} R.C. 2711.01(A) states, “A provision in any written contract, except 
as provided in division (B) of this section, to settle by arbitration a controversy that 
SUPREME COURT OF OHIO 
 
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subsequently arises out of the contract * * * shall be valid, irrevocable, and 
enforceable, except upon grounds that exist at law or in equity for the revocation of 
any contract.”  In turn, R.C. 2711.01(B)(1) provides that R.C. 2711.01 through 
2711.16—a statutory scheme that includes the authority for a court to stay 
proceedings pending arbitration, see R.C. 2911.02(B)—“do not apply to 
controversies involving the title to or the possession of real estate.” 
{¶ 14} This court has explained that “the natural meaning of the word 
‘involving’ is ‘to relate closely’ or ‘connect.’ ”  State ex rel. Suwalski v. Peeler, ___ 
Ohio St.3d ___, 2021-Ohio-4061, ___ N.E.3d ___, ¶ 21, quoting Webster’s Third 
New International Dictionary 1191 (1993).  The word “title” means “ ‘[t]he union 
of all elements (as ownership, possession, and custody) constituting the legal right 
to control and dispose of property.’ ”  Chesapeake Exploration, L.L.C. v. Buell, 144 
Ohio St.3d 490, 2015-Ohio-4551, 45 N.E.3d 185, ¶ 59, quoting Black’s Law 
Dictionary 1712 (10th Ed.2014).  And the word “possession” means “the exercise 
of dominion over property.”  Black’s Law Dictionary at 1351. 
D.  The Nature of Oil and Gas Leases 
{¶ 15} It is well settled in our caselaw that an oil and gas lease grants the 
lessee a property interest in the land.  Bohlen v. Anadarko E & P Onshore, L.L.C., 
150 Ohio St.3d 197, 2017-Ohio-4025, 80 N.E.3d 468, ¶ 12; Harris v. Ohio Oil Co., 
57 Ohio St. 118, 129-130, 48 N.E. 502 (1897).  Notably, R.C. 5301.09 provides 
that all oil and gas leases must be recorded in the applicable county’s land records, 
“[i]n recognition that such leases and licenses create an interest in real estate.”  See 
also R.C. 317.08(A)(25).  This is consistent with our prior determination that when 
an oil and gas lease burdens property, it prevents the landowner from passing “title 
free and clear of all liens and encumbrances.”  Karas v. Brogan, 55 Ohio St.2d 128, 
129, 378 N.E.2d 470 (1978).  And our decision in Buell made clear that an “oil and 
gas lease constitutes a title transaction because it affects title” to real estate.  
January Term, 2022 
 
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(Emphasis added.)  Id. at ¶ 66; see also R.C. 5301.47(F) (defining “title transaction” 
for purposes of Ohio’s Marketable Title Act, R.C. 5301.47 et seq.). 
{¶ 16} In addition, an oil and gas lease affects the possession of the land.  
As this court said long ago in Harris, an oil and gas lease “is a lease of the land for 
the purpose and period limited therein, and the lessee has a vested right to the 
possession of the land to the extent reasonably necessary to perform the terms of 
the instrument on his part.”  (Emphasis added.)  Id. at 129-130.  Similarly and more 
recently, this court explained in Buell that an oil and gas lease affects the possession 
of the land “[b]ecause the lessee also enjoys reasonable use of the surface estate to 
accomplish the purposes of the lease.”  Id. at ¶ 60.  That is, the lessee may exercise 
dominion over the part of the real estate that is subject to the lease, sometimes to 
the exclusion of the lessor. 
{¶ 17} What happens, then, when an oil and gas lease expires under its own 
terms?  Our precedent also supplies the answer to that question. 
{¶ 18} “Generally, a contemporary oil and gas lease sets forth the duration 
of the lease in a habendum clause that contains two tiers: a ‘primary term’ and a 
‘secondary term.’ ”  Bohlen, 150 Ohio St.3d 197, 2017-Ohio-4025, 80 N.E.3d 468, 
at ¶ 16.  “The primary term sets forth a period of definite duration, and the 
secondary term then sets forth a period of indefinite duration, permitting extension 
of the lease as long as certain conditions are met, typically, when oil and gas are 
produced in paying quantities.”  Id.  If the conditions of the primary term or the 
secondary term are not met, then the lease terminates by its express terms and the 
property interest that it created is revested to the lessor by operation of law.  State 
ex rel. Claugus Family Farm, L.P. v. Seventh Dist. Court of Appeals, 145 Ohio 
St.3d 180, 2016-Ohio-178, 47 N.E.3d 836, ¶ 20.  The expiration or termination of 
an oil and gas lease returns the lessor and the lessee to the status quo prior to the 
execution of the lease: the lease no longer encumbers the land or affects title to it, 
SUPREME COURT OF OHIO 
 
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and the lessee has no right to possess it.  See Buell, 144 Ohio St.3d 490, 2015-Ohio-
4551, 45 N.E.3d 185, at ¶ 73. 
E.  Application of Law to the Leases in this Case 
{¶ 19} The oil and gas leases at issue in this case are no different from the 
typical lease discussed above.  The leases grant rights to Ascent to explore the land 
for oil and gas and to produce it, and they permit Ascent to physically occupy the 
land, which includes the rights to construct wells and other facilities, to erect 
telephone lines, pipelines, and powerlines, and to build roads.  The leases also 
include a primary term and a secondary term, and they state that the leases terminate 
unless a well is producing oil or gas or unless Ascent has commenced drilling 
operations within 90 days of the expiration of the primary term.  Therefore, the oil 
and gas leases may terminate by operation of law if certain conditions stated in their 
terms are not met. 
{¶ 20} The action in this case is therefore a controversy involving the title 
to or the possession of real property.  If the action is successful, it will quiet title to 
the property, remove the leases as encumbrances to the property, and restore the 
possession of the land to the lessors.  If the action is unsuccessful, however, title to 
the land will remain subject to the leases, affecting the transferability of the 
property.  See Buell at ¶ 64.  Also, Ascent would have the continued right to possess 
and occupy the land, as permitted by the leases, denying French the right to use the 
property without restriction.  See id.  Either way, the action closely involves the 
title to or the possession of real property and, under R.C. 2711.01(B)(1), the action 
is not subject to arbitration. 
III.  Conclusion 
{¶ 21} An action seeking a determination that an oil and gas lease has 
expired by its own terms is a controversy involving the title to or the possession of 
real estate and, under R.C. 2711.01(B)(1), the action is not subject to arbitration.  
The Seventh District Court of Appeals therefore erred in reversing the trial court’s 
January Term, 2022 
 
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judgment declining to stay the action in this case pending arbitration.  
Consequently, we reverse the judgment of the Seventh District and remand the 
matter to the trial court for further proceedings consistent with this opinion. 
Judgment reversed 
and cause remanded. 
O’CONNOR, C.J., and FISCHER, DEWINE, DONNELLY, STEWART, and 
BRUNNER, JJ., concur. 
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Buckingham, Doolittle & Burroughs, L.L.C., Joshua E. O’Farrell, and Jude 
B. Streb, for appellants. 
 
Frost Brown Todd, L.L.C., Matthew C. Blickensderfer, Kevin L. Colosimo, 
and Christopher W. Rogers, for appellee. 
 
Thomas A. Hill and Joseph N. Spano, urging reversal for amicus curiae, 
Eric Petroleum Corporation. 
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