2018 Ohio 2814
Ohio Ct. App.2018Background
- Hills and Hollers (Stronz) executed a March 27, 2015 recorded pipeline right-of-way (ROW) agreement with an unrecorded addendum that included a ‘‘charges to the flow of gas’’ clause obligating the grantee (Ohio Gathering) to be responsible for certain taxes/charges on gas or liquids from named well pads.
- Appellee performed midstream services to Gulfport; payments for gathering/processing were billed to Gulfport and reduced royalties to Hills and Hollers.
- On June 15, 2015 (≈80 days after the ROW), Hills and Hollers conveyed the surface parcel subject to the ROW to Gulfport, expressly reserving mineral rights but not reserving rights under the ROW (the simultaneous purchase agreement contained a “no merger” clause but only expressly reserved pipeline-damage payments).
- Hills and Hollers later claimed breach of the ‘‘charges to the flow of gas’’ clause and sued Ohio Gathering; Ohio Gathering recorded a release of the ROW on June 13, 2016 naming Gulfport as successor in interest.
- The trial court granted summary judgment for Ohio Gathering, holding the disputed clause was not an independent/collateral covenant enforceable by the seller after conveying the burdened servient estate; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the "charges to the flow of gas" clause remained enforceable by Hills and Hollers after Hills sold the servient surface to Gulfport | Clause is an independent and collateral covenant that benefits the retained mineral owner and survives the sale (exception to merger) | The clause is a continuing term of the ROW tied to ownership of the burdened servient estate; after conveyance Hills lost standing to enforce it | Held for Ohio Gathering: clause was a dependent incident of the easement and Hills lost the right to enforce it after selling the surface |
| Whether parol evidence of negotiations can be used to show clause meaning or survival | Proffered extrinsic negotiations show parties intended the clause to protect mineral owner and were bargained-for | Contract integration limits parol evidence for interpretation; but evidence of subsequent sale is admissible to show loss of enforcement rights | Court declined to resolve clause meaning; allowed evidence of sale to determine standing (parol rule not a bar to standing issue) |
| Whether Ohio Gathering’s recorded unilateral release of the ROW extinguished obligations under the clause | Release cannot extinguish an independent/collateral covenant that survives the ROW | ROW expressly allowed abandonment/release; agreement had no survival provision, so recording a release ended obligations | Alternate holding (not necessary to decide): release would relieve obligations, but appeal decided on conveyance ground making release moot |
| Whether Hills preserved any ROW-related rights in the sale (e.g., payment for future pipeline) | Purchase agreement expressly reserved right to receive pipeline damage payments and no-merger clause — sufficient to retain ROW benefits | Reservation only preserved expressly listed payment rights (second-pipeline payment); Hills did not reserve general enforcement rights under the ROW | Held: Hills reserved only the limited pipeline-damage payment right; other ROW rights (including §13 clause) conveyed to Gulfport |
Key Cases Cited
- Byrd v. Smith, 110 Ohio St.3d 24 (2006) (summary-judgment standards: movant burden and reciprocal burden)
- Dresher v. Burt, 75 Ohio St.3d 280 (1996) (party moving for summary judgment bears initial burden)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (genuine issue standard for summary judgment)
- Comer v. Risko, 106 Ohio St.3d 185 (2005) (de novo appellate review of summary judgment)
- Moore v. Middletown, 133 Ohio St.3d 55 (2012) (standing doctrine—elements and review)
- Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (1978) (easement extent and effect governed by grant language)
- Van Dyke v. Rule, 49 Ohio St. 530 (1892) (covenant against encumbrances is a real covenant that runs with the land)
- Garlick v. Pittsburgh & Western R.R., 67 Ohio St. 223 (1902) (an easement perpetual unless terminated by release or abandonment)