Schlabach v. Kondik
2017 Ohio 8016
| Ohio Ct. App. | 2017Background
- In 1982 the Berrys leased 957 acres to Kimble under an oil-and-gas lease that continues so long as production exists; wells are producing.
- Mrs. Berry conveyed 160 acres to Douglas Schlabach in 1999, expressly subject to the existing lease; Schlabach later subdivided and sold parcels in 2000.
- Schlabach used a one-page purchase agreement that stated: "ALL MINERAL RIGHTS shall pass to BUYER. SELLER reserves rights to any existing leases." The identical language appeared in the Sinclair and Macko purchase agreements.
- The reservation language was omitted from the recorded deeds to some purchasers (including the Sinclairs and Mackos); Schlabach discovered this omission in 2010–2011 and sought voluntary reformation; defendants refused.
- Schlabach filed an equitable action for deed reformation (mutual mistake) in July 2015; the trial court granted summary judgment for defendants, ruling the claim was time-barred under a 10-year statute of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court improperly considered parol evidence to interpret the unambiguous purchase agreements | Schlabach: extrinsic evidence about parties' intent and deposition testimony may be considered to show mutual mistake | Defendants: the reservation clause is clear on its face; parol evidence cannot vary an unambiguous written agreement | Court: trial court erred to the extent it relied on parol evidence because §8 of the agreement is unambiguous, so extrinsic evidence was inadmissible |
| Nature of the reserved rights (interest in land vs. personal right) | Schlabach: reserved rights include approval of well/tank/pipeline locations and thus constitute an "interest in land" subject to a 21-year limitations period | Defendants: reserved rights are limited to lease rights (royalties and conditional approval) — a revocable, non-possessory right akin to a license, not a title interest | Court: reserved rights are an assignable but revocable right (hybrid license/easement attributes) that do not create a title or possessory interest in land |
| Applicable statute of limitations | Schlabach: 21-year statute for actions to recover title/possession of real property (R.C. 2305.04) applies | Defendants: deed reformation here is an equitable action governed by the 10-year catch-all statute (R.C. 2305.14) | Court: action is not to recover title/possession; governed by 10-year limitations and is time-barred |
| Reliance on particular deposition statements to decide intent | Schlabach: trial court selectively relied on one deposition statement while ignoring others | Defendants: court properly considered evidence to determine nature of reserved rights | Court: because reliance on parol evidence was erroneous, the specific objection to one deposition statement is moot — outcome stands on limitations ground |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (summary judgment standard)
- Kelly v. Medical Life Insurance Co., 31 Ohio St.3d 130 (contract interpretation; intent resides in chosen language)
- Galmish v. Cicchini, 90 Ohio St.3d 22 (integration rule; parol evidence bars variation of final written agreement)
- Pure Oil Co. v. Kindall, 116 Ohio St. 188 (minerals in place are realty; severed minerals become personal property)
- Chesapeake Expl., L.L.C. v. Buell, 144 Ohio St.3d 490 (definition of "interest in land" and relation to easements)