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Supreme Court of Ohio Holds 21-Year Statute of Limitations Applies to Stale Lease Expiration Claims

By Ilya Batikov

On November 26, 2019, the Supreme Court of Ohio clarified that a declaratory judgment claim that an oil and gas lease terminated for lack of production is subject to the 21-year statute of limitations for recovery of title to or possession of real property in R.C. 2305.04.  See Browne v. Artex Oil Co., Slip Op. No. 2019-Ohio-4809. In Browne, the lessee argued that an action like the case at bar was subject to the 15-year statute of limitations for actions upon written contracts in former R.C. 2305.06.  The Court disagreed. The Court noted that the lessors were not alleging a breach of the oil and gas lease, but were simply requesting a declaration that the oil and gas lease had terminated by its terms through operation of law.  This claim was was more akin to an action to quiet title than one upon a written contract, the Court found, as the lessee had no obligation to produce under the lease and the parties did not dispute the lease’s provisions.   Relying heavily on the notion that in Ohio an oil and gas lease vests a real property interest in the lessee, the Court held that R.C. 2305.04 was the controlling limitations statute.  The Court reasoned that because the oil and gas lease vested the lessee with a real property interest and the lessors were merely seeking recognition of their reversionary interest in that real property, R.C. 2305.04, which applies to actions to recover title to or possession of real property, was the operative statute.  The Court remanded the matter to the trial court for an evaluation of the parties’ claims in light of the correct statute of limitations.

[Disclosure: Vorys represented amici curiae Ohio Oil and Gas Association and Southeastern Ohio Oil and Gas Association in this case.]

Tags: Ohio, Oil and Gas, Energy

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