Ohio Supreme Court Further Clarifies ‘Reasonable Diligence’ Standard under the Ohio Dormant Mineral Act

On March 24, 2022, the Supreme Court of Ohio issued its decision in Fonzi v. Brown and Fonzi v. Miller, Slip Opinion No. 2022-Ohio-901, discussing the level of due diligence required of a surface owner to provide notice to a severed mineral interest owner in order to abandon said mineral interest under the Ohio Dormant Mineral Act (DMA).  The court held that surface owners did not exercise reasonable due diligence when they failed to conduct a public record search in the county where the last known mineral interest holder resided, despite having knowledge of the same.

These cases concern two adjoining parcels of land located in Monroe County, Ohio.  For both parcels, prior deeds within the chain of title identified that the severed mineral interest holder, being Elizabeth Henthorn Fonzi (Fonzi), resided in Finleyville, Washington County, Pennsylvania.  The surface owners, being appellants Gary D. Brown, Allen B. Miller, M. Craig Miller, and Brenda Thomas, subsequently began the process to have the Fonzi mineral interests declared abandoned.  In doing so, their attorney searched the Monroe County public records and conducted “limited Internet searches,” but failed to uncover any information about Fonzi or any potential heirs to send notice by certified mail.  Therefore, the surface owners published notices of intent to declare the Fonzi mineral interests abandoned in a Monroe County newspaper, and subsequently filed affidavits of abandonment.  The Fonzi heirs then filed complaints in the Monroe County trial court for declaratory judgment, seeking to quiet title, alleging that the surface owners had failed to exercise reasonable due diligence in attempting to locate the holders of the Fonzi mineral interest.

The trial court granted summary judgment in favor of the surface owners in both cases, holding that the surface owners had made reasonable efforts to locate the potential Fonzi heirs.  The Seventh District Court of Appeals reversed the trial court’s decision in both cases, instead finding that the surface owners failed to conduct any search outside Monroe County when the surface owners knew that Fonzi lived in Washington County, Pennsylvania, at the time the reservations were made. On September 1, 2020, the Supreme Court of Ohio accepted this appeal.

In its discussion, the court relied upon its prior decision in Gerrity v. Chervenak, 162 Ohio St.3d 694 (2020), wherein it refused to adopt a bright-line rule and instead stated that the analysis of reasonable diligence should be conducted on a case-by-case basis. Here, the court stated, “[s]urface owners are not required to do the impossible… the issue is not whether the surface owner could have located all mineral-rights holders by exercising reasonable diligence.  Instead, the question is whether the surface owner did exercise reasonable diligence.”  The court placed the burden of proof on the surface owners to show that they were reasonably diligent in attempting to identify and locate the holders of the severed mineral interests.  In placing the burden of proof on the surface owners, the court stated that O.R.C. 5301.56(E)(1) provides that the surface owner “shall” comply with the statutory notice requirements outlined therein, and therefore, “the reasonable-diligence standard is entirely within the hands of the surface owner.”

The court found that the surface owners did not exercise reasonable due diligence because they failed to search the public records of Washington County, Pennsylvania, and as a result, the surface owners’ attempts fell short compared to those attempts made in Gerrity. The Supreme Court of Ohio affirmed the appellate court’s decision. If you have questions about this ruling or how it might affect your business, please contact the authors of this alert.