Monday, November 4, 2013

Recent W.Va. Supreme Court Decision Continues To Define Surface Owner Rights

The ongoing development of natural gas resources in West Virginia, particularly from Marcellus production, continues to give rise to potentially tumultuous relationships between surface owners and the producer/mineral estate owners whose operations substantially impact the surface estate. However, a recent and important decision decided by the Supreme Court of Appeals of West Virginia better defines surface owner rights and, thereby, lessens risk to producers and mineral owners.

In Faith United Methodist Church v. Morgan, decided June 13, 2013, The Supreme Court of Appeals of West Virginia overruled its previous holding in Ramage v. South Penn Oil Co.  Ramage held that the word “surface,” when used in a deed, is ambiguous on its face, thereby opening the door to interpretation from extrinsic evidence as proof of the Grantor’s original intent.  However, the Court in Faith United Methodist Church overturned its prior decision, holding that a deed using the words “surface only” as the language of conveyance does express the clear and unambiguous intent of the Grantor. Moreover, the Court held the word surface, when used in a conveyance “generally means the exposed area of land, improvements on the land, and any part of the underground actually used by a surface owner as an adjunct to surface use.”

The high court in Faith United Methodist Church, based its decision, at least in part, upon the unpredictable results which occur when leaving seemingly unambiguous terms open to interpretation. This new interpretation adds uniformity and certainty to words of conveyance for both the practitioners drafting deeds and title opinions, as well as the West Virginia Courts interpreting the sometimes archaic language encountered in land titles.  

For West Virginia surface owners, mineral owners and oil and gas operators, the Faith United Methodist Church decision eliminates an undeniable business risk. The court noted however, as new technologies and drilling techniques develop, conflicts between surface owners and mineral owners will continue.

For more information, please contact Mark Sadd or Richard Gottlieb.