| Opinion: | CLAUDE C. ARNOLD NON-OPERATED ROYALTY INTEREST PROPERTIES v. CABOT OIL & GAS CORP., 2021 OK 4 |
| Subject matter: | Oil and gas; Real estate; Statute of limitations |
| Date Decided: | January 26, 2021 |
| Trial Court: | District Court of Beaver County (J. Parsley) |
| Route to this Court: | Final order of District Court via Court of Civil Appeals (Division 4) |
| Facts: | Plaintiffs held an overriding royalty interest (ORRI) under a 1973 lease. Wells drilled under the 1973 lease produced continuously until at least 2012 and Plaintiffs were continuously paid their ORRI during that time on production from the wells. In 2012, the Defendant began producing from a new formation on lands covered by the 1973 lease. Plaintiff demanded payment on the new production and the Defendant refused, claiming that Plaintiffs’ claims were barred by the applicable statute of limitations (15 years under 12 O.S. § 93(4) because the claim accrued in 1984 upon the filing of new leases in the land records that (in Defendant’s view) should have put the Plaintiffs on notice of an adverse claim to the formation at issue in the dispute over the new 2012 production. The trial court found that the ORRI remained in effect. The Court of Civil Appeals reversed the trial court after determining that the statute of limitations barred Plaintiffs’ claims due to a purported cloud on Plaintiffs’ interest arising from the oil and gas leases recorded in 1984. |
| Standard of Review: | De novo review of issues of law. “Although limitation issues may involve mixed questions of law and fact, they are ordinarily reviewed in this Court as questions of law.” quoting Scott v. Peters, 2016 OK 108. “Likewise, ‘the application of the discovery rule and its effect on limitation issues present questions of law’ that receive de novo review.” quoting Woods v. Prestwick House, Inc., 2011 OK 9. |
| Analysis: | Plaintiffs could not have brought their claim until the defendant first developed the disputed formation in 2012. Accordingly, plaintiffs filed a timely lawsuit to enforce their valid ORRI. The Court held that, “the existence of the subsequent 1984 leases–notwithstanding the fact of their recording–did not reasonable cast doubt on the viability of [Plaintiffs’] interest in the as-yet-undeveloped Marmaton formation.” |
| Outcome: | Court of Civil Appeals opinion vacated; Trial court affirmed. |
| Vote: | Opinion authored by J. Gurich. Concur: Kauger, Edmonson, Colbert, Combs, JJ. Bass, S.J. (sitting by special designation). Concur in result: Darby, V.C.J. Dissent: Winchester. Kane, C.J. not participating. |
| Other: | Amicus Curiae filed by Kraettli Q. Epperson. Petition for Rehearing filed February 12, 2021. Relevant to this case is an atypical vertical severance clause in the 1973 oil and gas lease. |
