RHDK Oil & Gas, L.L.C. v. Dye

[Cite as RHDK Oil & Gas, L.L.C. v. Dye, 2016-Ohio-4654.]
STATE OF OHIO, HARRISON COUNTY

IN THE COURT OF APPEALS

SEVENTH DISTRICT

RHDK OIL AND GAS LLC ) CASE NO. 14 HA 0019
dba RED HILL DEVELOPMENT, )
)
PLAINTIFF-APPELLEE )
)
VS. ) OPINION
)
WILLIAM A. DYE, et al., )
)
DEFENDANTS-APPELLANTS )

CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Harrison County, Ohio
Case No. CVH-2012-0069

JUDGMENT: Affirmed.

APPEARANCES:
For Plaintiff-Appellee: Atty. Owen J. Rarric
Atty. Matthew W. Onest
Krugliak, Wilkins, Griffiths
& Doughtery Co., LPA
4775 Munson St. NW
P.O. Box 36963
Canton, Ohio 44735-6963

For Defendants-Appellants: Atty. Robert M. Owens
Owens Law Office
46 North Sandusky Street, Suite 202
Delaware, Ohio 43015

JUDGES:

Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Carol Ann Robb
Dated: June 20, 2016
[Cite as RHDK Oil & Gas, L.L.C. v. Dye, 2016-Ohio-4654.]
WAITE, J.

{¶1} In this action involving an oil and gas lease, Appellants William A. Dye

et al. (“the Dye family”) appeal the Harrison County Common Pleas Court’s decision

to grant summary judgment in favor of Appellees RHDK Oil & Gas, LLC (“RHDK”).

The Dye family argues that the lease terminated on its own terms due to a lack of

production, thus the trial court erroneously granted summary judgment in RHDK’s

favor as to the following claims: quiet title, breach of contract, conversion,

declaratory judgment, negligent maintenance, and trespass. For the reasons

provided, the Dye family’s arguments are without merit and the judgment of the trial

court is affirmed.

Factual and Procedural History

{¶2} On January 8, 1980, the Cramblett family entered into an oil and gas

lease with Floyd Kimble. The lease covered approximately 288 acres of land located

in North Township, Harrison County. The lease contained a two-tiered habendum

clause. The lease also contained a provision that allowed the Cramblett family free

gas for one residence.

{¶3} On September 3, 1982, a well was drilled on the property. The well

produced both oil and gas. In accordance with the lease, a small house on the

Cramblett property began receiving free gas. In addition to the free gas, Kimble

began sending royalty payments to the Cramblett family. The well produced

consistently until 1990 when the production records show no production of either gas

or oil for six consecutive months. The parties dispute whether oil was produced and

collected in the tank during this period. After the six-month period, production
 -2-

records show that the well resumed production of both oil and gas. In 1991, the

records reflect a second period of five months without production. The well

apparently resumed production until 1996, where the records indicate another six-

month period of nonproduction.

{¶4} In 1994, the Dye family obtained 252 acres of Cramblett property.

Shortly thereafter, the Dye family built a larger home and a shed, which was used for

commercial purposes. Although the lease terms allowed only one residence to

receive free gas, the Dye family hooked up both new buildings to the unmetered gas

line without informing Kimble.

{¶5} On October 6, 2009, the estate of Floyd Kimble assigned the lease to

RHDK. Shortly thereafter, RHDK began sending royalty checks to the Dye family.

Despite receiving checks from RHDK for the next three years, on January 4, 2012,

the Dye family sent Kimble notice of forfeiture pursuant to R.C. 5301.332. However,

the notice did not conform to the requirements of R.C. 5301.332. Two months later,

the Dye family recorded an affidavit of forfeiture, which was also defective. Shortly

thereafter, the Dye family physically blocked RHDK’s access to the well.

{¶6} The Dye family’s actions caused RHDK to file a complaint and motion

for a temporary restraining order. On August 7, 2012, the trial court granted RHDK’s

motion for a temporary restraining order. In accordance with the restraining order,

RHDK paid a $10,000 bond. In its declaratory judgment complaint, RHDK alleged

breach of contract and slander of title, and sought quiet title and injunctive relief. The

complaint was later amended to add claims of trespass, negligence, conversion,
 -3-

accounting, and unjust enrichment. The Dye family filed a counterclaim alleging

trespass and negligent maintenance of property. Both parties filed respective

motions for summary judgment.

{¶7} On June 10, 2014, the trial court granted summary judgment in favor of

RHDK on its breach of contract, quiet title, conversion action, granted declaratory

judgment and granted judgment on all of the Dye’s counterclaims. A damages

hearing was scheduled, however, the parties stipulated to damages. This timely

appeal followed.

Summary Judgment

{¶8} Each of the Dye family’s assignments of error challenges the trial

court’s decision to grant summary judgment in favor of RHDK. A trial court’s decision

to grant summary judgment is reviewed de novo using the same standard as the trial

court set forth in Civ.R. 56(C). Haney v. Barringer, 7th Dist. No. 06 MA 141, 2007-

Ohio-7214, ¶ 33, citing Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671

N.E.2d 241 (1996). Pursuant to Civ.R. 56(C), the movant must demonstrate that: (1)

no genuine issue as to any material fact remains to be litigated; (2) the moving party

is entitled to judgment as a matter of law; and (3) it appears from the evidence that

reasonable minds can come to but one conclusion, and viewing the evidence most

favorably for the party against whom the motion for summary judgment is made, the

conclusion is adverse to that party. If this burden is met, the non-movant has a

reciprocal burden and must set forth specific facts demonstrating that there is a

genuine issue of material fact. Civ.R. 56(C).
 -4-

{¶9} A court must consider the evidence and all reasonable inferences to be

drawn in a light most favorable to the non-movant. Dennison Bridge, Inc. v.

Resource Energy, L.L.C., 7th Dist. No. 14 HA 21, 2015-Ohio-4736, ¶ 17-18, citing

Jackson v. Columbus, 117 Ohio St.3d 328, 2008-Ohio-1041, 883 N.E.2d 1060, ¶ 11.

The court must resolve any doubts in the non-movant’s favor and “may not weigh the

proof or choose among reasonable inferences.” Dennison at ¶ 18, citing Leibreich v.

A.J. Refrig., Inc., 67 Ohio St.3d 266, 269, 617 N.E.2d 1068 (1993); Dupler v.

Mansfield Journal Co., 64 Ohio St.2d 116, 121, 413 N.E.2d 1187 (1980).

First Assignment of Error

THE COURT ERRED IN ENTERING SUMMARY JUDGMENT IN

FAVOR OF THE APPELLEE ON ITS QUIET TITLE CLAIM, BECAUSE

THE RECORD CONTAINED EVIDENCE SHOWING THAT THE

MINERAL-RIGHTS LEASE IN QUESTION HAD TERMINATED

UNDER ITS OWN TERMS.

{¶10} The Dye family contends that the lease terminated under its own terms,

thus the trial court erred in granting summary judgment to RHDK in regard to the

quiet title claim. The Dye family asserts that there were three significant periods

during the secondary term where the well failed to produce either oil or gas:

December of 1989 to May of 1990, February of 1991 to June of 1991, and January of

1996 to June of 1996. As the well failed to produce during these periods, the Dye

family contends that the lease terminated in accordance with the habendum clause.
 -5-

{¶11} In the alternative, the Dye family argues that a lack of production in

paying quantities is evident in this case. Although the trial court determined that the

well produced sufficient volumes of oil and gas, the Dye family argues that the court

never addressed the value of the oil and gas the well produced.

{¶12} In response, RHDK argues that the only evidence of non-production

pertains to a temporary cessation that occurred twenty years ago. Although RHDK

concedes a temporary cessation of no more than six months took place, it argues

that this cessation applied only to gas production. RHDK says that there has never

been a period of time where neither oil nor gas was produced. As the well was

producing either oil or gas at all times, RHDK contends that the conditions necessary

to extend to the secondary term have been satisfied.

{¶13} As to the issue of paying quantities, RHDK points out that the lease

requires production in paying quantities “in the judgment of the lessee.” (Appellee’s

Brf., p. 13.) As such, RHDK only needed to show there was production of oil or gas

and that it made a good faith determination that the well remains profitable. RHDK

argues that the production report shows that oil or gas was produced every year from

1983 to 2012. As to profitability, RHDK argues that it provided two affidavits which

state its reasonable and good faith belief that the well remains profitable.

{¶14} The lease at issue contains a two-tiered habendum clause. The

habendum clause provides that the lease:

[S]hall continue in force and the rights granted hereunder be quietly

enjoyed by the Lessee for a term of three years and so much longer
 -6-

thereafter as oil or gas or their constituents shall be found on the

premises in paying quantities in the judgment of the Lessee or as the

premises shall be operated by the Lessee in the search for oil or gas.

(1/8/1980 Lease, ¶3.)

{¶15} At issue, here, is whether the well continuously produced gas or oil in

paying quantities during the secondary term. The well was drilled in 1983, eight

months before the primary term ended. The production report shows that the well

has produced gas during every year from 1983 until this action was filed in 2012.

The production report shows that oil was additionally produced from the well.

However, it is unclear whether the recorded oil production reflects a monthly

measurement or a pickup measurement. There are three cessation periods where

the production report reflects that neither oil nor gas was produced: December of

1989 to May of 1990, February of 1991 to June of 1991, and January of 1996 to June

of 1996. None of these periods exceeded six months.

{¶16} We begin with RHDK’s argument that either oil or gas was produced at

all times since the well was drilled. Importantly, according to the habendum clause, a

well need only produce oil or gas, not both. Mobberly v. Wade, 7th Dist. No. 13 MO

18, 2015-Ohio-5287, 44 N.E.3d 313. RHDK argues that, unlike gas, oil is produced

over time and collects in a tank until it reaches a certain volume. At that point, the oil

is removed from the tank and is sold. Accordingly, RHDK argues that even though oil

production was not recorded each month, the well was producing oil which was

building up in the tank until enough was collected to schedule a pickup.
 -7-

{¶17} In Mobberly, we held that a lessee who presented evidence that he

regularly measured the oil in the tank to determine when to call for pickup had

demonstrated production. The lessee charted these measurements in handwritten

production reports. In addition to the production report, the lessee also presented the

following evidence: receipts which indicated the date the oil was picked up, the tank

number the oil was taken from, the amount of oil removed from the tank, and the

lessor’s corresponding royalties.

{¶18} RHDK has failed to present such evidence, here. Although RHDK

argues that the oil collects in the tank until a specific volume is reached, unlike the

lessee in Mobberly RHDK has not presented any evidence as to how much oil

collects before pickup is scheduled. The lack of evidence is significant in our case,

as oil production has been recorded as low as 22.9 barrels and as high as 124

barrels. In fact, RHDK has presented no evidence to support its argument that oil

was being produced during the cessation periods other than a statement that oil

generally collects in a tank over time. As RHDK has not shown production of oil

during the cessation periods, we must decide whether the cessation periods

terminated the lease.

{¶19} To determine this issue, we first look to whether the cessation period

was temporary or permanent. Preliminarily, we note that the Dye family argues that

the determination of whether a cessation period is temporary or permanent is a

question of fact reserved for a jury. However, we recently held that this issue
 -8-

involves a legal question when reasonable minds could not differ based on the

evidence presented. See Dennison, supra.

{¶20} Although both parties cite to caselaw from other states, Ohio appellate

courts, including this Court, have already addressed the issue. The Fifth District

provided the general rule in Wagner v. Smith, 8 Ohio App.3d 90, 92, 456 N.E.2d 523

(5th Dist.1982). In Wagner, the court acknowledged that:

Courts universally recognize the proposition that a mere temporary

cessation in the production of a gas or oil well will not terminate the

lease under a habendum clause of an oil and gas lease where the

owner of the lease exercises reasonable diligence and good faith in

attempting to resume production of the well.

{¶21} The court stated that “[a] critical factor in determining the

reasonableness of the operator's conduct is the length of time the well is out of

production.” Id. at 93, citing Jath Oil Co. v. Durbin Branch, 490 P.2d 1086

(Okl.1971). In addition to the length of time, a court must consider all attendant

circumstances. Id., citing Barrett v. Dorr, 140 Ind.App. 295, 212 N.E.2d 29 (1966).

{¶22} According to Wagner, the primary factor to consider is the length of the

cessation. Here, there are three periods of nonproduction, none of which lasted

more than six months. No case can be found where an Ohio appellate court deemed

a lease forfeited based on less than two years of nonproduction. See Casto v.

Positron Energy Resources, Inc., 4th Dist. No. 14 CA 39, 2016-Ohio-285 (seven

years of nonproduction during the secondary term resulted in termination of the
 -9-

lease); Schultheiss v. Heinrich Ents. Inc., 4th Dist. No. 15 CA 20, 2015-Ohio-121

(four years of nonproduction during the secondary term resulted in termination of the

lease); Lauer v. Positron Energy Resources, 4th Dist. No. 13 CA 39, 2014-Ohio-4850

(two years of nonproduction during the secondary term resulted in termination of the

lease); Moore v. Adams, 5th Dist. No. 2007AP090066, 2008-Ohio-5953 (six years of

nonproduction during the secondary term resulted in termination of the lease);

Tisdale v. Walla, 11th Dist. No. 94-A-0008, 1994 WL 738744 (Dec. 23, 1994) (twenty

plus years of nonproduction during the secondary term resulted in termination of the

lease); Hanna v. Shorts, 163 Ohio St. 44, 125 N.E. 338 (1955) (the well failed to

produce any oil or gas during the secondary term).

{¶23} The Wagner court stated “that while courts tend to hold the cessation of

production temporary when the time periods are short, lessees have, for the most

part been held not to have proceeded diligently when the cessation from production

exists for two years or more.” Wagner, supra, at 94. The court relied on an

Oklahoma case, Jath, supra. Jath held forfeiture of a lease proper where a cessation

period lasted two years. The court distinguished its cessation period from the six-

month cessation period found in its earlier case, Kerr v. Hillenberg, 373 P.2d 66

(Okl.1962), which was not “more than six or twelve months.” Jath at 1090, citing

Kerr.

{¶24} While we held in Dennison, supra, that there is no bright line rule in

regard to cessation periods, the caselaw indicates that absent a finding of

unreasonableness, a six-month cessation period is temporary and does not terminate
 -10-

a lease. Accordingly, we next address the reasonableness of RHDK’s actions.

Importantly, the Dye family has not argued that RHDK failed to take reasonable

actions to resume production after the cessation periods. Even so, we find that the

record shows that RHDK’s actions were reasonable.

{¶25} Generally, when we analyze reasonableness, we consider whether the

lessee made a timely effort to resume production of the well. The question becomes

more difficult in this matter, as the lease was not assigned to RHDK until 2009, well

after all three cessation periods. Hence, we look to the reasonableness of RHDK’s

predecessor, Mr. Kimble. Further complicating our review, RHDK’s predecessor is

deceased. Likely for these reasons, RHDK has not provided an explanation as to

what caused the cessation periods.

{¶26} While RHDK does not provide a specific explanation, it notes that there

are always inevitable cessations in production for several reasons, including

mechanical breakdowns, market conditions, reworking operations, and other

problems. 3 Williams & Myers, Oil & Gas Law, Section 604.4, at 61 (2012). Among

the “other problems” in this case may have been weather-related issues. The

cessation periods include the following months: January, February, March, and April.

The monthly production average of these months from 1983 until 2012 is

approximately half the averages of the remaining months.

{¶27} In addition to potential weather-related problems, a daily production

report shows that maintenance has been periodically performed on the well. Some of

the problems the wells have experienced include line and drip issues, a leaking tank,
 -11-

valve issues, tubing gauge issues, and battery problems. Although the report only

provides maintenance records from 2005 through 2012, it is clear from this report that

the well periodically required maintenance. Based on the record, there is no

evidence that Kimble acted unreasonably.

{¶28} The Dye family argues that even if the cessation periods did not cause

the lease to terminate, the well has not been producing in paying quantities. The

habendum clause requires production in paying quantities. The term “paying

quantities” has been defined as the production of “quantities of oil or gas sufficient to

yield a profit, even small, to the lessee over operating expenses, even though the

drilling costs, or equipping costs, are not recovered, and even though the undertaking

as a whole may thus result in a loss.” Blausey v. Stein, 6th Dist. No. OT-78-3, 1978

WL 214959 (Dec. 8, 1978).

{¶29} The habendum clause in this case requires “paying quantities in the

judgment of the Lessee.” (1/8/1980 Lease, ¶3.) We note that this language provides

the lessee even more discretion in judgment than that already given within the

“paying quantities” standard. Consistent with this discretion, RHDK provided two

affidavits from its employees. In these affidavits, the affiants stated their reasonable

and good faith belief that the well remained profitable.

{¶30} In addition, RHDK presented evidence of royalty payments. While not

conclusive evidence, royalty payments can be evidence of production in paying

quantities. See Price v. K.A. Brown Oil & Gas, LLC, 7th Dist. No. 13 MO 13, 2014-

Ohio-2298 (the failure to pay royalties or the payment of de minimum royalties is
 -12-

evidence of nonproduction); Bohlen v. Anadarko E&P Onshore LLC, 4th Dist. No. 14

CA 13, 2014-Ohio-5819 (the fact that production has resulted in royalty payments is

evidence of production in paying quantities).

{¶31} Here, RHDK produced evidence of royalties paid from 2010 through the

end of 2011. In 2010, RHDK sent the Dye family five checks: $43.62 on 2/28/2010;

$45.00 on 4/30/2010; $27.29 on 6/30/2010; $36.14 on 9/30/2010; and $18.14 on

12/31/2010. These five checks totaled $170.19. In 2011, RHDK sent the Dye family

five more checks: $33.89 on 3/31/2011; $645.68 on 4/30/11; $30.62 on 6/30/2011;

$29.98 on 9/29/2011; and, $18.98 on 12/31/2011. These royalties totaled $759.15.

The 2010 and 2011 royalty payments represent a significantly higher production than

the $68.59 produced in Price, which was found to be de minimus.

{¶32} However, a problem arises when looking at 1983 through 2009, as the

parties have not submitted evidence of royalty checks. Again, this is likely because

RHDK did not have an interest in the lease during this period and its predecessor

died before the assignment to RHDK was made. However, Rosemary Dye stated in

her deposition that she has been cashing royalty payments since at least 1994,

which is when the Dye family obtained an interest in the property. In her deposition,

Mrs. Dye described these royalty checks as “enormous.” (Rosemary Dye Depo., p.

84.) Again, while royalties are not conclusive evidence of production, they tend to

confirm RHDK’s affidavits which assert a good faith belief that the well remains

productive. The lease has not, then, terminated.
 -13-

{¶33} Taking all evidence within the record into consideration, we find that the

trial court correctly granted summary judgment in RHDK’s favor on the quiet title

claim. The Dye family’s first assignment of error is without merit and is overruled.

Second Assignment of Error

THE COURT ERRED AS A MATTER OF LAW BY ENTERING

SUMMARY JUDGMENT IN FAVOR OF THE APPELLEE ON ITS

BREACH OF CONTRACT CLAIM RULING THAT THE MINERAL

RIGHTS LEASE WAS STILL VALID BECAUSE EVIDENCE OF THE

WELL'S FAILURE TO PRODUCE REQUIRED TERMINATION OF THE

LEASE.

{¶34} To prove a breach of contract, a plaintiff must “demonstrate by a

preponderance of the evidence (1) that a contract existed, (2) that the plaintiff fulfilled

his obligations, (3) that the defendant failed to fulfill his obligations, and (4) that

damages resulted from this failure.” Moore, supra, at ¶ 22, citing Circuit Solutions,

Inc. v. Mueller Electric Company, 9th Dist. No. 07CA009139, 2008-Ohio-3048;

Farmers Market Drive–In Shopping Centers v. Magana, 10th Dist. No. 06AP–532,

2007-Ohio-2653.

{¶35} The Dye family argues that a valid lease must exist before a court can

find a breach. The Dye’s alleged breach in this case is their addition of two gas lines,

including one to a commercial building, resulting in free gas for three buildings. The

Dye family argues that the court erred in finding they breached the lease as the lease

is invalid due a lack of production in paying quantities.
 -14-

{¶36} In response, RHDK contends that the lease remains valid as it is held

by production. Additionally, RHDK asserts that the Dye family’s use of free gas was

a benefit gained from an express term of the lease. As the Dye family continued to

take advantage of a lease term, RHDK argues that the Dye family acted as if a valid

lease existed.

{¶37} We note that the Dye family solely contests the validity of the lease and

does not argue that their use of free gas for three structures does not constitute a

breach. As we have determined that the lease is valid, the Dye family’s arguments

have no merit. Accordingly, the Dye family’s second assignment of error is overruled.

Third Assignment of Error

THE COURT ERRED AS A MATTER OF LAW IN ENTERING

SUMMARY JUDGMENT IN FAVOR OF THE APPELLEE ON ITS

CONVERSION CLAIM, BECAUSE THE GENUINE ISSUES OF

MATERIAL FACT EXISTED AS TO WHICH PARTY HELD TITLE TO

THE MINERAL RIGHTS AND BECAUSE THE APPELLEE'S CLAIM

WAS BARRED BY THE DOCTRINE OF LACHES.

{¶38} “Conversion is an exercise of dominion or control wrongfully exerted

over property in denial of or under a claim inconsistent with the rights of another.”

Keybank Natl. Assoc. v. Guarnieri & Seacrest, PLL, 7th Dist. No. 07 CO 46, 2008-

Ohio-6362, ¶ 15, citing Joyce v. Gen. Motors Corp., 49 Ohio St.3d 93, 96, 551 N.E.2d

172 (1990); Union Sav. Bank v. White Family Cos., Inc., 167 Ohio App.3d 51, 2006-

Ohio-2629, 853 N.E.2d 1182, (2d Dist.) ¶ 26. The elements of conversion are “(1)
 -15-

plaintiff's ownership or right to possession of the property at the time of the

conversion; (2) defendant's conversion by a wrongful act or disposition of plaintiff's

property rights; and (3) damages.” Keybank at ¶ 15, citing Haul Transport of VA, Inc.

v. Morgan, 2d Dist. No. 14859, 1995 WL 328995 (June 2, 1995).

{¶39} The Dye family continues to argue that the lease terminated as the well

failed to produce oil or gas in paying quantities. They contend that termination of the

lease caused ownership of the mineral rights to revert back to them as the owners of

the property. As the Dye family believes they owned the mineral rights because the

rights reverted to them, they argue that RHDK cannot meet the first element of

conversion, which requires ownership or interest in the property and actual or

constructive possession or immediate right to possession of the property.

{¶40} RHDK responds that the lease is valid and is held by production. The

lease restricted the Dye family’s use of gas to one residential structure. As the Dye

family received free gas for more buildings than it was entitled to receive, RHDK

argues that the trial court properly granted its motion for summary judgment on the

conversion claim.

{¶41} As we have determined that the lease remains valid, the Dye family’s

arguments are without merit. They alternately argue that RHDK’s conversion claim is

barred by laches. The elements of laches are: “(1) unreasonable delay or lapse of

time in asserting a right, (2) absence of an excuse for the delay, (3) knowledge,

actual or constructive, of the injury or wrong, and (4) prejudice to the other party.” In

re Guardianship of Mull, 7th Dist. No. 15 BE 11, 2015-Ohio-5440, ¶ 68, citing State
 -16-

ex rel. Craig v. Scioto Cty. Bd. of Elections, 117 Ohio St.3d 158, 2008-Ohio-706, 882

N.E.2d 435, ¶ 11, quoting State ex rel. Polo v. Cuyahoga Cty. Bd. of Elections, 74

Ohio St.3d 143, 145, 656 N.E.2d 1277 (1995).

{¶42} The Dye family also argues there was an unreasonable delay in

asserting the conversion claim, as RHDK waited eight years after their multiple

structures were added to the gas line to raise this claim, there was no excuse for the

delay, and RHDK undertook monthly meter readings and supposedly conducted

regular maintenance and must have had constructive notice of the alleged wrong.

The Dyes also claim the delay had a prejudicial effect on them as the lump sum

damages are significant.

{¶43} RHDK argues that mere delay in bringing a claim does not constitute

laches because the standard requires that the delay was “unreasonable.” RHDK

says that the delay here was reasonable as it did not learn the Dyes connected

multiple structures to the free gas line until discovery began. Regardless, RHDK

contends that the Dye family was required to demonstrate material prejudice, a

standard which is met only by showing actual proof that evidence was lost or they

suffered a detriment. The Dye family has shown neither that evidence was lost nor

detrimental effect. RHDK contends that the lump sum damage award, while large, is

not considered a “detriment” for these purposes.

{¶44} The record does not support the Dye family’s arguments as to laches.

There is no evidence that RHDK had actual or constructive knowledge of the Dye’s

additional gas usage. The Dye family admits that they did not seek permission from
 -17-

Kimble before adding two other buildings to the unmetered gas line and never

informed Kimble or RHDK of the additional lines.

{¶45} There is also no evidence of an unreasonable delay. The record shows

that RHDK did not learn of the additional gas lines until discovery was undertaken in

this case. Shortly thereafter, RHDK amended its complaint to raise the conversion

claim. As RHDK amended its complaint as soon as it gained knowledge of the

conduct, any delay in bringing the claim was reasonable. Finally, a valid lump sum

judgment, alone, is insufficient to show material prejudice. Smith v. Smith, 168 Ohio

St. 447, 457, 156 N.E.2d 113 (1959). As the Dye family’s sole argument in support of

laches is the size of the valid lump sum damage award, they cannot show material

prejudice. Accordingly, the Dye family’s third assignment of error is without merit and

is overruled.

Fourth Assignment of Error

THE COURT ERRED AS A MATTER OF LAW IN ENTERING

SUMMARY JUDGMENT IN FAVOR OF THE APPELLEE ON ITS

CLAIM FOR DECLARATORY JUDGMENT, BECAUSE GENUINE

ISSUES OF MATERIAL FACT EXISTED AS TO WHICH PARTY HELD

TITLE TO THE MINERAL RIGHTS IN QUESTION.

{¶46} Based on their belief that the well is not producing, the Dye family

argues the trial court erroneously determined that R.C. 5301.332 is inapplicable. In

response, RHDK points out that the Dye family admits that their R.C. 5301.332
 -18-

affidavit of forfeiture is non-conforming. Regardless, the evidence shows that the

well has been producing since 1983.

{¶47} Pursuant to R.C. 5301.332(A)(1):

Whenever leases of natural gas and oil lands recorded under section

5301.09 of the Revised Code concerning lands upon which there are no

producing or drilling oil or gas wells become forfeited for failure of the

lessee or the lessee's successors or assigns to abide by specifically

described covenants provided for in the lease, or because the term of

the lease has expired, the lessor or the lessor's successors or assigns

may file for record an affidavit of forfeiture with the county recorder after

serving notice by certified mail, return receipt requested, to the lessee

or the lessee's successors or assigns, at the lessee's or the lessee's

successors' or assigns' last known address, or if service is not obtained

by certified mail, by giving notice by publication at least once in a

newspaper of general circulation in the county in which the land is

located of the lessor's intent to declare the lease forfeited.

{¶48} In order to declare the lease forfeited pursuant to R.C. 5301.332, the

Dye family was required to show lack of production. As the record shows that the

well is producing in paying quantities, the Dye family’s fourth assignment of error is

without merit and is overruled.

Fifth Assignment of Error
 -19-

THE COURT ABUSED ITS DISCRETION IN ENTERING SUMMARY

JUDGMENT IN FAVOR OF THE APPELLEE ON THE APPELLANT'S

NEGLIGENT MAINTENANCE CLAIM, BECAUSE ITS JUDGMENT

WAS COMPLETELY UNSUPPORTED BY THE RECORD.

{¶49} The Dye family contends that RHDK has failed to perform any

maintenance on the well from the time it was built in 1983 until this action was filed.

They argue that they presented evidence that the well suffered from gas leaks and

valve corrosion, and that RHDK failed to establish and maintain a corrosion-control

plan. The Dye family argues that the trial court improperly relied on production

reports produced by RHDK which noted various maintenance attempts.

{¶50} RHDK responds that the Dye family failed to timely and properly raise

this issue to the trial court. As such, this issue was not considered during summary

judgment. RHDK also argues that the only evidence of negligent maintenance was

in failing to paint the pipeline and lack of a corrosion-control plan. RHDK argues,

however, that these issues do not affect the lease, but are governed by a separate

easement. RHDK also argues that it presented evidence to show the well had been

properly maintained. Two experts addressed this issue, including an ODNR

inspector, who examined the well and determined it was in proper condition. RHDK

also asserts it presented production reports which detailed and provided dates for all

maintenance performed.

{¶51} Despite RHDK’s assertion, the trial court did address and rule on this

issue during summary judgment. In finding that RHDK properly maintained the well,
 -20-

the court relied on the production report, which included maintenance work

performed on the well. The production report covers the entire period of time RHDK

held an interest in the property. The report shows that various maintenance was

performed almost daily.

{¶52} The Dye family argues that the work noted on the production report

does not qualify as maintenance. However, it is clear that this work can be classified

as maintenance. For instance, RHDK spent significant time working on the drip line,

fixing tubing leaks, changing fluids, changing batteries, and installing tubing gauges.

The sole evidence presented by the Dye family to refute this evidence is an expert’s

report which found a gas leak around a valve caused by rust. However, at the time of

the expert’s visit to the property, RHDK was in the process of repairing this problem.

As noted in the report prepared by the Dye family’s expert, significant efforts were

taken to successfully remove and replace this valve. Accordingly, the record

demonstrates that RHDK has been performing maintenance on the well and there is

nothing within the record showing failure to properly maintain. As such, the Dye

family’s fifth assignment of error is without merit and is overruled.

Sixth Assignment of Error

THE COURT ERRED AS A MATTER OF LAW BY ENTERING

SUMMARY JUDGMENT IN FAVOR OF THE APPELLEE ON THE

APPELLANT'S TRESPASS CLAIM, BECAUSE GENUINE ISSUES OF

MATERIAL FACT EXISTED REGARDING THE APPELLEE'S RIGHT

TO ENTER THE APPELLANT'S LAND.
 -21-

{¶53} In their final argument, the Dye family argues RHDK’s entrance onto the

property is unauthorized, again because they believe that the lease has terminated

by lack of production. RHDK again responds by arguing that the lease remains valid

and it is entitled to access the land.

{¶54} To state a cause of action in trespass a property owner must prove two

essential elements: (1) an unauthorized intentional act, and (2) an intrusion that

interferes with the owner's right of exclusive possession of their property. Merino v.

Salem Hunting Club, 7th Dist. No. 07 CO 16, 2008-Ohio-6366, ¶ 41, citing Brown v.

Scioto Cty. Bd. of Commrs., 87 Ohio App.3d 704, 717, 622 N.E.2d 1153 (4th Dist.

1993).

{¶55} The sole issue in dispute here is whether RHDK’s entrance on the

property was unauthorized. As the lease is valid, RHDK’s entrance on the property is

authorized. As such, the Dye family’s sixth assignment of error is without merit and is

overruled.

Conclusion

{¶56} The Dye family contends that the lease terminated on its own terms due

to a lack of production, thus the trial court erroneously granted summary judgment in

RHDK’s favor. The record demonstrates that the well has produced in paying

quantities, except for three temporary cessations. As these cessations did not

terminate the lease, the Dye family’s arguments are without merit and the judgment

of the trial court is affirmed.

Donofrio, P.J., concurs.
 -22-

Robb, J., concurs.