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Lessons from the Courtroom: Leasing and Title Litigation in WV
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Today’s Presenter
Allison J. Farrell Bridgeport, WV
Lessons From The Courtroom: Leasing and Title Litigation in WV
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Partition in WV
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Goals
Understand: • Relevancy of co-tenancy laws • Requirements for filing partition action • Legal issues surrounding actions
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WHAT is Partition?
• Division of property among co-owners • Key: Must be a co-owner
– What does this mean to the judges?
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WHY Do We Need It?
• No forced pooling for Marcellus Shale
• Need 100% leased • And... solution for
stubborn mule Holdout Lessors
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May Avoid The Dreaded Willful Trespass Claim!
• Consent of all co-tenants needed • Mineral extraction without consent
constitutes irreparable injury to real estate • Subject to injunctive relief, intentional
trespass, and treble damages
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Governing Law
• W. Va. Code § 37-4-1, et seq.
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Three Types of Partition
1. In-Kind (physical division) 2. Allotment (forced sale to one or more
co-tenants) 3. Public Sale Or, court may order allotment of part &
sale of part
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Partition In-Kind
• Carving of property into smaller parcels based on respective ownership interests
• Physical division
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Example of Partition In-Kind
• 3 owners of 100 acre tract with undivided interests of 70%, 20%, and 10% respectively
• Court divides land into 3 parcels where each owner owns 100%
• Generally for surface • “Fugitive Minerals”
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70
20
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Partition by Allotment
• If partition in kind is not “convenient,” court may partition by “allotment”
• Forced sale • Must show that interests of owners will be
promoted by the sale and interest of the others will not be prejudiced
• Special Commissioner appointed to execute deed
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Appraisers
If parties cannot agree on value, court appoints three appraisers: • Appraisers have 30 days to appraise &
file report • Parties have 30 days to object • Some judges now requiring them
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Partition by Judicial Sale
• Usually, option of last resort • Sold at public auction courthouse steps • Risky! Beware of Buyer
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WHO Can Partition?
• Mineral owners • Lessees of mineral rights other than
lessees of oil & gas… – This issue has been litigated
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Infant, Insane Person, or Convict
• If value of interest exceeds $300, court requires security for faithful application of proceeds
• Bond, with approved security, payable to State in penalty prescribed by court (WV Code § 37-1-14)
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If State Owns Interest
• Before filing Complaint, party seeking partition must notify State official who has supervision of State land
• State shall be named a plaintiff • Costs of suit shall come from proceeds of
sale
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Unknown Owner
• Can partition against an unknown owner if you state as much in the Complaint
• Except in counties where the judges refuse to allow it
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WHERE Can You File?
• In the county where the land sits • If it’s in multiple counties, you can file in
any county where it sits
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Necessary Parties • All parties with an interest in the real
property (PITA) • Creditor (secured or unsecured) is not a
necessary party
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Those Pesky Details
• Describe subject property • Include chain of title • Set forth undivided interests • And…explain why you need a partition
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Relief Requested • State your priority:
– In Kind – Allotment – Sale
• Request specific type of partition – head off CONFUSION!
• All questions of title are resolved in a partition action
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Hearing on Damages
• Parties must set forth evidence of fair market value
• If can’t agree, appraisers appointed to determine value
• Parties can object
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Risks • If can’t partition in kind or by allotment,
the tract will be auctioned on the courthouse steps. – Entire tract, or small portion?
• High bid wins - those courthouse steps can be dangerous!
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Deed
• If defendant refuses or is unable to execute deed, court appoints Special Commissioner to make, execute & deliver deed and distribute sales proceeds
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Can’t We All Just Get Along?
• ALL co-tenants must unite to seek termination or forfeiture of a lease
• If no agreement, then partition • Cawthon et al. v. CNX Gas Company et al.,
memorandum opinion issued November 16, 2012
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Partition v. Petition
• PARTITION – Used to acquire property from Holdouts
• Missing Heirs PETITION – used to acquire leases from Houdinis
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Just Who Are Missing Heirs?
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“Unknown or Missing Owner” Person vested with title whose present identity or location cannot be determined from records of: • Clerk of the County Commission • Clerk of Circuit Court where
property is located • Diligent inquiry in vicinity of owner’s
last known place of residence • Sheriff • Assessor
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Due Diligence to Find Missing Heirs Due diligence includes but is NOT limited to: • All county records where property located • All county records in missing person’s last known
county of residence • Online resources • Newspapers, especially obituaries • Interviews with relatives • DOCUMENT all efforts in sworn affidavit • If you don’t make a diligent effort, the judge may
send you back for a re-do
Parties To Be Named in Petition
• All unknown or missing owners or abandoning owners having record title
• Unknown heirs, successors, and assigns of all such owners not known to be alive
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The Petition Itself Petition MUST contain, among other things: • Standing of petitioner to file • Identity of defendants and ownership interest of
each • Legal description of land at issue • Nature of proposed development • Efforts to locate unknown or missing owners, usually
by affidavit • Petitioner must sign and verify accuracy of petition • The devil is in the details!
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Service of Petition • Personal service, if possible
– But if this was possible, they wouldn’t be missing!
• How Petitions Are Actually Served – Via publication in newspaper – File Notice of Lis Pendens in County Clerk’s
office
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Guardian Ad Litem
• Once the action is filed, the Court appoints a guardian ad litem to represent the missing heirs
• GAL must confirm they are missing AND being treated fairly by lessee
• GAL paid by Petitioner
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Waiting is the Hardest Part…
After filing and serving, petitioner must wait SIX MONTHS before the Court can appoint a Special Commissioner to execute the lease on behalf of the missing heirs.
Special Commissioner’s Duties
• Once appointed, he or she: – Signs lease on behalf of missing heirs – Files report with Court recommending Court
approval • Usually, we all then go BACK to Court for the
final hearing
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Final Hearing
• Court will accept reports of GAL and Special Commissioner
• Order payments to GAL and Special Commissioner
• Approve lease • Special Commissioner signs lease • Record lease • Pay money for lease into court receiver
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Declaratory Judgment
W.Va. Code § 55-13-1 et seq.
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Declaratory Judgment Actions
• Court declares relationships, rights, responsibilities
• Clears up uncertainties • Must be actual controversy • 55-13-8 – “further relief”
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• Broader implications than quiet title actions
• Not need to be in possession of the real property in dispute
• Validity of leases, assignments • Competing claims by mineral owners;
interpleader
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Declaratory Judgment Actions
Quiet Title
W.Va. Code § 51-2-2 (d)
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Quiet Title Actions
• Must have claim to the real property in dispute
• Actual competing claims of title • Gaps in record title • Achieve marketable title
Points to Takeaway
• Use partition for Holdouts • Use missing heirs actions for Houdinis • Use quiet title actions for title disputes • Summary proceedings needed for minors
and incompetent persons.
These materials are public information and have been prepared solely for educational purposes to contribute to the understanding of energy and oil and gas law. These materials reflect only the personal views of the authors and are not individualized legal advice. It is understood that each case is fact-specific, and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors and Steptoe & Johnson PLLC cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with the authors or Steptoe & Johnson PLLC. While every attempt was made to insure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed.
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