Shiloh Ministries, Inc. v. Simco Exploration Corp. , 2019 Ohio 2291 ( 2019 )

[Cite as Shiloh Ministries, Inc., v. Simco Exploration Corp., 2019-Ohio-2291.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
TRUMBULL COUNTY, OHIO
SHILOH MINISTRIES, INC., : OPINION
Plaintiff-Appellant, :
CASE NO. 2018-T-0057
- vs - :
SIMCO EXPLORATION :
CORPORATION, et al.,
:
Defendants-Appellees.
Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2016 CV
00057.
Judgement: Affirmed in part, reversed in part, and remanded.
Stephen A. Turner, Turner, May & Shepherd, 185 High Street, N.E., Warren, OH 44481
(For Plaintiff-Appellant).
Molly K. Johnson, Johnson and Johnson Law Office, 12 West Main Street, Canfield, OH
44406 (For Defendants-Appellees).
MARY JANE TRAPP, J.
{¶1} This is an appeal from the judgment entry of the Trumbull County Court of
Common Pleas, in which the trial court overruled objections filed by appellant, Shiloh
Ministries, Inc. (“Shiloh”), and adopted the magistrate’s January 26, 2018, Decision and
Recommendation granting appellee, Ohio Valley Energy Systems (“OVE”), a prescriptive
easement for oil and gas on Shiloh’s two adjoining parcels of land.
{¶2} Shiloh appeals, raising the following three arguments against the
prescriptive easement granted in OVE’s favor: (1) it was improperly raised due to the trial
court’s findings on summary judgment, (2) OVE lacked standing to do so, and (3) finally,
the scope is impermissibly vague.
{¶3} We find the trial court’s rulings on the motions for summary judgment did
not preclude consideration of the affirmative defense of a prescriptive easement at trial.
OVE had standing to raise the affirmative defense because it established its long history
of using the southern parcel for its operations. We also find the prescriptive easement
granted by the trial court is not vague in scope. We do find, however, it is vague as to
the scope of the relative use of the easement by each party and apportionment of future
expenses incurred for repair and maintenance of the easement as necessary to prevent
the use of the easement from becoming an annoyance or nuisance to Shiloh. Thus,
finding the last assignment of error to have merit in part, we affirm in part, reverse in part,
and remand for further proceedings accordingly.
Substantive and Procedural History
The Parties and Parcels of Land at Issue
{¶4} Pastor and president, Reverend Nicholas Furries, leads Shiloh, the owner
and lessor of the two adjoining parcels of land at issue (the “southern parcel” and
“northern parcel”). Shiloh’s predecessor in interest, Lighthouse Tabernacle of the Niles
Peoples Full Gospel Mission Church (“Lighthouse”), led by Reverend Frank M. Hewison
and his wife, Lois A. Hewison, was the original party to the oil and gas agreements.
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{¶5} Initially, there was a pastor’s house on the northern parcel and a church on
the southern parcel. Sometime before 2004, the pastor’s house was demolished. The
church then renovated and expanded so that it now sits on both parcels of land.
{¶6} OVE is the successor corporation of Simco Exploration (“Simco”). Its
primary business is obtaining leases and drilling/managing gas wells. Olympic Oil and
Gas, Inc. (“Olympic”) was a subcontractor for Simco. Olympic entered into the original
Oil and Gas Lease and Non-Drilling Lease Agreements with Shiloh on Simco/OVE’s
behalf. Thus, Olympic is the signature party to the original lease agreements.
{¶7} The oil and gas well, “Cheyenne #2,” is located on a property adjacent to
the northern parcel. Cheyenne #2 was drilled prior to the execution of the agreements in
1989. It was at that time Olympic approached Lighthouse because it needed a location
to place the tanks, a meter, and the other equipment associated with the well.
The Agreements
{¶8} There are three agreements between the parties. On October 18, 1989,
Lighthouse entered into an “Oil and Gas Lease Agreement,” which permitted the lessee
to conduct surface operations and for equipment to be placed on the northern parcel. It
also granted Lighthouse a right to a certain amount of free gas.1
{¶9} On January 19, 1990, the parties entered into a Non-Drilling Oil and Gas
Lease Agreement for the use of the southern parcel. This agreement permits the lessee
to utilize the property “with other properties, which other properties shall bear the burden
of development.”
1. In the original 1989 Oil and Gas Agreement, the free gas was piped to the pastor house on the northern
parcel. In 2004, the agreement was amended to provide for 125,000 cubic feet of gas per year to the
church on the southern parcel.
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{¶10} Lastly, there is a Meter Site Agreement between Dominion Energy’s
predecessor, East Ohio Gas Company (“Dominion”) and Lighthouse granting Dominion
the right to place equipment and pipelines on the southern parcel to transport gas to and
from the well.
{¶11} The northern parcel contains underground equipment, pipes and tanks,
which hold the oil and gas. Piping runs to the southern property where there is a meter,
regulators, and piping. To access the holding tanks on the northern property, OVE
crosses the southern property by way of the church’s parking lot. Both OVE and Dominion
also access the southern property to check and maintain the meters.
Summary Judgment
{¶12} On January 11, 2016, Shiloh filed a complaint against OVE setting forth four
claims for relief: a declaratory judgment that the leases have terminated due to lack of
commercial production; a declaratory judgment ruling that the leases have terminated due
to lack of commercial production; a breach of contract for the placement of pipeline and
meter site equipment on the southern parcel; and lastly, trespass for the installation of
equipment and continued operations on the southern parcel.
{¶13} Both parties filed motions for summary judgment. The trial court found
Shiloh was “entitled to judgment” on its breach of contract and trespass claims because
there was no dispute of fact that OVE continually entered upon the southern parcel and
that equipment had been installed on the southern parcel without permission in violation
of the agreement. The trial court further found that the elements of continuing trespass
had been met.
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{¶14} OVE argued that the issues raised by Shiloh were barred by the doctrine of
res judicata because Shiloh failed to raise them in the parties’ previous 2014 suit.2 The
court agreed with this argument in part, finding Shiloh was entitled to judgment on the
claims of trespass and breach of contract only from 2014 to the present since there were
continuing violations after the date of judgment in the last action.
{¶15} Turning to the issue of damages, the trial court found that Shiloh had not
alleged the breach of contract to be material, and it independently found the breach was
not material. While the court found there was no dispute of fact that the parking lot had
been damaged by heavy machinery, it found Shiloh failed to provide evidence of the
monetary cost of repair regarding its trespass claim or evidence of the diminution of the
land’s value as to its breach of contract claim; thus, genuine issues of material fact
remained.
{¶16} Neither party raised the issue of OVE’s claim of adverse
possession/prescriptive easement in their respective summary judgment motions.
{¶17} After seemingly granting partial summary judgment in favor of Shiloh on
trespass and breach of contract claims and partial summary judgment in favor of OVE on
its res judicata claim, the trial court ruled “both the Defendant and the Plaintiff’s Motions
for Summary Judgment are DENIED. Case to proceed.”
The Magistrate’s Hearing and Decision
2. Shiloh filed suit in 2014, praying for an accounting of all production and receipts for oil and gas sales
and a reconciliation of the property owners’ royalties; an accounting of all charges for Shiloh’s natural gas
usages; and a temporary and permanent injunction restraining OVE from interrupting Shiloh’s free gas
supply and damages. The court found OVE erroneously overbilled Shiloh in the amount of $679.32 and
encouraged the parties to implement a process whereby Shiloh could obtain free gas from Dominion rather
than from the well.
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{¶18} The magistrate conducted the trial and issued a decision finding that Shiloh
failed to provide any evidence showing Cheyenne #2 was not commercially productive.
The magistrate found that Shiloh did provide evidence of a continuing violation for
trespass and breach of contract since the April 27, 2015 judgment of the previous suit but
that the breach of contract was not material. While the magistrate found that the parking
lot was damaged by OVE’s regular use, it also found that Shiloh did not introduce
sufficient evidence of the monetary cost to repair the parking lot caused by OVE’s use.
Further, the magistrate found that Shiloh failed to introduce any evidence of the diminution
of the value of the property due to the presence of the meter and the value. Thus, there
was no evidentiary foundation for a determination as to the reasonableness of the
restoration costs. Finally, the magistrate found that OVE had established all the elements
of a prescriptive easement and that Shiloh failed to present evidence of permissive use.
{¶19} The decision imposed “an easement by prescription across Plaintiff’s land
encompassing the meter site and reasonable right of entry across the non-drilling lease
parcel to access both the meter site and well equipment on the adjacent parcel.”
{¶20} The trial court adopted the magistrate’s decision after overruling Shiloh’s
objections and reviewing OVE’s response and the transcript.
{¶21} Shiloh timely appealed, raising the following assignments of error:
{¶22} “[1.] The trial court erred when it permitted the appellee to assert the
affirmative defense of an easement by prescription at trial.
{¶23} “[2.] The appellees do not have the requisite standing to claim an easement
by prescription for the equipment on the southern parcel.
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{¶24} “[3.] The trial court erred when [it] granted an easement by prescription
across the southern parcel that was impermissibly vague.”
Standard of Review
{¶25} “On appeal, a trial court’s adoption of a magistrate’s decision will not be
overruled unless the trial court abused its discretion in adopting the decision.” (Citations
omitted.) In re Beynenson, 11th Dist. Geauga No. 2012-G-3066, 2013-Ohio-341, ¶12.
{¶26} “The term of ‘abuse of discretion’ is one of art, ‘connoting judgment
exercised by a court, which does not comport with reason or the record.’” Id., citing State
v. Underwood, 11th Dist. Lake No. 2008-L-113, 2009-Ohio-2089, ¶30, citing State v.
Ferranto, 112 Ohio St. 667, 676-678 (1925). “The Second Appellate District also recently
adopted a similar definition of the abuse-of-discretion standard: an abuse of discretion is
the trial court’s ‘failure to exercise sound, reasonable, and legal decision-making.’” Id.,citing State v. Beechler, 2d Dist. Clark No. 09-CA-54, 2010-Ohio-1900, ¶62, quoting
Black’s Law Dictionary 11 (8th Ed.Rev.2004).
The Use of a Prescriptive Easement as an Affirmative Defense
{¶27} Shiloh first contends that because OVE did not raise a prescriptive
easement defense on summary judgment it was precluded from doing so at trial. Shiloh
argues the trial court made clear and explicit findings regarding its claim of trespass and
breach of contract in the court’s summary judgment entry. Thus, the only material issue
of fact remaining was the amount of damages per Civ.R. 56(D).
{¶28} Shiloh’s argument is procedurally flawed whether we interpret the court’s
summary judgment decision as either a partial grant of summary judgment or an outright
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denial of both parties’ motions. OVE would not be prohibited from raising it at trial under
either interpretation (whether Civ.R. 56(D) applied or not).
{¶29} Thus, if we take the position that the court’s findings on summary judgment
were in effect a grant of partial summary judgment, leaving only the issue of damages,
nothing in Civ.R. 56(D) precludes OVE from raising the affirmative defense of a
prescriptive easement at trial. Summary judgment as to less than all claims is
interlocutory by its very nature and subject to change before a final judgment on the
merits.
{¶30} “A party seeking summary judgment must specifically delineate the basis
for which summary judgment is sought in order to allow the opposing party a meaningful
opportunity to respond.” Mitseff v. Wheeler, 38 Ohio St.3d 112, 116 (1988).
{¶31} “The requirement that a party seeking summary judgment disclose the basis
for the motion and support the motion with evidence is well founded in Ohio law. ‘The
burden of showing that no genuine issue exists as to any material fact falls upon the
moving party in requesting a summary judgment.’ Harless v. Willis Day Warehousing Co.
(1978), 54 Ohio St.2d 64, 66. * * * ‘Reading the requirement of Harless, supra, in
conjunction with Civ.R. 56 and 7(B)(1), it can readily be seen that the moving party must
state specifically which areas of the opponent’s claim raise no genuine issue of material
fact and such assertion may be supported by affidavits or otherwise as allowed by Civ.R.
56(C).” Id. at 115.
{¶32} The same reasoning applies if we read the trial court’s summary judgment
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decision as a denial of both party’s motions. Whether Civ.R. 56(D) applies is immaterial
because either party is free to raise a defense so long as material issues remain to be
tried and the other party has a meaningful opportunity to respond.
{¶33} Shiloh’s first assignment of error is without merit.
Standing
{¶34} Shiloh next argues OVE does not have the requisite standing to claim an
easement by prescription for the equipment on the southern parcel. Shiloh contends the
meter and pipes are solely the property of Dominion and governed by the Meter Site
Agreement to which OVE is not a party. Thus, Shiloh argues only Dominion, who is not
a party to the case, can assert a prescriptive easement.
{¶35} To raise a prescriptive easement as an affirmative defense, OVE only needs
to show a possessory interest in the estate in which they seek to quiet title, which in this
case, is an easement of access. Harris v. Dayton Power & Light Co., 2d Dist. Montgomery
No. 26796, 2016-Ohio-517, ¶11. There is no doubt OVE has demonstrated this use in its
routine oil and gas equipment maintenance.
{¶36} For example, OVE regularly utilizes the pipes and meter on the southern
parcel to check the tanks for oil. Victor Masters, OVE’s field supervisor and maintenance
technician, testified that although Dominion is the owner of the equipment, the equipment
is a “shared effort” of use, maintenance, and repair.
{¶37} In addition, OVE is permitted to access the property and regularly does so
to access the tanks on the northern property per the Non-Drilling Oil and Gas Agreement
so long as the well is operating. The agreement states, in relevant part, that “the within
Lease being granted solely for the purpose of permitting the Lessee to unitize the leased
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property with other properties, which other properties shall bear all the burden of
development.”
{¶38} The court in Harris, supra, explained that “[a]n easement is a right, without
profit, created by grant or prescription, which the owner of one estate, called the dominant
estate, may exercise in or over the estate of another, called the servient estate, for the
benefit of the former. Malone v. Bd. of Zoning Appeals of Xenia Twp., 2d Dist. Green No.
06-CA-62, 2007-Ohio-3812, ¶10, citing Trattar v. Rausch, 154 Ohio St. 286 (1950),
paragraph one of the syllabus. ‘An easement in or over the land of another may be
acquired only by grant, express or implied, or by prescription.’ Trattar at paragraph two
of the syllabus. ‘Prescription is the acquisition of an easement, over the property of
another, through adverse use of that property.’ Crawford v. Matthews, 4th Dist. Scioto
No. 97CA2555, 1998 WL 720734, 2 (Sept. 21, 1998). ‘Prescription is, in essence a form
of adverse possession. They differ in that prescription grants the adverse user an
easement or incorporeal rights in the property, while adverse possession grants the
adverse user legal title.’ Id. at fn. 6.” Id. at ¶12.
{¶39} There is no question that OVE established standing to raise a prescriptive
easement claim as it has a long history of using the southern parcel for its oil and gas
operations.
{¶40} Shiloh’s second assignment of error is without merit.
The Prescriptive Easement is Not Impermissibly Vague as to Scope of the
Easement Area
{¶41} In its third assignment of error, Shiloh contends that the prescriptive
easement is impermissibly vague as the trial court failed to convey “any meaningful
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dimension or scope,” giving OVE “veritable free reign to cross the southern parcel where
and as the Appellees see fit.”
{¶42} At the outset, we note that Shiloh failed to raise the vagueness of the
prescriptive easement’s dimension and the scope of OVE’s repair obligations in its
objections to the magistrate’s decision. Thus, Shiloh’s third assignment of error is waived
except for a claim of plain error.
{¶43} “‘Matters referred to magistrates are governed by Civ.R. 53.’ Dinardo v.
Dinardo, 11th Dist. Lake No. 2016-L-111, 2017-Ohio-4379, ¶17. ‘A party may file written
objections to a magistrate’s decision within fourteen days of the filing of the decision
* * *.’ Civ.R. 53(D)(3)(b)(i). ‘However, if a party fails to object on a particular basis, he
waives the right to assign the court’s adoption of that fact as an error on appeal “[e]xcept
for a claim of plain error * * *.”’ Dinardo, supra, quoting Civ.R. 53(D)(3)(b)(iv). ‘“The
objection process gives the trial court the opportunity to review the magistrate’s decision,
in light of a party’s objections. As a result, the trial court may decide to adopt, reject, or
modify the magistrate’s decision, hear additional evidence, recommit the matter to the
magistrate with instructions, or hear the matter. Civ.R. 53(E)(4)(b).”’ Dinardo, supra,quoting Arthur v. Trimmer, 5th Dist. Delaware No. 02CA06029, 2003-Ohio-2034, ¶12.”
Spencer v. Spencer, 11th Dist. Portage No. 2017-P-0073, 2018-Ohio-4277, ¶33.
{¶44} “Plain error in civil cases is defined as error that ‘seriously affects the basic
fairness, integrity, or public reputation of the judicial process, thereby challenging the
legitimacy of the underlying judicial process itself.’” Id. at ¶35, quoting Dinardo, supra, at
¶19, quoting Goldfuss v. Davidson, 79 Ohio St.3d 116 (1997), syllabus.
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{¶45} “In applying the plain error doctrine in civil cases, appellate courts must
proceed with utmost caution, and limit the doctrine to those extremely rare cases where
exceptional circumstances require its application to prevent a miscarriage of justice.” Id.
at ¶36, citing Dinardo at ¶20.
{¶46} We do not find plain error from the trial court’s proceedings that would result
in a manifest injustice inasmuch as the scope of the easement is clear.
{¶47} The trial court granted OVE “an easement by prescription across Plaintiff’s
lands encompassing the meter site and reasonable rights of entry across the non-drilling
lease parcel to access the meter site and well equipment on the adjacent parcel.”
{¶48} “The dimension and scope of an easement may be ascertained from the
language of the conveyance and the circumstances surrounding the grant.” (Citation
omitted.) Aurora Partners Ill, Ltd. v. Aurora, 11th Dist. Portage No. 2013-P-0019, 2013-
Ohio-4310, ¶17.
{¶49} The court granted OVE a prescriptive easement to continue using the
southern parcel as it has been, i.e., to access the tanks on the northern parcel and to
check the meters and equipment located on the southern.
{¶50} During the hearing, OVE submitted evidence by way of a plot plan marked
as Exhibit E and testimony of its customary usage of the properties and hence the scope
of the easement; namely, that trucks once or twice weekly, during normal business hours,
access the southern parcel making use of its parking lot to check the meters and
equipment. The trucks then access the northern parcel to check the tanks via the
southern parcel’s parking lot and a wooden bridge that leads them to the load line.
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{¶51} There is quite simply nothing to suggest the prescriptive easement grants
OVE a “veritable free reign to cross the southern parcel however it should so choose,” as
asserted by Shiloh or that OVE would stray from its customary practice of using the same
described access route across the property for normal oil and gas well maintenance.
Future Maintenance and Repair of the Prescriptive Easement
{¶52} Shiloh also contends that the scope of OVE’s repair obligation under the
prescriptive easement was not defined. The magistrate reviewed the evidence only for
damages as to the trespass and breach of contract claims. Specifically, the magistrate
found that “the evidence does warrant replacement of the parking lot, especially given
that the breach of contract and trespass claims are barred by res judicata prior to April
27, 2015, the date of the judgment in the prior proceedings.” Shiloh failed, however, to
introduce any evidence of the monetary cost to repair the parking lot as a result of OVE’s
use and to establish any damages by way of the diminution of the value of the property
due to the presence of the meter and pipeline. OVE’s future maintenance and repair
obligations regarding prescriptive easement, however, were not determined by the trial
court.
{¶53} Since a prescriptive easement is essentially an equitable remedy, we find it
would be inequitable for OVE to be granted a prescriptive easement without addressing
the responsibility for future maintenance and repairs of the easement. Pinkerton v.
Salyers, 4th Dist. Ross No. 13CA3388, 2015-Ohio-377, ¶19 (“[E]asements created by
prescription and estoppel are equitable remedies * * *”).
{¶54} Shiloh’s brief in lieu of closing arguments argued an approximate figure of
$2,500 as the estimation of OVE’s damage to the parking lot since 2014, but it offered no
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evidence at trial to support this figure. Shiloh only presented testimony of the “terrible”
condition of the parking lot, specifically “holes,” without further description or location.
{¶55} The Fifth District Court of Appeals’ decision in Market Enterprises, Inc. v.
Summerville, 5th Dist. Stark No. 2001CA00315, 2002-Ohio-3692, provides guidance.
“‘The burden devolves upon the owner of the dominant estate, of making whatever repairs
are necessary for his use [of the easement].’ * * * The dominant estate is also required
to make repairs if ‘necessary to prevent the enjoyment of the right [from] becoming an
annoyance and nuisance to the owner of the servient tenement, unless the grantor
himself has expressly undertaken the performance of that duty.’” Id. at 2, citing Natl.
Exchange Bank v. Cunningham, 46 Ohio St. 575, 589 (1889).
{¶56} As in the case before us, the trial court in Market Enterprises, supra, found
the repairs and maintenance in a parking lot used by both parties were necessary. Based
upon the trial court’s finding that a pedestrian in the parking lot fell in a sinkhole, the Fifth
District “conclude[d] the trial court implicitly found the parking lot was becoming or had
become an annoyance or nuisance.” Id. at 2. The court then determined that inasmuch
as the easement did not address the responsibility of maintenance and repairs, and
“because the repairs were necessary to prevent the lot from becoming an annoyance and
nuisance, * * * the burden devolved upon [the dominant estate]. However, because the
parking lot was used jointly between the parties, we find the trial court properly determined
the relative use of each party and apportioned the expenses incurred in maintaining and
repairing the easement accordingly.” Id.
{¶57} We find this persuasive and applicable to this matter.
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{¶58} Finding this assignment of error to be with merit, in part, we reverse the
judgment, in part, and remand to the trial court on this limited basis to the trial court for
further proceedings to determine the relative use of each party of the easement and
accordingly apportion the future expenses incurred in maintaining and repairing the
easement as necessary to prevent the use of the easement from becoming an annoyance
or nuisance to Shiloh.
{¶59} The judgment of the Trumbull County Court of Common Pleas is affirmed
in part, reversed in part, and remanded for further proceedings.
THOMAS R. WRIGHT, P.J.,
MATT LYNCH, J.,
concur.
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