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L&D Investments, Inc. v. Mike Ross, Inc.

Supreme Court of West Virginia

May 22, 2018

L&D INVESTMENTS, INC., A WEST VIRGINIA CORPORATION; RICHARD SNOWDEN ANDREWS, JR.; MARION A. YOUNG TRUST; AND CHARLES A. YOUNG, DAVID L. YOUNG, AND LAVINIA YOUNG DAVIS, SUCCESSORS OF MARION A. YOUNG TRUST, Plaintiffs Below, Petitioners
v.
MIKE ROSS, INC., AND ANTERO RESOURCES CORPORATION, Defendants Below, Respondents AND ROBERT HITZELBERGER, Defendant Below, Petitioner
v.
MIKE ROSS, INC., Defendant Below, Respondent and L&D INVESTMENTS, INC., A WEST VIRGINIA CORPORATION; RICHARD SNOWDEN ANDREWS, JR.; MARION A. YOUNG TRUST; CHARLES A. YOUNG, DAVID L. YOUNG, AND LAVINIA YOUNG DAVIS, SUCCESSORS OF MARION A. YOUNG TRUST, Plaintiffs Below, Respondents

          Submitted: February 13, 2018

          Appeals from the Circuit Court of Harrison County Honorable Thomas A. Bedell, Judge Civil Action Nos. 13-C-528, 13-C-528-2

          David J. Romano, Esq. Brandon D. Cole, Esq. Romano Law Office Clarksburg, West Virginia Attorneys for L&D Investments, Inc., Richard Snowden Andrews, Jr., Marion A. Young Trust, Charles A. Young, David L. Young, and Lavinia Young Davis

          Nicholas S. Preservati, Esq. Kelly G. Pawlowski, Esq. Spilman, Thomas & Battle, PLLC Charleston, West Virginia Attorneys for Robert Hitzelberger

          Robert Louis Shuman, Esq. Reeder & Shuman Morgantown, West Virginia and Loren B. Howley, Esq. Grantsville, West Virginia Attorneys for Mike Ross, Inc.

          W. Henry Lawrence, Esq. Amy M. Smith, Esq. Amber M. Moore, Esq. Shaina D. Massie, Esq. Steptoe & Johnson PLLC Bridgeport, West Virginia Attorneys for Antero Resources Corp.

         SYLLABUS

         1. "The standard of review applicable to an appeal from a motion to alter or amend a judgment, made pursuant to W.Va. R. Civ. P. 59(e), is the same standard that would apply to the underlying judgment upon which the motion is based and from which the appeal to this Court is filed." Syl. Pt. 1, Wickland v. Am. Travellers Life Ins. Co., 204 W.Va. 430, 513 S.E.2d 657 (1998).

         2. "A circuit court's entry of summary judgment is reviewed de novo." Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

         3. "In case of two assessments of the same land under the same claim of title for any year, one payment of taxes under either assessment is all the state can require." Syl. Pt. 2, State v. Allen, 65 W.Va. 335, 64 S.E. 140 (1909).

         4. "'"This Court will not pass on a nonjurisdictional question which has not been decided by the trial court in the first instance." Syllabus Point 2, Sands v. Security Trust Co., 143 W.Va. 522, 102 S.E.2d 733 (1958).' Syllabus Point 2, Duquesne Light Co. v. State Tax Department, 174 W.Va. 506, 327 S.E.2d 683 (1984), cert. denied, 471 U.S. 1029, 105 S.Ct. 2040, 85 L.Ed.2d 322 (1985)." Syl. Pt. 4, State ex rel State Line Sparkler of W.Va. v. Teach, 187 W.Va. 271, 418 S.E.2d 585 (1992).

          OPINION

          LOUGHRY, JUSTICE

         This case is before this Court upon consolidated appeals from an "Omnibus Order" entered by the Circuit Court of Harrison County on February 21, 2017, granting summary judgment to the respondent, Mike Ross, Inc. ("MRI") and an April 5, 2017, order whereby the circuit court refused to alter or amend its grant of summary judgment.[1] Through its Omnibus Order, the circuit court declared MRI to be the owner of eighty percent of the oil and gas interests in two adjacent tracts of land in Harrison County pursuant to a 2003 tax deed issued to MRI after it purchased the subject property at a delinquent tax sale. In the appeal identified by Docket No. 17-0432, petitioners L&D Investments, Inc.; Richard Snowden Andrews, Jr.; the Marion A. Young Trust; and Charles A. Young, David L. Young, and Lavinia Young Davis, successors of the Marion A. Young Trust (hereinafter collectively "L&D"), [2] contend the circuit court erred by not finding that they collectively own a 16.44 percent undivided interest in the oil and gas in the subject properties. In the appeal identified by Docket No. 17-0325, petitioner Robert Hitzelberger claims ownership of an undivided twenty percent interest in the oil and gas separate from L&D. In both cases, the petitioners assert that they paid real property taxes on their oil and gas interests before and after the delinquent tax sale and that their payment of the taxes renders the tax deed issued to MRI void. Alternatively, the petitioners argue that the tax deed issued to MRI should be set aside because MRI failed to give them notice of the right to redeem as required by the delinquent tax sale statutes. [3] L&D Investments further argues the circuit court erred by declaring its claim against respondent Antero Resources Corporation ("Antero") relating to the pooling of the oil and gas under certain properties moot. In granting summary judgment to MRI, the circuit court found that the petitioners' claims were barred by the three-year statute of limitation set forth in West Virginia Code § 11A-4-4 (1994).[4]

         Having considered the parties' briefs and arguments, the submitted appendix records, and pertinent authorities, we find that the tax deed issued to MRI is void and the statute of limitation is inapplicable. Accordingly, we reverse the circuit court's orders and remand this case for further proceedings consistent with this opinion.

         I. Factual and Procedural Background

         At issue in this case is the present ownership of the oil and gas interests in two adjacent tracts of land, totaling approximately 1, 041 acres, located on "Middle Fork of Sycamore Creek in the Union District of Harrison County." The oil and gas interests were severed from the surface and coal interests in 1903. Prior to the severance, Charles Lee Andrews held fee simple title to the two tracts as trustee for the benefit of his mother, Mary Catherine Lee Andrews. By deed dated April 4, 1903, Charles Lee Andrews, as trustee, conveyed the surface and coal interests to Jonathan D. Springer. Charles Lee Andrews excepted and reserved the oil and gas interests from that conveyance. [5] As trustee for his mother, Charles Lee Andrews retained title to the oil and gas interests until her death on March 2, 1920. Pursuant to Ms. Andrews' will and its five codicils, the oil and gas interests were divided among her surviving children and grandchildren as follows: an undivided one-fifth interest (twentypercent) was devised to each of her four children: Charles Lee Andrews, Louisa Lee Andrews (Bacon Eldridge), Carolyn Snowden Andrews (Fahenstock), and George Snowden Andrews. The remaining undivided one-fifth interest was split evenly among her decedent daughter's three children: Rosalie Tunstall Smith (Forster Cooper), Anita Tunstall Smith, and Marion Tunstall Smith.

         In the years that followed, the oil and gas interests were further divided among the heirs of Ms. Andrews's children and grandchildren. Petitioner Richard Snowden Andrews, Jr., inherited his interest from his father Richard Snowden Andrews who received his interest from his father, Charles Lee Andrews, and uncle, George Snowden Andrews. The interest held by the Marion A. Young Trust and its successors was also inherited from Richard Snowden Andrews. The interests claimed by L&D Investments were purchased from siblings, Deborah Lee Tschappat and Michael Tschappat.[6] The purchases were perfected by separate quit claims deeds that were recorded in Harrison County on March 15, 2013. Collectively, L&D claims a 16.44 percent undivided interest in the oil and gas.

         Petitioner Robert Hitzelberger claims ownership of the twenty percent undivided interest in the oil and gas that was originally bequeathed to Carolyn Snowden Andrews Fahnestock. The record indicates that Carolyn Fahnestock died on October 18, 1937, in Rhode Island, where her will was probated. Her will and codicils were recorded in the Harrison County Clerk's office on July 28, 1986. Pursuant to the will and codicils of Carolyn Fahnestock, the executors of her estate, who were her children, conveyed her twenty percent oil and gas interest to Harry Parsons Cross by deed dated December 1, 1949.[7] Harry Parsons Cross died testate in 1955 in Rhode Island. Pursuant to the terms of his will, which was recorded in the Harrison County Clerk's Office in 1986, his interest was devised to a testamentary trust known as the Cross Trust. On January 18, 1999, an instrument titled "Assignment and Conveyance" dated December 18, 1998, was recorded in the Harrison County Clerk's Office. This instrument conveyed all the interests in the oil and gas in the subject property that was owned by the Cross Trust to Mr. Hitzelberger.

         Although Charles Lee Andrews died in 1946, and the interests in the oil and gas were conveyed or inherited by several different individuals over the years, a real property tax assessment for one hundred percent of the oil and gas interests remained solely in the name of Charles Lee Andrews until 1999. [8] In other words, all fractional interests in the oil and gas were on the Harrison County landbooks as a single entry in the name of "Andrews, Charles Lee, " which the parties refer to as the "master assessment." However, additional assessments were added on the landbooks of Harrison County beginning in 1988 with a new entry in the name of the "Harry P. Cross Estate, " which described 1000 acres oil and gas on Sycamore and referenced a Consolidated lease or well. According to deposition testimony from a staff member of the Harrison County Assessor's office, the mineral interest had been previously assessed on the personal property books rather than the landbooks and was made based on a gas producer's report of income paid to the Harry P. Cross Estate from production of the oil and gas. New landbook assessments were made in 1990 for "Richard Andrews, Agent" of ".0764% Int. 150 Ac leased O & G (Alamco) A-774;" "Andrews, Richard Snowden Hrs." of " Int. leased O&G Eastern American (8243 C Andrews); and "Saunders, Phyllis Fletcher" of "0.2244 Int. 271.67 as leased O&G Sycamore (CNG Dev 2088). [9] In 1991, the Assessor created a new entry on the landbooks in the name of "Catherine T. Schappat, " which surname was corrected to Tschappat in 1993. This entry, like the others, was based on a gas producer's report of income. The deposition testimony indicated that these entries were made at the direction of the Property Tax Division of the West Virginia State Tax Department. The record in this case includes a letter written on November 7, 1988, by the Director of the Property Tax Division in the State Tax Department concerning "the reworking of oil and gas royalty owners (real estate) from the personal to the real property books." The letter indicated that "every effort should be made to convert the personal property account to the (corresponding) real estate entry" but "[i]f all efforts fail in matching a personal record with a real estate entry, enter that personal property record as a separate assessment on the land book in its proper alphabetical sequence." [10] As a result of these entries, real property tax tickets were generated and were paid by the petitioners or their predecessors-in-title. At the same time, the "master assessment" in the name of "Andrews, Charles Lee" also resulted in the issuance of a tax ticket which was paid each year through 1999.

         In 1999, Emmi Wyatt, H. R. Thurber Jr., Richard S. Thurber, and Edythe T. Donovan, each claiming an undivided one-twentieth (five percent) interest in the property[11]requested separation of their respective interests in the subject property from the "master assessment" in the name of "Andrews, Charles Lee." Thereafter, these individuals paid and have continued to pay the tax assessments on their respective shares. However, the "master assessment" for the year of 2000, in the name of "Andrews, Charles Lee, " was not paid and became delinquent. Because of the delinquency, a tax lien on the property in the name of "Andrews, Charles Lee, " assessed as an eighty percent undivided interest in the oil and gas, was sold at a delinquent tax sale to MRI in 2001. In 2003, a tax sale deed was issued to MRI, which conveyed an eighty percent interest in the oil and gas.

          After L&D Investments purchased the oil and gas interests of the Tschappat siblings in 2013, it notified the entities that were extracting the oil and gas from the property of the purchases and its right to receive any royalty payments. L&D Investments was then informed by the gas producers that the interests it claimed to have purchased had been sold for delinquent taxes to MRI in 2001. On December 10, 2013, L&D Investments filed this action for declaratory relief and to quiet title to its undivided oil and gas interest in the subject properties. The action named MRI, Antero Resources Corporation, Consol Energy, CNX Gas Company, and Robert Hitzelberger as defendants.

         In its complaint, L&D Investments asserted that CNX, Consol, and Antero were extracting oil and gas from the property and had refused L&D Investments's request for the royalty payments because of the alleged ownership of the oil and gas interests by MRI. L&D Investments also sought declaratory relief from Antero "regarding other Harrison County properties owned by [L&D Investments] and which this Defendant has acted in an unlawful manner bydrilling and producing on Plaintiff's mineral interests without Plaintiff's consent to pooling, or by otherwise acting in a unilateral manner without authority[.]" The ...


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