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Case Bulletin – Pennsylvania Federal District Court Creates Clarification in Pennsylvania’s Quiet Title Procedure

Given the history of oil and gas production in Pennsylvania, quiet title actions are sometimes necessary to clear the title on the mineral estates underlying properties before production can commence. This past year, the Middle District of Pennsylvania clarified the requirements a plaintiff must satisfy to maintain a quiet title action for a mineral estate in Pennsylvania Game Commission v. Thomas E. Proctor Heirs Trust, 1:12-cv-1567 (M.D. Pa. July 24, 2014).

 

In that action, the Pennsylvania Game Commission filed an action in federal court to quiet title to 2,500 acres in Sullivan County, Pennsylvania pursuant to Pennsylvania Rule of Civil Procedure 1061, et seq. By way of background, Thomas Proctor and his wife first conveyed the property to Union Tanning Co. in 1895, but reserved for himself, his heirs and assigns “all the minerals, coal, oil, gas or petroleum found in or under the surface” of the property. However, the property was eventually sold at a tax sale in 1908 to satisfy unpaid taxes on the land. C.H. McCauley then purchased the property at the tax sale. McCauley eventually deeded the property to Central Pennsylvania Lumber Co., who then deeded the property in to the Pennsylvania Game Commission in 1925.

 

The game commission believed it was the rightful owner of the mineral estate, but Thomas Proctor’s heirs conveyed their mineral interest in the mineral estate to the 2,500 acres to the Thomas E. Proctor Heirs Trust  in 1980. The Trust asserted that it was the rightful owner of the mineral estate.

 

After the game commission filed an action to quiet title on the property, the trust filed a motion to dismiss that action on several bases. The court granted in part the motion based on the trust’s argument that the game commission could not satisfy Rule 1061(b)(2), which sets forth that a plaintiff can only bring an action to quiet title if he cannot bring an ejectment action. An ejectment action is the appropriate remedy when  a plaintiff is out-of-possession of the property and  the defendant has actual possession of the property. However, the question of “actual possession” is not as clear with a mineral estate as it is with a surface estate, which complicated the issue of whether or not the game commission had satisfied Pa. R. C. P. 1061(b)(2).

 

In response to the trust’s motion to dismiss, the game commission argued that it’s quiet title action should not be dismissed, contending that a mineral estate could not be exclusively possessed. Citing to an 1889 precedent, the federal court ruled that minerals could be possessed if they were “in grasp”, for example, if a well was built or underlying minerals were extracted or removed. Since the game commission never pleaded that it was “in grasp” of the mineral estate, the federal court determined that it had not shown that ejectment was not a viable remedy.

 

Despite not satisfying that requirement, the court ruled that the game commission could maintain its quiet title action. The court cited to Rule 1061(b)(4) which expressly permits a plaintiff to bring a quiet title action to obtain possession of land sold at a judicial or tax sale. The court found that the mineral estate had in fact been sold at the 1908 tax sale because a landowner’s failure to notify the assessor that the mineral estate has been severed from the property allows the purchaser of the surface property at a tax sale to also obtain title to that mineral estate. Though Proctor severed the estate when he reserved the mineral estate but sold the surface to Union Tanning, Co., there was no record that he notified the county of the severance. By failing notify the county’s assessor, the mineral estate was then also sold at the 1908 tax sale, which made the Pennsylvania Game Commission the proper owner of the property.