In Browne v. Artex (May 31, 2018), Ohio’s Fifth District Court of Appeals held that a claim that an oil and gas lease expired for lack of production is governed by Ohio’s statute of limitation for contract claims—not the state’s longer statute of limitations for recovery of possession of real property.

In Browne, the plaintiffs alleged that their oil and gas lease had lapsed for lack of production from 1981-1999.  The defendant-lessee asserted that plaintiffs’ claims were barred by Ohio’s statute of limitations for contract claims in R.C. 2305.06 (which, prior to being amended in September 2012, provided for a 15-year limitations period).  Plaintiffs disagreed, contending that the applicable limitations period was 21-years under R.C. 2305.04, relating to the recovery of possession of real property.

The trial court agreed with the lessee and the court of appeals affirmed.  Quoting the Supreme Court of Ohio, the court of appeals noted that “courts must look to the actual nature or subject matter of the case, rather than to the form in which the action is pleaded.”   Here, “[a] review of the complaint reveals the ‘actual nature or subject matter of the case’ is a dispute over the written terms of the lease agreement,” and specifically, the lease’s habendum clause.  Therefore, the proper limitations period was set by Ohio’s statute of limitations for contract claims, the appellate court found.

Click here to read the decision.

[Disclosure: Vorys represented amicus curiae The Ohio Oil & Gas Association in this case].