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Currence v. Harrogate Energy, LLC

Court of Appeals of Tennessee, Nashville

May 11, 2015

CHARLES CURRENCE
v.
HARROGATE ENERGY, LLC

Session April 07, 2015

Appeal from the Chancery Court for Fentress County No. 1320 Andrew R. Tillman, Chancellor

James Frank Wilson, Wartburg, Tennessee, for the appellant, Harrogate Energy, LLC.

Harold Eugene Deaton and Donald Kelly Vowell, Knoxville, Tennessee, for the appellee, Charles Currence.

J. Steven Stafford, P.J., W.S., delivered the opinion of the Court, in which Arnold B. Goldin, J., and Kenny Armstrong, J., joined.

OPINION

J.STEVEN STAFFORD, JUDGE

Background

On April 25, 2013, Plaintiff/Appellee Charles Currence filed a complaint for claim of abandoned mineral interest regarding real property located in Fentress County. The complaint indicated that Appellee Harrogate Energy, LLC ("Harrogate Energy") filed a statement of claim to the separated mineral rights underlying a portion of Mr. Currence's property on August 21, 2008. In the statement of claim, Harrogate Energy asserted that it owned the mineral rights underlying 98 parcels of property in Fentress County, including property owned by Mr. Currence. Specifically, the statement of claim asserted that Harrogate Energy retained the mineral interests to the property located at Fentress County Tax Map 30, parcels 31 and 35. Mr. Currence asserted that he was the owner of the surface rights of these parcels.[1] In his complaint, Mr. Currence alleged that the taxes on the alleged mineral interest went unpaid from 1995 until 2008, when Harrogate Energy filed its statement of claim. Mr. Currence further alleged that any claim that Harrogate Energy had to the property under existing leases, if any, was too vague to enforce, and was abandoned through non-use for over twenty years pursuant to Tennessee Code Annotated Section 66-5-108(c).

Harrogate Energy filed an answer on June 27, 2013, denying that its interest in Mr. Currence's land was too vague to be enforceable. Further, Harrogate Energy asserted that it paid all taxes owed on the property, which Harrogate Energy contended was a proper use of the property pursuant to Tennessee Code Annotated Section 66-5-108(c).

The trial court heard the matter on March 25, 2014. Much of the parties' proof was entered through stipulated exhibits. At trial, Harrogate Energy asserted that it was the successor-in-interest to a lease of the mineral rights underlying Mr. Currence's property, which lease constituted a valid use of those mineral rights within twenty years of the filing of its statement of claim, as required by Tennessee Code Annotated Section 66-5-108(c). This lease, referred to as the Heatherly lease, was executed in 1980, by Mr. Currence's alleged predecessor-in-interest. The Heatherly lease was for a six-month term, which could be extended upon the construction of a well on the property and payment of $30, 000.00. If extended, the Heatherly lease would run for a term of ten years, expiring in 1990. Harrogate Energy asserted that the Heatherly lease was extended and that their filing of a statement of claim in 2008 was timely. At the conclusion of trial, the trial court ruled that the Heatherly lease was extended, and as such, did not expire until 1990. The trial court further ruled that because Harrogate Energy filed its statement of claim within twenty years of the last use of the property, its claimed mineral interests were not extinguished.

Prior to the entry of a final written order memorializing the trial court's oral ruling, Mr. Currence, on March 27, 2014, filed a motion to alter or amend the trial court's decision on the basis of newly discovered evidence. Mr. Currence alleged that an affidavit recorded in the Fentress County Register's Office indicated that the Heatherly lease had not been extended. Accordingly, Mr. Currence argued that because the Heatherly lease expired in 1981, it was insufficient to show a use of the mineral rights underlying Mr. Currence's property in the twenty years preceding 2008. Attached to Mr. Currence's motion was a copy of a 1981 affidavit from the owner of the land subject to the Heatherly lease that indicated that the lease had not been extended, and therefore, expired in 1981.

On April 8, 2014, the trial court entered a final order finding that Harrogate Energy has a legal claim to the mineral rights underlying Mr. Currence's property and that the Heatherly lease, extended to 1990, was a valid use of those mineral rights within twenty years of the filing of Harrogate Energy's statement of claim. Accordingly, the trial court entered judgment in favor of Harrogate Energy.

On May 12, 2014, Harrogate Energy filed a response to Mr. Currence's motion to alter or amend, admitting that the Heatherly lease had not been extended. Harrogate Energy asserted, however, that its interest in the mineral rights underlying Mr. Currence's property had not been extinguished because it held another valid lease showing a use of the property within twenty years of the date of filing their statement of claim. Specifically, Harrogate Energy asserted that it was the successor-in-interest to a lease, referred to as the Wynn lease, which was executed in 1983. The Wynn lease purported to lease the mineral interest underlying property in Fentress County, described as undetermined parcels found on Fentress County Tax Map 40, and parcel 38.01 found on Fentress County Tax Map 30. Harrogate Energy asserted that the Wynn lease was extended until 1992, which Harrogate Energy asserted showed a use of the property well-within twenty years of its filing of a statement of claim in 2008.

The trial court heard the motion to alter or amend on May 13, 2014. The trial court reopened proof to consider the affidavit indicating that the Heatherly lease was not extended, [2] and ultimately set the original final decree aside due to the undisputed evidence that the Heatherly lease had not been extended. The trial court then heard Harrogate Energy's evidence regarding the Wynn lease. At the conclusion of the proof, the trial court found that the Wynn lease actually leased only two tracts of land that were not a part of Mr. Currence's property, [3] but that it also contained an option to lease the mineral rights underlying additional lands, which included Mr. Currence's property. The trial court further found that no proof was presented that this option was ever exercised. Based on this evidence, the trial court concluded that a lease of the mineral rights underlying two unrelated parcels and an unexercised option to lease the mineral rights underlying Mr. Currence's property was not a sufficient use of the mineral rights at issue so as to satisfy Tennessee ...


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