Harvey v. Sines

²⁸⁷ ROBERT A. ZARNOCH, J. (Retired, Specially Assigned). The opening of the Marcellus Shale in the late-2000s spawned a resurgence in natural resource extraction across the Northeast and Mid-Atlantic regions, including Western Maryland. In 2010, the General Assembly enacted the Maryland Dormant Mineral Interests Act, now codified at Section 15-1201, et seq. of the Environment Article (“Env.”), Maryland Code (1982, 2014 RepLVol.), to allow surface owners to terminate severed mineral interests that had gone unused for twenty years or more.

Toward the end of 2014, Joseph L. Sines and Sandra S. Sines (“the Sineses”), appellees, brought an action in the Circuit Court for Garrett County to terminate an undivided half-mineral interest owned by the descendants of Henry B. Harvey — Mary Harvey and Patricia Sue Lannom née Harvey (“the Harveys”), appellants. After the parties filed cross-motions for summary judgment, and without a hearing, the court found no material facts in dispute, and entered an order terminating the mineral interest of the Harveys. The Harveys appealed to this Court and present the following question for our review, which we have rephrased: Whether the Dormant Mineral Interests Act is unconstitutional under Article 24 of the Maryland Declaration of Rights and Article III, Section 40 of the Maryland Constitution? [1] We hold that the Maryland Dormant Mineral Interests Act is constitutional because it does not retroactively impair vested rights, nor does it take property without just compensation. We affirm the decision of the circuit court. ²⁸⁸ BACKGROUND A. The Maryland Dormant Mineral Interests Act 2 The General Assembly passed the Maryland Dormant Mineral Interests Act (“the Act”) by a unanimous vote in each house during the 2010 legislative session. 3 See 2010 Laws, ch. 268 (S.B.288), ch. 269 (H.B.320).

The Act created a new cause of action, allowing a surface owner of real property subject to a mineral interest to terminate a dormant mineral interest. 4 Env. § 15-1203(a)(l). The action is “in the nature of and require[s] the same notice as is required in an action to quiet title as set forth in § 14-108 of the Real Property Article.” 5 Env. § 15-1203(b)(l). “A court order that terminates a min ²⁸⁹ eral interest merges the terminated mineral interest, including express and implied appurtenant surface rights and obligations, with the surface estate in shares proportionate to the ownership of the surface estate, subject to existing liens for taxes or assessments.” Env. § 15-1203(d)(2). The Act defines a dormant mineral interest as one that “is unused for a period of 20 or more years preceding the commencement of termination of the mineral interest.” Env. § 15-1203(a)(2)(i). Additionally, notice of the mineral interest must not have been recorded during the period of 20 or more years preceding the commencement of the action to terminate the mineral interest.

Env. § 15 — 1203(a)(2)(ii). Several actions constitute “use” of the mineral interest by an owner. These include: (i) active mineral exploration or exploitation; (ii) payment of taxes on a separate assessment of the mineral interest; (iii) recordation of an instrument that evidences the continued existence of the mineral interest; and (iv) recordation of a judgment or decree that makes a specific reference to the mineral interest. 6 Env. § 15 — 1203(c)(1). An owner of a mineral interest may record, at any time, a notice of intent to preserve the mineral interest or a part of a mineral interest.

Env. § 15-1204(a)(l) After a petition to terminate a dormant mineral interest has been filed, an owner of the mineral interest can still “record a late notice of intent to preserve the mineral interest as a condition of dismissal of the action, if the owner of the mineral interest pays the litigation expenses incurred by the surface owner of the real property that is subject to the mineral interest.” Env. § 15 — 1205(b). However, the Act precludes an owner of a mineral interest that has been unused for a period of 40 years or more preceding the commencement of the action from filing a late notice of intent to preserve the ²⁹⁰ mineral interest. Env. § 15-1205(c). The Standing Committee on Rules of Practice and Procedure adopted rules to aid the implementation of the Act. 7 See Md. Rules 12-701, et seq.

The Act’s stated purpose “is to make uniform the law governing dormant mineral interests among the states.” Env. § 15-1202(b). In that vein, Act was patterned on the Uniform Dormant Mineral Interests Act, which in turn was designed “to enable and encourage marketability of real property and to mitigate the adverse effect of dormant mineral interests on the full use and development of both surface estate and mineral interests in real property.” Uniform Law Commission, Uniform Dormant Mineral Interests Acts § 1(a). The uniform act also provides that it “shall be construed to effectuate its purpose to provide a means for termination of dormant mineral interests that impair marketability of real property.” Id. § 1(b). The Attorney General, in a letter to Governor Martin O’Malley, dated May 3, 2010, approved of the constitutionality of the statute.

B. The Sineses’ Property The Sineses are the surface owners of approximately twenty acres in Garrett County, and own an undivided one-half interest in the minerals beneath the property. On November 20, 2014, the Sineses filed a petition in the circuit court to terminate any dormant mineral rights on their property. They identified the Harveys as potential owners of a portion of the mineral interest, as descendants of Henry B. Harvey who purchased a one-half interest in the minerals on the property, evidenced by a deed dated March 26,1912 and recorded in the Garrett County land records. ²⁹¹ On April 17, 2015, the parties filed cross-motions for summary judgment. The record showed that there had been no use of the mineral interest for at least the past 40 years.

The Sineses asserted that because there was no use during the past 40 years, the court should enter an order terminating the dormant mineral rights, pursuant to Env. §§ 15 — 1203(a), - 1205(c). The Harveys asserted that, among other things, the statute was facially unconstitutional because it abrogated vested rights. The Sineses opposed the Harveys’ motion for summary judgment. Neither party requested a hearing, and the record before the circuit court was sparse.

On May 12, 2015, the court entered an order, granting summary judgment for the Sineses, denying the Harveys’ motion, and terminating the dormant mineral interest in the property. The Harveys appealed to this Court on June 11, 2015. DISCUSSION Whether a circuit court’s grant of summary judgment is proper in a particular case is a question of law, subject to a non-deferential review on appeal. Charles Cnty.

Comm’rs v. Johnson, 393 Md. 248, 263 , 900 A.2d 753 (2006). In reviewing a grant of summary judgment, we review independently the record to determine whether the parties generated a dispute of material fact and, if not, whether the prevailing party was entitled to a judgment as a matter of law. Muskin v. State Dept. of Assessments & Taxation, 422 Md. 544, 554 , 30 A.3d 962 (2011) (citing Charles Cnty. Comm’rs, 393 Md. at 263 , 900 A.2d 753 ).

We review the record in the light most favorable to the non-moving party and construe any reasonable inferences that may be drawn from the well-pled facts against the moving party. Id. Here, neither party has argued that any of the facts are in dispute; therefore it was proper for the trial court to make a decision on the parties’ motions for summary judgment. See id.

The Harveys argue that the Act violates Article 24 of the Maryland Declaration of Rights and Article III, Section 40 of ²⁹² the Maryland Constitution because it retroactively impairs vested rights and takes property without just compensation under the Court of Appeals’s decisions in two cases: Muskin v. State Dep’t of Assessments & Taxation, 422 Md. 544 , 30 A.3d 962 (2011) and Scharf v. Tasker, 73 Md. 378 , 21 A. 56 (1891). The Sineses assert that the cases are distinguishable and that the statute is constitutional because it does not impermissibly divest the mineral interest owner of a vested right. In addressing a claim involving the constitutionality of a statute, we begin “with a presumption that the statute is constitutional.” Beattie v. State, 216 Md.App. 667, 678 , 88 A.3d 906 (2014) (citing Walker v. State, 432 Md. 587, 626 , 69 A.3d 1066 (2013)). We are reluctant to find a statute unconstitutional if, “by any construction, it can be sustained.” Galloway v. State, 365 Md. 599, 611 , 781 A.2d 851 (2001) (quoting Beauchamp v. Somerset County, 256 Md. 541, 547 , 261 A.2d 461 (1970)).

The appellant bears the burden of overcoming this presumption and establishing the statute’s unconstitutionality. Beattie, 216 Md.App. at 678 , 88 A.3d 906 . We undertake an “independent constitutional appraisal” to determine whether a constitutional right has been infringed. Watkins v. Sec’y, Dept. of Pub.

Safety & Corr. Services, 377 Md. 34, 46 , 831 A.2d 1079 (2003) (citing Crosby v. State, 366 Md. 518, 526 , 784 A.2d 1102 (2001)). In light of the posture of and contentions in this case, the Harveys’ arguments are tantamount to a facial challenge to the Act. However, they would gain nothing if they contested the constitutionality of the Act as applied to their specific circumstances, considering the protracted time that this property was neither used nor taxed.

The Harveys have not asserted their rights since the property was acquired more than 100 years ago in 1912. 8 ²⁹³ The Court of Appeals observed in Muskin v. State Dep’t of Assessments & Taxation: Together, Maryland’s Declaration of Rights and Constitution prohibit the retrospective reach of statutes that would have the effect of abrogating vested rights. Dua v. Comcast Cable of Md. Inc., 370 Md. 604 , 630 n. 9, 805 A.2d 1061 , 1076 n. 9 (2002). Article 24 of the Maryland Declaration of Rights, guaranteeing due process of law, and Article III, § 40 of the Maryland Constitution, [9] prohibiting governmental taking of property without just compensation, have been shown, through a long line of Maryland cases, to prohibit the retrospective reach of statutes that would result in the taking of vested property rights. See Dua, 370 Md. at 604 , 805 A.2d at 1061 and cases therein. 422 Md. 544, 555-56 , 30 A.3d 962 (2011).

The Maryland Declaration of Rights and the Maryland Constitution are generally read in concert with their federal constitutional counterparts, and cases interpreting federal constitutional provisions are treated as “persuasive authority by a Maryland court interpreting the Maryland Declaration of Rights and Constitution.” Id. (citing Dua, 370 Md. at 604 , 805 A.2d 1061 ). A. Retrospectivity We first consider whether the statute operates retrospectively. “[A] statute does not operate ‘retrospectively’ merely because it is applied in a case arising from conduct antedating the statute’s enactment....” John Deere Const. & Forestry Co. v. Reliable Tractor, Inc., 406 Md. 139, 147 , 957 A.2d 595 (2008) (quoting Landgraf v. USI Film Products, 511 ²⁹⁴ U.S. 244, 269, 114 S.Ct. 1483 , 128 L.Ed.2d 229 (1994)) (Internal quotation marks omitted). Moreover, a statute “is not made retroactive merely because it draws upon antecedent facts for its operation.” Landgraf, 511 U.S. at 297 n. 24, 114 S.Ct. 1483 (quoting Cox v. Hart, 260 U.S. 427, 435 , 43 S.Ct. 154 , 67 L.Ed. 332 (1922)).

In evaluating retrospectivity, we consider three factors, “fair notice, reasonable reliance, and settled expectations,” to determine “the nature and extent of the change in law and the degree of connection between the operation of the new rule and a relevant past event.” John Deere Const., 406 Md. at 147 , 957 A.2d 595 (quoting Landgraf, 511 U.S. at 270 , 114 S.Ct. 1483 ) (Internal quotation marks omitted). In Muskin , the Court of Appeals considered the constitutionality of a ground rent statute, which provided that, upon the failure of a ground rent owner to register this interest with the State, that interest in the land was automatically extinguished and transferred to the tenant. The Court concluded that the statute at issue in Muskin satisfied fair notice by providing a reasonable time period — two years — between its enactment and the registration deadline. 422 Md. at 558 , 30 A.3d 962 . Although the statute satisfied fair notice, it nevertheless operated retrospectively because it impermissibly impacted the reasonable reliance and settled expectations of ground rent owners.

Id. Because of the nature of a ground rent lease — where the fee simple owner (the ground rent owner) of a property received an annual or semi-annual payment (ground rent) and retained the right to re-enter the property and terminate the lease if the leaseholder failed to pay — the statute infringed upon the owners’ reasonable reliance and settled expectations. The Court noted that “[gjround rent owners rel[ied] reasonably on the future income from ground rents or the ability to sell the fee simple interest on the open market or in the future, if necessary.” Muskin, 422 Md. at 550, 558 , 30 A.3d 962 (citing Kolker v. Biggs, 203 Md. 137, 141 , 99 A.2d 743 (1953)). Moreover, the statute did not provide for additional remedies for the ground rent owner, such as an opportunity for a ²⁹⁵ hearing or an appeal process.

The Court posited a valid, alternative statutory approach in which the failure to register before a fixed deadline triggered restrictions on the property interest short of a total extinguishment of rights. Id. at 559, 30 A.3d 962 . Here, the Act provides fair notice. Although not quite the two-year grace period in Muskin , it provides for a similar grace period of one and a half years — the statute was enacted on May 4, 2010 and allowed the filing of a petition only on or after October 1, 2011. 10 See John Deere Const., 406 Md. at 148 , 957 A.2d 595 (Parties are presumed to be aware of the actions of the General Assembly). “The Maryland Constitution requires that a plaintiff must have a reasonable period of time, after the enactment of the new statute, to bring the cause of action which existed under prior law.” Dua, 370 Md. at 633 , 805 A.2d 1061 ; see Env. § 15-1204(a) (“An owner of a mineral interest may record, at any time, a notice of intent to preserve the mineral interest or a part of a mineral interest”) (Emphasis added).

In this case, the Sineses did not file a petition until November 20, 2014, more than four years after the law went into effect — providing the Harveys with a reasonable period of time to exercise their rights. In contrast to Muskin , however, the Act does not impermissibly infringe the reasonable reliance and settled expectations of mineral interest owners. The owners subject to the act, by their very definition as owners of dormant mineral interests, are not relying on rents or income from the property. They have not made use of the interests for at least twenty, and in this case well beyond 40 years.

In fact, the conveyance was made in 1912, over 102 years before this action was initiated, ²⁹⁶ and there was no evidence that the mineral interest had ever been exploited. We also note that a mineral interest owner may “use” the interest by paying taxes on it. “If minerals and mineral rights are owned separately from the land in which they are located, the supervisor may assess the minerals and mineral rights separately from the land.” Tax-Prop. § 8-229. The owner of the mineral rights can be assessed tax on its value even if the minerals are not then being exploited. See Macht, supra, 266 Md. at 608-09, 296 A.2d 162 (citing Weil v. Supervisor of Assessments, 266 Md. 238 , 292 A.2d 68 (1972); Sears Roebuck v. State Tax Comm., 214 Md. 550, 557-558 , 136 A.2d 567 (1957)) (noting that “situations may be postulated where a fair and equitable valuation can only be achieved by the use of this mechanism.

It has long been established that assessors have reasonable latitude in selecting a method of valuation, so long as they arrive at the ‘full cash value’ ”). There was no evidence that taxes had ever been paid on the Harveys’ mineral interest. The Act is also distinguishable from the legislation at issue in Muskin , because the interest is not automatically extinguished. The General Assembly, in this case, did not provide for unavoidable reversion of a mineral interest if the owner failed to register the interest by a certain date.

Instead, it is the surface owner who initiates the process by filing an action in the circuit court. The owner of a mineral interest can, of course, use the interest at any time before the petition is filed by exploring for minerals or even paying taxes on the interest. Env. § 15-1203(c)(l). Alternatively, the owner can record a