May 20, 2019

Colorado Court of Appeals: Oil and Gas Lessee Had Standing to Bring Claim Because of Legally Protected Property Interest in Mineral Estate Under Lease

The Colorado Court of Appeals issued its opinion in Maralex Resources, Inc. v. Chamberlain, Public Trustee of Garfield County on Thursday, January 2, 2014.

Lessee—Oil and Gas Lease—Prescriptive Easement—Adverse Use—Quiet Title—Standing.

Since 1996, Maralex Resources, Inc. (Maralex) has been the lessee under oil and gas leases issued by the United States. Under the leases, Maralex operates and maintains various oil and gas wells located on land owned by the federal government. To access the wells, Maralex and its predecessors in interest historically have traversed two roads located on what is now Nona Jean Powell’s property, which is adjacent to the federal land. After issues arose between Maralex and Powell regarding access to the roads on Powell’s property, Maralex filed an action seeking a declaration that it is the owner, by prescription, of access easements across Powell’s property. Maralex also sought a decree quieting title for its continued use of the easements. The trial court concluded that Maralex lacked standing to assert a prescriptive easement claim. In addition, despite concluding that it lacked jurisdiction over Maralex’s claims, the court considered and resolved the merits of the suit “to promote judicial economy and to avoid multiple appeals.” The court found that Maralex’s use of the roads was permissive and not adverse, and that Maralex did not establish the existence of the asserted prescriptive easements.

On appeal, Maralex contended that the trial court erred in concluding that it lacked standing. The Court of Appeals agreed. An oil and gas lessee has a legally protected property interest in the mineral estate covered by the leases. Thus, the trial court erred in finding Maralex did not have standing to maintain its prescriptive easement claim.

Maralex also argued that the trial court erred in finding that Maralex did not establish a prescriptive easement across Powell’s property. The parties did not dispute that Maralex and its predecessors openly and continuously used the roads on Powell’s property for the statutory period. However, because Powell previously permitted the use, which included giving Maralex a key to the locked gate to enter the property, the use was not adverse, which is required to establish a prescriptive easement. The trial court’s finding that Maralex’s use was permissive was sufficiently supported by the record. The judgment was affirmed.

Summary and full case available here.

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