U.S. Markets close in 5 hrs 24 mins

Recent Decisions in Real Estate Law Could Provide Context for Future Cases

[caption id="attachment_8887" align="alignleft" width="289"] Frank Kosir Jr. of Meyer Unkovic & Scott.[/caption] Pennsylvania courts have recently handed down several important decisions in the realm of real estate law that provide context for future cases.

Frank Kosir Jr. of Meyer Unkovic & Scott.
  • The long-standing rule in Pennsylvania that lands of a local municipality must be put to a public use in order to be exempt from adverse possession claims.

 In City of Philadelphia v. Galdo, 2018 Pa. Commw. LEXIS 105 (2018), the city of Philadelphia held title to a parcel of undeveloped real property situated adjacent to Interstate 95, having taken title thereto by a declaration of taking filed on Nov. 13, 1974. On Jan. 19, 1976, the commonwealth of Pennsylvania filed a notice of condemnation condemning a temporary easement over the property for the relocation of a railway line adjacent to the interstate.  In the late 1970s, following the completion of this relocation, the city retook possession of the property with the intention of holding it for future use or sale. However, the city never physically occupied the property, or performed any acts of maintenance thereon. In September 1989, Francis Galdo took title to a residential structure situated directly across the street from the property. Soon thereafter, Galdo began to make use of the property for such things as parking, storage and recreation. Over the subsequent years, Galdo constructed numerous improvements on the property including, inter alia, a fence, pavilion and barbecue pit. On Feb. 5, 2013, the city posted a notice on the property directing Galdo to cease making any use of the property, and to remove the improvements that he had constructed.  When Galdo refused to comply, the city commenced an ejectment action against him in the Philadelphia County Court of Common Pleas. In response, Galdo filed a counterclaim for adverse possession, asserting that he had possession of the property for a period in excess of 21 years and had established title thereto.  The trial court, finding that the city had held the property for a public purpose, concluded that the land was exempt from an adverse possession claim, and entered a verdict for the city, and dismissed Galdo’s counterclaim with prejudice. On appeal, Pennsylvania’s Commonwealth Court reversed, and remanded the matter to the trial court for a hearing on whether Galdo had established the requisite elements of an adverse possession claim. In issuing its ruling, the court noted the long-standing principle in Pennsylvania law that adverse possession does not lie against the lands of the commonwealth.  However, lands titled in a local government do not enjoy similar protections unless they are held pursuant to a legal obligation, or for a public use. Since the city merely held the property for future sale, the property was not exempt from an adverse possession claim.

  • Pennsylvania Superior Court fundamentally changes the long-standing rule of capture as it applies to nonconventional oil and gas drilling.

In Briggs v. Southwestern Energy Production, 2018 Pa. Super. 79 (2018), the Briggs are the owners of an 11-acre parcel of real property situated in Harford Township, Susquehanna County, Pennsylvania. The property was located adjacent to two separate nonconventional gas drilling units operated by Southwestern Energy Products Co. The Briggs did not have a lease with Southwestern and commenced an action against Southwestern in the Susquehanna County Court of Common Pleas asserting that Southwestern had trespassed onto the property by taking the natural gas that had migrated into the lands comprising the units as a result of hydraulic fracking. In response, Southwestern asserted that the Briggs’ claims were barred by the long-standing principle of the rule of capture, which provides that no trespass takes place when natural gas under a parcel of real property not subject to a lease migrates to an adjoining parcel as a result of drilling on that parcel. The trial court entered summary judgment for Southwestern. However, Pennsylvania’s Superior Court reversed, and remanded the matter to the trial court for further proceedings. In issuing its ruling, the court noted that non-conventional gas drilling differs from conventional gas drilling in that the process requires the injection of chemicals into the subsurface, as well as the fracturing of rock layers to permit the harvesting of gas. As such, the migration of gas from one parcel of land to another does not occur naturally but, rather, is the result of intervening factors. Because the process is different, the rule of capture does not apply to nonconventional gas drilling, and the chemicals used in that process may constitute an actionable trespass where those chemicals cross property lines into unleased lands. Frank Kosir Jr. is an attorney at Pittsburgh-based law firm Meyer, Unkovic & Scott. He can be reached at FK@MUSLAW.com.