Those who help obtain oil-and-gas leases in Ohio for oil-and-gas development companies must be licensed real-estate brokers, the Ohio Supreme Court ruled today.

The Supreme Court affirmed the dismissal of Thomas Dundics’ lawsuit against Eric Petroleum Corp. and its owner for nonpayment after Dundics found property owners, negotiated gas leases, and worked with Eric Petroleum to obtain leases. Dundics did not have a real-estate broker license and claimed that negotiating subsurface leases did not require a license.

Writing for the Court majority, Chief Justice Maureen O’Connor stated that nothing in Ohio’s real-estate broker law — R.C. 4735.01 — excludes oil-and-gas leases.

Justices Judith L. French, Patrick F. Fischer, and R. Patrick DeWine joined the opinion, as did First District Court of Appeals Judge Beth A. Myers, sitting for Justice Mary DeGenaro. Justices Terrence O’Donnell and Sharon L. Kennedy concurred in judgment only.

Lease Acquisition Arrangement Disputed
In 2010, Dundics met with Bruce E. Brocker of Eric Petroleum to discuss a venture in which Dundics would find property owners and work with Eric Petroleum to execute oil-and-gas leases. In exchange, the company would pay Dundics and his firm for every leased acre and a percentage of the proceeds from working wells placed on the leased land.

In 2014, Dundics filed a lawsuit against Eric Petroleum for refusing to pay for certain leases for which Dundics alleged he was entitled to be compensated. He sought both compensatory and punitive damages.

Eric Petroleum asked the Mahoning County Common Pleas Court to dismiss the case, arguing in part that because Dundics was not a licensed real-estate broker, R.C. 4735.21 prevents him from bringing a lawsuit to recover compensation for certain real-estate related activities. The trial court agreed and dismissed the case.
Dundics appealed to the Seventh District Court of Appeals, which affirmed the trial court’s decision. Dundics appealed to the Supreme Court, which agreed to hear the case.

Real-Estate Law Examined
Dundics argued that the term “real estate” in R.C. 4735.01 was ambiguous and that oil-and-gas leases are not the type of traditional leases for surface property that would require a real-estate license to broker.

The opinion noted that the law provides a broad definition of real estate that “includes leaseholds as well as any and every interest or estate in land situated in this state...,” and provides a specific exclusion for “cemetery interment rights.”

The Court stated it disagreed with Dundics’ contention that the law is ambiguous, and noted that whether it makes sense to require a real-estate license to broker oil-and-gas leases is a policy question for the state legislature to decide.

“There is simply no exception in the statutes governing real-estate-broker’s licenses for oil-and-gas leases or oil-and-gas land professionals,” the opinion stated.

The opinion noted that Dundics and supporters of his position that filed amicus curiae briefs in the case asserted that oil-and-gas professionals have worked a long time in Ohio without real-estate broker licenses and that Eric Petroleum did not take issue with Dundics not having a license until the lawsuit was filed.

“The assertion that this requirement has historically not been enforced in the oil-and-gas industry does not give this court permission to write an exception into the statute,” the Court concluded.

2017-0448. Dundics v. Eric Petroleum Corp., Slip Opinion No. 2018-Ohio-3826.

View oral argument video of this case.

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