Wolf Block Sued for Failing to Advise on Subsurface Rights

, The Legal Intelligencer


Wolf Block

A bankrupt Florida business has sued Wolf Block for malpractice, alleging the firm failed to advise it that the company's plans to build multimillion-dollar homes on a West Virginia property it bought would be stifled by the fact that others owned the subsurface mineral rights.

In Dutch Run-Mays Draft v. Wolf Block, Dutch Run is suing defunct Wolf Block in the Philadelphia Court of Common Pleas regarding the work former real estate partner Henry Miller did in acquiring the title to the West Virginia property on behalf of Dutch Run. Miller, who joined Cozen O'Connor after Wolf Block dissolved in 2009, died in February 2010.

Dutch Run is alleging the property's value is decreased and the company's plans to build high-end homes is stifled by the fact that mineral rights holders can build things such as railroads and retention ponds on the land as part of their efforts to extract subsurface minerals.

In October 2004, Dutch Run, a company created solely for the purpose of purchasing this land, contracted to purchase about 5,000 acres of land in Greenbrier County in West Virginia. Dutch Run said the land abutted the "famous luxury hotel and country club" The Greenbrier. Before, during and after this time, Dutch Run said, it worked with Miller, a "prominent and exceptionally experienced and talented land-use attorney."

In October 2004, Miller allegedly procured a title insurance commitment for Dutch Run for the purchase of the land. The title policy listed exceptions to the title of the land, including certain mineral rights holders, Dutch Run said in its complaint.

Dutch Run said Miller knew of its plans to develop the land into multiple high-end subdevelopments, one of which would include numerous multimillion-dollar homes advertised for their "serenity, privacy, exclusivity and relaxation."

Miller negotiated, reviewed and advised Dutch Run on the title policy as well as handled other legal matters involving the land deal, Dutch Run said. The company said in the complaint that it ultimately purchased the land based on Miller's representations.

"Miller never advised or informed Dutch Run that the mineral rights holders could or would frustrate Dutch Run's development plans and hinder the development or the sales points," Dutch Run said in the complaint.

Dutch Run said it became aware Jan. 20, 2013, that West Virginia law gave surface rights to the owners of subsurface minerals. Among those rights, the company said, was a right to access the surface to retrieve the minerals and a right to engage in extraction operations.

Dutch Run said it became aware that certain mineral rights holders claimed or could claim through their conveyance deeds surface rights to the land that included the right to build roads and railroads across the land; create waste and refuse piles; construct buildings, pipelines and plants; and create waste ponds. Not only would the mineral rights holders' use of the land reduce the amount of land Dutch Run could sell or use as homebuilding, park or recreational space, but the mineral rights holders would be considered a nuisance to interested buyers of and visitors to the property, Dutch Run said in the complaint.

What's being said

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    What a disaster! How could "an experienced" real estate lawyer miss such a basic issue? Better call the excess carrier too.

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