Doctrine of Estoppel by Deed does not Require Detrimental Reliance

Detrimental reliance is not a prerequisite for application of the doctrine of estoppel by deed, the Pennsylvania Supreme Court decided in Shedden v. Anadarko E. & P. Co., L.P., __ A.3d __ (No. 103 MAP 2014, filed Mar. 29, 2016). Leo and Sandra Shedden leased the oil and gas rights to their 62-acre property to Anadarko, expressly warranting they had full title to those rights. Prior to tendering an agreed upon bonus payment of $80 per acre on 62 acres, Anadarko’s land agent discovered that the Sheddens’ predecessors in interest had reserved one-half of the oil and gas rights. Anadarko modified the bonus payment to 31 acres, which the Sheddens accepted. Two years later, the Sheddens filed a motion to quiet title and perfected their title to all of the oil and gas rights. When Anadarko asserted its right as lessee of 100% of the oil and gas rights, the Sheddens sought a declaratory judgment that the lease pertained to only 50% of the rights. Anadarko moved for summary judgment, asserting that the doctrine of estoppel by deed barred the Sheddens from denying that the lease was for 100% of the oil and gas rights to the property.

The trial court granted Anadarko’s motion and dismissed the Sheddens’ action. The court rejected the Sheddens’ argument that the adjusted bonus payment modified the lease. The court then applied the doctrine of estoppel by deed, which precludes one who conveys an interest in land that he does not own, but subsequently acquires, from denying the validity of the first conveyance. Applying the doctrine, the trial court held that the Sheddens’ subsequent acquisition of the previously-reserved one-half interest in the oil and gas rights passed to Anadarko under the terms of the lease. On appeal, the Superior Court affirmed. See Anadarko v. E&P Co., L.P., 88 A.3d 228 (Pa. Super. 2014).

The Supreme Court allowed the Sheddens’ appeal and affirmed. Writing for the unanimous Court, Justice Todd rejected the Sheddens’ argument that, because Anadarko paid a reduced bonus upon learning of the reservation of one-half of the oil and gas rights, it failed to demonstrate detrimental reliance. The Court held that, unlike the doctrine of equitable estoppel, the doctrine of estoppel by deed does not require the party asserting the doctrine to establish detrimental reliance. Although the doctrine of estoppel by deed is rooted in equity, the Court explained, its considerations are broader because it “promotes the judicious policy of making certain formal documents final and conclusive evidence of their contents.” In this case, the Sheddens were estopped from denying the validity of their initial conveyance to Anadarko of all of the oil and gas rights to the property.

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One Comment

  1. bambi May 6, 2016 at 9:22 am

    This blog isn’t really a blog – you need someone with an opinion and a face.

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