Have you ever been named as a defendant in a mineral royalty interpleader lawsuit? Ever heard of such a thing? In Arkansas, and especially in those counties in the Fayetteville Shale, oil, gas, and mineral royalty interpleader lawsuits are actually quite common. Interpleaders are usually initiated by an operator when there is a title ownership dispute over the minerals. In such a case, the well operator, who owes royalties to the rightful mineral owners, may initiate the interpleader lawsuit and name all possible claimants of the oil, gas, and minerals as defendants and request that the court determines the ownership. The well operator will usually deposit the royalties and other disputed funds that are owed in an account that is held and managed by the circuit court clerk until the court determines the winner and orders a distribution.
Title disputes can arise in a variety of situations, but usually, are caused by ambiguities in drafting title instruments. Interpleaders are effective methods to resolve title disputes and are advantageous to an operator in Arkansas for a couple of reasons. First, by initiating the lawsuit, and depositing the funds with the court registry, the operator is relieved of liability in connection to distributing those funds. Second, the operator, in the discretion of the court, may receive an award of its attorney's fees from the disputed funds. Thus, it is virtually risk-free for an operator to pursue an interpleader.
If you are named as a defendant in an interpleader lawsuit, the worst thing you can do is to rest on your laurels. Rather, you should contact an attorney to discuss your rights, options, and chances of prevailing. In Arkansas, you have 30 days to respond to the complaint or petition. If you fail to respond, you may lose your right to claim ownership of the disputed mineral interest.