Beavers v. Kaiser, 940154

• Decision Date: 11 September 1995
• Docket Number: No. 940154,940154
• Parties: J.W. BEAVERS, Jr., as Trustee of the William Herbert Hunt Trust Estate, Plaintiff and Appellant, v. Marvin L. KAISER and Russell L. Kiker, Jr., Defendants and Appellees, and William D. Walters, Sr.; Imperial Oil of North Dakota, Inc., a corporation; Target Energies, Inc.; an unnamed joint venture or enterprise consisting of William D. Walters, Sr., Marvin L. Kaiser, Russell L. Kiker, Jr., and possible other unknown persons; and all other persons unknown claiming any estate or interest in, or lien or encumbrance upon, the herein referred mineral estate, Defendants, and Russell L. KIKER, Jr. and Marvin L. Kaiser, Plaintiffs, v. William D. WALTERS, Sr.; and Imperial Oil of North Dakota, Inc., a corporation, Defendants. Civ.
• Court: North Dakota Supreme Court

Page 653

537 N.W.2d 653

J.W. BEAVERS, Jr., as Trustee of the William Herbert Hunt

Trust Estate, Plaintiff and Appellant, v. Marvin L. KAISER and Russell L. Kiker, Jr., Defendants and Appellees, and William D. Walters, Sr.; Imperial Oil of North Dakota,

Inc., a corporation; Target Energies, Inc.; an unnamed

joint venture or enterprise consisting of William D.

Walters, Sr., Marvin L. Kaiser, Russell L. Kiker, Jr., and

possible other unknown persons; and all other persons

unknown claiming any estate or interest in, or lien or

encumbrance upon, the herein referred mineral estate, Defendants, and Russell L. KIKER, Jr. and Marvin L. Kaiser, Plaintiffs, v. William D. WALTERS, Sr.; and Imperial Oil of North Dakota, Inc., a corporation, Defendants.

Civ. No. 940154.

Supreme Court of North Dakota.

Sept. 11, 1995.

Charles S. Miller, Jr., of Fleck, Mather & Strutz, Bismarck, for plaintiff and appellant. Appearance by Craig C. Smith, Bismarck.

Steven A. Johnson, of Vogel, Brantner, Kelly, Knutson, Weir & Bye, Ltd., Fargo, and Serkland, Lundberg, Erickson, Marcil & McLean, Ltd., Fargo, for plaintiffs. Appearance by Kermit E. Bye and Maureen Holman, Fargo.

SANDSTROM, Justice.

J.W. Beavers, Jr., as Trustee of William Herbert Hunt Trust Estate (Hunt Trust), appealed from that part of a district court judgment ordering that Russell L. Kiker, Jr., and Marvin L. Kaiser recover damages of $305,500, attorney fees of $70,162.61, and costs and disbursements of $1,579.53, for a total judgment of $377,242.14. We affirm the damage award and the costs and disbursements, reverse the attorney fee award, and remand for entry of an amended judgment.

I

In 1976, Kiker, Kaiser, William D. Walters, Sr., and Duane Peterson secretly formed a group to invest in oil and gas interests. Walters was the leader and coordinator. Purchases were to be made in Kiker's name and the profits split according to each member's capital contribution.

On January 13, 1977, Kiker, on behalf of himself, Kaiser, and Walters, purchased 20 mineral acres in Dunn County from Pete and Lillian Glovatsky, and, on the same day, leased them to Target Energies, Inc., a corporation solely owned by Kaiser, and recorded the mineral deed and the lease. After oil development began in 1979, Kiker distributed oil proceeds from the Glovatsky minerals: 37.5 percent to himself, 37.5 percent to Imperial Oil of North Dakota (Walters' assignee), and 25 percent to Kaiser. Kiker, Kaiser, and Walters each received one-third of the proceeds from the Target lease of the Glovatsky minerals.

Shortly after the Target lease of the Glovatsky minerals was recorded, the Hunt Trust sued Kiker and Target to establish the priority of its 1972 Glovatsky lease, which had been recorded in McKenzie County, but, through inadvertence, had not been recorded in Dunn County. "The litigated question was whether Kiker and Target acquired their interests in the Glovatsky property without notice of the Hunt Trust's lease." Disciplinary Bd. v. Kaiser, 484 N.W.2d 102, 102-03 (N.D.1992). At trial in June 1977, Kaiser falsely testified that he had never been a partner with Kiker and had never entered into a joint venture with Kiker. "Had Kaiser testified truthfully, Kiker's knowledge of the Hunt Trust's lease would have been imputed to Kaiser and Target as partners." Id. at 103. The trial court held that the Hunt Trust lease was subordinate. On appeal, this Court concluded:

"We hold that Target is a good faith purchaser for value without notice of the prior oil and gas lease executed between Hunt and the Glovatskys on the NW 1/4 of Section 19 and that Target's lease is not subject to Hunt's lease."

Hunt Trust Estate v. Kiker, 269 N.W.2d 377, 385 (N.D.1978). "Kaiser's false testimony tipped the scales of justice in favor of himself and his secret partners." Disciplinary Bd. v. Kaiser at 103.

In 1981, Kaiser disclosed his perjury to his wife, Lillian Walters Kaiser. In his October 1988 divorce trial, Kaiser admitted testifying falsely in the 1977 Hunt Trust trial. On December 29, 1988, Kiker and Kaiser settled with the Hunt Trust by each paying $305,500, transferring their interests in the Target lease and the Glovatsky minerals to the Hunt Trust, and agreeing to "fully cooperate with the Trust Estate and provide truthful and accurate testimony in assisting the Trust Estate as it asserts its claim against Walters."

In 1989, Hunt Trust sued Walters, Imperial Oil of North Dakota, Target Energies, Inc., Kaiser, Kiker, and others, for damages, punitive damages, and a quieting of title as to any adverse claims of the defendants. In May 1991, Chevron, U.S.A., Inc., successor in interest to all rights of Gulf Oil Corporation, joined in the action, suing Kiker, Kaiser, Walters, Imperial Oil, and Hunt Trust for damages. Chevron alleged that Gulf and Hunt Trust executed a farmout agreement on December 1, 1976, covering the Glovatsky minerals leased by Hunt Trust; that Kaiser's false testimony in the 1977 trial and the wrongful acts of Kiker, Kaiser, Walters, and Imperial Oil caused them to share the income from the Target Lease, to Chevron's detriment; that the Hunt Trust lease was assigned to Gulf in 1979; that in settling with Kiker and Kaiser, Hunt Trust had no authority to settle any claims on behalf of Gulf or Chevron; and that "Kaiser, Kiker, Walters, the joint venture and Imperial Oil have shared in the proceeds from the Target Lease and minerals in the amount of $1,664,368, or an amount proved at trial, which has wrongfully diminished Gulf and Chevron's interest by 50% of this amount;" and that Chevron did not become aware of the perjury until 1989.

Hunt Trust counterclaimed against Chevron, seeking a decree that Chevron has no interest in 12.5 net mineral acres of the 20 Glovatsky mineral acres or any leasehold interest burdening the Glovatsky minerals. Walters and Imperial Oil answered Chevron's complaint and cross-claimed against Kiker and Kaiser. Kaiser answered Chevron's complaint and cross-claimed against Hunt Trust, alleging that in settling with Kaiser, Hunt Trust represented that it owned any claim against Kaiser arising out of the Glovatsky minerals and Kaiser's testimony in the Hunt Trust trial, and that "If Hunt did not own all claims against Kaiser arising from the above described events, and if Plaintiff Chevron should prevail in its claim against Kaiser, Kaiser is entitled to indemnity for the same from Hunt." Kaiser also cross-claimed against Walters for contribution. Kiker answered Chevron's complaint and cross-claimed against Hunt Trust for indemnity if it did not own all claims against Kiker, and cross-claimed against Walters and Imperial Oil for contribution.

Kiker, Kaiser, and Hunt Trust moved for summary judgment dismissing Chevron's action, alleging that the wrongful acts by Kiker, Kaiser, and Walters were done before Chevron had any interest in the property, and the claims were barred by the statute of limitations. The trial court held that Gulf's acceptance by performance of a December 1, 1976, option farmout agreement related back to the date the option was given, so it had an interest in the property, and Chevron's action was not barred by any statute of limitation.

In April 1992, Kiker and Kaiser paid Chevron $850,000 for dismissal of Chevron's claims against them and for an assignment of Chevron's claims against Walters and Imperial.

Kiker and Kaiser's cross-claims against Hunt Trust were severed from the main action for trial. The main action was tried in April 1993. The jury returned a verdict for Hunt Trust and for Kiker and Kaiser as assignees of Chevron's claim in equal amounts of $889,356.87, representing the total working interest income lost as a result of the Target lease being held superior to the Hunt Trust lease of the 20 Glovatsky mineral acres. Judgment was entered ordering that Hunt Trust recover $984,020.61 from Walters and Imperial Oil, and that Kiker and Kaiser, as assignees of Chevron, recover $549,630.60 from Walters and Imperial Oil.

In the separate trial on Kiker and Kaiser's cross-claims against Hunt Trust, the jury found in favor of Kiker and Kaiser for $305,500. The court added attorney fees of $70,162.61, costs and disbursements of $1,579.53, and judgment was entered for a...