BNSF Ry. Co. v. Box Creek Mineral Ltd. P'ship

• Decision Date: 18 June 2018
• Docket Number: S-17-0254
• Parties: BNSF RAILWAY COMPANY, a Delaware corporation, d/b/a Burlington Northern and Santa Fe Railway Company, Appellant (Defendant), v. BOX CREEK MINERAL LIMITED PARTNERSHIP, a Wyoming limited partnership, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

420 P.3d 161

BNSF RAILWAY COMPANY, a Delaware corporation, d/b/a Burlington Northern and Santa Fe Railway Company, Appellant (Defendant),

v.BOX CREEK MINERAL LIMITED PARTNERSHIP, a Wyoming limited partnership, Appellee (Plaintiff).

S-17-0254

Supreme Court of Wyoming.

June 18, 2018

Representing Appellant: Lori A. McMullen and Clayton H. Gregersen of Crowley Fleck PLLP, Sheridan, Wyoming. Argument by Ms. McMullen.

Representing Appellee: Dan B. Riggs, Amanda K. Roberts, and J. Kyle Hendrickson of Lonabaugh and Riggs, LLP, Sheridan, Wyoming. Argument by Mr. Riggs and Mr. Hendrickson.

Before DAVIS, FOX, and KAUTZ, JJ., HILL, J. (Ret.), and RUMPKE, D.J.

RUMPKE, District Judge.

[¶1] Box Creek Mineral Limited Partnership (herein "Box Creek") filed suit against BNSF Railway Company (herein "BNSF") for declaratory judgment and to quiet title on the mineral rights in lands conveyed by two deeds in 1913.¹ The parties disputed whether the two deeds passed a fee simple estate from Box Creek to BNSF, thereby conveying the underlying mineral estate, or if the deeds merely conveyed an easement in fee simple, whereby the minerals would not pass to BNSF.

[¶2] The district court found the deeds ambiguous and denied summary judgment. Following a bench trial, the district court found that "the parties intended an easement-like conveyance rather than a fee simple interest." Consequently, the district court quieted title to the mineral estate in Box Creek. BNSF appealed. For the reasons set forth below, we affirm the district court’s decision.

ISSUES

[¶3] We agree with Box Creek’s statement of the dispositive issues, which we restate as:

1. Did the right of way deeds convey the underlying mineral estates?

2. Did the district court properly admit the testimony of Marc Strahn as expert witness testimony?

PART I

PROCEDURAL HISTORY AND RELEVANT FACTS

A. Procedural History

[¶4] Box Creek filed an action for declaratory judgment and seeking to quiet title to the mineral rights underlying real property in Converse County. Box Creek claimed the deeds did not convey the minerals underlying the railroad. In response, BNSF generally denied Box Creek’s claims and argued that the mineral estate passed to BNSF’s predecessor in interest.²

[¶5] Box Creek designated Marc Strahn as its expert witness. In his report, Strahn described his methodology in determining the intent of the parties when a deed is unclear. After looking at the deed itself, Strahn examined the surrounding title to see if those documents indicate the parties’ intent. Then, Strahn asked questions concerning the circumstances surrounding the execution of the instrument including whether there was mineral activity in the area at the time of the conveyance. In this case, Strahn also examined the historical practices surrounding property conveyances used by persons in Wyoming.

[¶6] Before trial, BNSF moved to exclude the expert report and testimony. Citing this Court’s familiar Bunting standard, BNSF argued that Strahn’s testimony not only lacked a sufficiently reliable methodology, but also that the testimony would not be helpful to the finder of fact. Box Creek opposed the exclusion of its expert. In general, Box Creek argued that Strahn’s experience as a landman researching mineral conveyances allowed him to "testify as to his observations of the language utilized in the two deeds and historical conveyancing standards." In reaching his opinions regarding the parties’ intent as to the deeds at issue, Strahn reviewed the deeds and 27 documents affecting title to the minerals at issue. All 27 documents post-dated the conveyances by at least 37 years.

[¶7] The district court held a hearing on BNSF’s motion to exclude Strahn’s testimony. Following the hearing, the district court denied BNSF’s motion finding in toto that "Mr. Strahn’s report is sufficiently reliable and he is properly qualified as an expert under W.R.E. 702. Defendant is certainly free to explore Mr. Strahn’s qualifications in cross examination." After denying cross motions for summary judgment, the district court conducted a bench trial. BNSF properly preserved its objection to Strahn’s testimony by filing a pretrial motion in limine and objecting to the testimony at trial.

[¶8] Following a bench trial, the district court found the deeds constituted "an easement-like conveyance, rather than a fee simple interest." Consequently, the district court quieted title to the minerals in Box Creek. BNSF filed a timely notice of appeal.

B. Relevant Facts

[¶9] Generally, the evidence at trial was undisputed. In large part, as explained below, the evidence consisted of testimony as to what part (or parts) of the deeds the district court should emphasize in determining the intent of the parties from two ambiguous instruments.

[¶10] This case involves two deeds drafted by BNSF. On July 10, 1913, Box Creek’s predecessors in interest, the Douglas Canal Company and John Morton and S.E. Morton, executed two Right of Way Deeds in favor of Big Horn Railway Company, BNSF’s predecessor in interest. The Converse County Clerk recorded the deeds on July 19, 1913 (Deeds 42338 and 42339).

[¶11] The parties titled each deed as a "Right of Way Deed." The granting clauses in each deed states that Box Creek "does hereby grant, bargain, sell and convey" an interest in the real property to BNSF. The grant is to BNSF’s "successors and assigns." Then, each deed described the property conveyed.

[¶12] Both deeds granted BNSF "[a] strip of land one hundred and fifty (150) feet wide, it being seventy-five (75) feet wide on each side of the center line of the railroad of said railroad company as the same is now located."³ These conveyances are described as going "over and across" certain lands. Box Creek also conveyed "a strip of land two hundred (200) feet wide, it being one hundred (100) feet wide on each side of the center line of the said railroad" in different sections. Again, these conveyances are described as going "over and across" certain lands. In Deed 42338, BNSF received "a strip of land" described as containing a little more than 41 acres "for station ground purposes."

[¶13] Each conveyance required the railroad to provide crossings and a means of irrigation. In Deed 42339, the "conveyance is made with the understanding that the said Railroad Company shall provide crossings across its right of way and track, and means of irrigating the land on either side of the right of way above described ...." (Emphasis added.) In Deed 42338, "the conveyance is made on condition that said Railroad Company shall provide crossings across its right of way and track, and means of irrigating the land on either side of said right of way." (Emphasis added.)

[¶14] Each deed’s habendum clause grants BNSF the right "TO HAVE AND TO HOLD the land above described unto the said Railroad Company, its successors and assigns forever." The same paragraph continues that:

[a ]nd in addition to the right of way described above , it hereby grants for itself, and its successors and assigns, the right to said railroad company to erect and maintain a snow fence, where the same may be deemed necessary, for the term of four months, each and every year after the date of this instrument, at any point within one hundred feet on either or both sides of the center line of said railroad, as now located on said above described land. [ (Emphasis added.) ]

PART II

APPLICABLE LAW

A. Standard of Review

[¶15] The district court heard this case without a jury. We, therefore, apply our standard for reviewing decisions made by a district court following a bench trial:

The factual findings of a judge are not entitled to the limited review afforded a jury verdict. While the findings are presumptively correct, the appellate court may examine all of the properly admissible evidence in the record. Due regard is given to the opportunity of the trial judge to assess the credibility of the witnesses, and our review does not entail re-weighing disputed evidence. Findings of fact will not be set aside unless they are clearly erroneous. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.

Mullinnix LLC v. HKB Royalty Tr. , 2006 WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo. 2006).

[¶16] Further, "we assume that the evidence of the prevailing party below is true and give that party every reasonable inference that can fairly and reasonably be drawn from it. We do not substitute ourselves for the trial court as a finder of facts; instead, we defer to those findings unless they are unsupported by the record or erroneous as a matter of law." Mullinnix, ¶ 12, 126 P.3d at 916. The district court’s conclusions of law and application of law to facts are subject to our de novo standard of review. Mullinnix, ¶ 12, 126 P.3d at 916.

B. General Wyoming Property Law

[¶17] Under Wyoming law, "every conveyance of real estate shall pass all the estate of the grantor therein, unless the intent to pass a less estate shall expressly appear or be necessarily implied in the terms of the grant." Wyo. Stat. Ann. § 34-2-101 (LexisNexis 2017). This statutory language has remained unchanged since at least 1910. See Forde v. Libby , 22 Wyo. 464, 143 P. 1190, 1191 (1914). As a result, in general, "[w]hen the surface is granted without reference to the mineral estate, it is presumed the mineral estate is included." Gilstrap v. June Eisele Warren Tr. , 2005 WY 21, ¶ 15, 106 P.3d 858, 863 (Wyo. 2005).

[¶18] However, easements are different. "An easement is an interest in land which entitles the easement holder to a limited use or enjoyment over another person’s property." Thornock v. Esterholdt , 2013 WY 42, ¶ 20, 299 P.3d 68, 74 (Wyo. 2013) (internal quotation marks and citations omitted) (emphasis added). Thus, by its own terms, an easement is a limited grant. Consequently, an easement "necessarily implies" that the grantor is...