Elsleger v. Van Runsick
| Decision Date | 16 December 2015 |
| Docket Number | No. CV–15–500,CV–15–500 |
| Parties | Kenneth Elsleger and Gloria Elsleger, Appellants v. Jeff Van Runsick, Tonya Runsick, and White County Title Co., Appellees. |
| Court | Arkansas Court of Appeals |
Taylor & Taylor Taw Firm, P.A., Little Rock, by: Tasha C. Taylor and Andrew M. Taylor, for appellants.
Morgan Taw Firm, P.A., Clinton, by: Nathan S. Morgan, for appellees Tonya Runsick and Jeff Runsick.
Dover Dixon Horne PTTC, Little Rock, by: Gary B. Rogers and Thane J. Lawhon, for appellee White County Title.
In February 2015 the White County Circuit Court found Jeff Van Runsick and Tonya Runsick to be the owners of a certain mineral interest, granted reformation of a correction deed, and awarded attorney fees following a bench trial. Kenneth and Gloria Elsleger appeal the circuit court's decision. Because we hold that the circuit court erred by going beyond the scope of the legal purpose that a correction deed serves by adding a mineral reservation or exception, we reverse and remand for further proceedings consistent with this opinion.
Jeff Van Runsick and Tonya Runsick sold Kenneth and Gloria Elsleger a home and five acres near Searcy, Arkansas in 2007. A deed was recorded in White County on 11 December 2007 (Deed I). Deed I contained the following language:
RESERVING AND RETAINING, HOWEVER , unto the GRANTORS all oil, gas and minerals and all oil, gas and mineral rights and interests, and subject to all prior and/or existing oil and gas leases, if any, and subject to all prior reservations and conveyances of oil, gas or minerals or right or interests therein. This conveyance conveys unto the GRANTEES no oil, gas or minerals and no oil, gas or mineral rights or interests.
The Runsicks executed two more deeds several months later at the request of White County Title Company. Although it appears from the trial testimony that the two additional deeds (Deeds II and III) were executed by the Runsicks on the same day, the deeds were recorded at different times. What we call Deed II is titled "Warranty Deed" and was recorded on 26 February 2008. In it, Tonya Runsick's name was correctly stated as "Tonya Runsick" and the grantors (the Runsicks) purportedly conveyed all the interest they owned in the property (what we call Blackacre in this opinion) to the Elslegers. After the granting clause, Deed II contained this statement:
* * GRANTORS shall retain and reserve all oil, gas, and mineral rights they hold on the above described property, less and except any previous reservations of oil, gas, and minerals, if any.
The Elslegers did not sign Deed II; it was signed only by the Runsicks.
A few weeks later, on 14 March 2008, what we call Deed III was recorded. It is titled "Correction Deed." Deed III did not contain any language about any mineral interest, and it was signed by Jeff Van Runsick and Tonya Runsick as grantors. Deed III was also signed by the Elslegers as grantees.
On 2 December 2008, Fatima Hoggard, an employee of White County Title, filed a Scrivener's Affidavit. Her affidavit stated that the correction deed (Deed III) "contain[ed] an unintentional scrivener's error in the absence of the mineral reservation." According to Hoggard's affidavit, this "mineral reservation" was intended to appear after the legal description in Deed III:
* GRANTORS shall retain and reserve any oil, gas, and mineral rights they hold on the above described property, less and except any previous reservations of oil, gas, and minerals, if any.
In January 2009, shortly after the Scrivener's Affidavit was filed, the Elslegers requested royalty payments from Chesapeake Operating, Inc. (Chesapeake). But Chesapeake objected to making royalty payments to either the Elslegers or the Runsicks. A 2010 letter from Chesapeake, which the court accepted as evidence during the bench trial, asked the parties to stipulate what interest each was claiming. Chesapeake noted that Deed I conveyed an undivided ½ surface interest to the Elslegers. It also observed that Deed II was a warranty deed and that it covered the property. In Chesapeake's view, Deed II's language dealing with the mineral-reservation language could be construed in two ways: either (1) a reservation of all minerals; or (2) a reservation of only ½ of the minerals and conveyance of the ½ of the minerals previously reserved. Chesapeake then noted that Deed III provided that the "conveyance is subject to all reservations of record, although it does not contain a reservation of minerals itself nor is it limited to an undivided ½ interest." It remarked that both the grantors (Runsicks) and the grantees (Elslegers) executed the correction deed. And, for its own limited purposes, the letter showed the property's mineral interest to be vested in the Elslegers. If the Runsicks claimed no mineral interest in the property, Chesapeake asked that they execute a quitclaim deed to the Elslegers covering the disputed mineral interest and oil-and-gas rights.
The Runsicks filed their complaint in September 2010 against the Elslegers and Chesapeake seeking reformation of Deed III, which contained no mineral-rights language. The Runsicks alleged that it was by mutual mistake that the correction deed (Deed III) failed to include an exclusion or reservation of the mineral interest, because the correction deed was "only and solely for the purpose" of correcting Tonya Runsick's name, as evidenced by the Scrivener's Affidavit.
The Elslegers, in turn, filed a third-party complaint for slander of title against White County Title Company. Chesapeake stipulated that it would cause all past and future royalty payments to be paid to whichever party prevailed after entry of a final order disposing of the proceeding.
A bench trial occurred in February 2015. The 2007 operative real-estate contract was entered into evidence during trial. The contract had three possible provisions that relate to mineral rights: Paragraph 8, Paragraph 12, and Paragraph 27. Paragraph 8 stated that "SUCH CONVEYANCE SHALL INCLUDE ALL MINERAL RIGHTS OWNED BY SELLER CONCERNING AND LOCATED ON THE PROPERTY, IF ANY, UNLESS OTHERWISE SPECIFIED IN PARAGRAPH 27." (emphasis in original). The referenced paragraph, Paragraph 27, contained no statement about mineral rights and stated that the real estate contract supersedes any other contract or agreement. In contrast, Paragraph 12 stated, "Mineral Rights do not convey with this property." Paragraph 12 was titled "Fixtures And Attached Equipment."
During the bench trial, the Runsicks testified that it was always their understanding and intention to retain all the mineral interest in the property, and they had never spoken to the Elslegers directly regarding the minerals. Phyllis Fitzgerald, the real-estate agent who had represented both parties in the transaction, testified that she felt that it was "clear from all communication, all documents" that it was the intent of the Runsicks to retain the minerals and the intent of the Elslegers to not get the minerals.
A co-owner of White County Title, Mitzi Hannah, also testified for the Runsicks. Hannah testified that White County Title became involved at the request of ENG Lending to do a refinance of the property for the Elslegers. The Elslegers apparently realized there were issues with Deed I when they tried to refinance the property in early 2008, and White County Title Company received a work order from the Elslegers' lender for the purpose of clearing up title to the property. The title problem was two-fold: (1) Deed I reflected one of the grantor's names (Tonya Runsick) as Tonya Van Runsick, not Tonya Runsick, and (2) it reflected that the grantors (the Runsicks) had conveyed only a one-half interest in Blackacre to the grantees (the Elslegers). She explained that White County Title prepared Deed II (warranty deed) with the purpose of conveying "all the interest in the property" and prepared Deed III (correction deed) "to correct the last name from Van Runsick to Runsick." Hannah agreed that the Runsicks signed the deeds "to help the Elslegers clear their title so ... the chain of title could be very clear." Hannah testified that Jeff Runsick later called and complained that the deed had done away with his mineral rights. Hannah also said that she felt that "Mr. Runsick has his mineral rights," but she agreed that they tried to help him. White County Title, Hannah explained, tried to "help out" the Runsicks by filing the December 2008 Scrivener's Affidavit. It also tried to get the Elslegers to sign another correction deed containing a mineral reservation in favor of the Runsicks, but the Elslegers refused to sign the proposed correction deed.
The Elslegers moved to dismiss the Runsicks' complaint, arguing that the Runsicks had failed to show mutual mistake by clear and convincing evidence and that "all prior negotiations are merged into a deed and that warranty deed and the subsequent correction deed make it very clear ... that the deed on its face, the correction deed, shows the minerals were not reserved." The court denied the Elslegers' motion.
The Elslegers then presented their side of the story. They testified that Fitzgerald, who had represented them (and the Runsicks) during the real-estate transaction, told them that the minerals conveyed with the house and that it was always their understanding that they were the owners of the property's mineral interest. They also called several other witnesses, whose testimony supported the Elslegers' or whose testimony was cumulative and reflected what had already been said during the Runsicks' case in chief. At the close of the evidence the Elslegers renewed their motion to dismiss, and the court denied it.
The circuit court took proposed findings of fact and conclusions of law in lieu of closing arguments, eventually adopting the Runsicks' proposed order. An 18 February 2015 judgment was entered, and it disposed of the Runsicks'...
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.... . . Adding a reservation or adding a property interest goes beyond the scope of what a correction deed can do." Elsleger v. Runsick, 479 S.W.3d 43, 50 (Ark. App. 2015); see also Golden v. Hayes, 277 So. 2d 816, 817 (Fla. Dist. Ct. App. 1973) (a correction deed did not affect the original ......