Grayden v. Spring Creek Energy Partners, LLC
| Decision Date | 31 March 2022 |
| Docket Number | Civil Action 21-cv-00106-RM-NRN |
| Parties | KIMBERLY S. GRAYDEN f/k/a Kimberly S. Pitman, Plaintiff, v. SPRING CREEK ENERGY PARTNERS, LLC, a Colorado limited liability company, and JASON L. EDDINGTON, individually, Defendants. |
| Court | U.S. District Court — District of Colorado |
Before the Court is the Recommendation of United States Magistrate Judge N. Reid Neureiter (ECF No. 79) to grant in part and deny in part Defendants' Motion for Summary Judgment (ECF No. 50). Defendants filed Objections to the Recommendation (ECF No. 81), and Plaintiff filed a Response (ECF No. 83). Further developments prompted additional motions. Defendants filed a Request for Judicial Notice (ECF No. 85), asking the Court to take judicial of documents recorded in the public records of the Clerk and Recorder for Weld County, Colorado. Plaintiff responded by filing an Opposition and Objection as well as a Motion to Strike. (ECF Nos. 86, 87.) Defendants in turn filed a Reply and Response to those pleadings (ECF Nos 90, 91), and raised the motions ante with a Motion to Supplement (ECF No. 92), seeking to add new facts about the Weld County public records to the Statement of Undisputed Material Facts they submitted with their Motion for Summary Judgment. Plaintiff responded with a Reply and Response to those pleadings (ECF Nos. 97, 98), and Defendants then filed an Amended Request for Judicial Notice (ECF No. 99), asking the Court to take judicial notice of certified copies of twenty-three Weld County public records, most, but not all of which were included in its previous Request for Judicial Notice (ECF No. 85).
The Court granted the Amended Request and provided Plaintiff an opportunity to supplement her response to the Motion for Summary Judgment in light of the Weld County public records. (ECF No. 100.) Plaintiff then filed a Supplemental Response (ECF No. 101), and Defendants filed a Reply (ECF No. 101). For the reasons below, the Court rejects the magistrate judge's Recommendation because, in light of the county records now in the record of this case, it is now moot. The Court grants Defendants' Motion for Summary Judgment and denies as moot the other pending Motions in this case.
Pursuant to Fed.R.Civ.P. 72(b)(3), this Court reviews de novo any part of the magistrate judge's recommendation that is properly objected to. When a magistrate judge issues a recommendation, the Court "may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Id.
Summary judgment is appropriate only if there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Gutteridge v. Oklahoma, 878 F.3d 1233, 1238 (10th Cir. 2018). Applying this standard requires viewing the facts in the light most favorable to the nonmoving party and resolving all factual disputes and reasonable inferences in its favor. Cillo v. City of Greenwood Vill, 739 F.3d 451, 461 (10th Cir. 2013). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury or is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136 (10th Cir. 2000). "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Scott v. Harris, 550 U.S. 372, 380 (2007) (citation omitted). A fact is "material" if it pertains to an element of a claim or defense; a factual dispute is "genuine" if the evidence is so contradictory that if the matter went to trial, a reasonable jury could return a verdict for either party. Anderson, 477 U.S. at 248.
These facts are undisputed. Wilda Eugene Thornton died in 2016 and bequeathed to Plaintiff certain overriding royalty interests located in Weld County. (ECF No. 62, fflf 1, 3.) In early 2018, Defendant Spring Creek Energy Partners, LLC ("Spring Creek")[1] approached Plaintiff to inquire whether she would be interested in selling some of those royalty interests, and negotiations ensued. (Id. at If 10.) In November 2019, Plaintiff contacted Defendant Eddington to inquire whether Spring Creek was still interested in purchasing some of her royalty interests. (Id. at ¶ 12.) In March 2020, Plaintiff and Spring Creek entered into a Purchase and Sale Agreement ("PSA") in which Plaintiff agreed to sell one third of her royalty interests for about $650, 000. (Id. at ¶ 20.) The following month, Plaintiff delivered an Assignment of Overriding Royalty Interest conveying those interests to Spring Creek. (Id. at ¶ 24.) In May 2020, Plaintiff and Spring Creek executed a Corrected Assignment of Overriding Royalties, changing the effective date of the conveyance from December 1, 2019, to March 31, 2020. (Id. at ¶ 49.)
Plaintiff filed this lawsuit in January 2021. She alleges she did not realize until spring 2020 that she was assigning to Spring Creek royalty interests in producing wells and that she never would have agreed to sell her royalty interests had she known the wells were producing. She further alleges she repeatedly told Defendant Eddington she did not intend to sell any royalty interests connected to producing wells, that Defendants knew of her mistaken belief that interests covered by the PSA were not producing, and that they affirmatively misled her by representing that those interests had no producing wells. In her Second Amended Complaint, she asserts claims for fraudulent concealment, unjust enrichment, unilateral mistake, and civil theft.
In the Recommendation, the magistrate judge concluded that Defendants were entitled to summary judgment on Plaintiffs unjust enrichment claim[2] but that disputed issues of fact precluded granting summary judgment on the remaining claims. Those claims hinge on whether Defendants made misleading statements to Plaintiff and, if so, whether Plaintiffs reliance on such statements was justified. However, county records subsequently produced by Defendants and judicially noticed by the Court have placed this case in a new posture. If, as Defendants assert, the county records placed Plaintiff on constructive notice that the wells at issue were producing, then Plaintiffs reliance on Defendants' alleged statements cannot be justified, and Defendants are entitled to summary judgment. As noted above, the parties have filed supplemental briefs addressing this issue.
As a threshold matter, the Court rejects Plaintiffs argument that Defendants' new arguments and evidence that the Weld County public records put her on constructive notice are untimely and waived. The Court may receive further evidence after a magistrate judge issues a recommendation. See Fed. R. Civ. P. 72(b)(3). Moreover, in their Motion, Defendants did raise the argument that Plaintiff was had constructive notice that the wells at issue were producing, albeit based on information available on the Colorado Oil and Gas Conservation Commission's website rather than the county records submitted later. (ECF No. 50 at 11-12.) The Court does not disagree with the notion that this case would have proceeded more efficiently had the county records been produced sooner, but in this instance, any prejudice to Plaintiff has been cured by allowing supplemental briefing, and the Court declines to find that Defendants have waived this issue.
Next, the Court finds the royalty interests at the heart of this case are real property interests, subject to Colorado's recording statute. See Page v. Fees-Krey, Inc., 617 P.2d 1199, 1194 (Colo. 1980) (en banc). "As a matter of law, a person who acquires an interest in real property is on constructive notice of all prior filings concerning that property." Bolinger v. Neal, 259 P.3d 1259, 1270 (Colo.App. 2010) (citing Colo. Rev. Stat. § 38-36-149); see also Arnov v. First Fed. Sav. & Loan Ass'n of Tarpon Springs, 713 P.2d 1329, 1331 (Colo.App. 1985) (). Moreover, "so long as a prior instrument is properly recorded, subsequent purchasers have an obligation to find it on the record and are considered to have constructive notice of it, even if they do not locate it." Franklin BankN.A. v. Bowling, 74 P.3d 308, 313 (Colo. 2003) (en banc) (quotation omitted). Although "the prime purpose of the recording acts is to give subsequent purchasers information regarding the title of the property that they propose to acquire," id. at 312 (quotation omitted), they provide the same notice to sellers of interests in real property.
Here, Defendants have submitted certified copies of twenty documents recorded with the Weld County Clerk and Recorded from June 2012 through January 2020. (See ECF No. 99 at 2-4.) The documents include Affidavits of Extension of Oil and Gas Leases, Agreements to Amend and Ratify Oil and Gas Leases, and Declarations of Pooling and Unitizations. Defendants contend that these county records pertain to Plaintiffs property at issue in this case and placed her on "constructive notice" of ongoing oil and gas production associated with her royalty interests.
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