Great N. Properties v. Extraction Oil & Gas, Inc.

• Docket Number: Supreme Court Case No. 22SC805
• Decision Date: 06 May 2024
• Citation: 547 P.3d 1110,2024 CO 28
• Parties: GREAT NORTHERN PROPERTIES, LLLP, a Colorado limited liability partnership, Petitioner, v. EXTRACTION OIL AND GAS, INC.; Richmark Energy Partners, LLC; and Richmark Royalties, LLC, Respondents.
• Court: Colorado Supreme Court

547 P.3d 1110

2024 CO 28

GREAT NORTHERN PROPERTIES, LLLP, a Colorado limitedliability partnership, Petitioner,

v.EXTRACTION OIL AND GAS, INC.; Richmark Energy Partners, LLC; and Richmark Royalties, LLC, Respondents.

Supreme Court Case No. 22SC805

Supreme Court of Colorado.

May 6, 2024

Certiorari to the Colorado Court of Appeals, Court of AppealsCase No. 21CA700

Attorneys for Petitioner: Witwer, Oldenburg, Barry & Groom, LLP, Patrick M. Groom, Kent A. Naughton, Francis L. Kailey, Greeley, Colorado

Attorneys for RespondentExtraction Oil and Gas, Inc.: Welborn Sullivan Meek & Tooley, P.C., Samuel S. Bacon, Joseph C. Pierzchala, Denver, Colorado

Attorneys for Amicus Curiae Mineral Resources, Inc.: Zarlengo & Kimmell PC, Thomas J. Kimmell, Denver, Colorado

No appearance on behalf of: Richmark Energy Partners, LLC and Richmark Royalties, LLC.

En Banc

JUSTICE BERKENKOTTERdelivered the Opinion of the Court, in which CHIEF JUSTICE BOATRIGHT, JUSTICE MÁRQUEZ, JUSTICE HOOD, JUSTICE GABRIEL, JUSTICE HART, and JUSTICE SAMOUR joined.

JUSTICE BERKENKOTTERdelivered the Opinion of the Court.

¶1 On its face, this case involves the relatively simple question of who owns the mineral rights beneath one block of a dedicated street in Greeley, Colorado.The answer to that question determines whether the landowners or the entity that developed the block back in the 1970s is entitled to receive certain oil and gas royalty payments.

[1]¶2 Beneath the surface of this relatively simple question, however, lies a more technical one: How does a court determine who holds title to the mineral estate under a dedicated right-of-way when a grantor, who has an interest in the mineral rights under that right-of-way, executes a conveyance of the land abutting the right-of-way that is silent as to those rights?To answer this question, we take a deep dive into Colorado property law and examine our jurisprudence concerning the "centerline presumption," a common law rule of conveyance this court first embraced over 125 years ago.Asmussen v. United States,2013 CO 54, ¶ 18, 304 P.3d 552, 557.The rule provides that a "conveyance of land abutting a highway or street is presumed to carry title to the center of that roadway to the extent that the grantor has any interest therein, unless a contrary intent appears on the face of the conveyance."Id. at ¶ 15, 304 P.3d at 556(citingOlin v. Denver & Rio Grande R.R. Co.,25 Colo. 177, 53 P. 454, 455(1898)).

¶3 In the decades since this court decided Olin,we have consistently applied this standard.But we have never explicitly addressed the question presented here: When the centerline presumption applies, is the conveyance of land abutting a road or highway presumed to carry title to the centerline of both the surface and the mineral estates beneath a dedicated right-of-way?

¶4The petitioner in this case, Great Northern Properties, LLLP("GNP"), asserts that the answer to this question is no—in its view, when the presumption applies, the conveyance is presumed to carry title only to the surface estate.The respondents, Extraction Oil and Gas, Inc., Richmark Energy Partners, LLC, and Richmark Royalties, LLC(collectively, "Extraction"), counter that the answer is yes—when the presumption applies, the conveyance is presumed to carry title to both.A division of the court of appeals agreed with Extraction, holding that, when the centerline presumption applies, the conveyance is presumed to carry title to the centerline of both the surface and mineral estates beneath a dedicated right-of-way to the owners of land abutting that right-of-way.Great N. Props., LLLP v. Extraction Oil&Gas, Inc., 2022 COA 110, ¶ 17, 522 P.3d 228, 234.

¶5 But in so holding, the division also concluded that, for the centerline presumption to apply, the grantor must divest all the property it owns abutting the right-of-way.Id. at ¶ 20, 522 P.3d at 235.Both parties argue, albeit for different reasons, that the division erred by tacking on this "complete divestiture" requirement as a new, additional condition to determine when the centerline presumption applies.

[2]¶6 After reviewing pertinent, well-settled principles of property conveyance and our centerline presumption jurisprudence, we affirm the division’s decision insofar as it concludes that a grantor is presumed under the centerline presumption to intend to convey to the centerline both the surface and mineral estates beneath a dedicated right-of-way to the owners of land abutting that right-of-way.We emphasize, as we have over the past century, that the presumption applies only to the extent the grantor has any interest therein and only if no contrary intent appears on the face of the conveyance document.

¶7 However, we reverse the division’s conclusion that the centerline presumption cannot apply to a particular property if a grantor owns any other property anywhere along the entire right-of-way.In adopting this standard, the division added a new condition for determining when this rule of conveyance applies—proof of complete divestiture along the entire right-of-way.We emphasize, in reversing this part of the division’s opinion, that the presumption applies to the surface and mineral estates under a dedicated right-of-way if the party claiming ownership to land abutting the right-of-way establishes that (1) the grantor conveyed ownership of land abutting the right-of-way; (2) the grantor owned the fee—to both the surface estate and the mineral rights—underlying the right-of-way at the time of the conveyance; and (3) no contrary intent appears on the face of the conveyance document.

¶8 Accordingly, we affirm in part and reverse in part the division’s judgment.

I.Facts and Procedural History

¶9 In 1974 and 1975, JRPW Construction Company("the developer"), a real estate de- veloper, platted and subdivided undeveloped pastureland that it owned in fee simple absolute in Greeley, Colorado into three parcels.To access the individual parcels, the developer dedicated a road ("11th Street") to the city in 1974.By the end of 1975, the developer had sold all three parcels.None of the deeds included any reservation of mineral rights or any other interests.Over time, the three parcels were further subdivided and conveyed to new owners.

¶10 In January 2019—almost forty-five years after the developer dedicated 11th Street and conveyed the parcels—the developer purported to convey to GNP its interest in the mineral estate beneath 11th Street.Shortly thereafter, GNP filed a C.R.C.P. 105 action to quiet title to the mineral estate, naming as defendants the owners of the parcels abutting 11th Street and Extraction, a mineral developer with oil and gas leases from each of the individual parcel owners and GNP.Extraction’s leases permit it to drill and produce oil and gas from beneath 11th Street regardless of who owns the mineral estate, so GNP’s suit sought, at least in part, to determine to whom Extraction must pay royalties.

¶11 In May 2019, Extraction moved pursuant to C.R.C.P. 56(h) for a determination of a question of law, asking the district court to decide whether the developer’s conveyances of the parcels abutting 11th Street in 1974 and 1975 had also conveyed the mineral estate to the centerline of the street.Extraction argued that the centerline presumption applied and, as a result, the developer conveyed "to the purchasers of the abutting parcels" all its interests to the centerline of 11th Street, including the mineral estate.In response, GNP filed a cross-motion agreeing "on the necessity of a determination of law" but maintaining that the centerline presumption didn’t apply to mineral rights and that it shouldn’t be expanded in this manner.

¶12The district court agreed with Extraction, concluding that the centerline presumption could be applied to a conveyance of the mineral estate beneath a right-of-way and that the developer therefore could be found to have "conveyed the mineral estate to the centerline of the roadway if the abutting lot owners carr[ied] their burden of [proof]" under Asmussen.GNP then moved for summary judgment declaring that GNP owned the mineral estate beneath the street, despite the court’s earlier ruling in Extraction’s favor.The court denied GNP’s motion, concluding that the centerline presumption applied to the developer’s earlier conveyances so the lot owners—not the developer—owned the mineral estate beneath 11th Street.This meant that the developer did not own the interests in the mineral estates it purported to convey to GNP.The court entered final judgment quieting title to the entire mineral estate in favor of the two parcel owners who had participated in the case and who had not disclaimed their interests.¹

¶13 GNP appealed, contending that the district court erred by determining that the centerline presumption can apply to convey the mineral estate beneath a right-of-way.In a unanimous, published decision, a division of the court of appeals affirmed the district court’s determination of law.Great N. Props.,¶ 17, 522 P.3d at 234.The division explained that Colorado law presumes a grantor’s intent "to convey along with the property all its appurtenant advantages and rights … and that a grantor conveying property by deed intends to convey their entire interest unless a portion of that interest is expressly excepted from the conveyance."Id. at ¶ 15, 522 P.3d at 234."As to mineral interests specifically," the division observed, " ‘a conveyance of land by general description, without any reservation of a mineral interest, passes title to both the land and the underlying mineral deposits.’ "Id. at ¶ 16, 522 P.3d at 234(quotingO’Brien v. Vill. Land Co.,794 P.2d 246, 249(Colo.1990)).Based on "these fundamental rules of property conveyance," the division concluded, "[W]hen the centerline presumption applies …, it applies to all interests the grantor possesses in the property underlying the right-of-way, including...