Great Plains Royalty Corp. v. Earl Schwartz Co.

• Decision Date: 05 April 2021
• Docket Number: No. 20200133,20200133
• Citation: 958 N.W.2d 128
• Parties: GREAT PLAINS ROYALTY CORPORATION, a North Dakota Corporation, Plaintiff, Appellee, and Cross-Appellant v. EARL SCHWARTZ COMPANY, a North Dakota partnership, Basin Minerals, LLC, a North Dakota limited liability company, and Kay Schwartz York, Kathy Schwartz Mau, and Kara Schwartz Johnson, as the Co-Personal Representatives of the Estate of Earl N. Schwartz, SunBehm Gas, Inc., a North Dakota corporation, Defendants, Appellants, and Cross-Appellees
• Court: North Dakota Supreme Court

958 N.W.2d 128

GREAT PLAINS ROYALTY CORPORATION, a North Dakota Corporation, Plaintiff, Appellee, and Cross-Appellant

v.EARL SCHWARTZ COMPANY, a North Dakota partnership, Basin Minerals, LLC, a North Dakota limited liability company, and Kay Schwartz York, Kathy Schwartz Mau, and Kara Schwartz Johnson, as the Co-Personal Representatives of the Estate of Earl N. Schwartz, SunBehm Gas, Inc., a North Dakota corporation, Defendants, Appellants, and Cross-Appellees

No. 20200133

Supreme Court of North Dakota.

FILED APRIL 5, 2021

James J. Coles, Bismarck, ND, for plaintiff, appellee, and cross-appellant; submitted on brief.

Lawrence Bender and Spencer D. Ptacek, Bismarck, ND, for defendants, appellants, and cross-appellees Earl Schwartz Company, a North Dakota partnership, Basin Minerals, LLC, a North Dakota limited liability company, and Kay Schwartz York, Kathy Schwartz Mau, and Kara Schwartz Johnson, as the Co-Personal Representatives of the Estate of Earl N. Schwartz; submitted on brief.

Jon Bogner and Jordan L. Selinger, Dickinson, ND, for SunBehm Gas, Inc., a North Dakota corporation; submitted on brief.

McEvers, Justice.

[¶1] Earl Schwartz Company; Basin Minerals, LLC; Kay Schwartz York, Kathy Schwartz Mau, and Kara Schwartz Johnson, as the co-personal representatives of the Estate of Earl N. Schwartz (together "ESCO") and SunBehm Gas, Inc. ("SunBehm") appeal from a judgment quieting title to oil and gas interests in Great Plains Royalty Corporation ("Great Plains"). Great Plains cross appeals arguing the district court erred when it denied its claims for damages. We affirm in part, vacate in part, reverse in part, and remand.

I

[¶2] We provided the background of the case in Great Plains Royalty Corp. v. Earl Schwartz Co. , 2019 ND 124, 927 N.W.2d 880 (" Great Plains I "). We repeat the history of the dispute here only as pertinent to the issues raised in the present appeal.

[¶3] Great Plains’ creditors filed an involuntary petition for bankruptcy under Chapter 11 of the Bankruptcy Code in 1968. The case was converted to a Chapter 7 liquidation proceeding. The bankruptcy trustee prepared an inventory and published a notice of sale that listed various assets, including oil and gas interests. Earl Schwartz was the highest bidder.

[¶4] The bankruptcy court issued an order confirming "the sale of all of the assets of the bankrupt corporation to Earl Schwartz." The order also noted that Schwartz had entered into an agreement with SunBehm to sell certain interests described in the notice, and the order approved the transfer of those interests directly from the bankruptcy estate to SunBehm. The bankruptcy court later issued an amended order confirming "the sale of all of the assets of the bankrupt corporation included in the Notice of Sale to Earl Schwartz."

[¶5] It is undisputed that there is no valid instrument of conveyance from the bankruptcy trustee to either ESCO or SunBehm concerning the interests now in dispute. It is also undisputed that Great Plains owned other interests that were not identified in the inventory or notice of sale. The bankruptcy case was closed in 1974. Great Plains’ creditors were not initially paid in full.

[¶6] The bankruptcy case was reopened in 2013, Great Plains’ creditors were paid in full with interest, and adversary proceedings were brought to determine ownership of various oil and gas interests. ESCO was a party to the proceedings. It argued the bankruptcy sale transferred all of the interests owned by Great Plains, regardless of whether they were listed in the notice of sale. The bankruptcy court rejected ESCO's argument and determined title to various properties that are not the subject of the present appeal.

[¶7] In 2016, Great Plains brought this quiet title action against ESCO and SunBehm. Great Plains also brought claims for slander of title and conversion of royalty proceeds. ESCO and SunBehm brought quiet title cross claims. The district court held a bench trial and found the bankruptcy trustee intended to sell "100%" of all of the oil and gas interests Great Plains owned at the time of the bankruptcy.

[¶8] We reversed the district court's judgment in Great Plains I . We held the district court erred when it determined the bankruptcy trustee intended to sell all of Great Plains’ interests, including those not listed in the notice of sale. Great Plains I , 2019 ND 124, ¶ 38, 927 N.W.2d 880. We concluded ESCO, as a party to the bankruptcy proceedings, was bound by the bankruptcy court's determination as to the trustee's intent under the doctrine of collateral estoppel. Id. at ¶ 21. We also held the evidence presented at the bench trial did not support a finding that the bankruptcy trustee intended to sell assets not identified in the notice of sale. Id. at ¶ 38. We remanded the case "for further proceedings to determine the parties’ claims and ownership of the properties consistent with this opinion." Id. at ¶ 46.

[¶9] On remand, ESCO and SunBehm claimed they hold equitable title to oil and gas interests in various tracts that were identified in the notice of sale. These interests (the "Disputed Interests") are the focus of the present appeal. ESCO and SunBehm asserted the Disputed Interests were identified in the notice of sale, which was confirmed by the bankruptcy court. They argued the bankruptcy order confirming the sale operated to vest them with ownership. The district court rejected their arguments and quieted title in Great Plains based on the absence of conveying instruments from the bankruptcy trustee. The court also rejected Great Plains claims to damages for slander of title and conversion.

II

[¶10] ESCO and SunBehm appeal arguing the district court's quiet title determination is erroneous. Great Plains cross appeals arguing the court erred when it denied Great Plains’ claims for damages for slander of title and conversion. Our standard of review for appeals from a bench trial is as follows:

In an appeal from a bench trial, the district court's findings of fact are reviewed under the clearly erroneous standard of review, and its conclusions of law are fully reviewable. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, after reviewing all of the evidence, this Court is convinced a mistake has been made. In a bench trial, the district court is the determiner of credibility issues and we will not second-guess the district court on its credibility determinations. Findings of the trial court are presumptively correct.

McCarvel v. Perhus , 2020 ND 267, ¶ 9, 952 N.W.2d 86 (quoting Larson v. Tonneson , 2019 ND 230, ¶ 10, 933 N.W.2d 84 ).

III

[¶11] ESCO and SunBehm argue Great Plains is precluded from claiming ownership of the Disputed Interests because it did not adequately identify and list its interests in the bankruptcy proceedings. Although these arguments were not made to the district court, SunBehm claims they may be advanced at any time because they implicate Great Plains’ standing and our subject matter jurisdiction.

[¶12] Issues involving subject matter jurisdiction may be raised at any time. Instasi v. Hiebert , 2020 ND 180, ¶ 6, 948 N.W.2d 25. For us to exercise our appellate jurisdiction, there must be an actual and justiciable controversy. Johnston Land Co., LLC v. Sorenson , 2018 ND 183, ¶ 7, 915 N.W.2d 664. "Standing is the concept used to determine if a party is sufficiently affected so as to insure that a justiciable controversy is presented to the court." Schmidt v. City of Minot , 2016 ND 175, ¶ 13, 883 N.W.2d 909 (internal quotations omitted) (quoting Whitecalfe v. N.D. Dep't of Transp. , 2007 ND 32, ¶ 15, 727 N.W.2d 779 ). Standing analysis requires us to determine whether a plaintiff has suffered a threatened or actual injury and whether a plaintiff is asserting his or her own rights. Nodak Mut. Ins. Co. v. Ward Cty. Farm Bureau , 2004 ND 60, ¶ 11, 676 N.W.2d 752. Whether standing exists is a question of law. Flatt v. Kantak , 2004 ND 173, ¶ 38, 687 N.W.2d 208.

[¶13] SunBehm claims Great Plains lacks standing to claim ownership of the Disputed Interests based on a bankruptcy rule that precludes a bankrupt debtor from evading creditors by failing to disclose assets. See Moore v. Slonim , 426 F.Supp. 524, 527-28 (D. Conn. 1977) (bankrupt debtor cannot assert title to property after withholding knowledge of the property and omitting it from the schedule of assets). ESCO argues Great Plains is barred from claiming ownership of the Disputed Interests based on judicial estoppel, which is an equitable doctrine that precludes parties from taking inconsistent or contradictory legal positions in the same or successive litigation. See In re Estate of Lindvig , 2020 ND 236, ¶ 20, 951 N.W.2d 214. Neither argument asserts the absence of an injury to Great Plains. Nor do the arguments assert the absence of a justiciable controversy. They therefore do not implicate jurisdictional standing. Because the arguments do not involve our jurisdiction and they were presented for the first time on appeal, we will not address them. See Grengs v. Grengs , 2020 ND 242, ¶ 18, 951 N.W.2d 260 ("This Court will not address issues raised for the first time on appeal.").

IV

[¶14] ESCO and SunBehm argue they acquired ownership of the Disputed Interests by virtue of the bankruptcy order confirming the sale. Great Plains claims their argument is barred by the law of the case doctrine and our mandate in Great Plains I .

Under the law of the case doctrine, if an appellate court has ruled on a legal question and remanded the case to the lower court for further proceedings, the legal question thus determined becomes the law of the case and will not be differently determined on a subsequent appeal in the same case where the facts remain the same.

Riverwood Commercial Park, L.L.C. v. Standard Oil Co., Inc., 2007 ND 36, ¶ 12, 729 N.W.2d 101. The law of the case doctrine precludes parties from relitigating issues resolved...