Great Plains Royalty Corp. v. Earl Schwartz Co.
| Decision Date | 04 August 2022 |
| Docket Number | 20220052 |
| Citation | 2022 ND 156 |
| Parties | Great Plains Royalty Corporation, a North Dakota Corporation, Plaintiff and Appellant v. Earl Schwartz Company, a North Dakota partnership, Basin Minerals, LLC, a North Dakota limited liability company, SunBehm Gas, Inc., a North Dakota corporation, and Kay Schwartz York, Kathy Schwartz Mau, and Kara Schwartz Johnson, as the Co-Personal Representatives of the Estate of Earl N. Schwartz, Defendants and Appellees |
| Court | North Dakota Supreme Court |
Appeal from the District Court of McKenzie County, Northwest Judicial District, the Honorable Daniel S. El-Dweek, Judge.
Lynn M. Boughey (argued), Mandan, ND, and James J. Coles (appeared), Bismarck, ND, for plaintiff and appellant.
Spencer D. Ptacek (argued) and Lawrence Bender (appeared) Bismarck, ND, for defendants and appellees Earl Schwartz Company, Basin Minerals, LLC, and Kay Schwartz York, Kathy Schwartz Mau, and Kara Schwartz Johnson as the co-personal representatives of the Estate of Earl N. Schwartz.
Jon Bogner (argued) and Jordan L. Selinger (on brief), Dickinson ND, for defendant and appellee SunBehm Gas, Inc.
[¶1] Great Plains Royalty Corporation appeals from a judgment entered on remand from this Court. Great Plains argues the district court erred in granting quiet title, dismissing the conversion claim, and awarding costs and disbursements. Great Plains also argues the defendants' title claims were barred by the statute of limitations and abandoned and the court lacked jurisdiction to enter judgment. We direct the district court to modify the judgment, and we affirm as modified.
I
[¶2] We provided the background of this case in Great Plains Royalty Corp. v. Earl Schwartz Co., 2019 ND 124, 927 N.W.2d 880 ("Great Plains I") and Great Plains Royalty Corp. v. Earl Schwartz Co., 2021 ND 62, 958 N.W.2d 128 ("Great Plains II"). The history is repeated here only as pertinent to the issues raised in the present appeal.
[¶3] Great Plains went bankrupt in 1968 and its assets were liquidated. The bankruptcy trustee published a notice of sale listing various assets, including oil and gas interests. Earl Schwartz purchased the oil and gas interests, and the bankruptcy court issued an order confirming "the sale of all assets of the bankrupt corporation to Earl Schwartz." The order also noted Schwartz agreed to sell certain interests to SunBehm Gas, Inc., approving the transfer to SunBehm directly from the bankruptcy estate. The bankruptcy court 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." The bankruptcy case was closed in 1974.
[¶4] The case was reopened in 2013 for Great Plains' creditors to be paid in full with interest. Various adversary proceedings were brought to determine ownership of oil and gas interests. The bankruptcy court did not determine title to the properties subject to this appeal.
[¶5] In 2016, Great Plains sued Earl Schwartz Co. ("ESCO") and SunBehm for quiet title, slander of title and conversion. ESCO and SunBehm filed quiet title cross claims. A bench trial took place in 2018, and the district court found the bankruptcy trustee intended to sell 100% of the oil and gas interests owned by Great Plains at the time of bankruptcy, including those not listed in the notice of sale. This Court reversed the judgment in Great Plains I and remanded for further proceedings to determine ownership of the properties and other claims. 2019 ND 124, ¶ 46.
[¶6] On remand, ESCO and SunBehm argued the bankruptcy order confirming the sale vested them with title to the properties. The district court rejected the argument and quieted title to Great Plains. This Court vacated the title determination and conversion claim in Great Plains II, 2021 ND 62, ¶ 33, and remanded the case "with instructions for the court to determine whether ownership of any interests in the tracts identified in the notice of sale passed to ESCO or SunBehm by virtue of the bankruptcy sale and confirmation order." Id. We directed the district court to "consider Great Plains' conversion claim based on the record and in light of the title determination it makes on remand." Id.
[¶7] The parties submitted supplemental briefing on remand. Great Plains argued ESCO's and SunBehm's claims were barred by the statute of limitations, any title claims were limited to the property described in the notice of sale, and Great Plains was entitled to damages. ESCO and SunBehm argued the bankruptcy court's amended order conveyed all assets included in the notice of sale and the conversion claim should be dismissed.
[¶8] The district court found ESCO and SunBehm obtained equitable title in all Great Plains' interests described in the notice of sale and dismissed the conversion claim. The court entered judgment granting ESCO and SunBehm all right, title, and interest to the properties in the notice of sale that belonged to Great Plains at the time of bankruptcy. The court awarded ESCO $16,703.24 in costs and disbursements.
[¶9] Great Plains argues the district court lacked subject matter jurisdiction to quiet title on properties not listed in the complaint. Great Plains also asserts the judgment contains properties not listed in any of the pleadings, including the counterclaims.
[¶10] The issue of subject matter jurisdiction can be raised at any time. Great Plains II, 2021 ND 62, ¶ 12. "Subject-matter jurisdiction refers to the court's power to hear and determine the general subject involved in the action[.]" Alliance Pipeline L.P. v. Smith, 2013 ND 117, ¶ 18, 833 N.W.2d 464. "A court has subject-matter jurisdiction over a proceeding if the constitution and laws authorize the court to hear that type of proceeding." Id. A district court has subject-matter jurisdiction to "hear and determine all civil actions and proceedings." N.D.C.C. § 27-05-06. Chapter 32-17, N.D.C.C., provides a cause of action to quiet title and determine claims to real estate in North Dakota.
[¶11] Although cloaked as a jurisdictional issue, Great Plains' argument really is one about pleading. Here, Great Plains sued ESCO and SunBehm to quiet title to three properties. ESCO filed a counterclaim seeking to quiet title to a number of properties involved in Great Plains' bankruptcy. The properties listed in the district court's judgment appear in the complaint and counterclaims filed in this case. The district court's jurisdiction to determine civil claims coupled with the statutory cause of action to quiet title to real estate provided the court with authority to resolve the issues presented. Therefore, Great Plains' "jurisdictional" issue is without merit.
III
[¶12] Great Plains argues the district court erred in granting quiet title.
[¶13] This appeal stems from a bench trial. The district court's findings of fact are reviewed under the clearly erroneous standard, and conclusions of law are fully reviewable. Great Plains II, 2021 ND 62, ¶ 10. "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." Id.
[¶14] Great Plains argues the district court disregarded the limiting terms in the notice of sale. Great Plains asserts the interests included in the notice of sale were for production payments only, so the court erred in awarding ESCO and SunBehm all right, title, and interest belonging to Great Plains at the time of bankruptcy.
[¶15] The district court found the bankruptcy trustee acquired all interest Great Plains had in the properties listed in the notice of sale, and whatever title Great Plains had at that time was sold to ESCO at the auction. The court found the notice of sale included descriptions to help prospective purchasers identify the property. In analyzing the descriptions, the court found the property interest was more expansive than argued by Great Plains and determined "because the bankruptcy trustee described the properties as 'parcels' with a legal description and not merely a well bore, this includes any interest Great Plains may have had in the legal description."
[¶16] At the time of the bankruptcy sale, the trustee was "vested by operation of law with the title of the bankrupt as of the date of the filing of the petition[.]" 11 U.S.C. § 110(a) (1970). "Real and personal property shall, when practicable, be sold subject to the approval of the court." 11 U.S.C. § 110(f) (1970). "The title to the property of a bankrupt estate which has been sold, as herein provided, shall be conveyed to the purchaser by the trustee." 11 U.S.C § 110(g) (1970).
[¶17] Here, the notice of sale was published in various newspapers and included a list of assets to be sold at the auction. The notice listed property by parcel numbers and included a legal description of various properties. Some properties specified working interests. The notice directed the public to contact the bankruptcy trustee for "further, complete information as to description, appraisal, production history or personal property inventory[.]"
[¶18] In a deposition filed as an exhibit in this case, Myron Atkinson, the bankruptcy trustee, testified as follows:
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