Hamilton v. Noble Energy, Inc.

• Court: Colorado Court of Appeals
• Writing for the Court: Davidson
• Citation: Hamilton v. Noble Energy, Inc., 220 P.3d 1010 (Colo. App. 2009)
• Decision Date: 17 September 2009
• Docket Number: 09CA0236
• Parties: Mark HAMILTON and Melvin Hamilton, Plaintiffs-Appellants, v. NOBLE ENERGY, INC., Defendant-Appellee.

220 P.3d 1010

Mark HAMILTON and Melvin Hamilton, Plaintiffs-Appellants, v. NOBLE ENERGY, INC., Defendant-Appellee.

No. 09CA0236.

Colorado Court of Appeals, Div. IV.

September 17, 2009.

Mark Hamilton, Pro Se.

Melvin Hamilton, Pro Se.

Holland & Hart LLP, Anthony J. Shaheen, Christopher A. Chrisman, Denver, Colorado, for Defendant-Appellee.

Opinion by Chief Judge DAVIDSON.

This action concerns subsurface mineral interests, currently leased by defendant, Noble Energy, Inc., located in Weld County. The issue raised is whether a "Declaration of Land Patent," filed here by plaintiffs, Mark and Melvin Hamilton, can alter or affect ownership of those mineral interests. Although there is no reported case in Colorado, numerous jurisdictions have held that such a "land patent" is a legal nullity which has no effect on existing ownership interests. The trial court agreed with those jurisdictions and dismissed plaintiffs' complaint seeking enforcement of the land patent against defendant's interests for failure to state a claim. We agree with the trial court and affirm.

I. Background

Melvin Hamilton, along with Marlene Hamilton (not a party to this action), acquired real property by warranty deed dated September 4, 1980. By its terms, the deed conveyed the land and "related rights," subject to certain enumerated reservations which, as relevant here, included a fractional interest in the oil and mineral rights in the property currently leased by defendant. Specifically, the deed and the chain of title reflect that Melvin and Marlene Hamilton acquired a one-eighth ownership interest in the mineral rights, with the remaining interests reserved by the grantor and its predecessors. Mark Hamilton subsequently acquired his interest in the property via quitclaim deed.

On January 9, 2008, plaintiffs filed a document entitled "Declaration of Land Patent" with the Weld County Clerk and Recorder, which provided a legal description of the property and stated: "If this land patent is not challenged within sixty days (60), in a court of law by someone, or by the government, it then becomes my/our property."

Mark Hamilton then sent a letter to defendant, asserting that plaintiffs were now the sole owners of the mineral interests leased by defendant, and informing defendant that if it did not respond within ten days, "No Trespassing" signs would be posted and enforced.

In a written response, counsel for defendant informed plaintiffs that the "Declaration of Land Patent" they had filed was without legal effect and advised them to retain legal counsel.

Shortly thereafter, plaintiffs filed a complaint in Weld County District Court, which included a copy of the "Declaration of Land Patent" and a document setting forth the chain of title originating with an 1875 land patent issued by the United States Bureau of Land Management (BLM) to the Union Pacific Railroad Company (Railroad). Plaintiffs asserted that they had "absolute title" to the mineral interests by virtue of their "Declaration of Land Patent" which, they alleged, nullified all previous conveyances and reservations of the mineral interests and entitled them to all future royalties on oil and gas production from defendant's wells previously paid to others.

On defendant's C.R.C.P. 12(b)(5) motion, the trial court agreed with defendant that plaintiffs' filing of a land patent had no effect on existing property rights, including those of the other owners of the mineral interests leased by defendant, and dismissed the complaint. The trial court also granted defendant's request for attorney fees pursuant to section 13-17-102, C.R.S.2008, finding that plaintiffs "clearly knew or reasonably should have known that their complaint was substantially frivolous, substantially groundless, and substantially vexatious."

Plaintiffs appeal, contending that the trial court erred in dismissing their complaint because their "Declaration of Land Patent" was not "challenged within the sixty days (60) [p]rescribed by law" and, therefore, the interests claimed therein became the sole property of plaintiffs. We disagree.

II. Standard of Review

Motions to dismiss brought under C.R.C.P. 12(b)(5) are viewed with disfavor and the trial court, in ruling on such a motion, must accept all facts of the complaint as true and determine whether, under any theory of law, the plaintiff could be entitled to some relief. Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095, 1099-100 (Colo.1995). Our review of the trial court's dismissal of plaintiffs' complaint for failure to state a claim is de novo. See Verrier v. Colo. Dep't of Corr., 77 P.3d 875, 877 (Colo.App. 2003).

III. Merits

We conclude that the trial court correctly determined that plaintiffs had no claim to any property right or interest based on the filing of their self-created "land patent."

A land patent is the instrument by which the federal government conveyed public lands to a private grantee. Black's Law Dictionary 1156 (8th ed.2004); see Britt v. Fed. Land Bank Ass'n, 153 Ill.App.3d 605, 106 Ill.Dec. 81, 505 N.E.2d 387, 392 (1987) (explaining that land patents were the means "by which the government passe[d] fee simple title of government land to private persons"); Schell v. White, 80 Ariz. 156, 294 P.2d 385, 388 (1956) (same). Here, the property at issue was conveyed via an original land patent issued by the BLM to the Railroad on April 24, 1875.

Once real property has been conveyed by a land patent, the grantee's rights in that property are fixed. See, e.g., Ashley v. Hill, 150 Colo. 563, 567, 375 P.2d 337, 339 (1962). Thus, the undisputed effect of the 1875 issuance of the patent from the BLM was to vest in the Railroad those rights in the property then possessed by the United States, which, as relevant here, included the mineral rights at issue. See, e.g., Wilson Cypress Co. v. Pozo, 236 U.S. 635, 648, 35 S.Ct. 446, 59 L.Ed. 758 (1915) (land patent is a deed of the United States and "its operation is that of a quitclaim," conveying whatever interest the government possessed in the land); see also Burke v. Southern Pac. R.R. Co., 234 U.S. 669, 705-10, 34 S.Ct. 907, 58 L.Ed. 1527 (1914) (patent passes title to "mineral lands" unless they were identified as such before the patent was issued); Thomas v. Union Pac. R.R. Co., 139 F.Supp. 588, 595 (D.Colo.1956) (although railroad land patents reserved "mineral lands," such reservation only applied to lands known to be mineral in character at the time of the grant and did not reserve mineral interests, including oil and gas, subsequently discovered), aff'd, 239 F.2d 641 (10th Cir.1956).

Plaintiffs do not disagree that the property, including reservations and encumbrances, was transferred from the Railroad and conveyed and encumbered numerous times since then. Nor do plaintiffs claim that they possessed any rights in those mineral interests reserved by their grantor and its predecessors at the time they filed their "Declaration of Land Patent."

Nevertheless, plaintiffs assert, because the original patent conveyed title from the federal government, no state, including Colorado, had authority to allow subsequent encumbrances on that title and, therefore, only a land patent, such as their "Declaration of Land Patent," could convey "perfect title" in the mineral interests at issue here. Thus, according to plaintiffs, they are entitled to all of the royalty payments due to owners of the mineral interests leased by defendant. We do not agree.

As with any other piece of real property, real property conveyed by the federal government via land patent can be conveyed and burdened by subsequent interests, such as a reservation of mineral interests, by a party otherwise conveying all surface rights, or a lease of the same. See Wisconsin v. Glick, 782 F.2d 670, 672 (7th Cir.1986) (rejecting the argument that a land patent "forever bars" subsequent interests in the land); Fed. Land Bank v. Gefroh, 390 N.W.2d 46, 47 (N.D.1986) (same); see also Grainger v. United States, 197 Ct.Cl. 1018, 1018 (1972) (patent intended to "quiet title to and secure the enjoyment of the land for the patentees and their successors" (emphasis added)); United States v. Budd, 144 U.S. 154, 163, 12 S.Ct. 575, 36 L.Ed. 384 (1892) (patentee has unlimited power of alienation over the land following purchase from the government) (applying Timber and Stone Act of 1878).

These subsequent conveyances are governed, respectively, by applicable state law. Packer v. Bird, 137 U.S. 661, 669, 11 S.Ct. 210, 34 L.Ed. 819 (1891) (once the patent has issued, "whatever incidents or rights attach to the ownership of property conveyed by the government will be determined by the states"); see also Oneida Indian Nation v. Oneida County, 414 U.S. 661, 676-77, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974) ("[o]nce patent issues, the incidents of ownership are, for the most part, matters of local property law to be vindicated in local courts"). This is so because each state has the power "to provide for and protect individual rights to the soil within its confines" in furtherance of the general welfare of society based on the security of title to real estate. Am. Land Co. v. Zeiss, 219 U.S. 47, 60, 31 S.Ct. 200, 55 L.Ed. 82 (1911); see also United States v. Fox, 94 U.S. 315, 320, 24 L.Ed. 192 (1876) (means of acquiring and transferring real property is the exclusive domain of "the government within whose jurisdiction the property is situated"); Arndt v. Griggs, 134 U.S. 316, 320-21, 10 S.Ct. 557, 33 L.Ed. 918 (1890) (same).

Here, plaintiffs do not contend that other claims to the reserved mineral interests at issue were not acquired in conformity with applicable Colorado law. Indeed, by relying on what they submitted as the chain of title to the property, plaintiffs necessarily admitted the existence of the reservation of the mineral interests as reflected in the warranty deed, under which plaintiffs took title to the surface rights and one eighth of the...