Moats v. Prof'l Assistance, LLC

• Decision Date: 15 January 2014
• Docket Number: No. S–13–0045.,S–13–0045.
• Parties: Alan G. MOATS and Chleo I. Moats, Appellants (Plaintiffs), v. PROFESSIONAL ASSISTANCE, LLC, d/b/a Summit Title Services, Kuzma Success Realty, and P. Olen Snider, Jr., Appellees(Defendants).
• Court: Wyoming Supreme Court

319 P.3d 892

Alan G. MOATS and Chleo I. Moats, Appellants (Plaintiffs),

v.PROFESSIONAL ASSISTANCE, LLC, d/b/a Summit Title Services, Kuzma Success Realty, and P. Olen Snider, Jr., Appellees(Defendants).

No. S–13–0045.

Supreme Court of Wyoming.

Jan. 15, 2014.

Representing Appellants: J. Kent Rutledge and Shawnna M. Herron^* of Lathrop & Rutledge, P.C., Cheyenne, Wyoming. Argument by Mr. Rutledge.

Representing Appellees Professional Assistance, LLC, d/b/a Summit Title Services and P. Olen Snider, Jr.: Kate M. Fox ^† and Amanda F. Esch of Davis & Cannon, LLP, Cheyenne, Wyoming. Argument by Ms. Esch.

Representing Appellee Kuzma Success Realty: Lindsay A. Woznick and Khale J. Lenhart of Hirst Applegate, LLP, Cheyenne, Wyoming. Argument by Mr. Lenhart.

Before KITE, C.J., and HILL, VOIGT,^‡BURKE, and DAVIS, JJ.

DAVIS, Justice.

[¶ 1] Appellants Alan and Chleo Moats (Moats) sold 850 acres of farm ground, intending to retain the mineral rights for themselves. The deeds prepared by Appellee Professional Assistance, L.L.C., d/b/a Summit Title Services did not reserve the minerals, even after the Moats were made aware of the omission at closing, insisted that it be rectified, and were assured by a Summit employee that the deeds had in fact been corrected. Approximately six years passed before the error was discovered, and the Moats sued Summit, its general counsel Appellee P. Olen Snider, Jr., and Kuzma Success Realty, the brokerage firm involved in the transaction.

[¶ 2] The district court granted summary judgment in favor of all Appellees, finding that the Moats failed to exercise due diligence to discover the error so as to extend the statute of limitation as a matter of law. We find that there are genuine issues of material fact as to the claims against Summit and Snider, and we therefore reverse and remand for further proceedings as to those claims. We find that the district court correctly granted summary judgment to Kuzma, and we affirm that decision.

ISSUE

[¶ 3] Are there genuine issues of material fact as to whether the Moats exercised reasonable diligence to discover their claims against Appellees under Wyo. Stat. Ann. § 1–3–107(a)(i)(B), and if not, were Appellees entitled to judgment as a matter of law under Wyoming Rule of Civil Procedure 56?

FACTS

[¶ 4] The Moats own farmland in northern Laramie County. In early 2004, they decided to sell 850 acres, but wanted to retain the mineral rights. They contacted George O'Hare (O'Hare), a broker associate with Appellee Kuzma Success Realty, and entered into a listing agreement on January 5, 2004.

[¶ 5] The listing agreement indicated that no mineral rights were to be included in the purchase. After the property was listed, Howard Romsa, who had some interest in purchasing the land, contacted Mr. Moats directly. The Moats set a price satisfactory to the Romsas and notified O'Hare that they would contact him. The record contains an undated amendment to the agency agreement in which the Moats consented that O'Hare act as an intermediary rather than as the Moats' agent, and which explained the change in the relationship. The Moats then received a written offer to purchase from the Michael Romsa and Heidi Romsa Revocable Trusts on May 17, 2004. They received a separate purchase offer for a different parcel from the Howard and Mary Romsa Revocable Trusts on May 19, 2004. The offers were prepared by O'Hare, and they each indicated that “[t]here are no mineral rights included.” The Moats accepted both offers in writing on May 19, 2004.

[¶ 6] Appellee Professional Assistance, LLC, doing business as Summit Title Services (Summit), was selected to serve as the closing agent for the transaction. Appellee P. Olen Snider, Jr. (Snider) is an attorney who serves as general counsel for Summit. The Moats and the Romsa trustees signed a set of general closing instructions which indicated that “[t]he parties will provide to the Closer all documents necessary for the closing and in form and content sufficient to satisfy the title insurance commitment requirements.” In fact, Summit prepared the documents necessary for the closing, including the deeds necessary to transfer title. Mr. O'Hare testified that his office customarily sends a copy of the executed purchase offer and acceptance to Summit for its use in preparing the required paperwork.

[¶ 7] Closing took place at Summit's offices in Cheyenne on May 19, 2004.¹ Summit employee Dawn West closed the transaction. Present for the closing were O'Hare, the Moats, four members of the Romsa family representing the two trusts, and West.

[¶ 8] Mr. Moats testified that he did not finish high school, and that his ability to read and understand complex documents is limited. Mrs. Moats also dropped out of high school but obtained a diploma through a correspondence course. She had a long career with AT & T, working as a manager in the sales department and later as a call quality analyst. She supervised up to twenty people while with AT & T. Mr. Moats customarily relies upon her to help him understand complex documents.

[¶ 9] At the closing, Ms. West presented the documents Summit had prepared to the parties to the transaction, explaining them as she went. The Moats did not read any of the documents presented. When Ms. West presented the warranty deeds necessary to transfer the property being sold, she explained that the deed did not reserve the mineral rights from the sale. Mr. Moats said “absolutely not,” and told the Romsas and West that he and his wife would not sell unless they kept the minerals as agreed.

[¶ 10] West picked up some documents, said she would fix them, and left the room. She did not return for up to twenty minutes according to Mrs. Moats. When she did return, she said “they're okay now” or words to that effect, and the Moats signed the deeds without reading them. Mr. Moats explained that “when somebody says they did something and puts it back down in front of you and says it's all right now, I guess I'm dumb enough, I just take them at their word.” O'Hare was not asked to and did not review the deeds, and the Moats did not ask him any questions about them.

[¶ 11] The deeds are each one page of single-spaced text, and they do not reserve the mineral rights.² Mineral rights not expressly reserved in the deed to a surface estate are transferred with the surface estate. See, e.g., 1 Patrick H. Martin & Bruce M. Kramer, Williams and Meyers Oil & Gas Law § 202 (2012); Whitney Holding Corp. v. Terry, 2012 WY 21, 270 P.3d 662 (Wyo.2012); Gilstrap v. June Eisele Warren Trust, 2005 WY 21, ¶ 15, 106 P.3d 858, 863 (Wyo.2005). The Moats were provided with copies of all the documents, but they did not review them after leaving the closing. The record contains no explanation for the twenty-minute hiatus in the closing, or why the deeds with which West returned did not reserve the minerals.

[¶ 12] Mr. Snider, counsel for Summit, testified that deeds can contain anything the parties want so long as the provisions do not affect insurability of title transferred, and that Summit was “simply the scrivener.” He also testified that he had never prepared a mineral reservation up to that point in time, and that it would have taken him hours to research how to properly draft one. The company would normally have told the parties to have their own attorneys prepare a deed containing a mineral reservation. West did not tell the Moats that their own attorney needed to prepare the deeds to reserve the minerals, but instead assured them that the deed did not convey the minerals after purportedly making corrections.

[¶ 13] About six years passed before the Moats learned of the problem with the deed. A landman with Family Tree Corporation offered to pay $30.00 an acre in bonus for a paid-up oil and gas lease on the property that had been transferred. The Moats were willing to lease the minerals for that price, and they executed the required documents. When a bonus check was not forthcoming, they followed up with the landman and learned that they did not own the minerals because they had been transferred.

[¶ 14] Mr. Moats contacted O'Hare, and he and the Moats went to the Laramie County courthouse to check the deeds. After reviewing the deeds, O'Hare told the Moats that the minerals had in fact been transferred with the land. He later told Mr. Moats that he had spoken with representatives of Summit Title, who told him that there had been a mistake and that they thought they could get the minerals back. Moats later met with a representative from Summit Title who had him sign some papers that were intended to play a role in transferring the minerals back to him and his wife, but he was later told that the representatives of the Romsa trusts would not sign the required papers. In the meantime, the land had been subdivided, apparently without reservation of the minerals, meaning that purchasers without knowledge of the underlying transaction (potentially bona fide purchasers) owned them. The intervening interests in the land would have made reformation of the deeds difficult if not impossible.

[¶ 15] The Moats filed suit against Appellees on September 28, 2011. They claimed negligence against all defendants, and breach of contract and breach of an implied covenant of good faith and fair dealing against Kuzma and Summit. They also claimed legal malpractice against Snider and Summit, and negligent misrepresentation against Summit.

[¶ 16] The district court granted summary judgment in favor of all Appellees on all claims. It found that there were no genuine issues of material fact as a matter of law, and that the two-year professional negligence statute, Wyo. Stat. Ann. § 1–3–107, barred the Moats' claims because they had not read the documents in question, thereby failing to exercise the diligence necessary to avail themselves of more time under the discovery rule. This timely appeal followed.

STANDARD OF REVIEW

[¶ 17] Our standard for review of summary...