Mullinnix LLC v. Hkb Royalty Trust

• Decision Date: 24 January 2006
• Docket Number: No. 05-80.,No. 05-81.,05-80.,05-81.
• Citation: 126 P.3d 909,2006 WY 14
• Parties: MULLINNIX LLC, Appellant (Plaintiff), v. HKB ROYALTY TRUST, c/o H. Kirk Brown, III, Trustee; Jaw Royalty Trust, Jill A. Wiltse, Trustee; Louis A. Oswald, III, Trustee of the Oswald Family Trust Dated April 27, 1998; Jonathan S. Roderick; Lynne M. Baalman and Mark E. Baalman, wife and husband; High Plains Associates, Inc.; Jimmie E. Parnell and Nancy Parnell, Husband and Wife; First Interstate Bank of Commerce and Mildred B. Parnell as co-trustees of the Parnell Primary Trust; Pennaco Energy, Inc.; Barrett Resources Corporation; Lance Oil and Gas Company, Inc.; Kenneth A. Schienker; William M. Fulton, III; Tongue River Royalties; M & M Oil and Gas Properties, LLC; Jimmie E. Parnell, individually; U.S. Bank National Association, NA; Mary Jo Schuman; Brian Lute Morton; William Dake Morton, a/k/a William Duke Morton; Mildred Smith; William W. Higgins and Barbara Lee Higgins, Husband and Wife; Michael Bennett, Attorney-in-fact for Mary Frances Bennett; Bank One, f/k/a The First National Bank of Chicago, NA; Don McDonald, Successor Trustee; Vernon A. Johnson and Teresa F. Johnson, Husband Wife; Richard E. Frazey; Mildred B. Parnell, Trustee of the Parnell Trust; First Interstate Bank, as Trustee of the Parnell Trust; Tower Colombia Corporation; Marshall C. Crouch III; Jane R. Crouch; Quantum Energy; Mike J. Coulter and Shirley P. Coulter, Husband and Wife; Mildred B. Parnell and First Interstate Bank of Commerce, Co-trustees with Reginald R. Parnell, deceased, of the Reginald R. Parnell Trust Dated April 5, 1976; Mildred B. Parnell and First Interstate Bank of Commerce, Co-trustees with Reginald R. Parnell, deceased, of the Mildred B. Parnell Trust Dated April 5, 1976; Mabel K. Rothwell, Widow of James L. Rothwell, a/k/a Jim Rothwell, deceased; Mabel K. Rothwell, as successor in interest, Heir and Beneficiary of Jim Rothwell, a/k/a James L. Rothwell, individually; and North Finn, LLC, Appellees (Defendants). John W. Hickman; Fred Boyce, Jr., Personal Representative of the Estate of Fred J. Boyce; and Lane Boyce, Appellants (Defendants), v. Bernice Groves; James E. Drake; and Edra June Drake, Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

126 P.3d 909

2006 WY 14

MULLINNIX LLC, Appellant (Plaintiff), v. HKB ROYALTY TRUST, c/o H. Kirk Brown, III, Trustee; Jaw Royalty Trust, Jill A. Wiltse, Trustee; Louis A. Oswald, III, Trustee of the Oswald Family Trust Dated April 27, 1998; Jonathan S. Roderick; Lynne M. Baalman and Mark E. Baalman, wife and husband; High Plains Associates, Inc.; Jimmie E. Parnell and Nancy Parnell, Husband and Wife; First Interstate Bank of Commerce and Mildred B. Parnell as co-trustees of the Parnell Primary Trust; Pennaco Energy, Inc.; Barrett Resources Corporation; Lance Oil and Gas Company, Inc.; Kenneth A. Schienker; William M. Fulton, III; Tongue River Royalties; M & M Oil and Gas Properties, LLC; Jimmie E. Parnell, individually;

U.S. Bank National Association, NA; Mary Jo Schuman; Brian Lute Morton; William Dake Morton, a/k/a William Duke Morton; Mildred Smith; William W. Higgins and Barbara Lee Higgins, Husband and Wife; Michael Bennett, Attorney-in-fact for Mary Frances Bennett; Bank One, f/k/a The First National Bank of Chicago, NA; Don McDonald, Successor Trustee; Vernon A. Johnson and Teresa F. Johnson, Husband Wife; Richard E. Frazey; Mildred B. Parnell, Trustee of the Parnell Trust; First Interstate Bank, as Trustee of the Parnell Trust; Tower Colombia Corporation; Marshall C. Crouch III; Jane R. Crouch; Quantum Energy; Mike J. Coulter and Shirley P. Coulter, Husband and Wife; Mildred B. Parnell and First Interstate Bank of Commerce, Co-trustees with Reginald R. Parnell, deceased, of the Reginald R. Parnell Trust Dated April 5, 1976; Mildred B. Parnell and First Interstate Bank of Commerce, Co-trustees with Reginald R. Parnell, deceased, of the Mildred B. Parnell Trust Dated April 5, 1976; Mabel K. Rothwell, Widow of James L. Rothwell, a/k/a Jim Rothwell, deceased; Mabel K. Rothwell, as successor in interest, Heir and Beneficiary of Jim Rothwell, a/k/a James L. Rothwell, individually; and North Finn, LLC, Appellees (Defendants) John W. Hickman; Fred Boyce, Jr., Personal Representative of the Estate of Fred J. Boyce; and Lane Boyce, Appellants (Defendants), v. Bernice Groves; James E. Drake; and Edra June Drake, Appellees (Plaintiffs).

No. 05-80.

No. 05-81.

Supreme Court of Wyoming.

January 24, 2006.

COPYRIGHT MATERIAL OMITTED

Representing Appellants: Cameron S. Walker of Schwartz, Bon, Walker & Studer, LLC, Casper, Wyoming.

Representing Parnell Appellees: James L. Edwards of Stevens, Edwards, Hallock & Carpenter, P.C., Gillette, Wyoming.

Representing Appellee Pennaco Energy, Inc., S. Thomas Throne of Throne & Hurst, Sheridan, Wyoming.

Representing Appellees: Kendal R. Hoopes and Jay A. Gilbertz of Yonkee & Toner, Sheridan, Wyoming.

Before HILL, C.J., and GOLDEN, KITE, VOIGT, and BURKE, JJ.

KITE, Justice.

[¶ 1] The dispositive issue in this case was whether deeds reserving "oil rights" which were executed in the 1940s in Campbell County, effectively reserved gas rights without a specific reference to "gas." In these consolidated appeals, Mullinnix, LLC and John W. Hickman, Fred J. Boyce and Lane Boyce (hereinafter referred to as Hickmans) contest the district court's order quieting title in gas rights in the appellees. The district court examined extrinsic evidence of the trade usage of the term "oil rights" at the time and place of the execution of the deeds and concluded the term, as used in real estate documents, did not include the gas rights. In the Mullinnix case, the district court also concluded that a document entitled "Declaration of Interest" executed in 1968, long after the deed was executed, by the grantees in the deed in question did not operate as a waiver or to estop them from asserting their full interest in the gas estate. We agree with the district court's conclusions and, therefore, affirm.

ISSUES

[¶ 2] Case numbers 05-80 and 05-81 were consolidated for a bench trial and, also, on appeal. Appellants Mullinnix and Hickman filed a single brief. They articulate the issues on appeal as follows:

1. Was the Court's decision that reservations of "oil rights" exclude gas contrary to the evidence introduced at trial[?] Did the Court intentionally ignore relevant evidence and rely on inadmissible evidence in reaching its conclusion? (Mullinnix and Hickman cases)

2. In analyzing evidence to decide that a reservation of "oil rights" excluded gas, did the Court fail to follow the precedent and process set forth by the Court in Hickman v. Groves, 71 P.3d 250 [256] [(Wyo.2003)]? (Mullinnix and Hickman cases)

3. Did the Court err by allowing an expert opinion from attorney Edward Halsey interpreting deeds when that was the job of the Court, and Mr. Halsey refused to apply the decision of Hickman v. Groves to his analysis? (Mullinnix and Hickman cases)

4. Did the Court erroneously exclude evidence of conduct of parties to the deeds and their successors in interest demonstrating that they considered a reservation of "oil rights" to include "gas" as well? (Mullinnix and Hickman cases)

5. Did the Court ignore the evidence and decide contrary to the evidence when it held that Johny Mullinnix did not have sufficient detrimental reliance to invoke the doctrine of equitable estoppel, and thereby preclude the Parnells and their successors in interest from disavowing the Declaration of Interest? (Mullinnix case)

6. Since actual consideration was recited and paid for the Declaration of Interest, was detrimental reliance necessary in order to give effect to the Declaration of Interest? (Mullinnix case)

7. Did the Court improperly curtail the evidence so that Mullinnix was unable to prove detrimental reliance upon the representations of the Parnells and their attorney, Tom Morgan, that the Declaration of Interest would be signed before allowing his draft to be paid and filing the mineral deed he had taken from the Rothwells? (Mullinnix case)

8. In light of the foregoing evidence, which should have been admitted, and the evidence which was admitted, was it error for the judge to conclude that Mullinnix did not rely on a Declaration of Interest before allowing the 10-day draft issued for the mineral interest in the property to be paid and filing the Rothwell mineral deed? (Mullinnix case)

9. Did the Court err as a matter of law when it determined that the Declaration of Interest was not a waiver or an estoppel of record? (Mullinnix case)

10. Did the Court err by failing to apply the doctrine of laches to prevent the Parnells and their successors in interest from disavowing the Declaration of Interest? Should the doctrine be applied as a matter of law to this case? (Mullinnix case)

11. Should the Parnells and their successors in interest be estopped as a matter of law by the fact of signing and providing the Declaration of Interest for filing of record in the records of the County Clerk? (Mullinnix case)

12. Is the Court's decision that the Declaration of Interest was not a waiver erroneous as a matter of law contrary to the evidence? (Mullinnix case)

13. Did the Court err by interpreting a reservation of "oil and commercial gravel rights" to be a reservation of "oil", but not "oil rights"? (Hickman case)

14. Should the reservation of "oil rights" include coalbed methane gas? (Mullinnix and Hickman cases)

[¶ 3] Appellees Pennaco Energy, Inc., Groves, and Parnells filed separate briefs on appeal. Pennaco identified the issues on appeal as:

1. Did the reservation of "oil" rights in the 1947 deed also include a reservation of "gas"?

2. Does a document without words of conveyance (the Declaration of Interest) recorded 20 years after the date of the deed change ownership transferred by the deed?

3. Should "circumstances surrounding" an unambiguous document be considered when determining the intent of the parties to a deed?

Parnells restate the issues as:

[1.] Did Appellant meet his burden of proof that "oil rights" includes "gas"?

[2.] Was the decision of the District Court that "oil rights" means "oil" and does not include "gas" substantiated by the evidence presented?

Groves phrases the appellate issues as follows:

1. Whether the District Court's determination that the reservation of "oil and commercial gravel rights" did not include gas or coalbed methane gas, is supported by the evidence.

2. Whether the District Court followed the process outlined in Hickman v. Groves, 2003 WY 76, 71 P.3d 256 (Wyo.2003), in interpreting the warranty deed.

FACTS

Case No. 05-81

[¶ 4] On October 14, 1944, Jerry Hickman and Effie Hickman executed a warranty deed conveying real property located in Campbell County to Ed Willard, but reserving "to the grantors one-half of all oil and commercial gravel rights" in the property. Hickmans are the successors in interest to Jerry and Effie Hickman; and Bernice Groves, James Drake, and Edra June Drake (hereinafter referred to as Groves) are the successors in interest to Mr. Willard.

[¶ 5] On July 20, 2001, Groves filed an action seeking to quiet title to all coal bed methane gas (CBM)¹ underlying the subject real property. Hickman filed a counterclaim seeking a declaration that they owned one-half of all of the gas, including CBM, underlying the property pursuant to the reservation of "oil rights" contained within the warranty deed. Hickmans contended the term "oil rights" had a particular meaning when the deeds were executed in 1944 in Campbell County, which included gas and they filed affidavits supporting that contention. The district court granted summary judgment in favor of Groves, ruling that the warranty deed was unambiguous and, as a matter of law, the reservation of "oil rights" did not include a reservation of gas rights. Hickman v. Groves, 2003 WY 76, ¶¶ 3-4, 71 P.3d 256, 256-57 (Wyo.2003).

[¶ 6] Hickmans appealed the summary judgment, and this Court reversed and remanded for a trial, finding a question of fact was raised concerning whether "oil rights" had a particular trade usage at the time the deed was executed. We ruled, although the term "oil...