Simmons v.

• Decision Date: 11 December 2017
• Docket Number: Civil Action No 16-cv-02462-RBJ
• Parties: IN RE ESTATE OF CHARLOTTE F. SIMMONS, a Colorado estate, Plaintiff, v. N.G.L. HOLDINGS, LLC, an Arizona limited liability company, Defendant.
• Court: U.S. District Court — District of Colorado

IN RE ESTATE OF CHARLOTTE F. SIMMONS, a Colorado estate, Plaintiff, v. N.G.L. HOLDINGS, LLC, an Arizona limited liability company, Defendant.

Civil Action No 16-cv-02462-RBJ

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

December 11, 2017

Judge R. Brooke Jackson

ORDER DENYING N.G.L. HOLDINGS, LLC'S MOTION FOR SUMMARY JUDGMENT

This matter is before the Court on defendant's motion for summary judgment, ECF No. 21. For the reasons below, the Court DENIES the motion.

I. BACKGROUND

A. Factual Background.

This case arises from a property dispute in Huerfano County, Colorado. ECF No. 1 at 1. Ms. Charlotte Simmons, through her estate, claims that she is the rightful owner of the mineral estate located beneath the surface estate owned by N.G.L. Holdings, LLC ("NGL"). Id. NGL contests this, claiming that it is the owner of both the surface estate and the mineral estate. ECF No. 15.

The land at issue (henceforth, "the Property") is legally described as:

"The North ½ of the Northeast ¼, and the Southeast ¼ of the Northeast ¼ of Section 9; and the Northwest ¼ of the Northwest ¼ of Section 10; all in Township 30 South, Range 69 West of the 6th Principal Meridian in Colorado containing one hundred and sixty acres."

ECF No. 21-1. The Property's chain of title is recorded as follows:

• On November 10, 1895 the United States government granted the Property to Robert J. Price. Id.

• In 1928 the Price family conveyed the Property to Dorothy A. Dawson. ECF No. 21-2.

• On November 24, 1965 the Dawson family conveyed the surface estate to Alva and William Adams (collectively the "Adamses"), but reserved the mineral estate to itself. ECF No. 21-3 at 1, 2.

• Then, on February 8, 1974, the Dawson family conveyed the mineral estate to the Adamses. ECF No. 21-4. At this point, both the surface and mineral estates of the Property were held in common ownership by the Adamses.

• On May 1, 1974, a co-partnership of the Adamses called the Quivira Land Company, see ECF No. 21-5, conveyed the surface estate to Charlotte and Alam Simmons (collectively the "Simmonses"). That same day, the Adamses, in their individual capacities, conveyed the mineral estate to the Simmonses. ECF No. 21-7. As such, as of May 1, 1974, the mineral and surface estates of the Property were held in common ownership by the Simmonses.

• Alan Simmons died on August 11, 1982, at which time the Property passed to Charlotte Simmons exclusively. ECF No. 1 at ¶ 17(A).

• On September 27, 1995 Charlotte Simmons conveyed at least some portion of the Property to the Leonard F. Austin Jr. Revocable Trust Date April 15, 1987 (the "Austin Jr. Trust"). ECF No. 21-8. The conveyance did not specifically reference the surface or mineral estates, but stated that the following were not included in the conveyance: "1995 taxes and all subsequent years, restrictions, reservations, covenants, easements and rights-of-way of record, if any." Id.

• On June 29, 2007 the Austin Jr. Trust conveyed to NGL via warranty deed "the real property, together with improvements, if any, and any right, title, or interest to mineral rights and water rights, if any." ECF No. 21-9 at 1. That same day, a quitclaim deed was made and delivered to NGL including the same legal description. ECF No. 21-9 at 2.

B. Procedural History.

Ms. Simmons filed a complaint with this Court on September 29, 2016 seeking to quiet title to the Property's mineral estate. ECF No. 1. After submitting an answer and counterclaimagainst Ms. Simmons for breach of warranty of title, ECF No. 15, NGL then filed this motion for summary judgment on June 21, 2017. ECF No. 21.

Federal jurisdiction is based upon diversity of citizenship under 28 U.S.C. § 1332.¹ Therefore, Colorado substantive law applies. Macon v. United Parcel Serv., Inc., 743 F.3d 708, 713 (10th Cir. 2014). Because the Colorado Supreme Court has not directly addressed the legal issue presented, this Court must "attempt to predict how [Colorado's] highest court would interpret [the issue]." Squires v. Breckenridge Outdoor Educ. Ctr., 715 F.3d 867, 875 (10th Cir. 2013). In doing so, this Court may "consider all resources available, including decisions of [Colorado] courts, other state courts and federal courts, in addition to the general weight and trend of authority." In re Dittmar, 618 F.3d 1199, 1204 (10th Cir. 2010) (internal quotation marks omitted).

II. STANDARD OF REVIEW

The Court may grant summary judgment if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party has the burden to show that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party must "designate specific facts showing that there is a genuine issue for trial." Id. at 324. A fact is material "if under the substantive law it is essential to the proper disposition of the claim." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998). A dispute about a material fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court willexamine the factual record and make reasonable inferences in the light most favorable to the party opposing summary judgment. Concrete Works of Colo., Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994).

III. ANALYSIS

NGL makes two distinct arguments in support of its motion for summary judgment. First, NGL argues that the mineral and surface estates of the Property merged automatically as a matter of law when they came together in common ownership under Ms. Simmons, and that subsequent conveyances of the Property failed to re-sever the mineral estate and reserve it to Ms. Simmons. Alternatively NGL argues that even if the estates did not automatically merge by operation of law, NGL is a bona fide purchaser of the Property and had no notice of Ms. Simmons' alleged intent to not merge the two estates. Therefore, NGL argues that it is the rightful owner of the mineral estate. For the reasons described below, I deny NGL's motion for summary judgment.

A. Automatic Merger of Surface and Mineral Estates.

NGL first asserts that the Property's surface and mineral estates merged as a matter of law when they were held in common ownership by Ms. Simmons. Therefore, in NGL's view, because the deeds of sale from Ms. Simmons to the Austin Jr. Trust and from the Austin Jr. Trust to NGL did not expressly re-sever the mineral estate from the surface estate, the deeds conveyed both the surface and mineral estates. As such, NGL purports to be the rightful owner of both the mineral and surface estates of the Property. Ms. Simmons argues that Colorado law does not support the proposition that mineral and surface estates automatically merge under common ownership as a matter of law.

NGL's motion for summary judgment presents a legal question undecided in Colorado law—namely, do mineral and surface estates automatically merge as a matter of law when they are united in common ownership? This question invokes two established property concepts: land severance and land merger. First, Colorado law holds that mineral and surface estates can be severed and separately owned. See Grynberg v. City of Northglenn, 739 P.2d 230, 234 (Colo. 1987). Second, under Colorado law "a merger always takes place when a greater estate and less coincide and meet in one and the same person, in one and the same right, without any intermediate estate, unless a contrary intent appears." Goldblatt v. Cannon, 95 Colo. 419, 423 (Colo. 1934). But, as noted, it is currently unsettled whether merger takes place when severed surface and mineral estates "coincide and meet in one and the same person." Id.

Colorado is not alone; the vast majority of states have not addressed this legal issue. See, e.g., Laettner, et. al. v. Kishiyama, 4:15-CV-3132, 2017 WL 1180483 at *3 (Neb. 2017) (recognizing that "[m]erger, as applied in the context of mineral estates is actually a complicated and uncertain area of law: there is a split of authority on whether, and under what circumstances, a surface estate and mineral estate can merge."). Of the states that have addressed the issue, the majority have found that surface and mineral estates automatically merge under common ownership. See DWG Oil & Gas Acquisitions, LLC v. S. Country Farms, Inc., 796 S.E.2d 201, 203 (W.Va. 2017) (finding automatic merger when one person owns both the surface estate and the mineral interest in a parcel of land); Hunter v. Rosebud Cnty., 783 P.2d 927, 929 (Mont. 1989) (same); Bowles v. Hopkins Cnty. Coal, LLC, 347 S.W.3d 59, 61 (Kent. App. 2011) (same). However, at least one state appellate court determined that the merger of severed mineral and surface estates depends upon the intent of the common owner during the time in which she heldboth estates. See Steger v. Muenster Drilling Co., Inc., 134 S.W.3d 359, 376 (Tex. App. 2003) (using a six-part test to determine if merger occurred, including "(5) merger must not be contrary to the intention of the owner of the two estates").

Because I must predict how the Colorado Supreme Court would decide this issue, I am "free to consider all resources available, including decisions of Colorado courts, other state courts and federal courts, in addition to the general weight and trend of authority." Id. As such, I will first assess existing and analogous Colorado property law, and then I will assess other states' decisions in this area.

1. Analogous Colorado Court Decisions.

Under Colorado property law, it is well established that "a merger always takes place when a greater estate and less coincide and meet in one and the same person, in one and the same right, without any intermediate estate, unless a contrary intent appears." Goldblatt, 95 Colo. at 423. Ms. Simmons argues that this rule does not apply to surface and...