Wicklund v. Sundheim

• Decision Date: 09 March 2016
• Docket Number: No. DA 15–0263.,DA 15–0263.
• Parties: Earle D. WICKLUND, Claude L. Teisinger, and Edward J. Stevens as Trustees of the Teisinger Stevens Wicklund Royalty Trust, Plaintiffs and Appellants, v. G'Nell SUNDHEIM, Jerry Sundheim, Jimmy Sundheim, Sharon Sundheim, Judean Sundheim, Patricia Sundheim, Orion Sundheim, Elma Sundheim, Robert E. Sundheim, Delores Frison, Audrey Sundheim Estate, Jeff Sundheim as Personal Representative of Audrey Sundheim Estate, Nancy Marie Pawlowski, Laura Ann Pawlowski, Scott E. Sundheim, Jeffry J. Sundheim, Rhonda Cayko and Eric L. Sundheim, individually, and all other heirs of Ole Sundheim and Iver Sundheim, Defendants and Appellees.
• Court: Montana Supreme Court

383 Mont. 1

367 P.3d 403

2016 MT 62

Earle D. WICKLUND, Claude L. Teisinger, and Edward J. Stevens as Trustees of the Teisinger Stevens Wicklund Royalty Trust, Plaintiffs and Appellants,

v.G'Nell SUNDHEIM, Jerry Sundheim, Jimmy Sundheim, Sharon Sundheim, Judean Sundheim, Patricia Sundheim, Orion Sundheim, Elma Sundheim, Robert E. Sundheim, Delores Frison, Audrey Sundheim Estate, Jeff Sundheim as Personal Representative of Audrey Sundheim Estate, Nancy Marie Pawlowski, Laura Ann Pawlowski, Scott E. Sundheim, Jeffry J. Sundheim, Rhonda Cayko and Eric L. Sundheim, individually, and all other heirs of Ole Sundheim and Iver Sundheim, Defendants and Appellees.

No. DA 15–0263.

Supreme Court of Montana.

Submitted on Briefs Dec. 16, 2015.

Decided March 9, 2016.

For Appellants: Donald L. Harris, Harris & Associates, PLLC, Billings, Montana, Michael E. Zimmerman, Attorney at Law, Sheridan, Wyoming.

For Appellees: Albert R. Batterman, Batterman Law Offices, P.C., Baker, Montana.

Justice BETH BAKER delivered the Opinion of the Court.

¶ 1 Earle D. Wicklund, Claude L. Teisinger, and Edward J. Stevens¹ (collectively Teisingers) appeal the findings of fact, conclusions of law, and order of the Seventh Judicial District Court, Richland County, denying their claim for a 3/5ths royalty interest in oil, gas, and minerals located on several sections of land in Richland County and quieting title to the royalty interest in Appellees'² favor. We address the following issues on appeal:

1. Whether the District Court improperly admitted testimony from an English professor interpreting the language of the warranty deed's royalty interest reservation.

2. Whether the District Court erred by resolving the ambiguity in the 1953 Warranty Deed in favor of Sundheims.

3. Whether the District Court erroneously applied the doctrine of laches to deny Teisingers' claim to the 3/5ths royalty interest.

¶ 2 We reverse and remand with instructions consistent with this opinion.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 3 On March 26, 1953, Chester L. Teisinger and Jennie M. Teisinger conveyed several sections of real property in Richland County (the Property) to Ole Sundheim and Iver Sundheim by a warranty deed (1953 Warranty Deed), which included the following reservation language:

First parties reserve unto themselves three-fifths (3/5ths) of Land owners [sic] oil, gas and mineral royalties and three-fifths (3/5ths) of any and all delay rentals on present and existing oil and gas leases now of record against the lands herein described; the conveyance herein is made subject to such oil and gas leases and any and all assignments now of record.

Prior to the sale, Teisingers' predecessors granted an oil and gas lease to R.L. Hill (Hill Lease) on certain sections of the Property. The Hill Lease was released in 1958. Teisingers and Sundheims dispute whether the reservation of royalties in the 1953 Warranty Deed applies to all royalty interests in the deeded property or only to delay rentals on oil and gas leases existing at the time of conveyance. The parties did not memorialize the terms of their purchase and sale agreement except through the 1953 Warranty Deed, and there is no evidence as to which party drafted the deed. Ole Sundheim—the longest-living party to the 1953 Warranty Deed—died in 1998.

¶ 4 From 1953 until 2011 there were few additional leases for drilling or production on the Property. In 2011 and 2012, True Oil LLC, Brigham Oil & Gas, LLP, and Whiting Oil and Gas Corporation began exploration and drilling. In August 2012, Whiting Oil and Gas obtained a First Supplemental Drilling and Division Order Title Opinion from Sadler Law Firm, LLP. The examining attorney noted that "the reservation in the [1953 Warranty Deed] is arguably ambiguous," and recommended that Whiting Oil and Gas obtain either a stipulation from the parties and other interest owners that Teisingers own a 3/5ths landowners royalty interest or a judicial determination as to the meaning and effect of the reservation.

¶ 5 In December 2012, based on the Sadler attorney's advice, Whiting Oil and Gas notified Teisingers that they would not receive payments for the 3/5ths royalty interest until they obtained a quiet title judgment or stipulation. Sundheims refused to stipulate to Teisingers' 3/5ths royalty interest, and Teisingers filed this quiet title action on May 17, 2013, to confirm their royalty interest.

¶ 6 The District Court denied cross-motions for summary judgment and conducted a two-day bench trial. At the conclusion of the trial, the District Court entered findings of fact, conclusions of law, and an order denying Teisingers' claim for a 3/5ths royalty interest. Teisingers appeal.

STANDARDS OF REVIEW

¶ 7 We review for clear error the findings of fact of a district court sitting without a jury. Moerman v. Prairie Rose Res., Inc., 2013 MT 241, ¶ 17, 371 Mont. 338, 308 P.3d 75

. Findings are clearly erroneous if they are not supported by substantial evidence, if the court misapprehended the effect of the evidence, or if we are convinced by our review of the record that the district court made a mistake. In re Estate of Quirin, 2015 MT 132, ¶ 10, 379 Mont. 173, 348 P.3d 658. We review a district court's conclusions of law to determine whether the court's interpretation of the law is correct. Moerman, ¶ 17.

¶ 8 We review a district court's ruling on the admissibility of expert testimony for abuse of discretion. Hastie v. Alpine Orthopedics & Sports Med., 2015 MT 346, ¶ 14, 382 Mont. 21, 363 P.3d 435

. Although a trial court's evidentiary rulings are discretionary, the court is "bound by the Rules of Evidence," and we review de novo its interpretation and construction of a statute or rule.

Kluver v. PPL Mont., LLC, 2012 MT 321, ¶ 19, 368 Mont. 101, 293 P.3d 817

.

¶ 9 Laches is a doctrine of equity that may apply when a person is negligent in asserting a right. Cole v. State ex rel. Brown, 2002 MT 32, ¶ 24, 308 Mont. 265, 42 P.3d 760

. In reviewing a district court's exercise of its equitable power, we review all questions of fact arising upon evidence presented in the record to determine if the court's findings are clearly erroneous. LeMond v. Yellowstone Dev., LLC, 2014 MT 181A, ¶ 22, 375 Mont. 402, 334 P.3d 366. We determine if the court's interpretation of the law is correct. LeMond, ¶ 22.

DISCUSSION

¶ 10 1. Whether the District Court improperly admitted testimony from an English professor interpreting the language of the warranty deed's royalty interest reservation.

¶ 11 Sundheims presented expert testimony from Dr. Nick Plunkey, an English professor from Rocky Mountain College, who analyzed the language of the deed. The District Court allowed Dr. Plunkey to give an expert opinion about his interpretation of the meaning of the reservation language in the 1953 Warranty Deed. Applying principles of grammar and sentence construction, Dr. Plunkey opined that the reservation language was ambiguous. Dr. Plunkey admitted that no rule of grammar mandates a particular interpretation of the reservation language. Nonetheless, Dr. Plunkey employed rules of sentence construction to conclude that the context and construction of the royalty reservation support interpretation in favor of Sundheims. Dr. Plunkey opined that the reservation should be resolved by applying the prepositional phrase "on present and existing oil and gas leases" to modify both royalties and delay rentals.

¶ 12 Pre-trial, Teisingers objected to Dr. Plunkey's testimony on the ground that his testimony was irrelevant and could not help the court determine the meaning that the parties intended for the reservation. At trial, Teisingers objected three more times on the same ground. The District Court overruled all of Teisingers' objections and adopted Dr. Plunkey's opinion.

¶ 13 On appeal, Teisingers argue that the court was required to apply statutory rules of construction to resolve the ambiguity and thus erred in admitting and adopting Dr. Plunkey's opinion about how the ambiguity should be resolved. Teisingers assert that Dr. Plunkey's grammatical expertise was appropriate only to confirm that the reservation was subject to two different interpretations. Teisingers argue that Dr. Plunkey's opinion was based on speculation with no basis in fact and on the mistaken assumption that both royalties and delay rentals are dependent upon existing oil and gas leases.

¶ 14 Sundheims contend that Dr. Plunkey was not required to have expertise in the oil and gas industry in order for him to interpret and form an opinion regarding the language of the deed. According to Sundheims, the District Court did not err in adopting Dr. Plunkey's interpretation because it was "reasonable" and because it "was the only expert interpretation of the contract language offered at trial."

¶ 15 Rules 702, 704

, and 705 of the Montana Rules of Evidence govern the admissibility of expert testimony. M. R. Evid. 702 provides: "If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise." M. R. Evid. 704 allows a qualified expert to testify as to an ultimate issue of fact. Under M. R. Evid. 705, however, expert opinion that states a legal conclusion or applies the law to the facts is inadmissible. Cartwright v. Scheels All Sports, Inc., 2013 MT 158, ¶ 43, 370 Mont. 369, 310 P.3d 1080 (citing Perdue v. Gagnon Farms, Inc., 2003 MT 47, ¶ 28, 314 Mont. 303, 65 P.3d 570 ). Legal conclusions offered by an expert witness invade the province of the fact-finder, whose duty it is to apply the law as given to the facts in the case. Perdue, ¶ 28.

¶ 16 When interpreting the language of a deed, we apply rules of contract interpretation. Whary v. Plum Creek L.P., 2014 MT 71, ¶ 10, 374 Mont. 266, 320 P.3d 973

. Construction and interpretation of a contract present questions...