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EOG Res., Inc. v. Soo Line Railroad Co.

Supreme Court of North Dakota

July 15, 2015

EOG Resources, Inc., a Delaware Corporation, Plaintiff and Appellee
v.
Soo Line Railroad Company, d/b/a Canadian Pacific Railway, successor in interest to Minneapolis, St. Paul & Sault Ste Marie Railway Company; G-4 LLC, Defendants, Third-Party Plaintiffs, and Appellants and Jeannette E. Gere; Lori Whitten; Kim Rachford; Skaar-Risan, LLLP; Linda G. Johnson; Joel D. Johnson; and Whiting Oil and Gas Corporation, Defendants and Third Party Plaintiffs
v.
Ralph A. Brendle, as Trustee of the Ralph A. Brendle Trust, Ralph A. Brendle Living Trust, Brendle Family LLLP, Arlene Sherven, Todd Sherven, Rick Sherven, Gladys Kirton, Alan L. Loen, Agribank, FCB, Wallace L. Nelson and Mary Ann Nelson, individually, and as Trustees of the Nelson Family Trust, UDT 1/10/92, Cynthia M. Roberts a/k/a Cynthia Roberts, Jeannette E. Gere, Lori Whitten, Kim Rachford, Linda G. Johnson, Joel D. Johnson, Michael Johnson Trust, A.G. Andrikopoulos, AgriBank, FCB, Solomonson Family Mineral Trust, Donna and Jerry Lyon, David and Doreene Pusc, Michael and Lorna Pusc, Steven and Collette Pusc, Diana and Frank Wollschlager, Panther Creek (James Simmons, Presco, Inc., Fred and Joyce Evans, Paladin Resources, Inc.), Dean and Sharon Solomonson, Richard W. Frazier, 1477521 Alberta LTD, Donald Nelson, Karolyn Nelson, Timothy Nelson, John Zimmerman, Thomas Miller Gordon, Robert Crawford, and all other persons unknown and claiming any estate or interest in or lien or encumbrance upon the property described in the Cross-Claim of the Defendant G-4, LLC, Third-Party Defendants and Roger Wollschlager and Amanda Olson, as Trustees of the Betsy Amanda Wollschlager Trust, Solveigm Swendsend, Roger Stenerson, Joan Stenerson, Cynthia M. Roberts, Lovila Krueger, Herbert Krueger, Roger Wollschlager, as Trustee of the Wollschlager Irrevocable Trust, Risan Limited Partnership, State of North Dakota, Thomas T. Ritter, John D. Larue, as Trustee of the Stamford Minerals Organization, Roger Wollschlager and Blane Wollschlager, individually, and as Co-Trustees of the Betsy Amanda " Betty" Wollschlager Irrevocable Trust, Skaar-Risan LLLP, Whiting Oil and Gas Corporation, Berry Ventures, Henry and Lorie Gordon, A.G Andrikopoulos Resources, Inc., Alicia Johnson, Mark Johnson, Wollschlager Irrevocable Mineral Trust, Ryan Family Mineral Trust, Kootenani Resources, Strata Resources, Michael S. Johnson Management One LLC, Michael S. Johnson Management Two LLC, Third-Party Defendants and Appellees G-4, LLC, Appellant

As Corrected July 16, 2015.

Page 309

[Copyrighted Material Omitted]

Page 310

Appeal from the District Court of Mountrail County, North Central Judicial District, the Honorable Todd L. Cresap, Judge.

Joseph J. Cassioppi (argued), Minneapolis, Minn.; Lawrence Bender (appeared) and Danielle M. Krause (on brief), Bismarck, N.D. for plaintiff and appellee EOG Resources, Inc., a Delaware Corporation and third-party defendants Berry Ventures, Inc., Strata Resources Inc., Michael S. Johnson Management One LLC, Michael S. Johnson Management Two LLC, Mark Johnson, Alicia Johnson, Henry Gordon, Lori Gordon, A.G. Andrikopoulos Resources, Inc., Ryan Family Mineral Partnership, and Kootenani Resources.

Janilyn K. Murtha (argued), Assistant Attorney General, Office of Attorney General, Bismarck, N.D. and Hope Lisa Hogan (on brief), Assistant Attorney General, Office of Attorney General, Bismarck, N.D., for third-party defendant and appellee State of North Dakota.

Richard P. Olson (on brief) and Andrew T. Forward (on brief), Minot, N.D., for appellee Skaar-Risan LLLP, and third-party defendants and appellees Risan Limited Partnership, Solveig Swendseid, Roger Stenerson, Joan Stenerson, Cynthia M. Roberts, Lovila Krueger, Herbert Krueger, John D. Larue as Trustee of the Stamford Minerals Organization and Thomas T. Ritter.

Michael J. Maus (on brief), Dickinson, N.D., and Christina M. Wenko (on brief), Dickinson, N.D., for third-party defendants and appellees Roger Wollschlager and Amanda Olson, as trustees of the Betsy Amanda Wollschlager trust; Roger Wollschlager, as trustee of the Wollschlager Irrevocable trust; Roger Wollschlager and Blane Wollschlager, individually and as co-trustees of the Betsy Amanda " Betty" Wollschlager irrevocable trust; and the Wollschlager irrevocable mineral trust.

Amy M. Oster (on brief) and Brian R. Bjella (on brief), Bismarck, N.D., for Whiting Oil and Gas Corporation.

Jon R. Brakke (argued) and Whitney M. Irish (on brief), Fargo, N.D., for appellant G-4, LLC.

Donald T. Campbell (argued) and Nathan E. Endrud (appeared), Minneapolis, Minn., for defendant, third-party plaintiff and appellant Soo Line Railroad Company, d/b/a Canadian Pacific Railway, successor in interest to Minneapolis, St. Paul & Sault Ste Marie Railway Company.

Michael C. McCarthy and Jesse D. Mondry, Minneapolis, Minn., for amicus curiae BNSF Railway Company, successor in interest to Minneapolis, St. Paul & Sault Ste Marie Railway Company.

Lisa Fair McEvers, Daniel J. Crothers, Zane Anderson, D.J. Opinion of the Court by McEvers, Justice. The Honorable Zane Anderson, D.J., sitting in place of Kapsner, J., disqualified. VandeWalle, Chief Justice, concurring and dissenting. Sandstrom, Justice, dissenting.

OPINION

Page 311

Lisa Fair McEvers, Justice.

[¶1] Soo Line Railroad Company and G-4, LLC appeal from a summary judgment declaring Soo Line does not own an interest in the minerals in and under certain Mountrail County property and G-4 does not hold a valid leasehold interest in the property. Soo Line and G-4 argue the district court erred in finding seven private deeds conveyed only easements and not a fee simple title to Soo Line's predecessor-in-interest. We reverse and remand.

I

[¶2] EOG Resources, Inc. has an interest in an oil and gas leasehold estate in Mountrail County and operates oil and gas wells. Soo Line is a railroad operating in North Dakota. G-4 has oil and gas exploration leases with Soo Line.

[¶3] EOG brought an action to quiet title to minerals in and under certain Mountrail County property against Soo Line, G-4, and other defendants claiming an interest in the property. EOG sought a declaration that Soo Line and G-4 have no interest in the minerals in and under the disputed property.

Page 312

[¶4] Soo Line answered and brought counterclaims against EOG and cross-claims against the other defendants. Soo Line alleged it obtained a fee simple title to the surface and minerals in the disputed property through a deed executed in 1914 by Henry Olson conveying a legal interest in the property to Soo Line's predecessor in interest, Minneapolis, St. Paul & Sault Ste. Marie Railway Company. Soo Line requested a judgment quieting title and declaring Soo Line is the fee simple owner of the property and recognizing G-4's leasehold interests in the property.

[¶5] G-4 filed a separate answer and brought counterclaims against EOG and cross-claims against the other defendants. G-4 requested the court also quiet title to the mineral interests in and under fifteen additional tracts of land. G-4 alleged Soo Line obtained a fee simple title to the surface and minerals in the original disputed property as well as fifteen additional tracts of land in Mountrail County through conveyances under the March 2, 1899 Act of Congress, a condemnation order, and seven deeds. The seven deeds were executed in 1914, 1915, and 1916 by Henry Olson, William and Lu Blatt, Dewar and Rose Grant, Hans and Thea Larson, Olaf and Dina Faro, Joy Kline, and John and Inger Trana conveying an interest in certain property to Soo Line's predecessor in interest. The parties did not argue these deeds were involuntary and there is no evidence in the record indicating the deeds were made in lieu of condemnation. G-4 sought to quiet title and requested a judgment declaring Soo Line is the fee simple owner of all of the Mountrail County property in dispute and G-4 has a leasehold interest in the property. Soo Line filed an answer to G-4's cross-claims and requested a judgment quieting title and declaring it is the fee owner of the Mountrail County property, including the original disputed property and the fifteen additional tracts of land, and recognizing G-4's leasehold interest in the property.

[¶6] The other defendants filed separate answers to EOG's complaint and Soo Line and G-4's cross-claims, aligning with EOG. They requested the court declare Soo Line and G-4 have no interest in the minerals in and under the disputed property.

[¶7] G-4 and Soo Line moved for partial summary judgment on the interests conveyed under the condemnation order and private deeds. EOG also moved for summary judgment, arguing judgment should be entered in its favor because the railroad acquired only an easement under the 1899 Act, the condemnation order, and the deeds. Soo Line and G-4 responded and stipulated that the railroad acquired only an easement under the 1899 Act.

[¶8] After a hearing and based on the parties' stipulation, the district court partially granted EOG's motion for summary judgment and dismissed G-4's claims related to the 1899 Act. The district court deferred ruling on the motions for summary judgment on the remaining claims until all record owners with potential claims related to the mineral interests for all of the disputed property were joined to the proceeding.

[¶9] G-4 filed an amended counterclaim and cross-claim adding numerous third-party defendants with potential claims to the mineral interests. The third-party defendants filed answers to G-4's amended counterclaim and cross-claim.

[¶10] Soo Line and G-4 moved for summary judgment, requesting the district court quiet title to the remaining disputed property in Soo Line's favor, and declare that Soo Line owns a fee simple interest in the surface and minerals in the property conveyed by the seven deeds and the condemnation order and that G-4 has a valid

Page 313

leasehold interest in the mineral interests by way of an oil and gas lease with Soo Line. Soo Line and G-4 argued the deeds are unambiguous and convey a fee simple interest to the railroad as a matter of law, and the court should find Soo Line owns the condemned property in fee simple because the condemnation order expressly conveyed the property to Soo Line in " fee simple."

[¶11] EOG and several third-party defendants (collectively " EOG parties" ) also moved for summary judgment, requesting the district court quiet title in their favor and declare Soo Line owns only an easement across the surface of the remaining disputed property. The EOG parties argued they were entitled to summary judgment as a matter of law, the railroad acquired only an easement under the seven deeds and condemnation order, Soo Line does not own the minerals in and under its railroad right of way, and G-4 did not acquire a leasehold interest in the minerals through its oil and gas lease with Soo Line.

[¶12] After a hearing on the motion, the district court denied Soo Line and G-4's motions for summary judgment and granted the EOG parties' motion for summary judgment. The court concluded the condemnation order granted Soo Line an easement over and across the property. The court also concluded the private deeds conveyed only an easement to Soo Line's predecessor-in-interest. The court found there were no material facts in dispute and the deeds were more indicative of a grant of an easement than of fee simple title based on the case law the parties cited in support of their arguments. The court found all of the deeds include language that is consistent with a grant of fee simple title because they all include the same granting, warranty, and habendum clauses, but the language was not necessarily conclusive of a grant of fee title. The court found that each of the deeds included the phrase " right of way" in the title and the inclusion of that language creates an uncertainty about what the grantors intended to convey. The court considered other factors in determining the deeds conveyed an easement, including the size and shape of the conveyed interest, the purpose of the conveyance, a provision in the deeds releasing the railroads from certain claims for damages, and extrinsic evidence. A judgment was subsequently entered.

II

[¶13] The standard for reviewing summary judgments is well established:

Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.

Page 314

Hamilton v. Woll, 2012 ND 238, ¶ 9, 823 N.W.2d 754 (quoting Wenco v. EOG Res., Inc., 2012 ND 219, ¶ 8, 822 N.W.2d 701). Summary judgment may not be granted if reasonable differences of opinion exist about the inferences to be drawn from the undisputed facts. Hamilton, at ¶ 9. Issues of fact become issues of law when reasonable persons can reach only one conclusion from the facts. Id.

III

[¶14] Soo Line and G-4 argue the district court erred in granting summary judgment and concluding the seven deeds conveyed only an easement. Soo Line and G-4 contend all seven deeds unambiguously conveyed a fee simple interest to Soo Line's predecessor in interest. Soo Line and G-4 do not argue the district court erred in finding the railroad acquired only an easement through the condemnation order.

[¶15] We interpret deeds in the same manner as we interpret contracts. N.D.C.C. § 47-09-11. The primary purpose in interpreting a deed is to ascertain and effectuate the grantor's intent. Wagner v. Crossland Constr. Co., Inc., 2013 ND 219, ¶ 8, 840 N.W.2d 81. The intent must be ascertained from the writing alone, if possible. Id. When a deed is unambiguous we determine the parties' intent from the instrument itself. Id. A deed is ambiguous if rational arguments can be made in support of contrary positions as to the meaning of the term, phrase, or clause in question. See In re Estate of Dionne, 2009 ND 172, ¶ 16, 772 N.W.2d 891. Whether a deed is ambiguous is a question of law, which is fully reviewable on appeal. Wagner, at ¶ 8.

[¶16] If a deed is ambiguous, the court may consider extrinsic evidence to determine the parties' intent. Dionne, at ¶ 16. Resolution of an ambiguity in a deed by extrinsic evidence is a finding of fact, reviewed under the clearly erroneous standard. See Rolla v. Tank, 2013 ND 175');">2013 ND 175, ¶ 5, 837 N.W.2d 907. Generally, summary judgment is not appropriate if the deed is ambiguous and reasonable differences of opinion exist as to the interpretation of a deed. Cf. Hillerson v. Bismarck Pub. Sch., 2013 ND 193, ¶ 17, 840 N.W.2d 65 (interpretation of terms of a contract).

A. Lalim

[¶17] The EOG parties argue this Court's decision in Lalim v. Williams Cnty.,105 N.W.2d 339 (N.D. 1960), sets the standard for interpreting the deeds in this case. They claim the Court's analysis in Lalim should be applied in this case and compels the conclusion ...


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