george-w-clay-iv-and-dana-clay-husband-and-wife-louis-oswald-iii , 2015 WY 84 ( 2015 )

IN THE SUPREME COURT, STATE OF WYOMING
2015 WY 84
APRIL TERM, A.D. 2015
June 11, 2015
GEORGE W. CLAY, IV and DANA
CLAY, husband and wife; LOUIS
OSWALD, III, Trustee of the Oswald
Family Trust, dated April 27, 1998;
JONATHAN S. RODERICK, Trustee of
the Jonathan S. Roderick Living Trust,
dated February 8, 2007; ALMA L.
TISHER and KELLY B. TISHER, wife
and husband; LINDA L. CONNELL;
L-K-E INVESTMENTS, a Texas
company; STEVEN A. TOFTE, successor
Trustee of the Edwin A. Tofte Mineral
Trust, dated July 31, 1995; JOE W. KING,
Trustee for the Joe W. King Revocable
Living Trust dated December 1, 1995;
ROBERT L. OSTLUND; MARY SUE
OSTLUND VAN NEWKIRK; POLLIE
ANN OSTLUND MADDEN; WELFELT S-14-0197
INTERESTS, LLC, a Texas company;
McMAHON ENERGY PARTNERS,
LIMITED PARTNERSHIP, a Colorado
limited partnership; TOFTE ENERGY
PARTNERS, LIMITED PARTNERSHIP,
a Wyoming limited partnership; HESS
CORPORATION, successor in interest to
American Oil and Gas, Inc., a Colorado
corporation; CONVERSE COUNTY
LAND AND MINERALS, LLC, a
Wyoming limited liability company;
JOHN O. BULLINGTON; JOHN L.
HOPPE, JR. and WARD F. HOPPE, as
Co-Trustees of the John L. Hoppe
Revocable Trust dated February 26, 1998
and PUMPKIN BUTTES, LLC, a
Wyoming Company,
Appellants
(Defendants),
v.
MOUNTAIN VALLEY MINERAL
LIMITED PARTNERSHIP,
Appellee
(Plaintiff).
Appeal from the District Court of Converse County
The Honorable Wade E. Waldrip, Judge
Representing Appellants:
Timothy M. Stubson and Jeff Oven of Crowley Fleck PLLP, Casper, Wyoming;
James Edwards, Gillette, Wyoming; Harry B. Durham, III of Brown, Drew, Massey
& Durham, Casper, Wyoming. Argument by Mr. Stubson and Mr. Edwards.
Representing Appellee:
Dan Riggs and Amanda K. Roberts of Lonabaugh & Riggs, LLP, Sheridan,
Wyoming. Argument by Ms. Roberts.
Before BURKE, C.J., and HILL, KITE, DAVIS, and FOX, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made
before final publication in the permanent volume.
KITE, Justice.
[¶1] Appellants George and Dana Clay, et. al (hereinafter referred to collectively as
“the Clays”) assert the district court erred by declaring Appellee Mountain Valley
Mineral Limited Partnership (Mountain Valley) owned title to mineral interests in certain
Converse County, Wyoming property. The district court granted summary judgment in
favor of Mountain Valley, concluding as a matter of law that its predecessor acquired title
to the mineral interest in a 1976 quiet title action that was not contested by the Clays’
predecessors.
[¶2] We affirm.
ISSUES
[¶3] The Clays present the following issues on appeal:
A. Whether the district court erroneously found that
[the Clays] were barred under the doctrine of res
judicata from litigating the issue of the [Clays’]
respective mineral rights where the identity in
subject matter and the issues were different from
those adjudicated in 1976.
B. Whether the district court erred by failing to
address the [Clays’] argument that [Mountain
Valley] [was] barred by the doctrine of laches from
asserting its ownership interest in the entire estate.
Mountain Valley restates the issues as:
A. Did the district court properly determine that [the Clays’]
claims to the subject mineral estate were previously
adjudicated by the unambiguous 1976 decree and are now
barred by the doctrine of res judicata?
B. Did the district court properly determine that laches does
not apply in light of the 1976 decree?
FACTS
[¶4] In 1914 and 1915, the United States issued patents to Marcus and Frank Githens
for property in Converse County, Wyoming, reserving only its interest in coal. The
1
Githens conveyed one-fifth interests in the property to Henry Sidles, Charles Stuart,
Alfred James, Jay Rice and Leslie Stire. Sidles and Stuart conveyed their interests to Jay
Rice, giving him a 60% ownership interest. Rice died and his heirs took title to his
interest as follows: Grace Rice – 30%; Jay Rice, Jr. – 15%; and Margaret Walters – 15%.
[¶5] In 1963, Jay Rice, Jr. conveyed one-half of his mineral interest (7.5% of the
whole) to Walters. When Grace Rice died, she apparently left her interest in the property
to Jay Rice, Jr. and Walters. In 1971, Jay Rice, Jr. conveyed an undivided “three tenths
surface interest” in the subject lands together with all of his mineral interest to Walters,
giving her a 60% interest in the property.
[¶6] The Stire 20% interest descended to Mary Stire and when she died in 1965, she
left it to Ruby Shepherd for life with the remainder to William, Harold and John Hoppe.
In 1974, the Hoppes conveyed their interest in the surface estate to Ruby Shepherd,
giving her fee title instead of a life estate in 20% of the surface. The Hoppes reserved
their remainder interest in the mineral estate. The James’ 20% interest descended to
family members.
[¶7] In 1974, Mountain Valley’s predecessor Art and Hope Sims began to acquire
record title to the surface of the property. They had apparently been grazing their sheep
on it for some period of time prior to that. On May 16, 1974, Walters conveyed to the
Sims “an undivided three-fifths interest” (60%) in the property, expressly reserving all of
her mineral interest. On August 5, 1974, pursuant to a probate court decree, James
conveyed to the Sims a one-fifth interest (20%) reserving the associated mineral interest,
which was conveyed to Energetics, Inc. later in the year. On July 1, 1975, Shepherd
conveyed to the Sims “an undivided one-fifth interest” (20%) in the property, but
reserved her mineral interest. Thus, by 1975, the Sims had ostensibly acquired all of the
surface interest in the property by deed. The owners of the mineral interest were:
Walters – 60%; Shepherd/Hoppes – 20%; and Energetics – 20%.
[¶8] On May 14, 1976, the Sims filed a quiet title action against Rice, Walters, Stire,
Shepherd, Stuart, Sidles, Githens, Hoppe, and any person claiming by, through or under
them. Some of those named as defendants only owned mineral interests. The only
interest owner not named in the action was Energetics. The Sims’ complaint stated they
were the owners in fee simple of the Converse County land, the defendants asserted some
“right, title, interest in, or claim to, or lien or encumbrance upon the real property,” and
their right, title, or interest in the property was inferior to the plaintiffs. The complaint
alleged that the Sims and their predecessors had paid all taxes against the real property
“for more than ten (10) years last past” and had maintained “actual, open, visible,
exclusive, continuous, adverse and notorious possession of said real property for more
than ten years preceding the filing of this Complaint.”
[¶9] The prayer for relief was broad:
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1. That said Defendants be required to set forth their adverse
claims to the premises hereinbefore described, and that the
Court adjudge and decree that the title of the Plaintiffs in
said real property is the full, free and valid fee simple
ownership therein and that the Plaintiffs are entitled to
possession of said real property.
2. That the Court adjudge and decree that the claims, titles
and interests, if any, of said Defendants are subservient
and inferior to the claims and title of Plaintiffs and have
no force and effect.
3. That the Defendants be adjudged to have no right, title,
estate or interest in, and lien or encumbrance in or upon
said described real property or any portion thereof.
[¶10] The district court entered a judgment and decree in favor of the Sims on October
7, 1976. The judgment recited that the defendants had all been “duly served by
publication according to law.” The district court stated that it had appointed an attorney
to represent any of the defendants who were in military service and a guardian ad litem
(GAL) to represent any defendants who were not competent to respond. The attorney
and GAL filed a general denial on behalf of the unknown defendants, but no other
response to the complaint was filed. All of the other defendants, which included the
Clays’ predecessors, failed to appear or answer the complaint’s allegations.
[¶11] The district court ruled in favor of the plaintiffs on all claims. The judgment
stated that default had been entered against all defendants except those represented by the
attorney and GAL, a trial had been held on the claims against the defendants so
represented, and the plaintiffs were entitled to judgment against all defendants. The
judgment included the following declarations:
1. That all and each of the Defendants have been lawfully
notified of this action and that no additional notice be or
need be given to any of the Defendants.
2. That the Defendants who have not answered Plaintiffs’
Complaint or who have not otherwise appeared herein or
defended pursuant to the Wyoming Rules of Civil
Procedure, or otherwise, are in default herein and the
Entry of Default heretofore entered is hereby confirmed.
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3. That the Plaintiffs were at the time of filing their
Complaint herein, and are now, the true and lawful owners
and entitled to possession of the following described real
property situate in Converse County, State of Wyoming:
[legal description].
4. That the Plaintiffs have Judgment against the Defendants
as prayed for in their Complaint and that Plaintiffs’ title to
and possession of the above-described real property be,
and is hereby, declared good and valid, and quieted
against any and all of the Defendants and persons
claiming through, by or under the Defendants or any of
them, and each and every adverse claim and demand of
any of said Defendants or persons is hereby adjudged to
be of no force and effect.
5. That each Defendant and their unknown heirs, devisees,
executors, administrators, and assigns, or any other
persons claiming by, through or under them, and each of
them, is hereby adjudged to have no right, title, interest or
estate whatsoever in or to said real property and is forever
enjoined, barred and estopped from asserting any claim,
right, title, interest or estate in or to said property or any
part or parcel thereof.
Because Energetics was not named a defendant in the action, its 20% mineral interest was
not affected in any way by the 1976 judgment.
[¶12] The record includes the first page of an unrecorded mineral lease for the property
from the Sims to Exxon dated February 1977, just a few months after the October 1976
judgment.1 Later, the Sims transferred their interest in the minerals to Mountain Valley,
whose general partner is their daughter, Judy Hageman. Mountain Valley has also leased
the minerals. Notwithstanding the 1976 judgment, the Clays’ predecessors conveyed
and/or leased the mineral interests. The Clays’ mineral title derives from interests once
held by Walters and Stire. Although no oil or gas wells have been drilled on the surface
of the property, it has been included in pooling arrangements and spacing units so that
mineral production has been attributed to the property at issue here.
1
Although there was some discussion at oral argument about the Sims’ possible reasons for filing the
quiet title action given they had already acquired the entire surface of the property, neither party provided
a definitive explanation. While it is speculation on our part, the fact that the Sims may have leased the
minerals shortly after title was quieted in them suggests they may have filed the action to obtain record
title to the mineral estate so it could be leased.
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[¶13] Mountain Valley filed the present action for declaratory relief on May 15, 2013.
Mountain Valley claimed to have title to 80% of the mineral interest in the property
pursuant to the 1976 judgment and asserted the Clays were barred under the doctrine of
res judicata from claiming any interest in the property. The only mineral interest owner
not included as a defendant in this action was Energetics (or its successors) with a 20%
mineral interest. The Clays responded by arguing the 1976 judgment did not affect the
mineral interest because only the surface was at issue in that proceeding. The district
court concluded that the 1976 action addressed the mineral interest; the judgment
specifically granted fee simple title to the Sims; the judgment extinguished any adverse
claims of the Clays’ predecessors; and res judicata barred the Clays’ current claim. The
Clays appealed.
STANDARD OF REVIEW
[¶14] Summary judgments are governed by W.R.C.P. 56(c):
The judgment sought shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.
We review a summary judgment de novo, using the same materials and following the
same standards as the district court. “We examine the record from the vantage point most
favorable to the party opposing the motion, and we give that party the benefit of all
favorable inferences which may fairly be drawn from the record.” Hasvold v. Park
County School Dist. No. 6, 2002 WY 65, ¶ 11, 45 P.3d 635, 637-38 (Wyo. 2002), quoting
Four Nine Gold, Inc. v. 71 Constr., Inc., 809 P.2d 236, 238 (Wyo. 1991). See also Baker
v. Speaks, 2014 WY 117, 334 P.3d 1215 (Wyo. 2014). We will affirm a summary
judgment ruling on any legal ground appearing in the record. Id., citing Retz v.
Siebrandt, 2008 WY 44, ¶ 14, 181 P.3d 84, 90 (Wyo. 2008).
DISCUSSION
1. Res Judicata
[¶15] This case presents the difficult legal question of how to give effect to a 1976
default judgment in a quiet title action and remain consistent with our law of adverse
possession of mineral interests. We conclude, under the specific circumstances presented
here, the default judgment quieted title to the mineral interest in Mountain Valley’s
predecessor, the Sims. The circumstances which warrant this decision include: the
surface and mineral interests in a large percentage of the property were still consolidated
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prior to 1974 when the Sims began acquiring the surface from various landowners who
reserved their mineral interest; the Clays’ predecessors were clearly named and properly
served in the 1976 action and did not respond; the default judgment against them has not
been set aside;2 the original quiet title complaint properly set forth claims of quiet title
and adverse possession; and the judgment was phrased in broad terms granting the Sims
all right and title in the property while declaring that the Clays’ predecessors had no right,
title, interest or estate “whatsoever” in the property.
[¶16] The district court ruled that the Clays were barred by res judicata from contesting
Mountain Valley’s title to the mineral interests. It concluded the 1976 judgment
effectively quieted title in “fee simple” to the property, which included the mineral
interest, against all of the named defendants and their successors. The elements of res
judicata are:
1) the parties must be identical; 2) the subject matter must be
identical; 3) the issues must be identical and relate to the
same subject matter; and 4) the capacities of the persons must
be identical in reference to both the subject matter and the
issues between them.
Wyo. Med. Center, Inc. v. Wyo. Ins. Guar. Ass’n, 2010 WY 21, ¶ 15, 225 P.3d 1061,
1065 (Wyo. 2010), citing CJ v. SA, 2006 WY 49, ¶ 11, 132 P.3d 196, 202 (Wyo. 2006).
[¶17] Starting with the first element, parties are considered identical for application of
res judicata when they are “the same as, or in privity with, those involved in previous
proceedings.” Grynberg v. L & R Exploration Venture, 2011 WY 134, ¶ 23, 261 P.3d
731, 737 (Wyo. 2011), citing Osborn v. Kilts, 2006 WY 142, ¶ 10, 145 P.3d 1264, 1267
(Wyo. 2006). The Clays’ interests derive from Walters and Stire, who were defendants
in the 1976 proceeding, and Mountain Valley acquired its interest from the original
plaintiffs, the Sims. There is no question that the parties in this case are identical under
principles of privity with parties involved in the 1976 proceeding.
[¶18] The Clays assert, however, that the subject matter and issues involved in this
declaratory judgment action are different from those resolved in the 1976 proceeding.
The heart of their argument is that the 1976 decree pertained only to the surface estate
and, therefore, the preclusive effect of the decree extends only to that estate and not to the
mineral estate.
[¶19] In 1976, the defendants defaulted by failing to respond to the Sims’ quiet title
complaint and the court entered judgment against them.
2
The district court analyzed whether the default judgment should be set aside under W.R.C.P. 60(b) and
concluded it should not. The Clays do not contest that decision on appeal .
6
“[A] party who suffers judgment by default in effect
confesses the truth of the facts respecting the claim except for
facts that in their nature require an examination of details, as,
for example, the amount of damages when the claim is
unliquidated. If he later wishes to draw in issue the facts thus
confessed, he must move in the trial court to set aside the
judgment; he cannot draw in issue the facts by appealing
directly from the default judgment, because on the record
they stand confessed.
Spitzer v. Spitzer, 777 P.2d 587, 589-90 (Wyo. 1989), quoting 9 J. Moore, B. Ward & J.
Lucas, Moore’s Federal Practice ¶ 203.06 at 3-27 to 3-28 (2d ed. 1989) (emphasis
omitted). See also 46 Am. Jur. 2d Judgments § 305 (“A default has been held to operate
as an admission of the truth of all the material allegations set forth in the complaint or
declaration. A default has also been held to operate as an admission of the cause of
action, so as to be tantamount to an admission that the plaintiff is entitled to judgment.”)
(footnotes omitted). The Sims’ default judgment has not been set aside and is, therefore,
still fully valid.
[¶20] The Sims’ complaint followed Wyo. Stat. Ann. § 1-32-201 (LexisNexis 2013),
which governs quiet title actions:
An action may be brought by a person in possession of
real property against any person who claims an estate or
interest therein adverse to him, for the purpose of determining
the adverse estate or interest. The person bringing the action
may hold possession himself or by his tenant.
As we explained in Barrett v. Town of Guernsey, 652 P.2d 395, 399 (Wyo. 1982),
The purpose for which a statutory action to quiet title is
brought is to determine adverse claims to real property to
secure repose and put at rest in one comprehensive action all
adverse and conflicting claims, to fix the status of the land
with respect to ownership and to establish by decree a
muniment of title to it. 74 C.J.S., Quieting Title § 6, pp. 16–
17.
In order to accomplish the purposes of an action to quiet
title, there must be some means whereby the finality sought is
real and has the stability intended.
7
[¶21] The Sims sought quiet title of the real property based upon the doctrine of adverse
possession. The Clays assert the Sims’ adverse possession claim was limited to the
surface estate because they could not, as a matter of law, have maintained a claim for
adverse possession of the severed mineral estate without establishing that they produced
minerals from the property. The general law on adverse possession states, “‘[i]n order to
establish adverse possession, the claiming party must show actual, open, notorious,
exclusive and continuous possession of another’s property which is hostile and under
claim of right or color of title.’ Possession must be for the statutory period, ten years.”
Addison v. Dallarosa–Handrich, 2007 WY 110, ¶ 11, 161 P.3d 1089, 1091 (Wyo. 2007),
quoting Gillett v. White, 2007 WY 44, ¶ 15, 153 P.3d 911, 915 (Wyo. 2007).
[¶22] Both the mineral estate and the surface estate may be adversely possessed. State
ex rel. Cross v. Bd. of Land Comm’rs, 50 Wyo. 181, 198-99, 58 P.2d 423, 429 (1936).
The difference between claims for adverse possession of the surface and mineral estates
is the method of proving the possession element. In Cross, we quoted with favor the
Supreme Court of Illinois in Kinder v. La Salle County Carbon Coal Co., 301 Ill. 362,
133 N.E. 772, 773 (1921), as follows:
Coal, limestone, and other minerals in place are land and are
attended with all the attributes and incidents peculiar to the
ownership of land. Title to minerals, distinct from title to
surface of land, may be proven in exactly the same way as
title to the surface. Catlin Coal Co. v. Lloyd, 176 Ill. 275, 52
N.E. 144. Title to the mineral stratum may therefore be shown
by proof of adverse possession, but the difficulty with respect
to getting title of such an estate by adverse possession is
found in the difficulty of getting and proving actual
possession. By a severance separate estates are created which
are held by separate and distinct titles, and each estate is
incapable of possession by the mere occupancy of the other.
Renfro v. Hanon, 297 Ill. 353, 130 N.E. 740; 2 Corpus Juris,
71; 1 R.C.L. 738.”
Id. (emphasis added).
[¶23] As we noted in Cross, proof of possession of the surface does not establish
possession of a severed mineral estate. In order to prove the “possession” element of an
adverse possession claim on a mineral estate after the surface and mineral estates have
been severed, actual possession of the minerals (as distinguished from possession of the
surface) is required. A claimant must establish that he specifically possessed the minerals
by engaging in some type of mining operation. Thus, without mineral production a
claimant cannot satisfy the elements of the adverse possession of a severed mineral
8
estate. Ohio Oil Co. v. Wyo. Agency, 63 Wyo. 187, 206, 179 P.2d 773, 779 (1947);
Roush v. Roush, 589 P.2d 841, 843 (Wyo. 1979).
[¶24] However, prior to severance of the minerals, adverse possession of the surface will
include the mineral estate. See id.; See also Cross 58 P.2d at 429. Furthermore, and of
great importance in this case, a severance of the mineral estate by one partial interest
owner of a property does not affect the consolidation of the mineral and surface interests
with respect to the other owners. Town of Glenrock v. Abadie, 71 Wyo. 414, 426-27, 259
P.2d 766, 769-70 (1953). See also 40 RMMLF-INST Chap. 21, p. 12 (1994) (“If only a
fractional undivided mineral interest has been severed from the surface, however, then
the adverse possessor of the surface can also acquire title to the unsevered part of the
mineral interest through his occupation of the surface.”) It appears the parties, and
perhaps the district court, assumed that severance of the property’s entire mineral estate
occurred when Jay Rice, Jr. conveyed one-half of his mineral interest (7.5% of the whole)
to Walters in 1963. However, under Abadie, the remainder of the mineral estate (92.5%
of the whole) stayed consolidated with the surface until the record title owners conveyed
the surface to the Sims and reserved the minerals in 1974 and 1975.
[¶25] The paragraph in the 1976 complaint setting forth the Sims’ adverse possession
claim stated:
5. That Plaintiffs and their predecessors in interest have
paid all taxes legally assessed against said real property for
more than ten (10) years last past, and have been in actual,
open, visible, exclusive, continuous, adverse and notorious
possession of said real property for more than ten (10) years
preceding the filing of this Complaint.
[¶26] The Clays assert the Sims only claimed to have adversely possessed the surface
and, therefore, they could not acquire the mineral estate in the 1976 quiet title action.
That is not an accurate reading of the Sims’ adverse possession allegation. They claimed
to have possessed the “real property.” Both mineral and surface estates are “real
property” under our law. Although the complaint did not make any specific allegation
about the nature of their adverse claim or the particulars of their means of possessing the
property, the Sims included defendants who only owned mineral interests at that time.
[¶27] The complaint also did not set forth a specific date that the Sims’ claim of adverse
possession commenced. It simply said the Sims had adversely possessed the real
property for more than ten years. Given the defendants defaulted, the allegations in the
complaint were admitted, including that the Sims had possessed the property for more
than the requisite ten year period. An argument could be made that the defendants
reasserted their claims of ownership over the mineral estate prior to the 1976 quiet title
action when they deeded their surface interests to the Sims and reserved the minerals,
9
thereby ceasing any period of adverse possession. We have, in two recent cases,
acknowledged that a claimant may establish adverse possession of property even though
the period of adverse possession has ceased. In Graybill v. Lampman, 2014 WY 100, ¶
35, 332 P.3d 511, 521 (Wyo. 2014), we noted that the Graybills’ predecessors had
adversely possessed the property decades earlier even though the Lampmans reasserted
ownership before the Graybills filed their quiet title action. In Ruby River Canyon
Ranch, LTD v. Flynn, 2015 WY 74, ¶¶ 11-14, ___ P.3d ___ (Wyo. 2015), we considered
the evidence of the claimant’s alleged possession of the property for a time period prior
to when the record owner granted the claimant express permission to use the property.
[¶28] The Clays’ predecessors did not appear at all to contest the Sims’ allegations of
adverse possession or to otherwise object to the Sims’ request that all right, title and
interest in the property be set over to them and that defendants be dispossessed of any
interest they had “whatsoever” in the property. So, unlike the claimants in Ohio Oil and
Roush, the Sims were never put to their proof on the possession element of adverse
possession of the surface or the minerals.
[¶29] Once we recognize that (1) 92.5% of the mineral and surface estate was
consolidated until just two years before the quiet title action was filed making that portion
of the mineral estate subject to adverse possession without proving mineral production;
and (2) a claimant may establish adverse possession by showing possession of the
property during any earlier 10 year period, the basic premise of the Clays’ argument falls
apart. It is simply not true that the Sims were unable, as a matter of law, to adversely
possess the mineral estate because they could not show mineral production from the
property.
[¶30] With regard to the 7.5% mineral interest severed by Jay Rice, Jr. in 1963, if the
case were contested the Sims would have been required to show mineral operations or
that they had adversely possessed the property for the requisite time prior to severance.
However, Walters (who owned the interest at the time of the 1976 action) did not answer
or otherwise respond to the Sims’ quiet title complaint.3 Regardless of the underlying
facts of the Sims’ adverse possession of that interest, the broad language of the default
3
An argument could be made that the previously severed minerals merged with the surface estate when
the ownership of both estates reunited in Walters in 1971. That is what happens when a dominant
interest merges with a servient interest, such as in the case of the merger of an easement and the surface
estate in a single owner. “When one party acquires a fee title to both the servient and dominant estates,
the easement merges into the interest of the servient estate and terminates.” Davidson Land Co, LLC v.
Davidson, 2011 WY 29, ¶ 31, 247 P.3d 67, 75 (Wyo. 2011). However, there apparently is a split of
legal authority on whether a merger takes place when the surface and mineral interest are reunited in a
single owner because the estates are of equal rank. See, e.g., Medicine Lodge Investments, LLC v. EAR,
Inc., 197 P.3d 502, 509, n.13 (Okla. Ct. App. 2008). We need not decide this legal issue in the present
case.
10
judgment confirms that title to the surface and 80% of the minerals, including the severed
7.5% interest, was quieted in favor of the Sims in 1976. Courts employ basic rules of
contract interpretation in determining the res judicata effect of a judgment.
The legal operation and effect of a judgment must be
ascertained by a construction and interpretation of its terms,
and this presents a question of law for the court. Courts
interpret judgments by the same rules of construction as other
written instruments, and the intention of the trial court must
be determined. That is, if there is uncertainty and ambiguity
in a judgment, the reviewing court must construe it so as to
express the intent of the trial judge. A judgment is
ambiguous when it would lead two reasonable persons to
different conclusions as to its effect and meaning.
Necessity of ambiguity in judgment.
If the language used in a judgment is ambiguous there is
room for construction. A judgment is ambiguous if it is
capable of more than one reasonable interpretation.
However, if the language employed is plain and unambiguous
there is no room for construction or interpretation, and the
effect thereof must be declared in the light of the literal
meaning of the language used. That is, an unambiguous
judgment must be enforced according to its terms.
50 C.J.S. Judgments § 741 (2015) (footnotes omitted). See also 46 Am. Jur. 2d
Judgments § 74 (2015) (stating that as “a general rule, judgments are to be construed like
other written instruments, and the legal effect of a judgment must be declared in light of
the literal meaning of the language used”).
[¶31] The quoted provisions of the 1976 decree in Paragraph 11, above, are very broad
granting the Sims all interest in the property, adjudging the defendants to have no right,
title, interest or estate “whatsoever” in or to said real property and declaring that the
defendants were “forever enjoined, barred and estopped from asserting any claim, right,
title, interest, or estate or to said property or any part or parcel thereof.” The plain
meaning of this language is that the Sims obtained all interest in the property and the
defendants were adjudged to have no interest in the property. Both the surface and
minerals fall within the definition of right, title, interest and estate of the property.
[¶32] The Clays also claim that use of the term “fee simple” in the 1976 action is
consistent with a holding that the Sims acquired the surface interest only. The Sims’
complaint referred to a fee simple interest but it did not specify the surface estate. The
1976 decree did not actually contain the term “fee simple,” but it did grant judgment in
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accordance with the prayer in the Sims’ complaint which requested the district court
“adjudge and decree that the title of the Plaintiffs in said real property is the full, free and
valid fee simple ownership.”
[¶33] The term “fee simple” does not go far to help resolve the issues in this case. “Fee
simple” just means an estate that can be inherited and is not subject to conditions or
“collateral determination.” Cross, 50 Wyo. at 201, 58 P.2d at 430. A fee simple estate
may be owned in the entire property before the minerals are severed or in the surface
and/or the mineral estates after severance. Id. at 430-31. See also Evanston v. Robinson,
702 P.2d 1283, 1289 (Wyo. 1985); Williams v. Watt, 668 P.2d 620, 624-25 (Wyo. 1983).
Thus, a ruling that a party owns a fee simple interest in a property, by itself, does not
determine whether that interest is in the mineral estate, the surface estate, or both. We,
therefore, reject the Clays’ argument that the 1976 action was limited to fee simple
ownership of the surface.
[¶34] The Oklahoma Supreme Court addressed a factual scenario similar to the present
case in Crain v. Farmers United Cooperative Pool, 472 P.2d 882 (Okla. 1970). In 1941,
Crain filed a quiet title action, generally alleging that she was the owner in fee simple of a
property and that numerous defendants, including Farmers, claimed an interest adverse to
hers. Crain recited the elements of a quiet title action without specifically alleging the
origin or basis of her adverse claim or that the mineral estate was included in her claim;
however, she named parties who only owned mineral interests as defendants. Farmers
owned a mineral interest and was named as a defendant but did not respond to the action.
After it defaulted, the trial court entered judgment quieting Crain’s title against any
adverse claim of Farmers and the other defendants. Crain, 472 P.2d at 883.
[¶35] In 1965, Crain commenced a second quiet title action on the same property, again
naming Farmers as a defendant. Farmers cross-petitioned asserting it had a paramount
interest in the mineral estate. The Oklahoma Supreme Court ruled that the 1941 petition
stated a sufficient cause of action to quiet title in the mineral estate even though Crain’s
claim against the mineral estate was not specified in the complaint; therefore, the
judgment rendered in the earlier proceeding was not subject to collateral attack by
Farmers. The court summarized its decision as follows:
We hold that the 1941 judgment rendered on a petition
alleging that Crain was the fee simple owner and in
possession of property, describing it, and that Farmers
claimed some unspecified adverse interest constituting a
cloud upon Crain's title, stated a cause of action. Farmers was
properly before the court by virtue of personal service of
summons. Farmers was, therefore, obligated to interpose the
asserted paramount mineral interest in that action. Farmers
12
declined, and the 1941 judgment rendered on behalf of Crain
is valid.
Id. at 883-84.4
[¶36] There is no relevant distinction between Crain and the instant case, and we agree
with the Oklahoma court’s resolution. Similarly, in Burch v. Hibernia Bank, 304 P.2d
212 (Cal. Ct. App. 1956), a California court of appeals held a default judgment in an
earlier quiet title action was not subject to collateral attack in a later action even though
the defendants may have had superior title to the property prior to the first action. The
defaulting defendant had notice of the judgment that would be taken against him if he did
not respond, and his failure to protect his interests in the first action could not be
remedied in a later action. A default judgment in a quiet title action is, therefore, entitled
to res judicata effect in subsequent actions. Id.; See also Golden Cycle Corp. v. Cresson
Consolidated Gold Mining & Milling Co., 497 P.2d 714 (Colo. Ct. App. 1972); Doctrine
of Res Judicata as Applied to Judgments by Default, 128 A.L.R. 472 (1940, updated
2015).
[¶37] The Clays insist that if the district court’s decision in this case is upheld, it puts
every owner of a mineral interest in property that has been subject to an adverse
possession action at risk of losing its interest. We do not share that concern because the
result in this case is driven by the specific circumstances. Those circumstances include
that the surface and minerals were consolidated as to most of the property until the Sims
acquired ownership of the surface so that adverse possession of the surface also included
the mineral estate. The Sims named all of the interest owners (with the exception of one
20% mineral interest owner) as defendants in the 1976 action, thereby giving them an
opportunity to contest the claim. The complaint did not limit the action to the surface
estate but clearly stated that it was intended to adjudicate any and all interests each
defendant had in the property and sought a judgment that the defendants had “no right,
title, estate or interest in . . . said described real property or any portion thereof.” The
complaint stated a general quiet title action and recited the elements of adverse
possession without delineating that it only pertained to the surface estate. The defendants
(the Clays’ predecessors) wholly failed to respond, so the Sims were not put to their proof
with regard to the possession element of their adverse possession claim on either the
surface or the mineral estate. The 1976 judgment specifically stated the defendants had
lost any interest they had “whatsoever” in the property, and the judgment has not been set
aside.
4
Like Wyoming, Oklahoma requires evidence of actual mineral operations on the surface to prove a
claim of adverse possession of a mineral estate. Cornelius v. Moody Bible Institute, 18 P.3d 1081, 1084
(Okla. Ct. App. 2000).
13
[¶38] Under these circumstances, the 1976 action and the present action involve
identical subject matters and issues and the parties’ relationship to the subject matter and
issues is the same. All of the elements of res judicata were satisfied, and the district court
properly ruled that the Clays were barred from asserting they owned the mineral interest.
2. Laches
[¶39] The district court declined to address the Clays’ laches defense after it concluded
the 1976 decree was valid. The Clays assert that their laches defense is still viable
because Mountain Valley delayed in asserting its right to the mineral interest until it
became valuable.
[¶40] We have held that the equitable doctrine of laches may apply to bar a claim to a
mineral interest under appropriate circumstances.
Laches bars a claim when a party has delayed in enforcing its
rights to the disadvantage of another. Dorsett v. Moore, 2003
WY 7, ¶ 9, 61 P.3d 1221, 1224 (Wyo.2003). “The defense of
laches is based in equity and whether it applies in a given
case depends upon the circumstances.” Ultra Resources, Inc.
v. Hartman, 2010 WY 36, ¶ 123, 226 P.3d 889, 929
(Wyo.2010). Two elements must be proven to establish
laches: 1) inexcusable delay; and 2) injury, prejudice, or
disadvantage to the defendants or others. Moncrief v. Sohio
Petroleum Co., 775 P.2d 1021, 1025 (Wyo.1989).
Windsor Energy Group, LLC v. Noble Energy, Inc., 2014 WY 96, ¶ 12, 330 P.3d 285,
288-89 (Wyo. 2014).
[¶41] In Windsor, ¶ 20, 330 P.3d at 290-91, the plaintiffs had inexcusably delayed in
asserting their contractual right to recover the costs of production on oil and gas leases
and were, therefore, barred by the doctrine of laches from asserting those rights several
years later. Similarly, Moncrief delayed in seeking specific performance of its right to
assignment of an oil and gas lease interest until after the lease became valuable. We
concluded the doctrine of laches applied because of Moncrief’s dilatory conduct.
Moncrief, 775 P.2d at 1026-28.
[¶42] The present dispute does not present an appropriate case for the application of
laches. Mountain View did not delay in asserting a right to the mineral interest. Its
predecessors, the Sims, moved to protect and/or establish their interest by filing the quiet
title action in 1976 and obtained a judgment declaring them the owners of the property in
all respects except the 20% interest owned by Energetics. Thus, Mountain Valley had
14
already acquired its interest and did not need to take further action to avoid the equitable
doctrine of laches.5
[¶43] Affirmed.
5
The Clays also asserted in the district court that they had acquired the mineral interest by adverse
possession after the 1976 judgment. They claimed to have adversely possessed the mineral interest by
leasing it and receiving payment, under various pooling agreements, for minerals produced from the
disputed interests. The district court denied their adverse possession claim and they do not argue on
appeal it erred in that regard.
15