Estate of Seidel v. Seidel

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
JANUARY 12, 2021
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2021 ND 6Estate of Leroy E. Seidel, Plaintiff and Appellee
v.
James A. Seidel; Gravel Supply LLC;
and Troy Seidel, Defendants and Appellants
No. 20200148
Appeal from the District Court of Williams County, Northwest Judicial
District, the Honorable Joshua B. Rustad, Judge.
REVERSED AND REMANDED.
Opinion of the Court by Tufte, Justice.
Charles L. Neff, Williston, N.D., for plaintiff and appellee.
Andrew D. Cook, West Fargo, N.D., for defendants and appellants.
Estate of Seidel v. Seidel
No. 20200148
Tufte, Justice.
[¶1] James Seidel, Troy Seidel, and Gravel Supply LLC (Defendants) appeal
from a judgment awarding the Estate of Leroy Seidel $68,958.75 relating to
the Defendants’ sale of gravel from certain real property. The Defendants
argue Leroy Seidel did not own any gravel interests in the property because he
had conveyed his interests to James Seidel in a 2008 warranty deed. We
reverse and remand, concluding Leroy Seidel did not own any gravel or other
surface mineral interests in the subject property.
I
[¶2] Leroy Seidel and his brother James Seidel each owned one-half of the
mineral interests, including gravel and other surface minerals, relating to
certain real property in Sections 20, 21, 27, 28, 29, and 33, Township 156
North, Range 101 West, Williams County. The mineral interests were
conveyed to them through mineral deeds by their mother, Hilda Seidel. In
2003, by contract for deed, Hilda Seidel agreed to convey her remaining
interest in the property to James Seidel.
[¶3] In 2006, Leroy Seidel sued James Seidel, alleging James Seidel had
exerted undue influence over Hilda Seidel in relation to the 2003 contract for
deed. The parties executed a release of claims to settle the case in December
2007. As part of the release, James Seidel paid Leroy Seidel $167,748.35, and
Leroy Seidel executed a January 2008 warranty deed conveying his interest in
the real property to James Seidel. The warranty deed did not include a
reservation of minerals or gravel.
[¶4] In 2014, Leroy Seidel sued James Seidel, claiming the 2008 warranty
deed to James Seidel involved the surface estate and did not include minerals
such as oil and gas. The parties settled and executed a stipulation and cross-
conveyance of mineral interests, stating each party owned one-half of the
minerals under the property. The stipulation and cross-conveyance stated that
surface minerals such as clay, scoria, and gravel were not included:
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The parties specifically agree that clay, scoria, and gravel are not
included in this stipulation and cross-conveyance. Further, the
parties specifically agree this stipulation and cross-conveyance in
no way construes or interprets the Parties’ rights, obligations or
intentions in that certain Settlement Agreement entered into by
and between the parties in Civil No. 06-C-0248 in District Court,
Williams County, North Dakota.
[¶5] In October 2016, Leroy Seidel sued the Defendants for conversion and
theft of property. Leroy Seidel alleged that he owned one-half of the gravel and
other surface minerals relating to the property and that the Defendants sold
gravel from the property without paying him for his share. Leroy Seidel sought
money damages and a declaration that the 2008 warranty deed did not convey
his surface minerals to James Seidel. Leroy Seidel’s estate was substituted as
Plaintiff after his death in 2017.
[¶6] The Defendants denied Leroy Seidel’s allegations, claiming he did not
own the gravel because he conveyed it to James Seidel in the 2008 warranty
deed. The Defendants counterclaimed, alleging Leroy Seidel breached the
covenants in the 2008 warranty deed and the conditions of the 2014 stipulation
and cross-conveyance by suing the Defendants in the instant case. The
Defendants sought damages, rescission of the stipulation and cross-
conveyance, and attorney’s fees.
[¶7] The Defendants moved for summary judgment, claiming the 2008
warranty deed unambiguously conveyed the gravel and other surface minerals
to James Seidel. The district court denied the motion, concluding the deed was
ambiguous because the release of claims executed before the deed was
ambiguous.
[¶8] After a bench trial, the district court concluded the 2008 warranty deed
did not convey Leroy Seidel’s gravel interests to James Seidel. The court found
that on the basis of other documents executed before the warranty deed, the
parties did not intend to convey the gravel and Leroy Seidel owned one-half of
the gravel interests. The court ordered the Defendants to pay $68,958.75 to
Seidel’s estate for Leroy Seidel’s share of the gravel sold from the property.
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II
[¶9] The Defendants argue res judicata precludes Leroy Seidel’s claim that
he owns one-half of the gravel interests in the property. They claim Leroy
Seidel could have and should have raised the issue of gravel ownership in his
2006 and 2014 lawsuits. They also assert the December 2007 release of claims
executed by Leroy and James Seidel prohibited additional claims relating to
the property.
[¶10] “Res judicata, or claim preclusion, prevents relitigation of claims that
were raised, or could have been raised, in prior actions between the same
parties or their privies.” Fredericks v. Vogel Law Firm, 2020 ND 171, ¶ 10, 946
N.W.2d 507. Res judicata means a valid, final judgment from a court of
competent jurisdiction is conclusive with regard to claims raised, or claims that
could have been raised, as to the parties and their privies in subsequent
actions. Kulczyk v. Tioga Ready Mix Co., 2017 ND 218, ¶ 10, 902 N.W.2d 485.
Res judicata should not “be applied so rigidly as to defeat the ends of justice.”
Fettig v. Estate of Fettig, 2019 ND 261, ¶ 15, 934 N.W.2d 547. The applicability
of res judicata is a question of law, fully reviewable on appeal. Fredericks, at
¶ 10.
[¶11] The district court concluded the release executed in December 2007 to
settle the 2006 lawsuit did not cover the claims involved in this case:
The Release of Claims signed to settle Case No. 06-C-0248 did not
cover and did not release any claims which are the subject of this
action, which claims had not yet manifested themselves, and are
different claims in this action [than] were the subject of the
Contract for Deed litigation. Accordingly, the Court declares the
settlement reached in Civil Case No. 06-C-0248 did not settle or
relate to any of the claims made in this action by Plaintiff against
the Defendants.
[¶12] The release states it applies to “any and all past, present or future claims
and demands which [Leroy Seidel] has or claims to have for or in any manner
in, to, or against the real property above described as well as those claims made
in the Complaint and Amended Complaint. This Release and discharge shall
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be a fully binding and complete settlement.” The release also states “[Leroy
Seidel] shall make no further claim to the land above described.”
[¶13] Although the 2007 release precluded Leroy Seidel from making
additional claims to the property, he sued James Seidel in 2014 claiming the
2008 warranty deed did not involve minerals such as oil and gas. The parties
executed a stipulation and cross-conveyance of mineral interests, stating each
party owned one-half of the minerals under the property. However, the
stipulation and cross-conveyance stated that surface minerals such as clay,
scoria, and gravel were not included in the stipulation and cross-conveyance.
[¶14] The earlier lawsuits between Leroy and James Seidel did not involve
ownership of gravel and other surface minerals; however, that issue arguably
could have been raised. The district court based its decision primarily on the
interpretation of the 2008 warranty deed and ownership of the gravel and
other surface minerals. Because the district court did not base its decision on
res judicata, and because the doctrine should not be rigidly applied, we decline
to address whether Leroy Seidel’s claims in this case were barred by res
judicata. Therefore, we will review the district court’s decision on the
interpretation of the 2008 warranty deed to resolve the ownership of gravel
and other surface minerals. See Fettig, 2019 ND 261, ¶ 15 (stating res judicata
should not be rigidly applied); Fed. Land Bank of Saint Paul v. Anderson, 401
N.W.2d 709, 712 n.2 (N.D. 1987) (declining to address a res judicata argument
because the district court based its decision on a different theory).
III
[¶15] The Defendants argue the district court erred in declaring Leroy Seidel
owned one-half of the gravel and other surface minerals relating to the
property. They argue Leroy Seidel conveyed his gravel interests to James
Seidel under the unambiguous language of the 2008 warranty deed.
[¶16] In Gerrity Bakken, LLC v. Oasis Petroleum N. Am., LLC, 2018 ND 180,
¶ 9, 915 N.W.2d 677 (quoting Johnson v. Shield, 2015 ND 200, ¶ 7, 868 N.W.2d
368), we explained:
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We interpret deeds in the same manner as we interpret contracts.
N.D.C.C. § 47-09-11. The primary purpose in construing a deed is
to ascertain and effectuate the grantor’s intent at the time of the
conveyance. Wagner v. Crossland Constr. Co., Inc., 2013 ND 219,
¶ 8, 840 N.W.2d 81; N.D.C.C. § 9-07-03. The intent must be
ascertained from the writing alone, if possible. N.D.C.C. § 9-07-04.
A contract must be construed as a whole to give effect to each
provision, if reasonably possible. N.D.C.C. § 9-07-06. If rational
arguments can be made in support of contrary positions as to the
term, phrase, or clause in question, a deed is ambiguous and a
district court may consider extrinsic evidence to determine the
parties’ intent. 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.
[¶17] In concluding the 2008 warranty deed did not convey gravel interests to
James Seidel, the district court found the minerals under the Seidel property
had been reserved in earlier deeds, and the 2003 contract for deed between
James and Hilda Seidel did not include minerals. The court found the appraisal
reports prepared as part of the 2007 settlement “did not value any minerals
including surface minerals such as coal, clay, scoria and gravel.”
[¶18] The district court concluded that, “at all times material to this action,
Leroy E. Seidel was the record title owner” to one-half of the gravel interests.
The court reached this conclusion by reasoning that the 2008 warranty deed
“could not convey title to any mineral estate including gravel and surface
minerals pursuant to [N.D.C.C. § 47-10-25], given the prior intent of gravel
and surface minerals being specifically named, in the prior mineral deeds for
the Seidel land.” Discussing the prior deeds, the court explained: “Section [47-
10-25] N.D.C.C. states it does not apply where the surface minerals are
specifically reserved by name in a deed, grant or conveyance, as did occur, in
the mineral deeds executed in the chain of title for the Seidel land, prior to the
2003 Contract for Deed.”
[¶19] Gravel must be specifically reserved by name in a deed:
In all deeds, grants, or conveyances of the title to the surface
of real property executed on or after July 1, 1983, in which all or
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any portion of the minerals are reserved or excepted and thereby
effectively precluded from being transferred with the surface, all
minerals, of any nature whatsoever, shall be construed to be
reserved or excepted except those minerals specifically excluded by
name in the deed, grant, or conveyance and their compounds and
byproducts. Gravel, clay, and scoria shall be transferred with the
surface estate unless specifically reserved by name in the deed,
grant, or conveyance.
N.D.C.C. § 47-10-25 (emphasis added).
[¶20] Section 47-09-16, N.D.C.C., provides, “A transfer vests in the transferee
all the actual title to the thing transferred which the transferor then has unless
a different intention is expressed or is necessarily implied. It also transfers all
its incidents unless expressly excepted.” “[E]xceptions or reservations of
property in a deed should be set forth with the same prominence as the
property granted and should be so explicit as to leave no room for doubt.”
N. Shore, Inc. v. Wakefield, 530 N.W.2d 297, 300 (N.D. 1995).
[¶21] Here, the document at issue is the 2008 warranty deed, not the release
of claims executed before the deed and not prior deeds in the chain of title. We
conclude the language of the deed is unambiguous, and the parties’ intent can
be ascertained from the deed alone. The district court erred in reading the last
sentence of N.D.C.C. § 47-10-25 to be satisfied when there was a specific
reservation in “a deed,” and relied on prior mineral deeds appearing in the
chain of title. The plain language of N.D.C.C. § 47-10-25 specifies a rule of
interpretation for “all deeds” executed after July 1, 1983. Unless “the deed”
specifically reserves gravel, the gravel “shall be transferred with the surface.”
Here, “the deed” refers to the 2008 deed, the instrument effecting the transfer
in question. If we interpreted this section to reserve gravel, clay, and scoria
when these surface minerals have been specifically reserved in any deed in the
chain of title, we would convert a clear rule of interpretation that requires only
the deed in question to determine what is conveyed into an unclear rule
requiring examination of every deed in the chain of title.
[¶22] The 2008 warranty deed conveyed Leroy Seidel’s interest in the real
property to James Seidel. Although Hilda Seidel conveyed the surface
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minerals, including gravel, to Leroy Seidel in earlier mineral deeds, the 2008
warranty deed conveyed all of Leroy Seidel’s interest in the property under
N.D.C.C. § 47-09-16. The warranty deed did not specifically reserve the gravel
or other surface minerals as required by N.D.C.C. § 47-10-25. Therefore, Leroy
Seidel conveyed the property, including gravel and other surface minerals, to
James Seidel.
[¶23] Leroy Seidel claims the release of claims and the warranty deed should
be taken together to determine the parties did not intend to include the gravel.
Under N.D.C.C. § 9-07-07, “[s]everal contracts relating to the same matters
between the same parties and made as parts of substantially one transaction
are to be taken together.” We are not persuaded by that argument. Even if we
read the two documents together, neither the release nor the warranty deed
states the gravel was excluded from the conveyance. See N. Shore, Inc., 530
N.W.2d at 300 (stating exceptions or reservations in a deed should be so
explicit as to leave no room for doubt). Ultimately, the actual intent of the
parties shown in unrecorded documents does not control where the law
imputes intent to the parties based on unambiguous documents of record. See
Lario Oil & Gas Co. v. EOG Res., Inc., 2013 ND 98, ¶ 17, 832 N.W.2d 49(VandeWalle, C.J., concurring specially) (emphasizing the need for certainty of
title). Nothing collateral to the 2008 warranty deed creates an ambiguity. The
legal descriptions in the deed are clear, and the gravel was not specifically
reserved as required by N.D.C.C. § 47-10-25.
[¶24] We conclude the district court erred by concluding the 2008 warranty
deed was ambiguous and N.D.C.C. § 47-10-25 did not apply because the gravel
had been reserved or conveyed in earlier deeds. We conclude the 2008 warranty
deed is unambiguous, and under the deed’s plain language, Leroy Seidel
conveyed his gravel interest in the property to James Seidel because Leroy
Seidel did not specifically reserve the gravel as required by N.D.C.C. § 47-10-
25. We therefore reverse that part of the judgment ruling that the 2008
warranty deed did not convey any gravel or other surface minerals. We reverse
that part of the judgment ordering the Defendants to pay Leroy Seidel’s estate
$68,958.75, and we remand for the court to address the Defendants’
counterclaims.
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IV
[¶25] The judgment is reversed and remanded for further proceedings.
[¶26] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
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