United States Court of Appeals

For the Eighth Circuit

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No. 11-2923

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Robert G. Fowler

lllllllllllllllllllll Plaintiff - Appellee

v.

LAC Minerals (USA), LLC, 

a Delaware limited liability company

lllllllllllllllllllll Defendant - Appellant

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 Appeal from United States District Court 

for the District of South Dakota - Rapid City

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 Submitted: March 13, 2012

 Filed: September 12, 2012

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Before MURPHY and GRUENDER, Circuit Judges, and ROSS,1

 District Judge.

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GRUENDER, Circuit Judge.

LAC Minerals (USA), LLC (“LAC”) and Robert Fowler are bound by an

agreement relating to 944 acres of property once targeted for mining development. 

1

The Honorable John A. Ross, United States District Judge for the Eastern

District of Missouri, sitting by designation.
Fowler filed suit, arguing that the agreement required LAC to assign to Fowler certain

portions of the property no longer needed for mining operations. LAC

counterclaimed, seeking to quiet title. After resolving certain issues on cross motions

for summary judgment and the remaining issues at a bench trial, the district court2

held that LAC’s current refusal to assign any land to Fowler did not breach the

agreement but that Fowler retains a reversionary interest in the land. LAC now

appeals, arguing that the district court erred in not declaring Fowler’s interest in the

land extinguished. For the reasons that follow, we affirm.

I. BACKGROUND

Fowler’s predecessor-in-interest, Viable Resources, Inc. (“Viable”), and LAC’s

predecessor company, St. Joe American Corporation, entered into a joint venture

agreement in 1984 with the goal of developing certain mining prospects in Lawrence

County, South Dakota.3 As part of the joint venture, in 1985 Viable deeded 90 mining

claims involving approximately 944 acres of land to LAC. In the deed, Viable

reserved a right “to obtain a reconveyance in the property . . . as specified in” an

amended joint venture agreement.4

 The parties agree that a 1988 Restated Joint

Venture Agreement (“RJVA”) superseded the amended joint venture agreement

2

The Honorable Jeffrey L. Viken, United States District Judge for the District

of South Dakota.

3

Through a series of corporate name changes, St. Joe American Corporation

became St. Joe Gold Corporation, which eventually became Bond Gold Richmond

Hill, Inc. After additional name changes and a merger, the company became LAC. 

For simplicity, we subsume all of these entities under the name “LAC.”

4

One of the ninety mining claims that “was previously inadvertently omitted”

in the parties’ initial agreement was transferred by a separate deed in 1987, and that

deed also referred to rights reserved to Viable under the amended joint venture

agreement. Because no party argues that this second deed should be construed

differently from the first deed, we refer solely to the first deed.

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referenced in the deed and that the RJVA is the controlling agreement. The parties

also agree that the right to obtain a reconveyance referred to in the deed is defined in 

section 4.3 of the RJVA, which reads as follows: 

Release of Property - During the course of the conduct of mineral

exploration under this Agreement the Manager [LAC] may in its sole

discretion determine that certain portions of the Property have little

potential for containing minerals of economic value or will not be

required for mineral development or mining facilities. Upon annual

review the Manager may eliminate such portions of the Property from

the terms of this Agreement, and in such event [LAC] will reassign any

such portions to Viable.

Section 2.1 of the RJVA establishes a minimum term of fifty years for the

agreement, subject to extension under certain conditions. In 1992, however, state

mining regulators issued a “stop order” for all mining operations on the property

because of problems with acid drainage. There is no dispute that, as a result of the

“stop order,” no mineral exploration has occurred since 1993. LAC is obligated by

state regulations to continue environmental reclamation and monitoring on certain

portions of the property for the indefinite future.

Fowler, one of the original organizers of Viable, succeeded to Viable’s rights

in the property in November 1999.5

 On October 11, 2001, Fowler formally requested

the release of land not being used for mining purposes. Over the next several years,

LAC sent occasional communications indicating that it was in the process of

determining which portions of the 944 acres could be released, but it never made such

a determination. In 2008, Fowler sued (1) for a declaratory judgment that LAC was

obligated to reassign any portion of the property that became unneeded for mining or

reclamation efforts, (2) for specific performance of that obligation with respect to

5

Fowler acquired the rights from a friend and business associate, Donn C.

Douglass, Viable’s largest shareholder in 1999, who in turn acquired the rights from

Viable in 1997.

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portions currently not needed, and (3) to quiet title for such portions. LAC

counterclaimed for a declaratory judgment that it owned the 944 acres “absolutely . . .

as against Fowler and all persons claiming under him” and to quiet title “against all

claims of Fowler and all persons claiming under him.”

On cross motions for summary judgment, the district court concluded that LAC

held the property in fee simple subject to a condition subsequent requiring it “to

reassign the property back to” Fowler “when the mining deed’s purposes are

exhausted.” After an ensuing bench trial, the district court found that the transfer of

Viable’s reversionary rights to Fowler was not precluded by S.D.C.L. § 43-4-3, which

states that “[a] mere right of reentry, or of repossession for breach of a condition

subsequent, cannot be transferred to anyone except the owner of the property affected

thereby,” because the deeds and RJVA established a covenant running with the land,

rather than a “mere” right of reentry. However, the district court held that LAC had

“acted in good faith in its decision to not release any of the [land] for reversion under

Section 4.3 . . . at this time” and that LAC was not required to release any of the land

at that time. 

LAC now appeals, arguing that the district court erred in holding that Fowler

retains an interest in the land. In support, it contends that (i) section 4.3 of the RJVA

did not create a condition subsequent, but rather a contractual covenant for which

damages would be the only remedy for breach; (ii) even if the RJVA did create a

condition subsequent in favor of Viable, Viable was precluded from transferring its

associated rights by S.D.C.L. § 43-4-3; and (iii) whatever rights Fowler might have

had under the RJVA to obtain the property are a nullity because mineral exploration

ended in 1993.

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II. DISCUSSION

“When the district court conducts a bench trial as it did here, we review the

district court’s fact finding for clear error, and we review legal conclusions and mixed

questions of law and fact de novo.” Eckert v. Titan Tire Corp., 514 F.3d 801, 804 (8th

Cir. 2008). Our jurisdiction in this case is based on diversity of citizenship, and the

parties agree that South Dakota law governs. See Kaufmann v. Siemens Med.

Solutions USA, Inc., 638 F.3d 840, 843 (8th Cir. 2011). 

Under South Dakota law, “[w]e interpret a deed as we would a contract.” Full

House, Inc. v. Stell, 640 N.W.2d 61, 63 (S.D. 2002). “Construction of a deed is a

question of law,” and we must “examine the instrument as a whole to determine what

type of conveyance was intended. If the language of a deed leaves doubt on the

intention of the parties, we will consider all the attendant circumstances existing at the

time of execution.” Swaby v. N. Hills Reg’l R.R. Auth., 769 N.W.2d 798, 808 (S.D.

2009) (internal citation omitted). “In order to ascertain the terms and conditions of

a contract, we must examine the contract as a whole and give words their ‘plain and

ordinary meaning.’” Gloe v. Union Ins. Co., 694 N.W.2d 252, 260 (S.D. 2005)

(quoting Elrod v. Gen. Cas. Co. of Wis., 566 N.W.2d 482, 486 (S.D. 1997)). 

LAC first asserts that section 4.3 of the RJVA establishes a contractual

covenant, rather than a condition subsequent. “The chief distinction between a

condition subsequent and a covenant pertains to the remedy in the event of a breach,

which in the former subjects the estate to a forfeiture and in the latter is merely a

ground for recovery of damages.” Rowbotham v. Jackson, 5 N.W.2d 36, 37 (S.D.

1942) (quoting Rooks Creek Evangelical Lutheran Church v. First Lutheran Church

of Pontiac, 124 N.E. 793, 795 (1919)). “Whether a clause shall be construed to be a

condition subsequent or [a] covenant must depend upon the contract or circumstances

and the intention of the party creating the estate.” Id. (quoting Rooks Creek, 124 N.E.

at 795). “Forfeitures and condition subsequent not being favored in law, a deed will

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not be construed to create a conditional estate unless the language used unequivocally

indicates an intention . . . to that effect.” DeHaven v. Hall, 753 N.W.2d 429, 435

(S.D. 2008) (omission in original) (quoting City of Huron v. Wilcox, 98 N.W. 88, 89

(S.D. 1904)).

In this case, the deed specifically refers to a “right[] to obtain a reconveyance

in the property . . . as specified in” the parties’ agreement (emphasis added). In turn,

the referenced agreement states that, should certain specified events occur with respect

to any portion of the property, LAC “will reassign any such portions to Viable”

(emphasis added). This express language unequivocally establishes the grantor’s right

to reacquire the relevant portions of the deeded estate upon occurrence of the stated

conditions. Cf. DeHaven, 753 N.W.2d at 436-37 (finding a deed established a

covenant that was susceptible to a remedy only of damages, rather than a condition

subsequent to be remedied by reversion to the grantors, where the deed stated a duty

to maintain the granted easement but included “no language that expressly or

implicitly provides that the easement will be forfeited if [the grantees] fail to maintain

it”). As a result, we agree with the district court that the deed here establishes a

condition subsequent, rather than a covenant.

In opposition, LAC argues that section 4.3 cannot create a condition subsequent

because it gives the grantor no power to terminate the estate. “A conveyance that

creates a fee simple estate subject to a condition subsequent provides the grantor,

heirs, and successors a power to terminate upon the happening of the stated event, i.e.,

when a condition is broken.” Swaby, 769 N.W.2d at 808. LAC contends that it, rather

than Viable, enjoyed sole power to terminate the estate because section 4.3 gives LAC

“sole discretion [to] determine that certain portions of the Property” will not be

needed for mining purposes and states that LAC “may eliminate such portions of the

Property from the terms of this Agreement” (emphases added). To be sure, LAC is

vested with broad discretion in determining which portions of the property are

unneeded for mining operations and eliminating those portions from the scope of its

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mining management. However, this determination constitutes the condition

subsequent itself, not the resulting power to terminate. If, for whatever reason, the

determination and elimination decisions are made, section 4.3 states that “in such

event [LAC] will reassign any such portions to” the grantor (emphasis added). 

Because the grantor has the power to terminate by demanding reassignment if the

condition subsequent comes to pass, the basic structure of a condition subsequent is

satisfied, regardless of the degree of LAC’s control over the condition subsequent.

LAC next asserts that Viable was precluded from transferring its rights

associated with the condition subsequent by S.D.C.L. § 43-4-3. Section 43-4-3

prohibits the assignment to a third party of a grantor’s right of reentry or repossession

unless the original instrument contemplated such assignments or otherwise indicated

an intent for the restriction to run with the land. See Rowbotham, 5 N.W.2d at 37-38

(holding that an identically worded predecessor statute prohibited the assignment of

a grantor’s rights under a reverter clause where the “reverter language used in the deed

. . . runs to [the grantors] personally, and not to their assigns”). Here, we agree with

the district court that the RJVA expressly contemplated the assignment of Viable’s

right of repossession under section 4.3. In particular, section 11.1 of the RJVA

expressly authorizes each party to assign “its rights in the Agreement” to any affiliate

of that party, without restriction.6

 LAC identifies no provision of the deed or the

RJVA that would suggest Viable’s reversionary rights under section 4.3 were

somehow excluded from the general assignment provisions of section 11.1. Because

the plain language of the parties’ agreement, see Gloe, 694 N.W.2d at 260, establishes

Viable’s right to make certain assignments, Viable held more than a “mere” right of

repossession, see S.D.C.L. § 43-4-3. Thus, the transfer of Viable’s right of

repossession to Fowler was not precluded by statute.

6

The district court found that both Douglass (the intermediate assignee) and

Fowler were “affiliates” of Viable for purposes of section 11.1, and LAC does not

challenge that finding.

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Finally, LAC contends that Fowler’s right to obtain reassignment of the

property has become a nullity because mineral exploration ended in 1993. LAC

argues that, under the plain language of section 4.3, it is only “[d]uring the course of

the conduct of mineral exploration under this Agreement” that LAC may identify

“certain portions of the Property [that] have little potential for containing minerals of

economic value or will not be required for mineral development or mining facilities.” 

In LAC’s view, because it never identified such portions of the property before

mineral exploration ended in 1993, there never will be “such portions of the Property”

to reassign as mandated in the second sentence of section 4.3. LAC also makes a

corollary argument that the statute of limitations on Fowler’s declaratory judgment

claim must have begun to run no later than 1993. Fowler responds that LAC’s duty

to reassign “such portions” in the second sentence of section 4.3 reaches not only

those portions that were specifically identified “[d]uring the course of the conduct of

mineral exploration” but also any similar portions no matter when they are identified.

We must resolve the dispute by giving the words used in the RJVA their “plain

and ordinary meaning.” Gloe, 694 N.W.2d at 260 (quoting Elrod, 566 N.W.2d at

486). In this case, the word “such” has two potentially applicable definitions: “of the

character, quality, or extent previously indicated or implied,” and “of the same class,

type, or sort.” Merriam-Webster’s Collegiate Dictionary 1247 (11th ed. 2005). As

a result, the reference to “such portions” of property in the second sentence of section

4.3 means not just the specific portions of property identified during the time frame

mentioned in the first sentence, but also any other portions of property with the same

“character, quality, or extent” or “of the same class, type, or sort” as that established

in the first sentence—that is, portions that are unnecessary for the stated mining

purposes. Accordingly, under the second sentence of section 4.3, LAC has a

continuing duty to “reassign any such portions” to Fowler, regardless of whether the

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portions were identified prior to 1993.7

 The district court did not err in holding that

Fowler retains an ongoing reversionary interest in the property.

III. CONCLUSION

For the foregoing reasons, we affirm the district court’s judgment that Fowler

retains a reversionary interest in the land.

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7

The district court noted LAC’s broad discretion in reviewing the use of the

property under section 4.3 and found that, as of the time of the district court’s

judgment, LAC had exercised this continuing duty in good faith. Fowler did not

appeal the district court’s ruling. To the extent LAC argues in its reply brief that the

district court erred by determining that an implied duty of good faith and fair dealing

applies to its exercise of discretion under section 4.3, we decline to address the merits

of the argument. See Cavegn v. Twin Pipe Trades Pension Plan, 333 F.3d 879, 882

n.2 (8th Cir. 2003) (declining to address an argument raised for the first time in a reply

brief).

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