Opinion ID: 2586675
Heading Depth: 3
Heading Rank: 3

Heading: Were the plaintiffs entitled to summary judgment on the question of whether they own the NPI?

Text: [¶ 49] In their amended complaint the plaintiffs requested a declaration that they are the owners of the NPI as alleged and are entitled to payment of the NPI and an accounting thereof by the Group A defendants from operations under the leases. It is fair to say that initially the defendants' resistance to paying the plaintiffs was based largely on their argument that the NPI had terminated with the Pinedale Unit. Nevertheless, the plaintiffs sought a declaration in their second motion for summary judgment that they were the owners of the NPI. Their motion and the accompanying memorandum contained an extensive review of the series of mesne conveyances through which they claimed ownership of the NPI. In response, the defendants conducted their own review of the title of the NPI. None of the defendants, however, claimed they owned the NPI. [¶ 50] The district court reviewed the conveyances and concluded, as a matter of law, plaintiffs owned the NPI. The defendants appealed that determination and the plaintiffs argue, on appeal, that the defendants do not have standing to challenge the district court's conclusion that they own the NPI. Standing is short for standing to sue, which requires a legally protectable and tangible interest at stake in the litigation. Olsten Staffing Servs., Inc. v. D.A. Stinger Servs., Inc., 921 P.2d 596, 599 (Wyo.1996) (quoting Black's Law Dictionary 1405 (6th ed.1990)). The phrase tangible interest has been equated with the phrase personal stake in the outcome. Goshen Irrigation Dist. v. Wyo. State. Bd. Of Control, 926 P.2d 943, 947 (Wyo.1996); State ex rel. Bayou Liquors, Inc. v. City of Casper, 906 P.2d 1046, 1048 (Wyo.1995). The person alleging standing must show a perceptible, rather than a speculative harm from the action; a remote possibility of injury is not sufficient to confer standing. Sinclair Oil Corp. v. Wyo. PSC, 2003 WY 22, ¶ 13, 63 P.3d 887, 894-95 (Wyo.2003). Halliburton Energy Serv., Inc. v. Gunter, 2007 WY 151, ¶ 11, 167 P.3d 645, 649 (Wyo. 2007). Standing is a jurisdictional issue, involving a question of law that may be raised at any time, and is reviewed de novo. Hicks v. Dowd, 2007 WY 74, ¶ 18, 157 P.3d 914, 918 (Wyo.2007). The standing issue was raised in the plaintiffs' consolidated brief in cases S-08-0258 through 0261. Without citation to any authority, the plaintiffs make the following argument: Defendants have no standing to contest ownership. They concede on appeal that they have now been furnished with legal evidence of plaintiffs' ownership. No other party claims any ownership of the NPI. The district court's Judgment settled any ownership dispute and provides defendants with protection from multiple claims for payment. Yet, defendants contest plaintiffs' NPI ownership. They do so in order to extinguish the NPI, not because they are accounting to or paying net profits to some other party or expect to do so. It seems odd that the plaintiffs would contest the standing of the defendants to appeal a trial court ruling on a claim that was raised by the plaintiffs against the defendants. However, the plaintiffs' argument does alert us to a related issue. [¶ 51] In any declaratory judgment action, the plaintiff must allege a justiciable controversy which requires, among other things, a showing that the parties before the court have a genuine interest in the dispute and the proceedings are truly adverse in nature. See, Brimmer v. Thomson, 521 P.2d 574, 578 (Wyo.1974) and its progeny. The necessity of showing an actual controversy is recognized in the elements of claims for declaration of ownership of property, whether real or personal. In a claim for declaration of ownership of personal property, i.e., conversion, the plaintiff must allege that the defendant is exercising dominion over the plaintiff's property. Ferguson, 884 P.2d at 975. In a claim for declaration of ownership of real property, i.e., quiet title, the plaintiff must allege an interest in the real property and the defendant claims an estate or interest adverse to him. Wyo. Stat. Ann. § 1-32-201 (LexisNexis 2009). See also, Bamforth v. Ihmsen, 28 Wyo. 282, 296, 204 P. 345, 352 (1922) (stating plaintiff has the right to bring an action to quiet title against a party making an adverse claim thereto). [¶ 52] A Washington court of appeals recognized that one cannot bring an action for declaration of title to property against someone who does not claim a right to the property. Ruvalcaba v. Kwang Ho Baek, 140 Wash.App. 1021, 2007 WL 2411691, No. S8877-0-I at 1 (Aug. 27, 2007). The court stated that a complaint brought by the plaintiff against strangers to the severed property failed to state a claim upon which relief could be granted. The same concept is stated in other contexts. For example, a Hawaiian court held that a defendant cannot set up title in a stranger to the litigation to defeat a plaintiff's quiet title claim. See, e.g., Hana Ranch, Inc. v. Kanakaole, 1 Haw.App. 573, 623 P.2d 885, 888 (1981). Similarly, Missouri courts have repeatedly stated that: The trial court in a quiet title action must ascertain and determine the rights of the parties under the pleadings and evidence, grant such relief as may be proper and determine the `better' title, as between the parties to the proceeding, though a title superior to the rights of either party may be held by a stranger. Manard v. Williams, 952 S.W.2d 387, 389-90 (Mo.Ct.App.1997), quoting Robertson v. North Inter-River Drainage Dist., 842 S.W.2d 544, 546 (Mo.App.1992). See also, Pitts v. Pitts, 388 S.W.2d 337, 339 (Mo.1965). [¶ 53] Any declaration by the court in this case as to the superiority of plaintiffs' title to defendants' title would have no effect since the defendants did not claim title to the NPI and others who may assert an interest in the NPI would not be bound by the declaration because they were not represented in the case. Stated yet another way, a mere stranger to the title cannot complain about a cloud upon the title. McVey v. Unknown Shareholders of Inland Coal and Washing Co., 100 Ill.App.3d 584, 56 Ill.Dec. 135, 427 N.E.2d 215, 218 (1981). Thus, a defendant can only assert his own title; if he does not make a claim to title, there is no dispute to adjudicate. Although not directly on point, we think that the concepts announced by this Court in Mountain West Farm Bureau Mut. Ins. Co. v. Hallmark Ins. Co., 561 P.2d 706, 710 (Wyo.1977) are applicable here. It is well settled that in no case can a stranger to a contract maintain an action upon it. Nowhere in the record do the defendants claim that they had somehow acquired ownership of the NPI, and no other party claimed ownership adverse to the plaintiffs. [¶ 54] Given that we have affirmed the district court's ruling that the NPI continued after termination of the Pinedale Unit, someone owns the interest. The district court stated in its order on the plaintiffs' second motion for summary judgment: It is significant that no other person or entity [besides the plaintiffs] has stepped forward to claim the net profits interest or any portion thereof. The Defendants do not and cannot claim ownership of the net profits interest and maintain that it ceased to exist with the termination of the Pinedale Unit. The true issue involving the plaintiffs' title was whether they gave sufficient notice of their ownership of the NPI to the defendants, as required by the Unit NPI Contract, to entitle them to payment. Once the plaintiffs satisfied that requirement, the defendants had no further right to challenge ownership of the NPI. [¶ 55] The plaintiffs provided evidence of the mesne conveyances that transferred title of the NPI from Novi and, ultimately, to them. After execution of the NPI contracts, Novi merged into Woodson Oil Company (Woodson). Woodson then defaulted on a debt to Prudential Insurance Company (Prudential) and, to cancel the indebtedness, conveyed a large package of properties in several states, including the NPI, to Prudential. Prudential conveyed the Woodson properties to Texas Pacific Coal & Oil Company (TP Coal), reserving among other things, 50% of the net profits realized from operations on the Woodson properties (referred to as the Net Profit Overriding Royalty). Prudential ultimately conveyed its Net Profit Overriding Royalty to Plaintiffs in 1984. Plaintiffs claimed that they acquired a 50% interest in the NPI through the Prudential conveyance. [¶ 56] The plaintiffs maintained that they acquired the rest of the NPI through the TP Coal chain of title. After acquiring the Woodson properties from Prudential, TP Coal transferred all of its rights in any county or state referenced in an attached exhibit, including Sublette County, Wyoming, to Joseph E. Seagram & Sons, Inc. (Seagram) in 1963. The conveyance included specific reference to a net profits interest in four Sublette County leases. In 1970, Seagram executed a document transferring its Sublette County interests, including the four Sublette County leases, to Texas Pacific Oil Company (TP Oil). A subsequent conveyance from Seagram to TP Oil in 1980, clarified that Seagram intended to transfer all of its right, title, interest and estate of every nature and description ... which were acquired from [TP Coal] ... covering lands located within the United States to TP Oil. TP Oil thereafter transferred all of its interests in the United States to Sun Oil Company (Sun). TP Oil also executed a supplemental conveyance to Sun, specifically identifying the aforementioned four Sublette County leases. In 1986, Sun transferred to plaintiffs the NPI obtained from TP Oil. [¶ 57] The defendants' objections to the plaintiffs' chain of title pertain to whether the title or contractual rights to the NPI were effectively passed in various conveyances. First, they argue that the plaintiffs did not acquire any part of the NPI through Prudential because Prudential sold all of its interest in the NPI to TP Coal. This argument is a red herring. Even if we assume that the defendants' position is true, it does nothing to further their case because if Prudential did not reserve any of the NPI, then it all passed to TP Coal and would have been conveyed through that succession to plaintiffs. As such, the defendants' argument as to the validity of the Prudential conveyance does not in any way affect their obligation to pay the NPI to the plaintiffs. [¶ 58] The defendants also challenge three of the mesne conveyances in the TP Coal/Sun chain, specifically the TP Coal to Seagram transfer, the Seagram to TP Oil transfer, and the TP Oil to Sun transfer. The defendants claim that, at most, those conveyances transferred an interest in the four listed Sublette County leases. The defendants' arguments are not convincing because the following immutable facts establish plaintiffs' right to payment of the NPI: 1) the NPI continues to exist, so, obviously, someone owns it; 2) the defendants do not own it; 3) if the conveyances were not sufficient to pass ownership of the NPI to the plaintiffs, then it would remain with the grantors; 4) the conveyances questioned by the defendants purported to transfer all of the grantors' interests even though they also listed specific interests and did not contain any express reservation of ownership of the NPI interest by any of plaintiffs' grantor(s); and 5) although they question the efficacy of certain conveyances, defendants do not point to any particular predecessor in plaintiffs' chain of title as having a current, valid claim of ownership. [10] Moreover, it is significant, given the amount of money and time involved in these proceedings, that no predecessor in the plaintiffs' chain of title has come forward to claim that it owns part or all of the NPI. Thus, there are no adverse claims to plaintiffs' right to the NPI and the defendants run no risk of being subject to multiple claims to the interest. [11] To the extent that the district court's summary judgment stated that the plaintiffs had provided a sufficient showing of their right to payment under the NPI, we affirm it. However, to the extent that it was intended to quiet title to the plaintiffs against any claims by others who are not parties to this action, we conclude that there was no justiciable controversy and reverse.