Court Opinion

ID: 155199
Source: CourtListenerOpinion
Date Created: 2010-08-14 04:12:16+00
Date Added: 2024-06-11T09:13:36.116752
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
               UNITED STATES COURT OF APPEALS                           DEC 15 1997
                        TENTH CIRCUIT
                                                                    PATRICK FISHER
                                                                             Clerk

JAMES BARLOW FAMILY LIMITED
PARTNERSHIP; JOHN AND LOIS
HAUN FAMILY PARTNERSHIP;
BARLOW & HAUN, INC.; L.A.
MCPEEK AND COMPANY;
BARBARA B. CREWS; B.J.
BRADSHAW ESTATE, by First
Interstate Bank of Utah, Trustee;
ALPHA EXPLORATION, INC.;
CHEVRON U.S.A., INC.,

       Plaintiffs-Appellees,
                                                          No. 96-1202
v.

DAVID M. MUNSON, INC.,

       Defendant-Appellant.

------------------------------------

UNITED STATES OF AMERICA,

       Amicus Curiae.

                                       ORDER

                              Entered December 15, 1997

Before SEYMOUR, Chief Judge, and HENRY, and BRISCOE, Circuit Judges.
      The Barlows have filed a motion to clarify our order and opinion on

rehearing. Because our mandate issued on November 21, 1997, we treat the

motion as one to recall the mandate. Under our inherent authority to recall the

mandate for the purpose of clarifying an ambiguous prior order of the court, see

Coleman v. Turpen, 827 F.2d 667, 671 (10th Cir. 1987); Dilley v. Alexander, 627

F.2d 407, 410-411 (D.C. Cir. 1980), we grant the motion and recall the mandate.

      We clarify the opinion by eliminating the phrase on page 3 stating that we

grant summary judgment in favor of Munson and by stating instead that we

remand the matter for further consideration. In addition, on the last page we

eliminate the phrase “and Munson thus has a complete defense to the nonpayment

of royalties to the Barrows.” The revised opinion is attached.

                                      Entered for the Court

                                      PATRICK FISHER, Clerk
                                                                           F I L E D
                                                                     United States Court of Appeals
                                                                             Tenth Circuit

                                                                            AUG 26 1997
                                        PUBLISH
                                                                       PATRICK FISHER
                                                                                 Clerk
                UNITED STATES COURT OF APPEALS
                         TENTH CIRCUIT

 JAMES BARLOW FAMILY LIMITED
 PARTNERSHIP; JOHN AND LOIS
 HAUN FAMILY PARTNERSHIP;
 BARLOW & HAUN, INC.; L.A.
 MCPEEK AND COMPANY;
 BARBARA B. CREWS; B.J.
 BRADSHAW ESTATE, by First
 Interstate Bank of Utah, Trustee;
 ALPHA EXPLORATION, INC.;
 CHEVRON U.S.A., INC.,

        Plaintiffs-Appellees,
                                                           No. 96-1202
 v.

 DAVID M. MUNSON, INC.,

        Defendant-Appellant.

 ------------------------------------

 UNITED STATES OF AMERICA,

        Amicus Curiae.

                      Appeal from the United States District Court
                              for the District of Colorado
                                 (D.C. No. 92-D-1817)

Craig R. Carver of Alfers & Carver, LLC, Denver, Colorado, for Defendant-
Appellant.

John F. Shepherd (Jane L. Montgomery with him on the brief) of Holland & Hart
LLP, Denver, Colorado, for Plaintiffs-Appellees.

Peter Coppelman, Acting Assistant Attorney General; Robert L. Klarquist, Gerald
L. Fish, and Jacques B. Gelin, Attorneys, Department of Justice, Environment and
Natural Resources Division; and Karen Hawbecker, Of Counsel, Office of the
Solicitor, Department of the Interior, Washington, D.C., on the brief for Amicus
Curiae.

Before SEYMOUR, Chief Judge, HENRY and BRISCOE, Circuit Judges.

SEYMOUR, Chief Judge.

                                       -2-
      This action involves a dispute between the Barlow Family Limited

Partnership and others (the Barlows), owners of overriding royalty interests in

certain federal oil and gas leases located in western Colorado, and David M.

Munson, Inc. (Munson), as lessee and operator, over whether the Barlows are

entitled to royalty payments from the federal leases. On cross motions for

summary judgment, the district court held in favor of the Barlows. On Munson’s

appeal, we reverse and remand.

                                         I.

      The leases at issue in this case cover federal lands in western Colorado on

which unpatented oil shale claims were located. For many years, oil shale

claimants and the Department of the Interior were involved in disputes over the

claimants’ rights to mineral patents on these and other lands where oil shale

claims were located. See generally Tosco Corp. v. Hodel, 611 F. Supp. 1130,

1145-56 (D. Colo. 1985) (discussing background of oil shale disputes). The

government contended that many oil shale claims were void for lack of valid

discovery and for failure of the claimants to perform required annual assessment

work. It therefore refused to issue mineral patents to the subject lands. A title

dispute ensued in which the oil shale claimants sued the federal government

seeking to compel issuance of mineral patents. Id. (Tosco claimants); Marathon

                                         -3-
Oil Co. v. Lujan, 751 F. Supp. 1454 (D. Colo. 1990) (Marathon claimants); Ertl v.

Hodel, No. 86-M-764 (D. Colo. filed Apr. 18, 1986) (Ertl claimants) (rec., vol. II

at 382). Since the mineral claims were staked prior to 1920, the claims would, if

valid, entitle the claim holders to patents including all minerals on the lands. See

United States v. Etcheverry, 230 F.3d 193, 195-96 (10th Cir. 1956); Union Oil

Co. of Cal. v. Udall, 289 F.2d 790, 791 n.1 (D.C. Cir. 1961).

      Notwithstanding the ongoing title dispute, the government issued federal

oil and gas leases on some of the lands which were involved in oil shale disputes.

The Barlows (or their predecessors-in-interest) acquired in the early 1970s federal

leases which were subject to outstanding oil shale claims.

      In the late 1970s, Munson became interested in exploring for oil and gas on

federal land in western Colorado. Since much of the area of interest was covered

by disputed oil shale claims, Munson was uncertain how to lease oil and gas

rights. Faced with this uncertainty of title, Munson prudently acquired both

private and federal oil and gas leases. Munson acquired the private leases from

the estate of Tell Ertl and others (Ertl), and from Marathon Oil Company, both of

which were successors in interest to oil shale claimants. Munson acquired

duplicative federal oil and gas leases by assignment from the Barlows. Under the

parallel lease scheme, Munson secured its right to drill for and to produce oil and

                                         -4-
gas regardless of whether the private or the federal claims ultimately prevailed in

the title dispute.

       Munson also protected itself from duplicative royalty payments under the

private and federal leases. The terms of the private leases provided that Munson

would pay the lessors royalty for one year: if title remained unresolved after

expiration of that year, Munson would, at its option, pay royalty only to the

federal government pending final resolution of the title dispute. In addition, the

federal unit operating agreement under which oil and gas was produced permitted

Munson to hold in suspense payments of royalties due unit members until

settlement of any title disputes.

       There is one significant difference between the private and federal leases

acquired by Munson. On the federal leases, Munson would pay not only a

standard 12.5% royalty to the United States, but also a 5.8% to 11.25% overriding

royalty to the Barlows which they retained as consideration for the assignment.

On the private leases, however, Munson would pay only a 12.5% royalty to Ertl

and to Marathon. Because its royalty burden is less under the private leases, it is

in Munson’s interest to have the private leases validated.

       Munson discovered gas on the leases in 1980. Since the beginning of

production, Munson has exercised its right under clause 27 of the unit operating

agreement, to hold in escrow the royalty payments potentially due the Barlows

                                         -5-
pending resolution of the Barlows’ and Munson’s competing claims to royalty

payments.

      The oil shale disputes were eventually settled. See Tosco Corp. v. Hodel,

826 F.2d 948 (10th Cir. 1987) (dismissing as moot the Tosco claimants’ cases);

Marathon Oil Co. v. Lujan, 771 F. Supp. 1556 (D. Colo. 1991) (closing Marathon

case upon issuance of patent to Marathon); rec., vol. II at 384 (describing district

court dismissal of the Ertl action). The Barlows contend that the settlements

validated their federal leases, that Munson’s conduct binds it to the contractual

terms of the settlement agreements, and that any assertion of rights under the

private leases constitutes an impermissible collateral attack on the validity of the

settlements. Munson argues that the settlements resulted in the issuance of

federal mineral patents to the oil shale claimants which, under the canons of

general mining law, validated its private leases and voided the federal leases. The

Barlows and Munson brought cross motions for summary judgment. The district

court granted summary judgment for the Barlows and ordered Munson to pay to

the Barlows the royalty payments held in suspense.

                                                II.

      We review the district court’s grant of summary judgment de novo, Ellis v.

United Airlines Inc., 73 F.3d 999, 1003 (10th Cir.), cert. denied, 116 S. Ct. 2500

                                          -6-
(1996), applying the same legal standard used by the district court under Fed. R.

Civ. P. 56(c). Summary judgment should not be granted unless the evidence,

viewed in the light most favorable to the party opposing the motion, shows there

are no genuine issues of material fact and the moving party is due judgment as a

matter of law. Harrison Western Corp. v. Gulf Oil Co., 662 F.2d 690, 691-92

(10th Cir. 1981). Where, as here, the parties file cross motions for summary

judgment, we are entitled to assume that no evidence needs to be considered other

than that filed by the parties, but summary judgment is nevertheless inappropriate

if disputes remain as to material facts. Id. at 692.

      We begin our analysis by reviewing and analyzing the settlement agree-

ments to which Munson is alleged to be bound.

A. Settlement Agreements

      1. United States/Ertl Settlement Agreement

      On August 4, 1986, Ertl entered into a settlement agreement with the

United States. Rec., vol. II at 390 (Agreement To Settle Pending Litigation

Between The United States And The Owners Of Certain Oil Shale Mining Claims

In Colorado). 1 In order for the claimants to be able to exploit oil shale while the

      The Ertl settlement agreement is identical to that reached by the Tosco
      1

claimants. Ertl was not part of the Tosco law suit because its claims were still in
administrative appeal during the pendency of that case. By the time the Tosco

                                          -7-
United States retained the right to oil, gas and coal currently under federal lease,

the United States agreed to grant the claim owners all minerals except oil, gas and

coal. The United States attempted to effectuate the agreement by issuing to the

claim owners standard mining claim patents in return for the claim owners’

“simultaneous” conveyance by special warranty deed of all oil, gas and coal

within the claims. The parties intended that the issuance of the patent and the

reconveyance of the oil, gas and coal should “occur precisely simultaneously,

with no temporal gap whatsoever in ownership by the United States of the

interests it retains.” Id. at 399. The conveyances under the settlement agreement

were intended “not [to] affect the validity or duration of [the] existing [federal]

oil and gas leases.” Id. at 400. On November 7, 1986, Ertl was issued mineral

patents covering its claims. By warranty deed signed by the relevant parties

between September 18 and November 7, 1986, Ertl conveyed to the United States

oil, gas and coal.

      2. United States/Marathon Settlement Agreement

      Marathon independently reached a settlement with the United States on

June 28, 1991. Id. at 242. Their agreement stipulates that Marathon has met all

settlement negotiations were instituted, the Ertl administrative appeals had run
their course and Ertl had filed suit in district court. Since the Ertl claims were
identical to those of the Tosco claimants, Ertl joined in the Tosco settlement
negotiations. This agreement is the result of those negotiations.

                                          -8-
requirements to receive a patent and that the United States will issue a patent

without reservation to Marathon. The parties agreed that, pending a land

exchange, an agent would hold the patent until June 28, 1994, and then release the

patent to Marathon. During the time the agent held the patent, the parties agreed

that the federal oil and gas leases on the subject lands would remain in effect. A

patent was issued to Marathon on June 29, 1991. Although the language

employed in the Marathon settlement is different from that used in the Ertl

settlement, the intent is similar. For at least some period of time, the parties

intended that, notwithstanding delivery of an unreserved patent, the federal leases

would be held to be in full force and effect. 2

      3. Effect of the Conveyances Pursuant to the Settlement Agreements

      Despite the intent of the parties, the instruments of title executed pursuant

to the settlements do not effectively preserve the federal leases. The patents were

issued without reservation of oil, gas and coal. The Ertl settlement agreement

specifically describes the patent to be issued as a standard mining patent:

      2
       The district court held that Munson was bound by the United
States/Marathon settlement until June 28, 1994, at which time a patent was
delivered to which general mining law applied. The court therefore held that in
1994, Marathon (and Munson through its derivative rights) had an ordinary patent
which did not preserve the federal oil and gas leases. Rec., vol. II at 739.

                                           -9-
                    2.3 The form of the patents to be issued by the
             Department of the Interior to the Claimowners shall be
             that of a standard mining claim patent granting the
             Claimowners fee ownership of the entire claim, subject
             only to a right-of-way thereon for ditches and canals
             constructed by the authority of the United States,
             pursuant to the Act of August 30, 1890 (43 U.S.C. 945).

Rec., vol. II at 397-98 (emphasis added).

      The rights accorded holders of such unreserved patents are clear:

             [W]hen a mining claim has been perfected under the
             law, it is in effect a grant from the United States of the
             exclusive right of possession to the same. It constitutes
             property to its fullest extent, and is real property subject
             to be sold, transferred, mortgaged, taxed, and inherited
             without infringing any right or title of the United States.

Etcheverry, 230 F.2d at 195. Upon issuance of a patent, title relates back to the

date of original entry. Id. at 196. “‘A patent from the United States operates to

transfer the title, not merely from the date of the patent, but from the inception of

the equitable right upon which it is based.’” Id. (quoting United States v. Detroit

Timber & Lumber Co., 200 U.S. 321, 334-35 (1906)). The consequence of

relation back is that the claimant’s rights and those of the claimant’s assignee

date from the time the claim was made, not from the time the patent was issued.

Reed v. Munn, 148 F. 737, 757 (8th Cir. 1906). Under general mining law, the

issuance of federal mineral patents to Ertl and to Marathon related back to the

date of the original claim and validated the private leases conveyed to Munson

prior to the execution of the settlements or the issuance of the patents. See id.

                                         -10-
Moreover, the issuance of patents to holders of valid mining claims ordinarily

voids federal leases. See, e.g. Union Oil Co. of Cal., 289 F.2d at 791 n.1 (federal

oil and gas leases issued pursuant to the Mineral Leasing Act of 1920 not valid if

the holder of a valid mining claim subsequently receives a patent); 1 R OCKY M TN .

M IN . L. F OUND ., L AW OF F EDERAL O IL AND G AS L EASES § 3.10 (1996); cf. Letter

from Thomas L. Sansonetti, Associate Solicitor, Energy and Resources, United

States Dep’t of the Interior, to Assistant Secretary, Land and Minerals

Management, United States Dep’t of the Interior (Feb. 23, 1989) (rec., vol. I at

293).

        Because Munson’s rights under the Marathon lease relate back, the issuance

of the Marathon patent voided the federal leases, regardless whether the patent is

considered to have issued in 1991 or 1994. Thus, contrary to the district court’s

conclusion, rec., vol. II at 739, delivery of the patent to an agent was not effective

to preserve the federal leases. Similarly, the fiction engaged in by Ertl and the

United States that the patent issuance and the warranty deed were executed

simultaneously so as to preserve the federal leases and to cut off Munson’s rights

under the private leases is simply not legally effective. Despite the recitals of the

settlement, the conveyances could not be made simultaneously. Ertl must have

received a patent before it could deed oil, gas and coal to the government. As the

special warranty deed acknowledges, Ertl could not convey title to oil, gas and

                                         -11-
coal unless Ertl at least momentarily held legal title. This title held by Ertl

related back, and thus validated Ertl’s lease to Munson. When Ertl did make the

conveyance, it conveyed to the government only what it had at the time it signed

the deed: rights to oil, gas and coal encumbered by a lease to Munson.

      We hold that the instruments of conveyance employed to effectuate the Ertl

and Marathon settlements did not cut off the rights of Munson under the private

leases, notwithstanding the intent of the settling parties. Ordinarily, we would

therefore conclude under general mining law that Munson has no obligation to

pay the Barlows royalty on leases voided by the issuance of patents. The Barlows

argue, however, and the district court held, that Munson is barred for other

reasons from asserting the validity of its private leases. We address these

arguments in turn.

B. Collateral Attack

      The Barlows and the United States contend that Munson’s attempt to assert

its rights under the private leases is an impermissible collateral attack on the

validity of the settlement agreements. They assert Munson knew of the ongoing

settlement negotiations, chose not to participate in them, and thereby waived its

rights, much as those who chose not to participate in the original Tosco litigation

did by failing to timely intervene in that case. Tosco Corp. v. Hodel, 804 F.2d

                                          -12-
590, 592 (10th Cir. 1986). Moreover, the United States claims Munson’s attack

on the validity of the settlements contravenes the power of the attorney general to

settle litigation in whatever manner he considers efficacious. We disagree with

both of these propositions.

      Munson is attempting to enforce the legal effect of the instruments of title

executed pursuant to the settlement agreements. As we have concluded, the

normal effect of these instruments would be to validate Munson’s rights.

Munson’s assertion of its rights in this proceeding, rather than in the settlement

negotiations, would constitute an impermissible collateral attack only if Munson--

despite being a nonsignatory--is by reason of his conduct bound by the terms of

the settlement agreements themselves, rather than by the instruments of

conveyance. We conclude, infra part C, that it is not so bound.

      Nor does this case derogate the right of the federal government to settle

litigation. The government chose to settle the oil shale litigation by issuing

patents. The patents were instruments of title with a particular legal significance,

which would ordinarily conclusively determine the priority of Munson’s private

leases despite the agreement of the Ertls and Marathon to the contrary. The

attorney general’s power to settle litigation does not allow the United States to

avoid the legal effect of the documents executed pursuant to its chosen manner of

settlement. The government and the Barlows could have secured the result they

                                         -13-
now seek by requiring that Munson assign its private leases back to the Ertls and

to Marathon prior to the execution of the settlement agreements.

C. Munson’s Conduct

      The Barlows contend Munson’s conduct, evidenced in written letters,

memoranda and contracts, indicates Munson’s intention to be bound by all the

terms and conditions of the United States/Ertl Settlement Agreement. These

documents, they assert, estop Munson from claiming the validity of the private

leases by operation of ordinary principles of mining law, or constitute waiver of

its rights thereunder. When reviewing this evidence, the district court focused on

whether the documents support the conclusion that Munson knew of the ongoing

settlement negotiations. We agree the documents do support such an inference.

We disagree, however, that the documents reveal the expression by Munson of

any intent regarding the relevant question: whether Munson intended to give up

its right to assert the priority of the private leases should the settlements result in

their validation. We consider each type of documentary evidence in turn.

      1. Letters/Memoranda

             a. Pre-Lease Negotiation Letters

      Before Munson acquired either private or federal leases, it entered into

negotiations with Ertl for acquisition of the right to drill and produce oil and gas

                                          -14-
on land subject to the Ertl oil shale claims. In the first of those negotiation

letters, Munson expressed a desire to “be a neutral party to any claims between

[Ertl] and the United States,” and it proposed leasing acreage from Ertl “[t]he

primary term [of which] would not start until . . . [the Ertl] claims for patent had

issued as to the oil and gas minerals on these lands.” Rec., vol. I at 261. The

second negotiation letter indicated Munson understood Ertl was willing to agree

either that it would “not claim[] the oil and gas rights or that it would lease

[Munson] the oil and gas rights.” Id. at 264. The third negotiation letter

contained a counter-offer which proposed the lease arrangement ultimately agreed

to: a private lease to run parallel with any future-acquired federal leases. Id. at

265. In that letter, Munson stated its belief that such a lease arrangement “would

perhaps reinforce [the Ertl] title position.” Id. at 266

      These letters represent preliminary negotiations regarding the issuance of

oil and gas leases on the Ertl oil shale claims. They do not reflect the final

agreement reached between the parties. It is the lease agreement itself which

embodies the full agreement between the parties, and that document shows that

Munson and Ertl ultimately rejected the previously discussed options and resolved

matters through execution of an oil and gas lease giving Munson legally protected

interests in the Ertl oil shale claims. Even if the negotiation letters were relevant,

                                          -15-
they express no intent by Munson to compromise its ability to assert the validity

of its private leases.

              b. Memoranda to Munson’s Ertl Lease File

       In 1985, Munson inserted a memorandum in its Ertl lease file from which it

is evident that Munson understood the government wanted to trade oil shale for

oil and gas rights, and that Ertl contemplated assigning the government a

substantial portion of the oil and gas royalty to secure title to the oil shale.

Another similar memorandum indicates that if title is resolved in favor of the

government, Munson will need to pay royalties presently held in suspense.

Although these documents indicate Munson’s general awareness of the Ertl

position on securing oil shale title, they do not indicate that Munson would fail to

assert the validity of its private leases, should title be resolved in a way that

preserved those leases.

       2. The Unit Operating Agreement

       In 1978, prior to establishing production on the leases, Munson signed a

Unit Operating Agreement (UOA). The Barlows ascribe particular significance to

a clause in the UOA permitting Munson to suspend royalty payments in the event

of a title dispute. 3 They suggest, and the district court agreed, rec., vol. II at 737,

       The relevant portion of the unit operating agreement says: “In the event of
       3

a dispute as to title as to any royalty . . . payment or delivery on account thereof
may be withheld without liability for interest until the dispute is finally settled . .

                                           -16-
that this clause demonstrates Munson’s affirmative intent to be bound by the

contractual terms of the United States/Ertl or the United States/Marathon

“settlements,” and by an “Agreement Not To Contest,” discussed infra, rather

       than by the instruments of title executed pursuant to the settlement

agreements.

       First, we note that the unit operating agreement is a standard form unit

agreement imposed by the federal government. 2 L AW OF F EDERAL O IL AND G AS

L EASES § 18.02[2]. As part of the standardized form, the clause in question holds

no particular significance for the oil shale disputes; rather, it is inserted in federal

forms to direct payment of royalties in the event of title disputes. It is not used to

prescribe the manner by which the operator of the unit may become bound to

settlements.

       Second, the unit agreement was signed by Munson on June 28, 1978, well

before the “Agreement Not To Contest” was signed with Ertl. It therefore cannot

inform us regarding ambiguities which may exist in a document executed three

years later.

       Finally, the language employed in the unit agreement says only that, in the

event of a title dispute, the unit operator may withhold payments of royalties to

any entity, other than the federal government, until such time as the dispute over

. .” Rec., vol. I at 126.

                                          -17-
who should be paid is resolved. The UOA refers to a dispute regarding proper

recipients of royalties. The Barlow/Munson dispute before the court is precisely

such a dispute, and it has not been settled. The UOA does not itself provide a

basis upon which the settlements between the United States and Ertl and

Marathon must be considered as having “settled” the Barlow/Munson dispute; the

UOA merely provides that if the Barlow/Munson dispute is deemed settled by the

Ertl and Marathon settlements, Munson must pay royalties. The unit operating

dispute will not be settled until the present case is settled. The UOA in no way

prevents Munson from contesting its obligation to pay royalty payments to the

Barlows.

      3. Munson/Ertl Agreement Not To Contest

      The Barlows have identified one last document which they say indicates

Munson’s intent to be bound by the contractual terms of the United States/Ertl

settlement agreement. On September 30, 1981, before Ertl settled with the United

States and shortly after Munson acquired federal leases by assignment from the

Barlows, Munson entered into an “Agreement Not To Contest” with Ertl. In this

agreement, Munson promises to neither “initiate, join in, support, defend or in any

way become involved in a contest of the Claims or otherwise object to Claim

Owner’s right to apply for, process and receive patents from the United States of

America covering the Land and the Claims.” Rec., vol. I at 275. Ertl’s rights as a

                                        -18-
claim owner is described as entitling it to a right of “exclusive possession of the

Land.” Id. at 274. This document, in conjunction with the letters and

memoranda, and a statement by Munson that it would not seek to intervene in the

United States/Ertl settlement agreement because it “did not believe that its

property rights would be affected and therefore saw no reason to participate,” rec.

vol. II at 382, suggest to the Barlows and to the district court that Munson gave

up its right to assert the validity of its private leases.

       We disagree. Although Munson might have been bound had Ertl acquired

title to the oil and gas which did not relate back to the establishment of its mining

claim, the language in the agreement does not support an inference that Munson

would refrain from asserting the validity of its private leases if Ertl were to

receive a standard mining patent.

       We conclude that none of the documentary evidence offered by the Barlows

supports the contention that Munson gave up its rights to assert the validity of its

private leases upon issuance of patents to Ertl and to Marathon. Munson’s

knowledge of the ongoing Ertl settlement proceedings 4 is simply not relevant to

the meaning of the federal patents. The instruments of title ultimately executed

pursuant to the agreements validated the private leases and thereby gave Munson

      There was no evidence submitted to support a contention that Munson was
       4

aware of or agreed to be bound by the Marathon settlement negotiations.

                                            -19-
a complete defense to the nonpayment of royalties to the Barlows.

                                        III.

      In sum, we are convinced the evidence does not support an inference that

Munson gave up its right to assert the validity of its private leases. The issuance

of patents to Ertl and to Marathon fully validates Munson’s private leases.

Consequently, the district court erred in granting summary judgment to the

Barlows.

      We REVERSE the order of the district court granting the Barlows’ motion

for summary judgment and REMAND for further proceedings to resolve

outstanding issues if any remain.

                                        -20-