Court Opinion

ID: 4328289
Source: CourtListenerOpinion
Date Created: 2018-11-06 18:00:41.721349+00
Date Added: 2024-06-11T14:20:24.548127
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 MARY ANN MURRAY; LIGE M.                        No. 16-35506
 MURRAY,
     Plaintiffs-Counter-Defendants-                D.C. No.
                         Appellees,             1:14-cv-00106-
                                                     SPW
                     v.

 BEJ MINERALS, LLC; RTWF, LLC,                     OPINION
     Defendants-Counter-Claimants-
                        Appellants.

        Appeal from the United States District Court
                for the District of Montana
         Susan P. Watters, District Judge, Presiding

           Argued and Submitted February 6, 2018
                    Seattle, Washington

                    Filed November 6, 2018

Before: Milan D. Smith, Jr. and Mary H. Murguia, Circuit
    Judges, and Eduardo C. Robreno, * District Judge.

                  Opinion by Judge Robreno;
                  Dissent by Judge Murguia

    *
      The Honorable Eduardo C. Robreno, United States District Judge
for the Eastern District of Pennsylvania, sitting by designation.
2                  MURRAY V. BEJ MINERALS

                          SUMMARY **

                          Montana Law

    The panel reversed the district court’s summary
judgment in favor of Lige and Mary Ann Murray, owners of
a Montana ranch, who brought the action seeking a
declaratory judgment that dinosaur fossils found on the
ranch belonged to them as owners of the surface estate.

    In 2005, prior to the discovery of the fossils, Jerry and
Robert Severson, the previous owners of the ranch, sold their
surface and one-third of the mineral estate to the Murrays.
In the conveyance, the Seversons expressly reserved the
remaining two-thirds of the mineral estate.

    The panel held, as an initial matter, that definitions of
“mineral” found in Montana statutes, like dictionary
definitions, were contradictory and therefore inconclusive.
The panel further held that the Montana Supreme Court has
generally adopted the test in Heinatz v. Allen, 217 S.W.2d
994 (Tex. 1940), for determining whether a particular
substance was a mineral in the context of deeds and
agreements regarding mineral rights to land. The panel held
that under this test, the dinosaur fossils, which were rare and
exceptional, were “minerals” pursuant to the terms of the
deed, and belonged to the owners of the mineral estate. The
panel rejected the Murrays’ policy-driven arguments to the
Heinatz test. The panel remanded for further proceedings.

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                 MURRAY V. BEJ MINERALS                      3

    Judge Murguia dissented, and she would hold that the
district court correctly concluded that dinosaur fossils do not
fall within the ordinary and natural meaning of the terms
“minerals,” as that term was used in the mineral deed in this
case. Judge Murguia would affirm the district court’s grant
of summary judgment for the Murrays.

                         COUNSEL

Eric D. Miller (argued), Perkins Coie LLP, Seattle,
Washington; Shane R. Swindle, Perkins Coie LLP, Phoenix,
Arizona; for Defendants-Counter-Claimants-Appellants.

Harlan B. Krogh (argued) and Eric Edward Nord, Crist
Krogh & Nord PLLC, Billings, Montana, for Plaintiffs-
Counter-Defendants-Appellees.

                         OPINION

ROBRENO, District Judge:

    Once upon a time, in a place now known as Montana,
dinosaurs roamed the land. On a fateful day, some
66 million years ago, two such creatures, a 22-foot-long
theropod and a 28-foot-long ceratopsian, engaged in mortal
combat. While history has not recorded the circumstances
surrounding this encounter, the remnants of these Cretaceous
species, interlocked in combat, became entombed under a
pile of sandstone. That was then . . . this is now.

    In 2006, an amateur paleontologist uncovered the well-
preserved fossils of the “Dueling Dinosaurs” on a Montana
ranch (“the Ranch”) in an area known as Hell Creek. Lige
4                   MURRAY V. BEJ MINERALS

and Mary Ann Murray (“the Murrays”), the plaintiffs in this
action, own the surface estate of the ranch where the fossils
were found. In 2005, prior to the discovery of the fossils,
Jerry and Robert Severson (“the Seversons”), the defendants
and previous owners of the ranch, sold their surface estate
and one-third of the mineral estate to the Murrays. In the
conveyance, the Seversons expressly reserved the remaining
two-thirds of the mineral estate, giving them ownership, as
tenants in common with the Murrays, of all right, title, and
interest in any “minerals” found in, on, and under the
conveyed land.

    These fossils are now quite valuable. After a dispute
arose regarding the true owner of the Dueling Dinosaurs and
several other valuable dinosaur fossils found on the Ranch
(including a nearly intact Tyrannosaurus rex skeleton, one of
only twelve ever found) (collectively, “the Montana
Fossils”), the Murrays filed this action seeking a declaratory
judgment that the Montana Fossils belonged to them as
owners of the surface estate. 1 In turn, the Seversons asserted
a counterclaim seeking a declaratory judgment that the
Montana Fossils belong to the mineral estate. The answer
turns on whether the Montana Fossils are deemed “minerals”

    1
      Although the term “surface estate” is used by the district court and
the parties to describe the property that constitutes the Ranch other than
the mineral estate, “surface estate” is a misnomer. The mineral estate
includes any minerals found “in, on or under” the conveyed land,
including minerals found on the surface. The surface estate, in turn,
includes all of the property other than minerals, including property
underneath the surface. Thus, whether a substance is found on the
surface of the Ranch or underneath the surface of the Ranch does not
determine whether that substance is part of the surface estate or part of
the mineral estate. Instead, the only relevant question is whether the
substance is a mineral. As a result, whether the Montana Fossils were
found under the surface of the Ranch or protruding from the surface of
the Ranch is irrelevant to this litigation.
                   MURRAY V. BEJ MINERALS                              5

within the meaning of the mineral deed under Montana law.
If the Montana Fossils are minerals, the Seversons, as
majority owners of the mineral estate, will own two-thirds of
the Montana Fossils. If the Montana Fossils are not
minerals, they will belong to the Murrays in their entirety.

    Following the filing of cross-motions for summary
judgment, the district court granted summary judgment for
the Murrays, holding that, under Montana law, the Montana
Fossils are not “minerals” within the meaning of the mineral
deed. The Seversons now appeal. The district court had
jurisdiction over this diversity action pursuant to 28 U.S.C.
§ 1332(a)(1). 2 We have jurisdiction pursuant to 28 U.S.C.
§ 1291, and for the reasons set forth below, we reverse the
district court’s order granting summary judgment for the
Murrays, and remand for further proceedings consistent with
this opinion.

                                   I.

    The facts of this case are largely undisputed. George
Severson previously owned property used as a farm and
ranch in Garfield County, Montana (“the Ranch”). In 1983,
he began leasing the Ranch to Mary Ann and Lige Murray

    2
       There is complete diversity between the plaintiffs and the
defendants in the underlying action: Plaintiffs Mary Ann and Lige
Murray are citizens of Montana; Defendant BEJ Minerals, LLC, is a
Washington limited liability company with its principal place of business
in Florida and members who are citizens of Florida and Washington;
Defendant RTWF, LLC, is a Florida limited liability company with its
principal place of business in Florida and members who are citizens of
Florida; and Defendants Robert and Jerry Severson are citizens of
Florida. In addition, the amount in controversy is over $75,000, as the
parties agree that the Montana Fossils are worth millions of dollars.
6                   MURRAY V. BEJ MINERALS

(“the Murrays”), who worked there as ranchers. George
Severson later transferred a portion of his property interest
in the Ranch to his sons, Jerry and Robert Severson (“the
Seversons”), and sold the remainder of his interest to the
Murrays.

    The Seversons and the Murrays jointly owned and
operated the Ranch until 2005, when the Seversons sold their
surface ownership rights and a portion of their mineral rights
to the Murrays. 3 The mineral deed that the parties executed
and recorded in connection with the 2005 transaction (“the
Deed”) stated that the Seversons and Murrays would own, as
tenants in common, “all right title and interest in and to all
of the oil, gas, hydrocarbons, and minerals in, on and under,
and that may be produced from the [Ranch].” The purchase
agreement for the 2005 transaction required the parties “to
inform all of the other parties of any material event which
may [affect] the mineral interests and [to] share all
communications and contracts with all other Parties.”

    The Seversons and the Murrays have represented that, at
the time of the sale, they did not suspect that there were any
valuable dinosaur fossils buried beneath the surface of the
Ranch. However, beginning a few months after the sale, the
Murrays discovered several rare dinosaur fossils on the

    3
       Under the 2005 agreement, the mineral estate for all but one parcel
of the Ranch is divided as follows: Robert Severson owns one third, Jerry
Severson’s company, Severson Minerals, LLC, owns one third, and Lige
and Mary Ann Murray each own one sixth. With respect to the other
parcel, Billings Garfield Land Company, an unrelated third party, owns
half of the mineral rights, with the other half distributed among the
Seversons and Murrays in the same proportions as the remainder of the
land’s mineral estate (one third to Robert Severson, one third to Severson
Minerals, LLC, and one sixth to each of the Murrays).
                   MURRAY V. BEJ MINERALS                           7

property, including: (1) the fossils of two separate dinosaurs
locked in battle when they died, nicknamed “the Dueling
Dinosaurs,” discovered in 2006; (2) a fossilized Triceratops
foot and skull, discovered in 2007 and 2011, respectively;
and (3) a nearly complete fossilized Tyrannosaurus rex
skeleton, nicknamed the “Murray T. Rex,” discovered in
2013. 4 The ownership of all of these fossils (previously
defined as “the Montana Fossils”) is implicated in this
litigation.

     The parties agree that the Montana Fossils are rare and
extremely valuable. The Murrays’ experts testified that,
because fossils of dinosaurs interacting are rare, the Dueling
Dinosaurs are a “one-of-a-kind find” with “huge scientific
value.” Although the Dueling Dinosaurs have not yet been
sold, they were appraised at between seven million and nine
million dollars, and the parties have stipulated that the set is
worth several million dollars. The Murrays sold the
Triceratops foot for $20,000 and have offered to sell the
skull for $200,000 to $250,000. Their expert, in an email
attempting to sell the skull, described it as “one of the best if
not the best Triceratops skull ever found.” Finally, the
Murray T. Rex is one of only a dozen intact Tyrannosaurus
rex skeletons ever found. The Murrays sold it to a Dutch
museum in 2014 for several million dollars. The proceeds
are being held in escrow pending the outcome of the instant
litigation.

    4
      For additional background regarding the discovery of the Montana
Fossils, see Mike Sager, Will the Public Ever Get to See the “Dueling
Dinosaurs”?, Smithsonian Magazine, July 2017, available at
https://www.smithsonianmag.com/science-nature/public-ever-see-
dueling-dinosaurs-180963676/ (last visited Sept. 4, 2018).
8                MURRAY V. BEJ MINERALS

    The Murrays first informed the Seversons about the
Montana Fossils in 2008. After the Seversons asserted an
ownership interest, the Murrays filed this action in Montana
state court seeking a declaratory judgment that, as owners of
the surface estate (i.e., all of the Ranch’s property other than
the mineral estate, see supra note 1), they are the sole owners
of the Montana Fossils. The Seversons removed the action
to federal court and asserted a counterclaim seeking a
declaratory judgment that the Montana Fossils are part of the
mineral estate. 5

    During discovery, both parties produced experts who
testified regarding the composition of the Montana Fossils.
The Seversons’ expert, Raymond Rogers, testified that
bones and teeth, including in living vertebrates, naturally
contain the mineral hydroxylapatite. Rogers performed an
x-ray diffraction test on the Montana Fossils and determined
that they had recrystallized from hydroxylapatite into the
mineral francolite during the fossilization process that
occurred over millions of years. The Murrays’ expert, Peter
Larson, agreed with Rogers regarding the fossilization
process in general. However, Larson concluded that the
Montana Fossils had not been replaced by francolite, and
instead contained the same patterns of the mineral
hydroxylapatite as a modern bison bone, “just as when [the
dinosaurs were] alive.”

    Following discovery, the parties filed cross-motions for
summary judgment. In an opinion dated May 20, 2016, the
district court found that the Montana Fossils are not included

    5
      Robert Severson’s interest is now held by BEJ Minerals, LLC
(“BEJ”), and Jerry Severson’s interest is now held by RTWF LLC
(“RTWF,” and hereinafter, together with Robert Severson, Jerry
Severson, and BEJ, “the Seversons”).
                 MURRAY V. BEJ MINERALS                      9

in the ordinary and natural meaning of “mineral” under
Montana law and therefore are not part of the mineral estate.
Accordingly, the court granted summary judgment for the
Murrays. The Seversons now appeal.

                              II.

    We review a district court’s ruling on motions for
summary judgment de novo. Guatay Christian Fellowship
v. County of San Diego, 670 F.3d 957, 970 (9th Cir. 2011).
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). We
review a district court’s interpretation of state contract law
de novo as well. AmerisourceBergen Corp. v. Dialysist
West, Inc., 465 F.3d 946, 949 (9th Cir. 2006). The parties
agree that Montana law applies.

                             III.

    Under Montana law, the interpretation of a deed
conveying an interest in real property is governed by the
rules of contract interpretation. Mary J. Baker Revocable Tr.
v. Cenex Harvest States, Coops., Inc., 164 P.3d 851, 857
(Mont. 2007) (citing Mont. Code Ann. § 70-1-513). The
interpretation of a contract is a question of law. Id. Words
in a contract are interpreted “in their ordinary and popular
sense unless the parties use the words in a technical sense or
unless the parties give a special meaning to them by usage.”
Dollar Plus Stores, Inc. v. R-Montana Assocs., L.P.,
209 P.3d 216, 219 (Mont. 2009). If the language in a
contract is ambiguous, i.e., subject to at least two reasonable
but conflicting meanings, then “a factual determination must
be made as to the parties’ intent in entering into the
contract.” Mary J. Baker Revocable Tr., 164 P.3d at 857.
10                  MURRAY V. BEJ MINERALS

                                   A.

    In order to determine the ordinary meaning of a word
used in a contract, we typically begin with dictionary
definitions. However, as the Supreme Court has recognized
and is particularly applicable to this case, “[t]he word
‘mineral’ is used in so many senses, dependent upon the
context, that the ordinary definitions of the dictionary throw
but little light upon its signification in a given case.” N. Pac.
Ry. Co. v. Soderberg, 188 U.S. 526, 530 (1903). In this case,
for example, the parties do not dispute that the Montana
Fossils are minerals in a scientific sense, as they are
composed entirely of the minerals hydroxylapatite and/or
francolite. 6 The Montana Fossils thus fit within definitions
of the word “mineral” that focus on a substance’s chemical
composition. See, e.g., Webster’s Third New International
Dictionary, Unabridged 1437 (3d ed. 2008) [hereinafter
Webster’s] (“an inorganic substance; especially: a mineral
element whether in the form of an ion, compound, or
complex”); New Oxford American Dictionary 1113 (3d ed.
2010) (“a solid inorganic substance of natural occurrence”);
Mineral, Black’s Law Dictionary (10th ed. 2014) (“Any

     6
       The parties’ experts testified that the bones and teeth of living
vertebrates are composed of the inorganic mineral hydroxylapatite and
various organic components, including, for example, tissue, marrow,
nerves, blood vessels, and collagen. After a vertebrate’s death, all of the
organic components of the bones and teeth eventually decompose,
leaving only the inorganic mineral hydroxylapatite. Over time, this
mineral may “recrystallize” into a different mineral, francolite. As noted
above, the parties’ experts dispute whether the x-ray diffraction test
results indicate that the Montana Fossils are composed of the mineral
hydroxylapatite, or whether the Montana Fossils instead contain the
mineral francolite (which the mineral hydroxylapatite could have
recrystallized into during the fossilization process). The parties do not
dispute, however, that the Montana Fossils are entirely composed of one
or both of these two mineral substances.
                MURRAY V. BEJ MINERALS                    11

natural inorganic matter that has a definite chemical
composition and specific physical properties that give it
value .”).

    Although the Montana Fossils clearly fall within these
dictionary definitions of the word “mineral,” our analysis
does not end there. Under traditional principles of contract
interpretation, words are interpreted “in their ordinary and
popular sense unless the parties use the words in a technical
sense or unless the parties give a special meaning to them by
usage.” Dollar Plus Stores, 209 P.3d at 219. While the
above-cited definitions of the word “mineral” are quite
broad, other dictionary definitions are more narrow, relating
to the manner in which a substance is used, as opposed to its
chemical composition. For example, Webster’s includes the
following secondary definition of “mineral”:

       any of various naturally occurring
       homogeneous or apparently homogeneous
       and usually but not necessarily solid
       substances (as ore, coal, asbestos, asphalt,
       borax, clay, fuller’s earth, pigments, precious
       stones, rock phosphate, salt, soapstone,
       sulfur, building stone, cement rock, peat,
       sand, gravel, slate, salts extracted from river,
       lake, and ocean waters, petroleum, water,
       natural gas, air, and gases extracted from the
       air) obtained for man’s use usually from the
       ground[.]

Webster’s 1437.       Similarly, Black’s Law Dictionary
provides one definition of mineral as including “[a]
subsurface material that is explored for, mined, and
exploited for its useful properties and commercial value.”
Mineral, Black’s Law Dictionary (10th ed. 2014).
12              MURRAY V. BEJ MINERALS

    Although, as explained above, the parties agree that the
Montana Fossils fit within the scientific definition of
minerals, they disagree about whether the Montana Fossils
fit within the more narrow use-related definitions of
minerals. The Murrays argue that they do not, while the
Seversons argue that they do. Relying on dictionary
definitions and several Montana mining statutes, the district
court agreed with the Murrays and determined that:

       [T]he common understanding of “mineral”
       includes the mining of a hard compound or
       oil and gas for refinement and economic
       exploitation. In contrast, dinosaur fossils are
       the remains of once-living vertebrates. The
       fossils’ properties are not what make them
       valuable. Fossils are not subject to further
       refinement before becoming economically
       exploitable. Instead, the fossils are valuable
       because of their very existence. Dinosaur
       bones are not economically valuable to be
       processed into fuel or materials or
       manufactured into jewelry. Further, dinosaur
       fossils are not mined in the traditional sense,
       but rather discovered by happenstance.

The definition that the court created – “the mining of a hard
compound or oil and gas for refinement and economic
exploitation” – did not itself appear in any of the dictionary
or statutory definitions the court cited, but instead
represented the court’s own interpretation of what it believed
to be the relevant portions of those dictionary and statutory
definitions.

    On appeal, the Seversons argue that the district court’s
interpretation of the dictionary definitions is disconnected
                   MURRAY V. BEJ MINERALS                            13

from the definitions themselves, and that even the narrower,
use-related dictionary definitions include – or at the very
least, do not exclude – the Montana Fossils. The Seversons
have the better of the arguments.

     First, the fact that the narrower dictionary definitions
found in Webster’s and Black’s Law Dictionary emphasize
the “use” of a substance does not exclude the Montana
Fossils. Some of the Montana Fossils are being “used” for
economic or commercial purposes: they were sold (or
offered for sale) for millions of dollars and subsequently
displayed in a museum that charges admission to view them.
Further, certain of the definitions do not limit the “use” of
the substance to use for economic or commercial purposes;
surely the Montana Fossils are being “used” in the general
sense. For example, under the Webster’s definition, the
Montana Fossils are clearly “naturally occurring
homogeneous . . . solid substances . . . obtained for man’s
use.” Webster’s 1437. Although it could be argued that
dinosaur fossils are unlike oil, gas, coal, and other substances
traditionally thought of as minerals because they are not used
as fuel, neither are many of the other substances specifically
listed in the Webster’s definition, such as salt, sand, and
gravel. In addition, as the Seversons point out, oil, gas, and
coal all derive from the remains of plants and animals, 7 just
like dinosaur fossils, and should not be treated any
differently because they are valuable for a different reason.

    Second, there are other definitions of the word “mineral”
not considered by the district court that explicitly include
fossils in general. For example, an older edition of Black’s

    7
     See Webster’s (defining “fossil fuel” as “a fuel (such as coal, oil,
or natural gas) that is formed in the earth from plant and animal
remains”).
14              MURRAY V. BEJ MINERALS

Law Dictionary defines a mineral as including “all fossil
bodies or matters dug out of mines or quarries, whence
anything may be dug, such as beds of stone which may be
quarried.” Mineral, Black’s Law Dictionary (6th ed. 1990).

    Given the inconsistencies in dictionary definitions of
“minerals,” and recognizing that at least one of the
definitions explicitly includes fossils as minerals, we
disagree with the district court’s conclusion that the word
“minerals” in the Deed did not encompass dinosaur fossils.
As the parties agree that the Deed must be interpreted under
Montana law, we next rehearse Montana law.

                             B.

    The Montana Supreme Court, when tasked with
interpreting the meaning of the word “minerals” in a similar
deed, noted that the need to determine the ordinary and
popular meaning of the term “mineral” has created
“considerable confusion in mineral law litigation
nationwide.” Farley v. Booth Brothers Land & Livestock
Co., 890 P.2d 377, 379 (Mont. 1995).

    Attempting to make sense of the legal morass regarding
the term “mineral,” the court observed:

       [t]he only reliable rule which surfaces from
       the confusing and inconsistent approaches
       taken by those courts attempting to ferret out
       the subjective intent of the parties is that the
       word ‘mineral’ means what the court says it
       means. The result is title uncertainty and the
       need to litigate each general reservation of
       minerals to determine which minerals it
       encompasses.
                    MURRAY V. BEJ MINERALS                            15

Id. (quoting Miller v. Land & Mineral v. Highway Comm’n,
757 P.2d 1001, 1002 (Wyo. 1988)). Explaining that the
question of the interpretation of the word “mineral” in a land
transfer agreement was one of first impression in Montana,
the court surveyed the definition of “mineral” in several
Montana statutes and case law from other states. Finding
these statutory definitions inconclusive, 8 the court rested on
the following test from the Texas Supreme Court’s decision
in Heinatz v. Allen, 217 S.W.2d 994 (Tex. 1949):

         [S]ubstances such as sand, gravel and
         limestone are not minerals within the
         ordinary and natural meaning of the word
         unless they are rare and exceptional in
         character or possess a peculiar property

    8
      The court looked at two conflicting statutory definitions of mineral
from Title 82 of the Montana Code, which relates to minerals, oil, and
gas. The first statutory definition, relating to metal mine reclamation,
defined “mineral” as:

         any ore, rock, or substance, other than oil, gas,
         bentonite, clay, coal, sand, gravel, phosphate rock, or
         uranium, taken from below the surface or from the
         surface of the earth for the purpose of milling,
         concentration, refinement, smelting, manufacturing,
         or other subsequent use or processing or for
         stockpiling for future use, refinement, or smelting.

Farley, 380 P.2d at 379 (quoting Mont. Code Ann. § 82-4-303(9)). The
second statutory definition, from the section relating to “opencut”
mining reclamation, defined “minerals” as “bentonite, clay, scoria,
phosphate rock, sand, or gravel.” Id. (quoting Mont. Code Ann. § 82-4-
403(6)). Recognizing that these two statutory definitions were “not
necessarily consistent” – given that one definition explicitly included
scoria but it was “unclear” whether it would be included in the other –
the court concluded that the term “mineral” has varying definitions in
different contexts. Id.
16               MURRAY V. BEJ MINERALS

       giving them special value, as for example
       sand that is valuable for making glass and
       limestone of such quality that it may be
       profitably be manufactured into cement.
       Such substances, when they are useful only
       for building and road-making purposes, are
       not regarded as minerals in the ordinary and
       generally accepted meaning of the word.

Id. at 380 (quoting Holland v. Dolese Co., 540 P.2d 549,
550–51 (Okla. 1975) (citing Heinatz, 217 S.W.2d at 997)).

    The particular question at issue in Farley was whether
“scoria,” a local term referring to the baked roof rock
(composed of shale, sandstone and clay) that results from the
burning of coal outcropping, was a mineral within the
meaning of a mineral reservation in a lease agreement. Id.
at 380. Like the Montana Fossils, scoria is a mineral in the
scientific sense, that is, it is composed of minerals. Applying
the Heinatz test, the court noted that the scoria at issue was
used in road construction, and then found that “[t]he use of
scoria in constructing roadways does not elevate scoria to the
status of a compound which is ‘rare and exceptional in
character’ and therefore, a ‘mineral.’” Id. (quoting Holland,
540 P.2d at 550–51).

    On appeal, the Seversons argue, as they did below, that
the Montana Fossils are minerals under the test adopted by
the Montana Supreme Court in Farley. The Seversons claim
that, pursuant to Farley, a substance that is technically a
mineral in the scientific sense is also a mineral within the
meaning of a real property agreement if it is rare and
exceptional in character or possesses a peculiar property
giving it special value. The Seversons then argue that the
Montana Fossils satisfy that test because the Montana
                 MURRAY V. BEJ MINERALS                       17

Fossils are composed of mineral substances as a technical
matter, and the Montana Fossils are rare and exceptional and
have special value.

    In response, the Murrays first argue that the Montana
Supreme Court did not adopt the Heinatz test in Farley as a
general universally applicable measure to determine whether
a substance is a mineral, and instead the court merely used
the Heinatz test as a “secondary reference” to determine
whether scoria was a mineral. They next argue that, to the
extent Farley did adopt Heinatz’s “rare and exceptional”
test, the test is a categorical one: a particular dinosaur fossil
cannot be a mineral unless all dinosaur fossils, in general,
are minerals. Because the Seversons admit that not all
dinosaur fossils are rare and valuable – and that, in fact,
many are virtually worthless – the Murrays contend that
dinosaur fossils, including the Montana Fossils at issue in
this case, are not minerals under Heinatz. The Murrays also
argue that the test the Seversons ask this Court to adopt
would create a confusing distinction between rare and
valuable mineral fossils and common and worthless non-
mineral fossils, requiring litigation with respect to each
individual fossil. Instead, the Murrays urge the Court to
focus its legal analysis on definitions of minerals found in
various Montana statutes and regulations, under which, the
Murrays claim, dinosaur fossils have “never” been defined
as minerals under Montana law.

    We address each of these arguments in turn.

                               C.

    As an initial matter, we agree with the Seversons that
definitions of “mineral” found in Montana statutes, like
dictionary definitions, are contradictory and therefore
inconclusive. Contrary to the Murrays’ assertions, the
18                   MURRAY V. BEJ MINERALS

majority of the statutes and regulations the Murrays cite do
encompass fossils in their definition of “minerals,” and those
definitions that exclude fossils are limited to particular
statutory schemes that are not relevant here. 9

     9
        The Murrays first cite a statutory definition stating in relevant part
that “mineral” means “any . . . substance, other than oil, gas, bentonite,
clay, coal, sand, gravel, phosphate rock, or uranium, taken from below
the surface of the earth or from the surface of the earth for the purpose
of . . . subsequent use or processing or for . . . future use.” See Mont.
Code Ann. § 82-4-303(16)). Although the Murrays claim that this
definition does not include the Montana Fossils, it does: the Montana
Fossils are a substance (other than the specific substances listed) taken
from below the surface of the earth for the purpose of subsequent use.
The Murrays’ second statutory definition, which states that “mineral”
means “any . . . nonrenewable merchantable products extracted from the
surface or subsurface of the state of Montana,” see Mont. Code Ann.
§ 15-38-103(3)), is similarly applicable to the Montana Fossils: the
Montana Fossils are nonrenewable, merchantable products, and they
were extracted from the subsurface of Montana.

     The Murrays next argue that “minerals” cannot include dinosaur
fossils in general because certain Montana statutes and regulations
differentiate between “fossils” and “minerals.” The Murrays point to the
definition for “general recreational use” within the Montana Department
of Natural Resource’s regulations regarding surface management rules
for leasing of state-owned land, which contains separate exclusions for
the “collection, disturbance, alteration, or removal of archeological,
historical, or paleontological cites or specimens (e.g. fossils, dinosaur
bones . . .)” and “mineral exploration, development, or mining,” and
notes that the former requires an antiquities permit and the latter requires
a mineral lease or license. See Mont. Admin. R. 36.25.145. The Murrays
also note that the Montana Historical Society has the power to collect
and preserve “fossils, plants, minerals, and animals,” suggesting that the
separate listing of “fossils” and “minerals” means that they must be
distinct, non-overlapping categories. See Mont. Code Ann. § 22-3-107.
Contrary to the Murrays’ assertion, the separate listing of minerals and
fossils does not establish that fossils are not a subset of minerals. More
                    MURRAY V. BEJ MINERALS                              19

     It is true that the Montana Supreme Court did not
explicitly announce in Farley that it intended to adopt the
Heinatz test for all mineral disputes going forward.
However, fourteen years later, when faced with the next
dispute regarding whether a substance was a mineral in the
context of a deed, the Montana Supreme Court again quoted
and applied the Heinatz test, pointing to Farley to support its
reliance on Heinatz. See Hart v. Craig, 216 P.3d 197, 198
(Mont. 2009). The Montana Supreme Court’s reliance on
the Heinatz test for a second time reinforces our conclusion
that the Montana Supreme Court has generally adopted the
Heinatz test for determining whether a particular substance
is a mineral in the context of deeds and agreements regarding
mineral rights to land. 10

fundamentally, these definitions relate to a particular statutory scheme
and are not relevant here.

     Finally, the Murrays cite the federal Paleontological Resources
Preservation Act (“the PRPA”), 16 U.S.C. § 470aaa, which defines
“paleontological resources” as including “fossilized remains,” and the
regulations under that act, which provide that “paleontological
resources” do not include “coal, oil, natural gas, and other economic
minerals that are subject to the existing mining and mineral laws.” See
36 C.F.R. § 291.9(d). In addition to their irrelevance to this case since
they apply to federal land, the PRPA regulations actually undermine the
Murrays’ argument, because the regulations would not need to exclude
coal, oil, natural gas, and other similar minerals from the definition of
paleontological resources unless those substances would otherwise be
included in the definition.

     10
        To the extent that the Montana Supreme Court has not formally
adopted the Heinatz test, we predict that, if faced with the issue, it would
do so. See First Intercontinental Bank v. Ahn, 798 F.3d 1149, 1157 (9th
Cir. 2015) (explaining that, as a federal court sitting in diversity, “when
the state’s highest court has not squarely addressed an issue, we must
predict how the highest state court would decide the issue”) (internal
20                 MURRAY V. BEJ MINERALS

    Under the Heinatz/Farley test, the court asks whether a
substance that is scientifically a mineral is also “rare and
exceptional in character or possess[es] a peculiar property
giving [it] special value.” Farley, 890 P.2d at 380 (quoting
Holland, 540 P.2d at 549 (citing Heinatz, 217 S.W.2d at
997)). As noted above, the parties disagree about whether
the test is “categorical” or “non-categorical;” that is, whether
all examples of a particular substance (e.g., all dinosaur
fossils) must meet the test in order for some examples of the
substance (e.g., the Montana Fossils at issue here) to be
considered minerals.

    The Murrays do not argue that the Montana Fossils are
not rare and exceptional or have special value. Instead, they
contend that Farley did not address whether the test is
categorical or not, and that we should reject the “non-
categorical” approach as confusing and unworkable.

    It may well be that the non-categorical approach
generates some unpredictability regarding which substances
are rare and valuable enough to be considered minerals
within the context of a mineral deed. Regardless, it is clear
from the explanation provided in Heinatz, which the
Montana Supreme Court quoted in Farley, that the test is
non-categorical. The court gave the examples of “sand that
is valuable for making glass” and “limestone of such quality
that it may profitably be manufactured into cement,” Farley,
890 P.2d at 380 (quoting Heinatz, 217 S.W.2d at 997),
suggesting that there exist sand that is not valuable for
making glass and limestone that is not of such quality that it
can become cement, neither of which would qualify as
minerals under the test. Likewise, although many dinosaur

quotation marks omitted) (quoting Glendale Assocs., Ltd. v. Nat’l Labor
Relations Bd., 347 F.3d 1145, 1154 (9th Cir. 2003)).
                 MURRAY V. BEJ MINERALS                     21

fossils have little or no value, the Murrays concede that the
Montana Fossils are rare and exceptional. Therefore, under
the teachings of Farley, the Montana Fossils are “minerals”
pursuant to the terms of the Deed, and belong to the owners
of the mineral estate.

     The remainder of the Murrays’ arguments are policy-
based criticisms of the Heinatz/Farley test. The Murrays
argue that the test is disconnected from the ordinary and
natural meaning of the word “minerals;” creates needless
litigation to determine which substances are valuable enough
to be considered minerals; and leads to absurd results in the
case of dinosaur fossils, including jeopardizing museums’
ownership of their fossil collections. Of course, as a federal
court sitting in diversity, in matters of state law we are not
free to impose our policy preferences over those of the
Montana Supreme Court. In any case, the Murrays’
assertions lack merit. The Farley test is connected to the
ordinary and natural meaning of the term “minerals” as used
in a deed, because the purpose of retaining or acquiring a
mineral estate is to extract something valuable from the land.
In a mineral estate transaction where the quantity, quality, or
type of substances present underneath the land may be
unknown to both the seller and purchaser of the mineral
estate, it is logical to tie the definition of the material
conveyed to whether or not it is valuable. Further, it is
unlikely that the Farley test will result in much, if any,
needless litigation, given the extremely broad definition of
“value” provided in Heinatz, which included both glass and
cement as examples of materials made of rare and valuable
22                  MURRAY V. BEJ MINERALS

minerals. Finally, the Murrays’ concern regarding museum
collections is hypothetical and unlikely to arise often. 11

                                   IV.

    For the foregoing reasons, we reverse the decision of the
district court granting summary judgment for the Murrays
and remand for further proceedings consistent with this
disposition.

     REVERSED AND REMANDED.

MURGUIA, Circuit Judge, dissenting:

    Because I disagree with the majority’s conclusion that
dinosaur fossils fall within the ordinary and natural meaning
of the word “mineral” and that they accordingly pertain to
the mineral estate, I respectfully dissent.

    The present case involves a dispute over ownership of
several valuable dinosaur fossils that were found on a large
ranch in Garfield County, Montana. The Severson family
owned the ranch until 2005, when the mineral and surface
estates were severed through a mineral deed that transferred

     11
        As the Seversons point out, a museum’s ownership of fossils
would only be in doubt following this decision if the museum purchased
fossils from the owner of the surface rights of the property where the
fossils were found, the mineral estate was owned by another party that
did not consent to the sale of the fossils to the museum, and the mineral
estate was defined to include all “minerals” without any further
definition or clarification of the term. Even then, if the mineral estate’s
owner successfully sued the museum for ownership of the fossils, the
museum could recover the value of the sale from the owner of the surface
estate.
                    MURRAY V. BEJ MINERALS                              23

the surface estate to the Murrays in full, but made express
reservations regarding the mineral estate. Specifically, the
mineral deed granted to Severson Minerals LLC, Robert E.
Severson, and the Murrays, in varying percentages,

         all right title and interest in and to all of the
         oil, gas, hydrocarbons, and minerals in, on
         and under, and that may be produced from the
         lands situated in Garfield County, Montana
         . . . together with the right, if any, to ingress
         and egress at all times for the purpose of
         mining, drilling, exploring, operating, and
         developing said lands for oil, gas,
         hydrocarbons, and minerals, and storing,
         handling, transporting, and marketing the
         same therefrom together with the rights to
         remove from said lands all of Grantors’
         property and improvements.

After the transfer was executed, the Murrays—now owners
of the surface estate and a portion of the mineral estate—
discovered the first dinosaur fossil: a Pachycephalosaur
spike cluster. Thereafter, the Murrays discovered and
excavated more valuable fossils, including the “Dueling
Dinosaurs” and the “Murray T-Rex.” The question presented
in this case is whether these rare and valuable dinosaur
fossils are “minerals” under the 2005 mineral deed.

   The question whether dinosaur fossils constitute
“minerals” is a question of first impression under Montana
law. 1 The Montana Supreme Court has twice considered

    1
      In spite of the novel question of law and the potential policy
implications of this case, the parties did not request certification of this
question to the Montana Supreme Court. See M. R. App. P. 15(3)(a)–(b).
24               MURRAY V. BEJ MINERALS

whether a particular substance constitutes a “mineral” for the
purposes of property transfers. In Farley v. Booth Brothers
Land and Livestock Co., 890 P.2d 377, 378 (Mont. 1995),
the Montana Supreme Court asked whether scoria, a type of
rock used in road construction, was a mineral. The court
concluded it was not. Id. at 381. In Hart v. Craig, the
Montana Supreme Court considered whether sandstone used
for rip-rap and landscaping was a mineral, again concluding
that it was not. 216 P.3d 197, 211 (Mont. 2009). In both
cases, the court looked to the particular properties of the
substance to see if it fell within the “ordinary and natural
meaning” of the term “mineral.” See Farley, 890 P.2d at 380
(quoting Holland v. Dolese Co., 540 P.2d 549, 550–51
(Okla. 1975)); Hart, 216 P.3d at 211 (quoting Heinatz v.
Allen, 217 S.W.2d 994, 997 (Tex. 1949)); see also Dollar
Plus Stores, Inc. v. R-Montana Assocs., L.P., 209 P.3d 216,
219 (Mont. 2009) (Words in a contract are interpreted “in
their ordinary and popular sense unless the parties use the
words in a technical sense or unless the parties give a special
meaning to them by usage.”).

    The “ordinary and natural meaning” test, as applied to
minerals conveyed through a property transfer, was first set
forth in a 1949 Texas Supreme Court case, Heinatz v. Allen,
217 S.W.2d 994 (Tex. 1949). The Texas court held that
“mineral,” for the purposes of property transfers, is to be
understood as used in its “ordinary and natural meaning
unless there is a clear indication that it was intended to have
a more or less extended signification.” Id. at 997. The
driving principle behind this test is to effectuate the intent of
the contracting parties. Id. (“The words ‘the mineral rights’
used in the will are to be interpreted according to their
ordinary and natural meaning, there being nothing in the will
manifesting an intention on the part of the testatrix to use
them in a scientific or technical sense.”). In other words,
                    MURRAY V. BEJ MINERALS                              25

when Party A transfers to Party B the rights to all “minerals”
in the estate, the court presumes that parties intended to
apply the ordinary and natural meaning of “minerals,” unless
the contract says otherwise. In determining the ordinary and
natural meaning of “mineral,” the Heinatz court considered
several factors, including “the evidence as to the nature of
the [substance], its relation to the surface of the land, its use
and value, and the method and effect of its removal.” Id. at
995–96. In concluding the limestone at issue was not a
mineral, one factor that the court considered was that the
limestone was not valuable, but the court also considered the
fact that limestone was quarried at the surface and would
significantly affect the use of the surface estate.

    As in Heinatz, in Farley and Hart, the Montana court
considered several factors, such as the substance’s particular
properties and use, in order to determine whether that
substance was a mineral. Specifically, Farley and Hart relied
on the principle that “substances such as sand, gravel and
limestone are not minerals within the ordinary and natural
meaning of the word unless they are rare and exceptional in
character or possess a peculiar property giving them special
value . . . . Such substances, when they are useful only for
building and road-making purposes, are not regarded as
minerals in the ordinary and generally accepted meaning of
the word.” Hart, 216 P.3d at 211 (quoting Heinatz,
217 S.W.2d at 997); Farley, 890 P.2d at 380 (quoting
Holland, 540 P.2d at 550–51).

    Here, the district court began by considering definitions
of the term “mineral,” including dictionary, statutory, and
regulatory definitions. 2 See, e.g., Mineral, Black’s Law

    2
     The majority goes to pains to distinguish each and every definition
presented by the Murrays, in an effort to prove that fossils fall under none
26                  MURRAY V. BEJ MINERALS

Dictionary (10th ed. 2014); Mont. Code Ann. § 15-38-
103(3); Mont. Code Ann. § 82-4-303(16). The district court
noted that all of the definitions described the mining of hard
substances or oil and gas that are primarily extracted for
future refinement and economic purposes, and that dinosaur
fossils do not seemingly fall into those statutory definitions.
I agree with the district court’s summation of the quoted
definitions. I further note that the district court’s observation
is supported by the way the term “mineral” is used in the
mineral deed here, which clearly contemplates traditional
mineral extraction for an economic purpose.

    The district court went on to consider the unique
properties of dinosaur fossils that distinguish them from
those substances that we typically think of as minerals. The
district court explained that fossils’ mineral properties are
not what make them valuable, but instead the value turns on
characteristics other than mineral composition, such as the
completeness of the specimen, the species of dinosaur, and
how well the fossil is preserved. The district court further
noted that fossils are the remains of once-living vertebrates,
with paleontological value, and that they are not refined for
economic purposes or mined in the traditional sense, but
rather are discovered by happenstance. These are precisely
the same types of factors that were determinative in Farley,

of them. While I would agree that no single definition cited by the district
court or the parties on appeal is wholly dispositive here, I see no error in
the district court’s use of these statutes in an effort to discern whether
any similar properties exist among these definitions that might shed light
on the scope of the term “mineral.” See Dollar Plus Stores, 209 P.3d at
219; Newman v. Wittmer, 917 P.2d 926, 930 (Mont. 1996) (“[S]tatutory
definitions provide guidance in interpreting the ordinary and popular
meaning of undefined terms in a restrictive covenant.”).
                   MURRAY V. BEJ MINERALS                           27

Hart, and Heinatz under the ordinary and natural meaning
test.

    Indeed, if we only apply the factors applied by the Texas
Supreme Court under Heinatz—“the evidence as to the
nature of the [substance], its relation to the surface of the
land, its use and value, and the method and effect of its
removal”—we would still reach the district court’s
conclusion that dinosaur fossils are not minerals. 3 Heinatz,
217 S.W.2d 995–96. First, the nature of the substance here
is organic matter that has fossilized over time into a mineral
compound. This factor weighs in favor of finding that fossils
are minerals. Second, however, fossils pertain much more
closely to the surface of the land. Like the quarried limestone
in Heinatz, fossils are not “mined” but rather excavated. A
large excavation would interfere with the use of the surface
estate—a factor which the Heinatz court found weighed
heavily against a finding that limestone was a mineral. Third,
the use and value of fossils are not akin to other substances
deemed minerals, such as coal, gas, or oil, which are
typically extracted for some economic purpose.
Collectively, these factors lead to the conclusion reached by
the district court here—that dinosaurs are not “minerals” as
that term is ordinarily understood.

   In sum, the district court correctly concluded that
dinosaur fossils do not fall within the ordinary and natural
meaning of the term “minerals,” as that term is used in the
mineral deed in this case. I would accordingly affirm the

    3
      I agree with the majority’s conclusion that although the Montana
Supreme Court did not expressly adopt the Heinatz test, it would likely
do so. In any event, the ultimate question—whether fossils fall within
the ordinary and natural meaning of “mineral”—is the same under
Farley, Hart, and Heinatz.
28              MURRAY V. BEJ MINERALS

district court’s grant of summary judgment for the Murrays.
For these reasons, I respectfully dissent.