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The Estate of Price v. Hodkin

Court of Appeals of Utah

August 8, 2019

The Estate of Amy Allen Price, Appellee,
v.
Michael Hodkin, Katherine S. Hodkin, and the Estate of Virginia S. Anderson, Appellants.

          Eighth District Court, Duchesne Department The Honorable Samuel P. Chiara No. 130800047

          Stephen P. Horvat and Heather M. Sneddon, Attorneys for Appellants

          Vincent C. Rampton, Attorney for Appellee

          Judge Gregory K. Orme authored this Opinion, in which Judges Kate Appleby and Diana Hagen concurred.

OPINION

          ORME, JUDGE.

         ¶1 Plaintiff Amy Allen Price (Amy)[1] brought an action to quiet title in a property's mineral rights by challenging a deed that had been recorded 47 years earlier. Because Amy and her predecessors unreasonably delayed in bringing suit after obtaining constructive knowledge of the cause of action and because their lack of diligence likely prejudiced the defendants to her quiet title action, we hold that the district court improperly granted summary judgment in favor of Amy. We thus reverse the summary judgment and remand for further proceedings consistent with this opinion.

         BACKGROUND[2]

         ¶2 The property at issue (the Property) consists of two parcels of land in Duchesne County. It was co-owned by two sisters, Virginia Nutter Price (Virginia) and Catherine Nutter Story (Catherine)[3] (collectively, the Sisters), for more than 20 years.

         ¶3 In 1945, the Property was conveyed by two separate deeds (the 1945 Deeds) to the Sisters "as joint tenants and not as tenants in common, with full rights of survivorship." Their mother, Katherine F. Nutter (Mother), conveyed the first parcel of land to them. Robert E. Mark (Mark), an attorney who, for decades, represented the Nutter family and its business, the Preston Nutter Corporation (PNC), conveyed the second parcel of land to the Sisters. As there is no record of any conveyance taking place between 1945 and 1966 that would have severed the Sisters' joint tenancy, it would appear that their co-ownership of the Property came to an end in 1966 with Catherine's passing.

         ¶4 Mark served as executor of Catherine's estate. Virginia presented a claim to the estate in the form of a promissory note in favor of Mother that Catherine had signed in 1960 (the Note). The Note was "for the principal sum of $10, 000.00 payable six months after [Catherine's] death bearing interest at 6% per annum." It was secured by 210 shares of PNC stock. Virginia succeeded to the Note and its security following Mother's death. And at the time of Catherine's passing, the Note was worth $13, 614.99. Because Catherine's estate did not possess sufficient funds to pay the Note, Mark petitioned the district court for authorization to convey Catherine's full "undivided one-half interest" in the Property's surface rights[4] to Virginia in full satisfaction of the debt. This petition (the Petition) stated that in exchange for Catherine's interest in the Property's surface rights, Virginia agreed (1) to pay the estate the difference between the value of Catherine's interest in the Property and the amount owed Virginia on the Note, (2) to return the PNC stock that she had held as security on the Note, and (3) that the conveyance expressly excepted "one-half of all oil and gas and one-half of all other minerals contained in [the Property]." The Petition further indicated that "Virginia N. Price has accepted said offer made to her by [Mark]," and it also bore her signature. Apparently no one at the time questioned whether Catherine's one-half interest in the Property had already passed to Virginia, the surviving joint tenant, upon Catherine's death.

         ¶5 The court granted the Petition, authorizing Mark to convey Catherine's full interest in the Property's surface rights to Virginia while retaining a half-interest in all oil, gas, and mineral rights. Mark executed and recorded a deed reflecting the court's order in late 1966 (the 1966 Deed). In 1968, the court further ordered that the Property's income from "one-half of all oil and gas and one-half of all other minerals" be distributed to Mark as trustee of Catherine's testamentary trust. Katherine S. Hodkin and Virginia S. Anderson[5] (collectively, Defendants)[6] are Catherine's daughters and are the beneficiaries of Catherine's testamentary trust.

         ¶6 In the years following the 1966 transaction, Virginia made a number of payments to Catherine's trust reflecting its share of proceeds from oil and gas leases on the Property, which payments continued after her death in 1977. Upon her passing, Virginia's husband, Howard Price (Howard), succeeded to her interest in the Property. He later married Amy, who likewise succeeded to his interest in the Property following his death in 1982. There is evidence of Amy making intermittent payments to Defendants for Catherine's estate's portion of the proceeds on oil and gas leases on the Property after Howard's passing.

         ¶7 In 2013, forty-seven years after the 1966 transaction, Amy initiated the current action seeking to quiet title "in and to the surface and subsurface interests in the [Property]" and "seeking related declaratory and equitable relief." In her subsequent motion for summary judgment, Amy argued that because neither sister had severed the joint tenancy ownership of the Property prior to Catherine's death in 1966, Virginia took full title to the Property-including all mineral rights-by right of survivorship. As a result, "[Catherine]'s estate never received, and therefore could not make disposition of, any rights [in the Property]." And as Howard's successor in interest to the Property, who in turn succeeded to Virginia's original interest, Amy argued that the Property's full mineral rights belonged to her by operation of law. She argued that this defeated Defendants' claims of right, title, or interest in any portion of the Property's mineral rights.

         ¶8 Defendants opposed the motion for summary judgment on several grounds. Among other things, they argued that the 1966 transaction raised a genuine issue of material fact as to whether the joint tenancy created in 1945 had been severed prior to Catherine's passing in 1966. In support of this argument, Defendants relied on Virginia's and Mark's sophistication as well as their conduct following Catherine's death. Specifically, Virginia served as president and treasurer of PNC for more than two decades. At that time, "PNC was one of the largest cattle ranching operations in the Intermountain West, leasing and owning substantial acres of grazing land with cattle herds . . . in Utah, in Arizona, and in various other locations." In addition to cattle ranching, PNC also leased oil and gas rights to major oil companies. Virginia was knowledgeable about real property transactions and, while she served as its president, PNC became one of the first companies to separate leases for tar sands from ordinary oil leases, thereby achieving additional revenue for PNC. Moreover, Mark was PNC's long-time attorney and grantor of one of the parcels of land that made up the Property. Defendants argued that a person possessing Virginia's business acumen and knowledge of real property transactions, or Mark's legal expertise, would have known that if the Property was owned in joint tenancy, full title would have passed to Virginia by operation of law following Catherine's death. And because both Virginia and Mark entered into the 1966 transaction under the apparent belief that Catherine's estate owned an "undivided one-half interest" in the Property, Defendants argued that they were entitled to the inference at the summary judgment stage that a severance of the Sisters' joint tenancy had somehow occurred prior to Catherine's death notwithstanding the lack of any documentation substantiating that theory.

         ¶9 Defendants also argued that even if the joint tenancy had not been severed, the 1966 transaction between Mark and Virginia was sufficient to operate as a conveyance of the Property's mineral rights to Catherine's estate. Additionally, they contended that Amy's suit to quiet title was barred by the doctrines of laches, estoppel, waiver, and res judicata given that Amy and her predecessors in interest had acted in accordance with the 1966 transaction for decades and because she and her predecessors waited 47 years, collectively, to file an action to quiet title.

         ¶10 The district court granted Amy's motion for summary judgment. The court concluded that because Defendants were unable to present direct evidence of severance of the joint tenancy, it was not severed as a matter of law and Catherine's entire one-half interest in the Property, including its mineral rights, passed to Virginia upon Catherine's death. The court stated that "evidence suggesting [Virginia] possessed strong business acumen in no way eliminates the possibility that she erred or had a lapse of memory" when she entered into the 1966 transaction. "The conclusion that [Virginia] believed in or intended a severance would be purely speculative . . . [as well as] irrelevant without evidence of an act of severance." The court also rejected Defendants' argument that the 1966 transaction and subsequent decades of performance constituted a conveyance of the Property's mineral rights to Catherine's estate. It held that because Catherine's estate did not possess an interest in the Property with which to bargain, the 1966 transaction did not constitute a binding agreement due to a lack of consideration. It also declined to enforce the agreement on the ground that it was "just as likely" that Virginia was acting under a mistake of fact or law when she entered into the agreement. The court further stated that even if the agreement was enforceable, it did not require Virginia to transfer mineral rights to Catherine's estate. And finally, the court rejected Defendants' other arguments, including those based on estoppel, laches, waiver, and res judicata. Regarding Defendants' laches argument, the court stated that "Defendants [had] provided the Court with no evidence to suggest that [Virginia] or her assigns failed to pursue the action after becoming aware of the facts."

         ¶11 Following additional filings, the district court entered final judgment in favor of Amy, ordering Defendants to disgorge all proceeds they had received from the Property's mineral rights leases since July 15, 2008. Based on the ...


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