James Barlow Family Ltd. Partnership v. David M. Munson, Inc.

132 F.3d 1316, 1997 WL 768335
CourtCourt of Appeals for the Tenth Circuit
DecidedAugust 26, 1997
DocketNo. 96-1202
StatusPublished

This text of 132 F.3d 1316 (James Barlow Family Ltd. Partnership v. David M. Munson, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
James Barlow Family Ltd. Partnership v. David M. Munson, Inc., 132 F.3d 1316, 1997 WL 768335 (10th Cir. 1997).

Opinion

SEYMOUR, Chief Judge.

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 [1318]*1318and 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 unpat-ented 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 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) (ree., 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.2d 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 gas regardless of whether the private or the federal claims ultimately prevailed in the title dispute.

Munson also protected itself from duplica-tive 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 pending resolution of the Bar-lows’ 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 [1319]*1319claimants’ 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 Bar-lows 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, — U.S.-, 116 S.Ct. 2500, 135 L.Ed.2d 191 (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 agreements 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

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Related

United States v. Detroit Timber & Lumber Co.
200 U.S. 321 (Supreme Court, 1906)
MARATHON OIL COMPANY v. Lujan
771 F. Supp. 1556 (D. Colorado, 1991)
Marathon Oil Co. v. Lujan
751 F. Supp. 1454 (D. Colorado, 1990)
Tosco Corp. v. Hodel
611 F. Supp. 1130 (D. Colorado, 1985)
Ellis v. United Airlines, Inc.
73 F.3d 999 (Tenth Circuit, 1996)
Reed v. Munn
148 F. 737 (Eighth Circuit, 1906)
Tosco Corp. v. Hodel
804 F.2d 590 (Tenth Circuit, 1986)
Tosco Corp. v. Hodel
826 F.2d 948 (Tenth Circuit, 1987)

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Bluebook (online)
132 F.3d 1316, 1997 WL 768335, Counsel Stack Legal Research, https://law.counselstack.com/opinion/james-barlow-family-ltd-partnership-v-david-m-munson-inc-ca10-1997.