Overturff v. Read

422 S.W.3d 143, 2012 Ark. App. 461, 2012 WL 3854454, 2012 Ark. App. LEXIS 584
CourtCourt of Appeals of Arkansas
DecidedSeptember 5, 2012
DocketNo. CA 12-67
StatusPublished
Cited by1 cases

This text of 422 S.W.3d 143 (Overturff v. Read) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Overturff v. Read, 422 S.W.3d 143, 2012 Ark. App. 461, 2012 WL 3854454, 2012 Ark. App. LEXIS 584 (Ark. Ct. App. 2012).

Opinion

DAVID M. GLOVER, Judge.

| ,This case evolves from a real-estate contract entered into in October 2002 by appellees — James Read, Mary Read, Clarence Conwell, and Jane Conwell — and appellant Teddy Overturff. The appeal must be dismissed because there is no final, appealable order.

Real-Estate Contract

The real-estate contract provided that Overturff would purchase the land over 180 months; that upon execution of the contract, the Reads and Conwells would deliver a properly executed warranty deed to the escrow agent, who would hold the deed; and, that upon Overturffs completion of the contract, the escrow agent would provide the deed to 12Overturff or, in the event of default, would return the deed to the sellers. The contract provided that Overturff was awarded immediate right of possession to the property upon execution of the contract, but that he would not sell, assign, sublet, or otherwise convey his interest in the contract or mortgage or otherwise encumber the property or make any transfer of his equity or rights therein, without written consent of the Reads and Conwells first being obtained.

In September 2005, while Overturff was still making payments on the property, the Reads and Conwells entered into an oil- and-gas lease on the property with Western Land Services, Inc., for an initial period of five years; the lease provided, in part, for a one-sixth royalty payment, a one-time damage payment of $5,000 for each well drilled and $10 per rod for all access roads and/or pipelines constructed on the leased property, as well as possible shut-in royalty payments. Furthermore, the lease provided that it could be extended, at Western’s option, for an additional five years for an extension payment of $250 per acre. The lease was entered into without the consent or knowledge of Over-turff.

Pleadings and Motions

In February 2009, Overturff filed a complaint against the Reads and Conwells, Western Land Services, and Petrohawk Properties, LP.1 In the complaint, Over-turff alleged that he was the contract purchaser of the property; that in 2005, while payment |swas pending, the Reads and Conwells entered into an oil-and-gas lease on the property with Western Land; that the Reads and Conwells received payment for this lease but failed to give him credit toward the purchase of the property; that Western Land knew or should have known of the pending real-estate contract, ignored those contractual obligations, and interfered with the obligations by obtaining the lease and recording it, knowing of the likely consequence of encumbering the title to Overturffs property; and that by executing the oil-and-gas lease and encumbering the property, including limiting damages for drill sites and pipelines, the Reads and Conwells breached the real-estate contract and breached the warranties of the deed. Overturff requested judgment against the defendants, jointly and severally, for interference with his contract rights and warranties contained in the deed, claimed entitlement to an order striking the encumbrance created by the oil-and-gas lease, and alleged that any interest claimed by Petrohawk should be quieted in his favor. Overturff further alleged that the Reads and Conwells breached actual and implied covenants not to encumber or impede the title to his mineral estate, causing him to be damaged by having to receive a reduced royalty rate below the lease rate integrated by the Arkansas Oil and Gas Commission.

The Reads and Conwells filed an answer to Overturffs complaint and a cross-claim against Western Land in March 2009. They alleged in the cross-claim that Western Land represented that it would research the title of each property covered under the lease, determine if it had been subject to any real-estate sales contract previously entered, and |4exclude any property from the lease that was subject to a real-estate contract; that Western Land had a duty to ensure that each property in the lease was not encumbered by a real-estate contract; and that Western Land falsely represented that it had researched the property and determined that it was not encumbered by a real-estate contract, thereby inducing the Reads and Conwells to rely upon those representations in signing the lease.

In its answer, Western Land alleged that it was a bona fide purchaser, that the oil-and-gas lease should be upheld, and that the lease had priority over the real-estate contract alleged in Overturffs complaint. Petrohawk alleged that the lease should be upheld and have priority over Overturffs interest, as it was a bona fide purchaser and its receipt of the assignment of the lease had priority over Over-turffs real-estate contract.

Overturff amended his complaint in May 2009, incorporating all of the allegations and averments of his original complaint and alleging that he suffered further damages in the form of reduced royalties; that the Reads’ and Conwells’ actions of leasing the mineral rights after execution of the escrow contract breached the implied covenants of good faith and fair dealing, which was the proximate cause of Overturffs damages; and that the Reads’ and Con-wells’ leasing of the mineral rights and their conscious disregard for his contractual rights was an intentional interference with Overturffs right to lease his mineral interests by impairing title when it was reasonably foreseeable that their lease would interfere with Overturffs ability to lease the mineral rights. Overturff further alleged that the Reads and Conwells had committed fraud and usury by collecting illegal interest and |snot crediting him with the lease bonuses paid. Overturff provided proof that he paid off the real-estate contract and filed the warranty deed in October 2007 by attaching the recorded deed to his amended complaint. As to Western Land and Petrohawk, Over-turff alleged that he was in actual, open, and notorious possession of the property; that such possession was sufficient to show that Western Land and Petrohawk were not innocent purchasers for value; that Western Land and Petrohawk were made aware and were on notice by both the words and actions of the Reads and Con-wells and Overturffs actual possession of the property; and that the oil-and-gas lease should be declared null and void.

In November 2009, Western Land and Petrohawk filed a counterclaim against Ov-erturff, alleging that at the time the oil- and-gas lease was entered into with the Reads and Conwells, the real-estate contract was not filed of record, and therefore Western Land had no record notice of the real-estate contract; and because there was no actual or record notice, Western Land was a bona fide purchaser, the lease was valid, and the lease had priority over the real-estate contract. The counterclaim further alleged that the real-estate contract was not of record at the time the lease was assigned to Petrohawk, and because there was no actual or record notice, Petrohawk was also a bona fide purchaser.

In January 2010, Western Land and Pe-trohawk filed a cross-claim against the Reads and Conwells, alleging that the oil- and-gas lease provided that the Reads and Conwells warranted and agreed to defend title to the leased property and that the cross-defendants had not yet resolved the title dispute or offered a defense to Western Land and Petrohawk. | ^Western Land and Petrohawk contended that if Overturff prevailed on his claim, the Reads and Con-wells would have breached the warranty of title provision and would be liable to Western Land and Petrohawk for damages.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Overturff v. Read
2014 Ark. App. 473 (Court of Appeals of Arkansas, 2014)

Cite This Page — Counsel Stack

Bluebook (online)
422 S.W.3d 143, 2012 Ark. App. 461, 2012 WL 3854454, 2012 Ark. App. LEXIS 584, Counsel Stack Legal Research, https://law.counselstack.com/opinion/overturff-v-read-arkctapp-2012.