Dale Exploration, LLC v. Hiepler

945 N.W.2d 306

DALE EXPLORATION, LLC, Bakken HBT, II LP, Dale Exploration, LP, and Dale Lease Acquisitions, LP, Plaintiffs

v. Orville G. HIEPLER, Florence L. Hiepler, DefendantsandMark Hiepler, as successor trustee of the Orville G. Hiepler and Florence L. Hiepler Family Trust dated January 9, 1997, Defendants and AppellantsandHefner Company, Inc., DefendantandBill L. Seerup and Hurley Oil Properties, Inc., Defendants and Appellees

No. 20190338

Supreme Court of North Dakota.

Filed June 29, 2020

Rehearing Denied July 22, 2020

Jonathan T. Garaas, Fargo, North Dakota, for appellants.

Adam M. Olschlager, Billings, Montana, for appellees.

Tufte, Justice.

[¶1] Mark Hiepler, as the trustee of the Orville G. Hiepler and Florence L. Hiepler Family Trust ("Trust"), appeals from a judgment ordering him to transfer certain Trust property to Bill Seerup and from an order denying his motion to dismiss. Mark Hiepler argues the district court erred in ordering him to convey the property to Seerup because the court did not have jurisdiction to enter a judgment against the Trust, the claims abated upon Orville Hiepler's death, and he could not be substituted as a party for Orville Hiepler. We affirm.

I

[¶2] In 1997, Orville and Florence Hiepler created the "Orville G. Hiepler and Florence L. Hiepler Family Trust Dated January 9, 1997." The Hieplers conveyed most of their mineral interests to themselves as co-trustees of the Trust in September 1997. The conveyance was recorded in March 1998. The Trust was fully revocable. The Hieplers were the grantors, co-trustees, and beneficiaries under the Trust. The trust document gave a settlor the power to add and remove any property from the Trust at any time, without requiring notice to or actions by a trustee.

[¶3] On April 7, 2007, Orville and Florence Hiepler deeded 150 net mineral acres in Williams County to Bill L. Seerup in exchange for $15,609. The mineral deed did not refer to the Trust or Orville and Florence Hiepler's role as co-trustees. When the deed was executed, Orville Hiepler individually owned only 7.3636 mineral acres. The remaining 142.6 mineral acres were owned by the Trust. Nine days after receiving the mineral deed from Orville and Florence Hiepler, Seerup conveyed 135 mineral acres to Hurley Oil Properties, Inc.

[¶4] In 2014, Dale Exploration, LLC, filed suit to quiet title to the 150 net mineral acres conveyed in the mineral deed from Orville and Florence Hiepler to Seerup. Seerup and Hurley Oil also brought a claim for breach of contract against Orville and Florence Hiepler, individually and as co-trustees, requesting specific performance or, alternatively, money damages if specific performance was not ordered.

[¶5] Florence Hiepler died in 2015. After her death, Orville Hiepler amended and restated the Trust to recognize Orville Hiepler as the sole settlor and designate Orville Hiepler and his son, Mark Hiepler, as co-trustees.

[¶6] In 2017, the district court dismissed Dale Exploration's claims on summary judgment, finding there was no evidence that Dale Exploration had an interest in the property. A bench trial was held on the remaining issues. The court found the Hieplers own the mineral interests in fee simple as trustees, not as individuals. The court also found the Hieplers breached the mineral deed to Seerup and the proper remedy was damages, not specific performance. The court awarded damages in the amount of $20,147.96.

[¶7] On appeal, this Court reversed the judgment and remanded for further proceedings. Dale Expl., LLC v. Hiepler , 2018 ND 271, ¶ 23, 920 N.W.2d 750. We said it was clear Seerup and Hurley Oil requested specific performance, and the Hieplers had the burden to prove monetary damages were adequate once Seerup and Hurley Oil showed the inadequacy of damages and pled for specific performance. Id. at ¶¶ 10, 13. We said Orville Hiepler was the settlor of the Trust, he reserved the right to add and remove property from the Trust, he was in a position to remove property from the Trust as an individual, he had constructive notice of what property was included in the Trust when he sold the minerals to Seerup, and therefore the mineral deed is enforceable against Orville Hiepler "as an individual and as settlor of the Trust." Id. at ¶ 21. We reversed the district court judgment and remanded for further proceedings consistent with the opinion. Id. at ¶ 23. The mandate was entered on January 23, 2019.

[¶8] Orville Hiepler died on March 17, 2019, after this Court's judgment and mandate were issued. Before Orville Hiepler's death, Seerup and Hurley Oil filed a proposed order and judgment. On March 21, 2019, Orville Hiepler and Mark Hiepler, as co-trustees, responded, arguing specific performance was impossible, Seerup and Hurley Oil never showed inadequacy of damages, reformation of the deed was impossible, and the pleadings did not adequately assert specific performance.

[¶9] Seerup and Hurley Oil moved to substitute Mark Hiepler, as successor trustee, in place of Orville and Florence Hiepler. The Trust opposed the motion, arguing the judgment was final as to the Trust and there was no pending action against the Trust. Orville and Florence Hiepler's attorney moved to dismiss, arguing neither of their personal representatives had been substituted and the action abated upon their deaths.

[¶10] The district court ordered substitution of Mark Hiepler as successor trustee in place of Orville and Florence Hiepler as trustees. The court granted Seerup and Hurley Oil's claim for specific performance of the mineral deed, and ordered Mark Hiepler to execute a mineral deed conveying the property to Seerup. Judgment was entered and the court denied the motion to dismiss.

II

[¶11] Mark Hiepler argues the district court erred in ordering him to execute a mineral deed conveying the property to Seerup.

A

[¶12] Mark Hiepler argues the district court did not have jurisdiction to alter the final judgment as to the Trust because the Trust's ownership interest was not the subject of the prior appeal, this Court did not reverse the portion of the judgment quieting title to the property in the Trust, and that part of the judgment is final. He also argues this Court remanded for further proceedings to determine whether specific performance was appropriate and Seerup and Hurley Oil failed to plead specific performance and prove the inadequacy of damages. He claims the district court does not have jurisdiction to enter a judgment against the Trust when state law prohibits specific performance to procure the act or consent of any third person.

[¶13] Mark Hiepler's arguments involve the law of the case doctrine and the mandate rule. We have explained the law of the case doctrine and mandate rule:

Generally, the law of the case is defined as the principle that if an appellate court has passed on a legal question and remanded the cause to the court below for further proceedings, the legal question thus determined by the appellate court will not be differently determined on a subsequent appeal in the same case where the facts remain the same. In other words, [t]he law of the case doctrine applies when an appellate court has decided a legal question and remanded to the district court for further proceedings, and [a] party cannot on a second appeal relitigate issues which were resolved by the Court in the first appeal or which would have been resolved had they been properly presented in the first appeal. The mandate rule, a more specific application of law of the case, requires the trial court to follow pronouncements of an appellate court on legal issues in subsequent proceedings of the case and to carry the appellate court's mandate into effect according to its terms.... and we retain the authority to decide whether the district court scrupulously and fully carried out our mandate's terms.

Johnston Land Co., LLC v. Sorenson , 2019 ND 165, ¶ 11, 930 N.W.2d 90 (quoting Viscito v. Christianson , 2016 ND 139, ¶ 7, 881 N.W.2d 633 ).

[¶14] In the prior appeal, we noted the Trust owns the property at issue and Seerup and Hurley Oil requested specific performance as a remedy for their breach of contract claim. Dale Expl. , 2018 ND 271, ¶¶ 3, 10, 920 N.W.2d 750. We reversed the judgment and held: (1) the district court erred by failing to apply the statutory presumption that monetary damages are inadequate for the breach of an agreement to transfer real property; (2) the Hieplers had the burden to prove monetary damages were adequate; (3) the mineral deed was enforceable against Orville Hiepler as an individual and as settlor of the Trust; and (4) the court erred in awarding damages instead of awarding specific performance. Id. at ¶¶ 13, 21-22. We held:

[Orville Hiepler's] ability to remove Trust property by himself, along with his constructive notice of what property was and was not included in the Trust when he sold the mineral rights to Seerup in 2007, makes the Mineral Deed enforceable against Orville Hiepler as an individual and as settlor of the Trust.

The district court erred in finding that Seerup was entitled to $20,147.96 in damages for the breach of the covenant of seizin instead of awarding specific performance. By awarding damages instead of specific performance, the district court failed to apply the N.D.C.C. § 32-04-09 presumption that damages are inadequate to remedy a breach of an agreement to transfer real property. The district court also erred in finding that Orville Hiepler as an individual was not liable for his conveyance of Trust property.... Orville Hiepler was a settlor with the power to remove property, who at least constructively knew what property was owned by him individually and by the Trust. The district court erred in finding that absence of the Hiepler Family Trust name on the Mineral Deed somehow changed the individual power held by Orville Hiepler.

Id. at ¶¶ 21-22. We held the court erred by awarding damages instead of specific performance, and we reversed the judgment...