Laettner v. Joseph Kishiyama & Chaloupka, Holyoke, Snyder, Chaloupka, Hoffmeister & Kishiyama, PC

JOHN LAETTNER, et al., Plaintiffs, v. JOSEPH KISHIYAMA and CHALOUPKA, HOLYOKE, SNYDER, CHALOUPKA,HOFFMEISTER & KISHIYAMA, PC LLO, Defendants.

4:15-CV-3123

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA

March 29, 2017

MEMORANDUM AND ORDER

Nebraska's dormant mineral statutes, Neb. Rev. Stat. § 57-228 et seq., provide that a severed mineral interest shall be considered abandoned if, for a period of 23 years, its "right of ownership" is not publicly exercised by its record owner. Ricks v. Vap, 784 N.W.2d 432, 433 (Neb. 2010). If a severed mineral interest is abandoned, the owner of the surface estate can sue to terminate the mineral interest. Id.

The issue in this legal malpractice case is whether the plaintiffs would have succeeded in their state court appeal from a state trial court order declaring that their mineral interests had been abandoned. The Court finds that had the defendants properly appealed, the Nebraska appellate courts would have affirmed the trial court's order. Accordingly, the Court will dismiss the plaintiffs' complaint.

BACKGROUND

The plaintiffs in this case are the various heirs of Charles Williams, Sr. and Laverne Davison, who in life had owned mineral interests in certain Sioux County, Nebraska real estate. Filing 39 at 4-5.¹ One of the plaintiffs, Donald Williams, inherited his mineral interests directly from Charles Sr. and Davison—his parents—at their deaths, in 1938 and 1981 respectively.Filing 39 at 5. The other plaintiffs inherited through Donald's sister, Ila Mullenix, who had inherited from her parents in 1938 and 1981, but died in 2005. Filing 39 at 4-5.

In 2011, Gale Henry filed a state court complaint against Donald, Ila, and several other individuals, to have their mineral interests declared abandoned. Filing 38-8 at 2-4. (Ila was deceased by that time, but for reasons that will become clear below, Gale didn't know that.) Donald answered, and the remaining plaintiffs in this case—Ila's heirs—intervened. Filing 38-8 at 6-9. The matter progressed to a bench trial. Filing 38-3 at 42. The plaintiffs were represented by the defendants in the instant case: Joseph Kishiyama and his law firm of Chaloupka, Holyoke, Snyder, Chaloupka, Hoffmeister & Kishiyama. Filing 38-3 at 42; filing 39 at 5. The state trial court found that the plaintiffs' mineral interests had been abandoned. Filing 39 at 5.

Specifically, the trial court rejected the plaintiffs' argument that Henry could not pursue a claim to terminate the severed mineral interests to the property because he only held a life estate in the property. Filing 38-5 at 44. The trial court reasoned that the holder of a life estate is still an "owner . . . of the surface of real estate" within the meaning of § 57-228. Filing 38-5 at 44-45. The trial court also found that Henry was not required to join all the other surface owners to bring the claim, because § 57-228 specifically permits the surface interest owner to prosecute a claim "on behalf of himself and any other owners of such interest in the surface . . . ." Filing 38-5 at 45. The trial court found that Ila's heirs were not "record owners" of the mineral interests because no recorded instrument identified them as such, so they could not—and had not—publicly exercised ownership of the mineral interests so as to prevent abandonment. Filing 38-5 at 47-49. And the trial court found that while Donald was a record owner, he had not publicly exercised his rights either. Filing 38-5 at 49.

Kishiyama and his firm timely appealed on the plaintiffs' behalf, but the appellate transcript they ordered did not include a default judgment that had been entered against other mineral interest owners who had not answered Henry's complaint. Filing 39 at 5-6. It appeared to the Nebraska Court of Appeals that the trial court had not ruled on all the claims against all the parties, so the Court of Appeals entered an order to show cause why the appeal should not be dismissed for lack of a final, appealable order. Filing 38-7 at 1; filing 39 at 6. Kishiyama did not respond to the show cause order. Filing 39 at 6. So, the Court of Appeals dismissed the appeal in November 2013. Filing 39 at 6. Kishiyama attempted to perfect another appeal in August 2015, but his attempts were rebuffed by both the trial court and the Court of Appeals. Filing 39 at 6; see filing 38-10 at 4-16.

In the instant case, the plaintiffs are suing Kishiyama and his former law firm under Nebraska law for legal malpractice—specifically, negligence in failing to perfect their appeal from the trial court's judgment. Filing 1. In Nebraska civil legal malpractice actions, a plaintiff alleging attorney negligence must prove three elements: (1) the attorney's employment, (2) the attorney's neglect of a reasonable duty, and (3) that such negligence resulted in and was the proximate cause of loss (damages) to the client. New Tek Mfg., Inc. v. Beehner, 702 N.W.2d 336, 346 (Neb. 2005). In such an action, the plaintiff must show that he or she would have been successful in the underlying action but for the attorney's negligence. Id.

The parties have cross-moved for summary judgment as to liability, asking the Court to determine as a matter of law whether the plaintiffs would have been successful in the underlying state court appeal.²

STANDARD OF REVIEW

Summary judgment is proper if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). The movant bears the initial responsibility of informing the Court of the basis for the motion, and must identify those portions of the record which the movant believes demonstrate the absence of a genuine issue of material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does so, the nonmovant must respond by submitting evidentiary materials that set out specific facts showing that there is a genuine issue for trial. Id.

On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts. Id. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the evidence are jury functions, not those of a judge. Id. But the nonmovant must do more than simply show that there is some metaphysical doubt as to the material facts. Id. In order to show that disputed facts are material, the party opposing summary judgment must cite to the relevant substantive law in identifying facts that might affect the outcome of the suit. Quinn v. St. Louis County, 653 F.3d 745, 751 (8th Cir. 2011). The mere existence of a scintilla of evidence in support of the nonmovant's position will be insufficient; there must be evidence on which the jury could conceivably find for the nonmovant. Barber v. C1 Truck Driver Training, LLC, 656 F.3d 782, 791-92 (8th Cir. 2011). Where the record takenas a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Torgerson, 643 F.3d at 1042.

DISCUSSION

The plaintiffs argue that they would have been successful on appeal by asserting six assignments of error:

Error 1: The Trial Court Decided the Case Without Jurisdiction Because the Underlying Plaintiff Lacked Standing to Sue.

Error 2: The Trial Court Decided the Case Without All Necessary Parties Present. This was a Jurisdictional Flaw.

Error 3: The District Court Failed to Appreciate [Ila's heirs] Had 23 Years from Their Mother's Death to Act.

Error 4: The District Court Erred When It Failed to Recognize that the Interests of [Donald] Acquired before 1968 Were Not Subject to the Abandoned Mineral Interests Statute Enacted In 1967.

Error 5: The District Court Erred When It Failed to Recognize that the Interests [Ila] Acquired Before 1968 Were Not Subject to the Abandoned Mineral Interests Statute Enacted In 1967.

Error 6: Neb Rev Stat § 57-229 Derogates the Common Law. The District Court Erred in When It Failed to Strictly Construe the Statute.

Filing 39 at 4. The Court will consider each of the plaintiffs' assignments of error in turn.

STANDING

The plaintiffs' standing argument is essentially a recasting of their argument to the trial court that Henry, seised of a life estate, could not bring an action under the dormant mineral statutes.

Section 57-228 provides that "[a]ny owner or owners of the surface of real estate from which a mineral interest has been severed, on behalf of himself and any other owners of such interest in the surface, may sue" to have a severed mineral interest terminated. The plaintiffs' first argument is that the owner of a life estate does not have a surface interest "from which a mineral interest has been severed." Filing 39 at 17. This, the plaintiffs say, is because "[t]he mere owner of a life estate, with no remainder interest, is the owner of a severed interest himself—the life estate being severed from theremainder interest" and "fee title to mineral interests cannot merge in a fractional life estate interest in surface rights." Filing 39 at 17.

This is, to start with, too narrow a view of a life estate: it is well-established that a life estate can include mineral interests. See, Weekley v. Weekley, 27 S.E.2d 591, 593 (W. Va. 1943); In re Estate of Womack, 372 P.3d 690, 694 (Utah Ct. App. 2016) (collecting authorities). But more fundamentally, the Court is unpersuaded that the doctrine of merger of estate somehow precludes application of the dormant mineral statutes.

The doctrine of merger's general rule is that where two unequal estates vest in the same person at the same time without an intervening estate, the smaller is merged into the greater. Landmark Enters., Inc. v. M.I. Harrisburg Assocs., 554 N.W.2d 119, 124 (Neb. 1996). The plaintiffs argue that because the mineral interest is the "greater" interest for these purposes—a fee simple estate—it cannot merge into the "lesser"...