Pistol Res., LLC v. McNeely

312 Or.App. 627

496 P.3d 28

PISTOL RESOURCES, LLC, an Oregon limited liability company, Plaintiff-Respondent,

v.Jody L. MCNEELY, an individual and Ted McNeely, an individual, Defendants-Appellants.

A169420

Court of Appeals of Oregon.

Argued and submitted November 9, 2020.

June 30, 2021

Bruce Cully Moore, Eugene, argued the cause and filed the briefs for appellants.

Sara Kobak, Portland, argued the cause for respondent. Also on the brief were Sara C. Cotton and Schwabe, Williamson & Wyatt, P.C.

Before Armstrong, Presiding Judge, and Tookey, Judge, and Aoyagi, Judge.

TOOKEY, J.

In this case related to forest management, the trial court granted plaintiff, Pistol Resources, LLC (Pistol), declaratory relief relating to an easement agreement about which Pistol and defendants, Jody McNeely and Ted McNeely, were at loggerheads.¹ Pistol and the McNeelys are owners of certain "intermingled forest land" in Curry County, Oregon, and the easement agreement grants each party the right to use the roads on the other's land. As detailed below, the McNeelys purported to terminate the easement agreement due to alleged breaches of that agreement by Pistol.

After a bench trial, the trial court determined that, although Pistol had breached the easement agreement, its breaches were not material, and, therefore, the McNeelys’ purported termination of the easement agreement was ineffective. The trial court also determined that the easement agreement did not require Pistol to "maintain its road or bridge for use by" the McNeelys. The McNeelys appeal the judgment resulting from those determinations.

On appeal, in their first assignment and second assignments of error, we understand the McNeelys to contend that the trial court erred in granting Pistol the declaratory relief that it sought in its complaint. In pressing those assignments, the McNeelys argue that the trial court erred in "concluding that [Pistol's] breaches of the easement were not material" and that the trial court erred in "declaring that the easement did not require [Pistol] to repair" its bridge or roads.

For the reasons that follow, we affirm.²

I. FACTUAL AND PROCEDURAL HISTORY

"In reviewing a trial court's determinations following a bench trial, we review the trial court's explicit and implicit findings of fact for any evidence in the record to support them, and the legal consequences of those facts for legal error." Grimstad v. Knudsen , 283 Or. App. 28, 31, 386 P.3d 649 (2016), rev. den. , 361 Or. 350, 393 P.3d 1181 (2017) (internal quotation marks and brackets omitted). We state the facts in accordance with that standard.

A. The Easement Agreement

In 1981, the McNeelys’ and Pistol's predecessors in interest—Crockett and Agnew, respectively—entered into the easement agreement that is at issue in this case. The recitals in the easement agreement state that the parties to the agreement are "owners of certain intermingled forest lands" in Curry County, Oregon, and that the parties "desire[ ] to obtain the right to use the existing roads and to construct and use roads across lands of the other for forest management purposes and for the purpose of transporting logs and other forest products, agricultural products, and minerals." The recitals further state that the parties "desire to grant, one to the other, such rights, upon and subject to the terms and conditions" stated in the easement agreement.

Section 1 and section 2 of the easement agreement contain granting language effectuating the goal expressed by the parties in the recitals to the easement agreement. Section 1 of the easement agreement provides that

"Agnew does hereby grant and convey to Crockett[ ] the perpetual nonexclusive right, privilege and easement, at Crockett's sole cost, risk and expense , to use, improve and maintain any roads now or hereafter existing, and the perpetual nonexclusive right, privilege and easement to construct new roads for all purposes related to timber or timberlands or mining, including without limitation, timber management, and the removal of forest, agricultural or mineral products upon, over or across [certain land owned by Agnew] in Curry County, Oregon."

(Emphasis added.)

Conversely, section 2 of the easement agreement provides that

"Crockett does hereby grant to Agnew the perpetual nonexclusive right, privilege and easement, at Agnew's sole cost, risk and expense , to use, improve and maintain any roads now or hereafter existing, and the perpetual nonexclusive right, privilege and easement to construct new roads for all purposes related to timber or timberlands or mining, including without limitation, timber management, and the removal of forest, agricultural or mineral products upon, over or across [certain land owned by Crockett] situated in Curry County, Oregon."

(Emphasis added.).

The easement agreement additionally obligates each landowner to pay certain "use fees" for the transportation of forest products or minerals over the land of the other. Specifically, section 3 of the easement agreement states:

"It is understood and agreed that *** no further consideration shall be paid one to the other, other than for the transportation of forest products or minerals other than rock for which either party shall pay the other for the transportation thereof, a use fee based upon the following rate schedule, to-wit:

"$ .30/MBF net Scribner sale for those products sold on a scale basis; "$1.00/load for those hardwoods or other products customarily sold on a weight basis.

"$1.00/load for all minerals other than rock."

Section 3 also requires that all "use fee payments shall be made on the 10th day of each month for products hauled during the previous calendar month" and that "scale tickets or weight receipts [are] to be furnished by the user with such payment."

Section 6 of the easement agreement provides for certain maintenance and repair responsibilities—to wit:

"Except as otherwise expressly provided herein, neither party shall have any obligation to maintain any roads for the benefit of the other. During any periods of road use each user shall maintain the road or roads in condition satisfactory for log hauling, and at the completion of any period of use shall repair all damage to and deterioration of the road caused by the exercise of his rights hereunder, shall clean up and remove all debris and shall leave the roads and ditches clear and generally in a condition as good as that existing at the time of the commencement of such use.

"In the event all or any portion of the road is used by more than one party at the same time, the cost of maintenance on account of such use shall be allocated between the parties in proportion to their respective use as determined by the volume of forest or other products hauled over the road.

"Either party shall have the right to suspend use of any road on his own land when, in his judgment, such action is desirable because of excessive risk of fire or damage to the road surface due to soil conditions, but any such suspension shall apply equally to the party suspending such use."

Finally, the easement agreement contains a termination provision in section 11, which provides:

"In the event either party fails to perform or comply with any provision hereof and such failure continues for thirty (30) days after receipt from the other party of notice in writing specifying such failure and demanding its cure, the non-defaulting party may at his option cancel this Agreement or suspend the defaulting party's rights hereunder until the default is cured in either event without prejudice to any other remedy which may be available under applicable laws."³

B. The McNeelys, Pistol, and the Present Dispute

The McNeelys and Pistol are the current owners of the "intermingled forest land" in Curry County, Oregon, referenced in the easement agreement: the McNeelys taking ownership in 2000 from a third party, Hitner, who took ownership from Crockett, and Pistol taking ownership from its parent company, South Coast Lumber Co., who took ownership of the parcels previously owned by Agnew as a result of two purchases, one in 1989 and one in 1991. A map reflecting the McNeelys’ and Pistol's respective interests was entered into evidence in the trial court and is included as an Appendix to this opinion.

As explained below, the crux of the dispute in this case relates to a bridge crossing the Pistol River which, as reflected in the Appendix, is situated entirely on Pistol's property. The McNeelys historically have used the bridge to access the approximately 400 acres of property that they own north of the Pistol River, as also reflected in the Appendix. The bridge was constructed shortly after Crockett and Agnew entered into the easement agreement.

In 2008, the bridge became impassible for anything other than foot traffic or possibly all-terrain vehicles, and the parties now dispute who is responsible for the repair and maintenance of the bridge under the easement agreement: The McNeelys contend that Pistol is responsible for repair and maintenance of the bridge, while Pistol, for its part, contends it has no such obligation. They also dispute who has the duty to repair certain roads on Pistol's property approaching the bridge from both the north and the south. In their briefing, the McNeelys refer to such roads as the "Subject Roads," which is a nomenclature that we will adopt for the rest of this opinion. The Subject Roads and the bridge had been damaged in part by a lack of maintenance.

The dispute in this case also concerns Pistol's historical failure to pay the use fees and provide the scale tickets or weight receipts required by section 3 of the easement agreement.

In a letter dated April 28, 2016, which was received by Pistol on May 9, 2016, Ms. McNeely informed Pistol that, in the McNeelys’ view, Pistol was in breach of the easement agreement for several reasons. Among those reasons, and as relevant to this appeal, Ms. McNeely contended that Pistol had failed to provide scale tickets and...