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Great Northern Properties v. Extraction Oil and Gas.

2022 COA 110. No. 21CA0700. Quiet Title—Conveyances—Centerline Presumption—Mineral Estates.

September 15, 2022

A real estate developer owned a parcel of land in fee simple absolute and later subdivided the property into individual lots. In 1974, the developer dedicated a right-of-way across its land to the City of Greeley, which became West 11th Street Road (11th Street). Shortly thereafter, the developer conveyed two parcels of land abutting 11th Street to two different grantees. The deeds conveying these parcels do not expressly reserve to the developer any mineral interests. The developer later conveyed a third parcel of land abutting 11th Street by a deed that also does not expressly reserve any mineral interests. Once the developer conveyed the third parcel, it no longer owned any property adjacent to 11th Street.

More than 40 years later, the developer conveyed whatever interest it had in the minerals beneath 11th Street to Great Northern Properties, LLLP (GNP). The same month, GNP brought a CRCP 105 action to quiet title to the mineral estate under the relevant section of 11th Street. Extraction Oil and Gas, Inc. (Extraction) has oil and gas leases from the owners of all parcels abutting the relevant section of 11th Street and from GNP and is therefore entitled to drill and produce oil and gas from beneath the relevant portion of 11th Street regardless of who owns the mineral estate, but ownership dictates to whom Extraction must pay royalties. In 2019, Extraction filed a motion for determination of a question of law pursuant to CRCP 56(h), arguing that the centerline presumption applied and the owners of the parcels abutting 11th Street own the mineral rights beneath 11th Street to the road’s centerline. The district court granted the motion. GNP moved for summary judgment, asking the court to enter a final judgment decreeing that it owns the mineral interests beneath the relevant portion of 11th Street. The court denied the motion and entered final judgment quieting title to the disputed mineral interests in the two landowner defendants that had participated in the proceeding.

On  appeal, GNP argued that the district court erred by applying the centerline presumption to conclude that a deed conveying a grantor’s interest in property adjacent to a right-of-way also conveys any interest the grantor may have in the mineral estate beneath and to the center of the right-of-way. The centerline presumption is a common law rule of conveyance providing that “a conveyance of land abutting a road or highway is presumed to carry title to the center of that roadway to the extent the grantor has an interest therein, unless a contrary intent appears on the face of the conveyance.” The centerline presumption applies only when (1) the grantor conveys ownership of a parcel of land abutting a right-of-way; (2) at the time of conveyance, the grantor owned the fee underlying the right-of-way; (3) the grantor conveys all property it owns abutting the right-of-way; and (4) the conveyance evidences no contrary intent. The centerline presumption can apply to convey mineral interests beneath a right-of-way to abutting property when these conditions have been satisfied. In an action to quiet title, the person claiming title to property under the centerline presumption must prove their ownership and must be able to trace title back to the owner of the fee underlying the right-of-way. Therefore, the district court correctly determined that all conditions of the centerline presumption were met in this case, such that title to the mineral interests beneath 11th Street passed to the owners of the abutting property.

GNP also contended that the district court erred in entering its decree quieting title by (1) not quieting title to the mineral estate beneath 11th Street in GNP and (2) quieting title to the entire mineral estate in the two landowner defendants that had participated in the proceedings. Because the district court correctly applied the centerline presumption to hold that the mineral interests beneath 11th Street passed to the owners of abutting property, the court did not err by refusing to quiet title to the mineral estate beneath 11th Street in GNP. However, several landowner defendants defaulted or disclaimed any interest in the subject property, and only two answered the complaint and participated in the proceedings. The district court quieted title to the entire mineral estate beneath the relevant section of the right-of-way in these two entities, but a court cannot quiet title in favor of a defaulting or disclaiming party, even where evidence presented by an appearing party supports the defaulting party’s title interests. Accordingly, the district court erred.

The order determining a question of law was affirmed. The final judgment and decree quieting title were reversed and the case was remanded with instructions to enter a new decree quieting title only to the mineral interests owned by the participating landowner defendants and dismissing the case as to all other parcels and defendants.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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