Colorado Supreme Court Grants Petition in Mineral Interest Case

A large building made of concrete has multiple windows and large columns at the front. Near the front entrance, a sign reads “Colorado Supreme Court” and “Colorado Court of Appeals.”
The Colorado Supreme Court granted a petition for a writ of certiorari March 20 in a case connected to mineral interests. / Law Week file.

The Colorado Supreme Court granted a petition for writ of certiorari March 20 in a case connected to the common law centerline presumption and mineral interests. 

Under the presumption, it provides when grantors convey land abutting a right-of-way, they intend to convey the title to the center of it, unless a conveyance reveals a contrary intent.

According to a Colorado Court of Appeals opinion from 2022, in this quiet title action plaintiff Great Northern Properties, LLLP and defendant Extraction Oil and Gas, Inc. asked that the court resolve an issue of first impression: “Does the centerline presumption apply to convey the mineral interests beneath a dedicated right-of-way to the owners of abutting parcels?”

In February 1974, a real estate developer owned some land in Greeley and at some point, it divided the property into lots. Later that month, the developer dedicated a right-of-way across the land to Greely with the city accepting. The right-of-way became West 11th Street Road.

In March 1974, the developer conveyed two parcels of land that abutted 11th Street to two different grantees. The deeds didn’t reference 11th Street and didn’t expressly reserve to the developer any mineral interests. 

In 1975, the developer conveyed a third parcel of land that abutted 11th Street. This deed referenced 11th Street and didn’t expressly reserve to the developer any mineral interests. Once the developer conveyed the third parcel, it didn’t have any more property adjacent to 11th Street. 

About 40 years later, the developer conveyed whatever interest it had in minerals below 11th Street to GNP. GNP brought a Colorado Rules of Civil Procedure 105 action to quiet title to the mineral estate under a relevant section of 11th Street. As the appeals court understood the record, Extraction has oil and gas leases from the owners of all parcels abutting the relevant portion of 11th Street and from GNP.

Extraction, according to the court of appeals, is entitled to drill and produce oil and gas beneath the relevant portion of 11th Street regardless of who owns the mineral estate, but the ownership would dictate who Extraction pays royalties.

In May 2019, Extraction filed a motion under C.R.C.P. 56(h) and argued when applying the centerline presumption, the owners of the parcels abutting 11th Street, own the mineral rights beneath the street to the centerline of the road. The district court granted the motion, ruling the developer conveyed the mineral estate to the centerline of the roadway if the abutting lot owners carry their burden of proving the conditions it discerned from the 2013 Colorado Supreme Court ruling in Asmussen.

Despite the ruling, GNP filed a motion for summary judgment that asked the district court to enter a final judgment decreeing it owns the mineral interests below the relevant portion of 11th Street. The lower court denied the motion and entered final judgment quieting the title to the disputed mineral interests in the two landowner defendants that participated in the proceeding.

On appeal, GNP contended the district court erred by applying the centerline presumption to conclude a deed conveying a grantor’s interest in property adjacent to a right-of-way also conveyed any interest the grantor could have in the mineral estate beneath and to the center of the right-of-way. 

After applying property law principles, the appeals court concluded when the centerline presumption applied, it applied to all interests a grantor has in the property that underlies a right-of-way, including the mineral interests. The appeals court affirmed the lower court’s C.R.C.P. 56(h) determination of the law and that part of its final judgment denying GNP’s quiet title claim.

The appeals court further concluded the judgment quieted the title to mineral interests beyond those claimed by the two landowner defendants that participated in the proceeding, it reversed the judgment and remanded the case to the district court with directions to correct a decree quieting title and dismissed the case concerning the remaining defendants.

The questions being asked before the Colorado Supreme Court could be whether a deed that described land next to a dedicated right-of-way, but does not purport to convey any interest in the right-of-way, should be presumed to convey the mineral estate underneath it. 

Another question that could be asked before the state high court is whether the Colorado Court of Appeals erred in determining the centerline presumption doesn’t apply if the grantor retained ownership of any property abutting the right-of-way.

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