Stone v. Stone

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NOT DESIGNATED FOR PUBLICATION

No. 120,519

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

PHYLLIS J. STONE,
Appellee,

v.

BILLY D. STONE; and ELNORA A. STONE REVOCABLE TRUST NO. 1,
Appellants,

and

O'BRATE REALTY, L.L.C.; WHEATLAND ELECTRIC COOPERATIVE, INC.; et al.,
Defendants.


MEMORANDUM OPINION

Appeal from Finney District Court; MICHAEL L. QUINT, judge. Opinion filed September 20,
2019. Affirmed.

Michael K. Ramsey, of Hope, Mills, Bolin, Collins & Ramsey, of Garden City, for appellants.

Jacob M. Cunningham and Randall D. Grisell, of Doering, Grisell & Cunningham, P.A., of
Garden City, for appellee.

Before POWELL, P.J., GARDNER, J., and LAHEY, S.J.

PER CURIAM: Billy D. Stone and Phyllis J. Stone were bequeathed various real
estate, surface rights, and mineral interests upon the death of Billy's father, Arthur. Billy
and Phyllis subsequently divorced and entered into a property settlement agreement
purporting to resolve their interests in their properties. A dispute arose as to the nature
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and extent of Phyllis' interest in the mineral rights from Arthur's estate, prompting her to
file a quiet title action to resolve the dispute. Ultimately, the district court granted Phyllis
summary judgment, holding that according to the divorce property settlement agreement,
Phyllis had received a one-half interest in the mineral interests bequeathed by Arthur's
estate; quieted title to her in these interests; and ordered an accounting of any royalties
paid. Billy now appeals, arguing the language of their property settlement agreement
clearly and unambiguously assigned such mineral interests to him. Alternatively, Billy
also contends that if the language of the property settlement agreement is ambiguous,
there exists a genuine issue of material fact as to the intent of the parties. Finally, Billy
argues Phyllis failed to describe her mineral interests in the case below. For the reasons
we more fully explain below, we affirm the district court's grant of summary judgment in
favor of Phyllis.

FACTUAL AND PROCEDURAL BACKGROUND

Billy and Phyllis married in 1964. Billy is the son of Arthur and Elnora Stone.
Arthur, who died in 1991, owned real estate, surface rights, and mineral interests in
Finney County, and his will bequeathed his real property and mineral interests to Billy
and Phyllis, subject to Elnora's life estate. Arthur's estate was settled in 1994, following
the express provisions of Arthur's will.

Billy filed for divorce from Phyllis a year later. Through their attorneys, Billy and
Phyllis negotiated and finalized a property settlement agreement. The journal entry of
divorce incorporates their agreement.

Elnora died in 2013. Her transfer on death deed conveyed her oil, gas, and other
mineral interests to the Elnora A. Stone Revocable Trust No. 1 (the Trust). That same
year, Billy conveyed some of his mineral interests to Tom Willis, and Willis later
conveyed those interests to O'Brate Realty.
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In 2014, Phyllis petitioned the district court to quiet title to the mineral interests
she received from Arthur's estate. Phyllis alleged Billy, the Trust, and O'Brate Realty had
adverse interests in those mineral interests. Phyllis asked the district court to impose a
constructive trust and order an accounting for all royalties paid after Elnora's death. Billy
answered and denied Phyllis had any claims to the mineral interests. He argued the
property settlement agreement from their divorce granted him all of the mineral interests
from Arthur's estate. O'Brate Realty and the Trust also answered Phyllis' petition.

Phyllis later moved for summary judgment, claiming the property settlement
agreement granted her a fractional mineral interest. To support her claim, Phyllis
submitted Arthur's will, the journal entry for Arthur's estate, a draft property settlement
agreement from the divorce, letters from the divorce attorneys, an affidavit from her
divorce attorney, and filed copies of the property settlement agreement and journal entry
of divorce.

Billy opposed Phyllis' motion and attached his own affidavit, several deeds
transferring property from Arthur and Elnora to Billy and Phyllis, an affidavit of mineral
ownership, and a quitclaim deed from Phyllis to Billy. Billy argued the property
settlement agreement granted him all of the mineral interests and that the parties had
intended for Phyllis to retain only surface rights to the land she inherited from Arthur's
estate. Billy claimed Phyllis' subsequent conduct showed this intent because she later
signed a quitclaim deed to Billy transferring some mineral interests to him.

The district court granted Phyllis' motion for summary judgment without
providing any findings of fact. Billy objected to the district court's order, claiming the
court made insufficient findings of fact, moved for additional findings, and sought to alter
or amend the judgment. The district court denied his request to amend the judgment but
granted the request for sufficient findings of fact, in part because Phyllis agreed to the
request.
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The district court made several findings of facts. It found the first property
settlement agreement lacked a provision that Phyllis would retain all of her interest in
Arthur's estate. Based on the letter from Billy's divorce attorney and an affidavit from
Phyllis' divorce attorney, the district court determined that Billy told his attorney to revise
the property settlement agreement. The district court also found that the property
settlement agreement was revised to reflect that Phyllis retained her mineral interests in
Arthur's estate.

The district court also made additional conclusions of law. The district court ruled
that Phyllis owned fractional mineral interests because of the will, the journal entry of
final settlement in Arthur's estate, the journal entry of divorce, and the property
settlement agreement. The district court held: "There is nothing in the Property
Settlement Agreement which set aside to Billy Stone, Phyllis Stone's mineral interests
from [Arthur's estate], as those mineral interests are described in Paragraphs 15 and 39 of
[Phyllis'] Petition." The district court concluded Billy only conveyed a one-half mineral
interest to Tom Willis, who in turn conveyed a one-half mineral interest to O'Brate
Realty.

Billy timely appeals.

I. THE DISTRICT COURT DID NOT ERR IN GRANTING SUMMARY JUDGMENT TO
PHYLLIS STONE.

First, Billy argues the district court erred in granting summary judgment because it
misinterpreted the parties' divorce property settlement agreement. The interpretation of a
written instrument, like the property settlement agreement and journal entry of divorce
here, is a matter of law subject to unlimited review. See In re Estate of Einsel, 304 Kan.
567, 579, 374 P.3d 612 (2016). We are not bound by the lower court's interpretation of
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written instruments. Prairie Land Elec. Co-op v. Kansas Elec. Power Co-op, 299 Kan.
360, 366, 323 P.3d 1270 (2014).

"'The primary rule for interpreting written contracts is to ascertain the parties'
intent. If the terms of the contract are clear, the intent of the parties is to be determined
from the language of the contract without applying rules of construction.' [Citations
omitted.]" Stechschulte v. Jennings, 297 Kan. 2, 15, 298 P.3d 1083 (2013).

"'"[I]nterpretation of a contractual provision should not be reached merely by isolating
one particular sentence or provision, but by construing and considering the entire
instrument from its four corners. The law favors reasonable interpretations, and results
which vitiate the purpose of the terms of the agreement to an absurdity should be
avoided." [Citations omitted.]'" Waste Connections of Kansas, Inc. v. Ritchie Corp., 296
Kan. 943, 963, 298 P.3d 250 (2013).

If, however, the court finds a written contract's language to be ambiguous, the court may
consider extrinsic or parol evidence to interpret the contract. 296 Kan. at 963.

"A written instrument is ambiguous when the application of rules of interpretation to the
[document] fails to ascertain which one of two or more meanings is conveyed by the
parties' words. Where ambiguity or uncertainty is involved, the parties' intentions are
ascertained by considering the language employed, the circumstances existing when the
agreement was made, the object sought, and other circumstances tending to clarify the
parties' real intentions. [Citations omitted.]" Byers v. Snyder, 44 Kan. App. 2d 380, 386,
237 P.3d 1258 (2010), rev. denied 292 Kan. 964 (2011).

Billy argues the district court erred in relying on evidence outside the property
settlement agreement. He claims the district court never determined whether the
agreement was ambiguous. Billy is correct that the district court failed to explicitly find
the property settlement agreement ambiguous, but the district court implicitly did so
because it relied on Arthur's will and the journal entry in Arthur's estate to determine the
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parties' intent. This failure is of no consequence, however, because we find the property
settlement agreement is ambiguous.

A. Paragraphs 1.i. and 2.a. of the Property Settlement Agreement Are
Ambiguous.

The property settlement agreement provides, in relevant part, that:

"1. i. The Respondent [Phyllis] will retain all of her interest in the Estate of F.A.
Stone, District Court Finney County, Case No. 91-P-48.

"2. The Petitioner [Billy] shall have as his sole and separate property, free and clear
of any right, title or interest on the part of the Respondent, the following:

a. All of the remaining personal and real property of the parties including, but
not limited to, all interest in Stone Acres, Inc.; all of the Petitioner's [Billy's]
interest in the Estate of F.A. Stone, District Court Finney County, Case No. 91-P-
48; all minerals including, but not limited to, oil and gas and production thereof;
and all other realty and personalty of every type and character whatsoever and
not specifically set over to the Respondent [Phyllis] in the above paragraph."

Billy and Phyllis' property settlement agreement makes no other provisions
concerning any real property interests. It also includes no other descriptions of real
property, mineral interests, or royalties. The parties' journal entry of divorce incorporates
their property settlement agreement but provides no other property division. The
language quoted above is the complete writing of how the parties intended to divide the
mineral interests. We read the writing as incomplete because when read together, the
above provisions do not convey only one reasonable interpretation of how Billy and
Phyllis intended to divide the mineral interests. See Byers, 44 Kan. App. 2d at 386. When
read as a whole, paragraphs 1.i. and 2.a. of the property settlement agreement are
ambiguous for reasons explored below.
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Billy contends there is only one reasonable interpretation because "all minerals
including, but not limited to, oil and gas and production thereof" in paragraph 2.a. is not
ambiguous. According to Billy, he keeps all of the mineral interests both he and Phyllis
received from Arthur's estate. However, we cannot interpret their agreement by reading
paragraph 2.a. alone. Instead, we must read it with paragraph 1.i. See Waste Connections,
296 Kan. at 963.

Under paragraph 1.i., the parties intended Phyllis to "retain all of her interest in
the Estate of F.A. Stone, District Court Finney County, Case No. 91-P-48." Under
paragraph 2.a., the parties intended for Billy to keep

"[a]ll of the remaining personal and real property of the parties including, but not
limited to all interest in Stone Acres, Inc.; all of [Billy's] interest in the Estate of F.A.
Stone, District Court Finney County, Case No. 91-P-48; all minerals including, but not
limited to, oil and gas and production thereof; and all other realty and personalty of every
type and character whatsoever and not specifically set over to the Respondent in the
above paragraph."

When reading paragraph 1.i. and paragraph 2.a. together, Billy argues there is no
conflict because of one rule of contract interpretation—specific language or phrases
control over general language or phrases. "'[S]pecific provisions express more exactly
what parties intend than broad or general clauses which do not necessarily indicate that
the parties had the particular matter in thought.' 184 Kan. at 779." Colburn v. Parker &
Parsley Dev. Co., 17 Kan. App. 2d 638, 649, 842 P.2d 321 (1992). Billy contends the
term "minerals" in paragraph 2.a. is specific language controlling over Phyllis' "interest"
in paragraph 1.i. While Billy correctly provides the rule, he offers too narrow of a reading
of the two paragraphs.

Cases addressing whether a specific provision controls a general provision do so
by comparing all of the language in the different provisions, not by viewing single words
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out of context. See, e.g., Smith v. Russ, 184 Kan. 773, 779, 339 P.2d 286 (1959) (finding
option paragraphs allowing for renewal if certain conditions met controlled over general
sentence excluding renewal of lease); Exchange State Bank v. Kansas Bankers Surety
Co., 39 Kan. App. 2d 232, 240-41, 177 P.3d 1284 (determining exclusions of coverage
paragraph controlled over general introductory sentence in insurance policy), rev. denied
286 Kan. 1177 (2008); Colburn, 17 Kan. App. 2d at 649 (noting paragraph governing
specific pricing controlled general language of subordination clause of saltwater disposal
agreement). Billy's narrow reading of "minerals" as more specific than "interest" ignores
the plain language in paragraph 1.i. that grants Phyllis "all of her interest."

A complete reading of paragraph 1.i. suggests a conflict between Phyllis retaining
"all of her interest" in Arthur's estate with Billy's right to retain "all minerals" in
paragraph 2.a. However, we cannot determine the extent of the conflict between these
paragraphs without first resolving the ambiguity of the parties' interests in Arthur's estate.

Billy contends there is no ambiguity here. He claims Phyllis inherited "mineral
interests and substantial surface land interests" from Arthur's estate, and they intended for
Phyllis to keep the surface interests but lose mineral interests. The four corners of the
property settlement agreement are silent about any surface land interests inherited by
Phyllis or Billy. Similarly, the agreement does not explain whether Phyllis or Billy
received any mineral interests from Arthur's estate. Based only on the agreement's
language, no reader can determine whether "all minerals" in paragraph 2.a. is intended to
modify some mineral interests Phyllis may have inherited. The agreement's ambiguity
requires us to examine the parol evidence in the record to resolve what interests the
parties received from Arthur's estate. See Waste Connections of Kansas, Inc., 296 Kan. at
963.

Looking at the estate documents—the will and the journal entry in Arthur's
probate estate case—Arthur bequeathed Elnora a life estate to surface rights of 8 parcels
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of land, mineral interests to 12 parcels, and the residue of his estate. Arthur bequeathed
Billy and Phyllis the remainder interest in equal, undivided shares. The parties' property
settlement agreement provides:

"1. i. [Phyllis] will retain all of her [remainder interest in the surface rights,
mineral interests, and residue of Arthur's estate, in equal undivided shares].

"2. [Billy] shall have as his sole and separate property, free and clear of any
right, title or interest on the part of [Phyllis], the following:

a. All of the remaining personal and real property of the parties
including, but not limited to, all interest in Stone Acres, Inc.; all of [Billy's
remainder interest in the surface rights, mineral interests, and residue of Arthur's
estate, in equal undivided shares]; all minerals including, but not limited to, oil
and gas and production thereof; and all other realty and personalty of every type
and character whatsoever and not specifically set over to [Phyllis] in the above
paragraph."

When reading this language in concert with the will and journal entry from
Arthur's estate, paragraph 1.i. conflicts with paragraph 2.a. Paragraph 1.i. allows Phyllis
to retain all of her mineral interests from Arthur's estate, but paragraph 2.a. grants Billy
"all minerals." Because of this conflict between paragraphs 1.i. and 2.a., Phyllis correctly
argues we must look outside the property settlement agreement at additional extrinsic
evidence. See Waste Connections of Kansas, Inc., 296 Kan. at 963.

However, before we determine what additional evidence we should consider, we
must first address whether Billy presented a genuine issue of material fact to preclude
summary judgment.

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B. Billy Presented No Genuine Issue of Material Facts About the Mineral
Rights from Arthur's Estate.

When Billy opposed Phyllis' request for summary judgment, he included his own
affidavit, several deeds transferring property, an affidavit of mineral ownership, and a
quitclaim deed from Phyllis to Billy. Billy claims these documents show he and Phyllis
intended for Phyllis to receive only surface rights from the property settlement
agreement. In other words, he argues those documents create a genuine issue of material
fact precluding summary judgment.

The standard of review for summary judgment is well known.

"'"Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law. The trial court is required to resolve all facts and inferences which may
reasonably be drawn from the evidence in favor of the party against whom the ruling is
sought. When opposing a motion for summary judgment, an adverse party must come
forward with evidence to establish a dispute as to a material fact. In order to preclude
summary judgment, the facts subject to the dispute must be material to the conclusive
issues in the case. On appeal, we apply the same rules and when we find reasonable
minds could differ as to the conclusions drawn from the evidence, summary judgment
must be denied."' [Citation omitted.]" Patterson v. Cowley County, Kansas, 307 Kan.
616, 621, 413 P.3d 432 (2018).

A genuine issue of material fact

"has legal controlling force as to the controlling issue. A disputed question of fact which
is immaterial to the issue does not preclude summary judgment. In other words, if the
disputed fact, however resolved, could not affect the judgment, it does not present a
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'genuine issue' for purposes of summary judgment." Sanchez v. U.S.D. No. 469, 50 Kan.
App. 2d 1185, 1192, 339 P.3d 399 (2014), rev. denied 302 Kan. 1011 (2015).

See Northern Natural Gas Co. v. ONEOK Field Services Co., 296 Kan. 906, 934, 296
P.3d 1106, cert. denied 571 U.S. 826 (2013).

According to Billy's affidavit and the deeds he provided, Arthur and Elnora gifted
several tracts of land to Billy and Phyllis. Later, Arthur, Elnora, Billy, and Phyllis agreed
that only the surface rights were transferred, not the mineral interests. Arthur, Elnora,
Billy, and Phyllis signed an affidavit of mineral ownership that supports this claim. These
events occurred several years before the divorce.

Four years after the divorce, Phyllis signed a quitclaim deed. The deed notes that
"[Phyllis], in consideration of 'divorce settlement, Case No. 95-D-54, Finney County
District Court', does by these presents convey and quitclaim, unto [Billy]" the gifted
property "subject however, to the lien granted to [Phyllis] in said Case No. 95-D-54."

Billy claims these subsequent actions present a genuine issue of material fact.
According to Billy, his affidavit and the quitclaim deed cast doubt on Phyllis' intent to
retain the minerals she inherited from Arthur's estate. We are unpersuaded by Billy's
argument because Billy's affidavit, the deeds from Arthur and Elnora to Billy and Phyllis,
the affidavit of mineral ownership, and the quitclaim deed address the gifted property, not
the property bequeathed from Arthur's estate. After the divorce, Phyllis granted her right
to the gifted property to Billy. But this transaction does not speak to whether Phyllis'
inherited property was to be transferred by paragraph 2.a. of the property settlement
agreement or whether she was to retain it as expressly provided in paragraph 1.i. Billy
presented no facts showing how this subsequent transaction demonstrates that the parties
intended for Phyllis to transfer away her mineral interests from the estate. Because Billy's
documents are irrelevant to the question at issue, they fail to create a genuine issue of
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material fact. See Northern Natural Gas Co., 296 Kan. at 934. Accordingly, we decline to
use Billy's documents to resolve the ambiguity in the property settlement agreement.

C. The Property Settlement Agreement Grants Phyllis the Right to Mineral
Interests from Arthur's Estate.

When Phyllis moved for summary judgment, she included letters from the divorce
attorneys, an affidavit from her divorce attorney, and a draft copy of the property
settlement agreement. Phyllis argues these documents show the parties intended for
Phyllis to keep all of her mineral interests from Arthur's estate.

During the divorce, Billy's attorney sent a copy of the property settlement
agreement to Phyllis' attorney. In the accompanying letter, Billy's attorney explained
Billy had visited with him because "Phyllis was concerned that the [property settlement]
agreement did not allow her to retain her interest in the Estate of F.A. Stone. That interest
is retained on her behalf in paragraph 1.h."

In response, Phyllis' attorney wrote back to Billy's attorney, explaining:

"I enclose herewith a redrafted Property Settlement Agreement. You will note the
changes as follows:

"At paragraph 1. f, we have clarified the amount and when it is to be paid.

"At Paragraph 1. h, we have secured the payments both before and after death.

"At paragraph 2. a, we have changed the language concerning the interest in the
Arthur Stone Estate because it was in conflict with the provision which preserves to
[Phyllis] all of her interest in the estate."

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Phyllis included a draft property settlement agreement in her motion for summary
judgment. It is unclear if this document is the agreement mentioned by Billy's divorce
attorney or Phyllis' divorce attorney. The draft filed with the district court is missing the
page that includes paragraph 1—the provision for Phyllis' property rights. It is also
unclear if there were any other modifications or negotiations. Even so, the draft version
of paragraph 2.a. differs from the final version because it provides to Billy:

"All of the remaining personal and real property of the parties including, but not
limited to, all interest in Stone Acres, Inc.; all real estate and other assets received by the
parties by the Arthur Stone Estate; all minerals including, but not limited to, oil and gas
and production thereof; and all other realty and personalty of every type and character
whatsoever and not specifically set over to [Phyllis] in the above paragraph." (Emphasis
added.)

Paragraph 2.a. of the final agreement grants Billy:

"All of the remaining personal and real property of the parties including, but not
limited to, all interest in Stone Acres, Inc.; all of [Billy's] interest in the Estate of F.A.
Stone, District Court Finney County, Case No. 91-P-48; all minerals including, but not
limited to, oil and gas and production thereof; and all other realty and personalty of every
type and character whatsoever and not specifically set over to [Phyllis] in the above
paragraph." (Emphasis added.)

Phyllis' divorce attorney signed an affidavit noting that the clear intent of Phyllis
and Billy was to allow Phyllis to retain her 1/2 undivided interest in all of the Finney
County, Kansas, property she inherited, including the mineral interests.

Given the content of these documents and their contemporaneous nature, it
appears the parties intended for Phyllis to retain all of her interest in Arthur's estate,
including her mineral interests. The district court did not err in making this finding:
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"There is nothing in the Property Settlement Agreement which set aside to Billy Stone,
Phyllis Stone's mineral interests from [Arthur's estate] as those mineral interests are
described in Paragraphs 15 and 39 of [Phyllis'] Petition."

II. THE DISTRICT COURT DID NOT ERR IN GRANTING SUMMARY JUDGMENT BECAUSE
THE DESCRIPTION OF MINERAL INTERESTS WAS NOT A GENUINE ISSUE OF MATERIAL
FACT.

Finally, Billy raises additional reasons to support his claim that the district court
erred in granting summary judgment. He alleges that Phyllis did not provide statements
of facts, title documents, or other exhibits describing the nature and extent of her mineral
interests. As a result, Billy argues the district court erred in allowing Phyllis to quiet the
title to the mineral interests. He also contends the district court erred by ordering the
Trust and Billy to provide an accounting of royalties. We disagree.

Phyllis detailed the fractional interests to 14 tracts of land in paragraphs 15(a)-(n)
of her petition. She incorporated those details by reference in her motion for summary
judgment. Billy did not challenge those facts in his response to her motion. The district
court's journal entry setting forth its findings of fact and conclusions of law notes:

"As a result of discussions between counsel for Plaintiff and Defendants Billy D.
Stone and Elnora A. Stone Revocable Trust No. 1 following the hearing on September
17, 2018, it has been determined that neither Plaintiff, nor Defendants Billy D. Stone and
Elnora A. Stone Revocable Trust No. 1, own any minerals described in Paragraph 15(e)
of Plaintiff's Petition and Paragraph 2(e) of the Journal Entry of Judgment, in a tract of
land 350' by 340' in the Southeast Quarter of the Northwest Quarter (SE1/4 NW1/4) of
Section 8, Township 26 South, Range 33 West of the 6th P.M., Finney County, Kansas."

The pleadings properly alleged Phyllis' mineral interests, and summary judgment
was appropriate because there was no genuine issue to those material facts. The district
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court did not err in granting Phyllis summary judgment, quieting the title of the property
set out in her petition, and ordering an accounting of royalties.

Affirmed.