Summary 2009 WY 16

Summary of Decision issued February 11, 2009

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Foxley & Co. v. Ellis

Citation: 2009 WY 16

Docket Number: S-07-0256

Appeal from the District Court of Carbon County, the Honorable Wade E. Waldrip, Judge.

Representing Appellant Foxley: Stephen H. Kline of Kline Law Office, PC, Cheyenne, Wyoming.

Representing Appellee Ellis: Paul J. Hickey, Roger C. Fransen, and O’Kelley H. Pearson of Hickey & Evans, LLP, Cheyenne, Wyoming.

Facts/Discussion: Foxley is a corporation involved in cattle ranching operations. The Ellises were the owners of the Difficulty Creek Ranch located near Medicine Bow which they sold to Foxley. Foxley claims the Ellises never informed it of a common use arrangement with a neighboring ranch that applied to grazing on a portion of the Difficulty Creek Ranch. Foxley sued for breach of contract and breach of warranty deed.

Application of the Agreement to Private Lands: The district court found the Agreement created common use rights to the BLM lands only, leaving the private lands unencumbered. It reasoned that the actual sale was for private lands only and the private lands were unencumbered so there could be no breach of contract or breach of warranty deed. The Court found the Agreement ambiguous as to its coverage in the West Pasture. The language of the Agreement indicated the blocks included both federal lands and private lands. Those references reflected a direct impact of the Agreement on private lands. How it affected the lands within the West Pasture was unclear. The ambiguity prevented the Agreement from being used as unambiguous support for the Ellis’ argument that private lands were unaffected. The Court proceeded under the assumption that common use rights existed upon private lands as well as federal lease lands in the West Pasture.
Breach of Sales Contract: The sales contract consisted of multiple documents including the initial offer to purchase and several counteroffers with the BLM lease and grazing allotments attached. An addendum gave Foxley time to conduct a due diligence investigation into the leased land and ranch operations. It also provided that if Foxley did not inform the Ellises of any problems by the end of the investigation period, the condition and characteristics of the property would be deemed satisfactory to the buyer. The Court noted the Addendum shifted the risk of loss from lack of disclosure of common use rights to Foxley but the risk was limited to facts that could reasonably be discovered in a due diligence investigation. The existence of the 2002 grazing allotment is one fact to be considered but the Court did not find it dispositive as a matter of law.
Breach of Warranty Deed: When a person conveys property by warranty deed, generally the property is conveyed free of all encumbrances. Consequently, any encumbrances on the seller’s title need to be specifically listed and excluded from the warranty or the seller will be in breach of the warranty. The common use rights were not expressly excepted in the conveyance by the Ellises. Questions of material fact existed as to the extent the Agreement encumbered Foxley’s private land and as to whether the common grazing rights were of record. Common grazing rights fit within the general category of servitudes. The warranty is against the diminution of the value of the land caused by the servitude, not a total loss of land as in Gilstrap. Whether the Ellises breached the warranty was dependent upon all the issues of material fact noted.
Denial of Foxley’s Motion to Amend Complaint: The district court denied Foxley’s motion to amend, finding the amendment would be unduly prejudicial to the Ellises. The initial complaint was filed in November, 2006. It was amended the first time in January 2007. In June 2007, the Ellises filed their motion for summary judgment. The motion to file a second amended complaint was filed in July 2007. It was not unreasonable for the district court to deny the motion.

Conclusion: Summary judgment was inappropriately granted. The sales contract required the Ellises to convey title to the property free from all encumbrances, and the warranty deed they gave Foxley stated that. There are common grazing rights enforceable against Foxley. Along with other material facts, the extent to which those rights encumber the property is a question of material fact yet to be determined.

Reversed in part, affirmed in part.

J. Golden delivered the decision.

Link: http://tinyurl.com/dgd6dn .

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