MURRAY v. BEJ MINERALS LLC RTWF LLC (2019)

ORDER

Upon a vote of a majority of the non-recused active judges, we granted rehearing en banc in Murray v. BEJ Minerals, LLC, 908 F.3d 437 (9th Cir. 2018) (“Murray II”), to determine whether dinosaur fossils are part of the surface estate or the mineral estate under Montana law. Murray v. BEJ Minerals, 920 F.3d 583 (9th Cir. 2019). This central question of state law is determinative of the instant case, and we find no controlling precedent in the decisions of the Montana Supreme Court. Mont. R. App. P. 15(3). Thus, we respectfully certify this question of law to the Montana Supreme Court pursuant to Rule 15 of the Montana Rules of Appellate Procedure.

As a general matter, “[t]he task of a federal court in a diversity action is to approximate state law as closely as possible in order to make sure that the vindication of the state right is without discrimination because of the federal forum.” Ticknor v. Choice Hotels Int'l, Inc., 265 F.3d 931, 939 (9th Cir. 2001) (quoting Gee v. Tenneco, Inc., 615 F.2d 857, 861 (9th Cir. 1980)). If the state's highest appellate court has not decided the question presented, then we must predict how the state's highest court would decide the question. Id.

However, if state law permits it, we may exercise our discretion to certify a question to the state's highest court. Lehman Bros. v. Schein, 416 U.S. 386, 391, 94 S.Ct. 1741, 40 L.Ed.2d 215 (1974). We may elect to certify a question sua sponte. Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 294 F.3d 1085, 1086 (9th Cir. 2002), certified question answered, 149 Wash.2d 660, 72 P.3d 151 (2003); see also Lombardo v. Warner, 391 F.3d 1008 (9th Cir. 2004) (en banc) (certifying question from an en banc court). The Montana Supreme Court permits certification of questions of law from federal courts. Mont. R. App. P. 15(3).

“We invoke the certification process only after careful consideration and do not do so lightly.” Kremen v. Cohen, 325 F.3d 1035, 1037 (9th Cir. 2003). In deciding whether to exercise our discretion, we consider: (1) whether the question presents “important public policy ramifications” yet unresolved by the state court; (2) whether the issue is new, substantial, and of broad application; (3) the state court's caseload; and (4) “the spirit of comity and federalism.” Id. at 1037–38.

Whether dinosaur fossils belong to the surface estate or the mineral estate under Montana law presents important public policy ramifications for Montana that have not yet been resolved by the Montana Supreme Court. Given the frequency of divided ownership of Montana surface and mineral estates, and that Montana possesses vast deposits of valuable vertebrate fossil specimens, the issue is substantial and of broad application. Therefore, after considering these factors, and in the spirit of comity and federalism, we exercise our discretion to certify this question to the Montana Supreme Court.

Thus, pursuant to Montana Rule of Appellate Procedure 15(6), we provide the following information for the consideration of the Montana Supreme Court.

1

We first provide the factual context of this dispute, along with the procedural history. Mary Ann and Lige Murray live on a farm and ranch in Garfield County, Montana. Murray v. Billings Garfield Land Co., 187 F. Supp. 3d 1203, 1204 (D. Mont. 2016) (“Murray I”). As is common in Montana, the Murray property mineral estate has been severed from the surface estate. Id. at 1205. The Murrays own the surface estate and a minority interest in the mineral estate. Id. The remaining mineral rights are currently owned by non-Montana entities, BEJ Minerals, LLC and RTWF, LLC. Id.

The parties’ mineral deed provides that the Murrays and these entities own, as tenants in common, “all right title and interest in and to all of the oil, gas, hydrocarbons, and minerals in, on and under, and that may be produced from the lands[.]” The purchase agreement accompanying the mineral deed obligated all the parties “to inform all of the other Parties of any material event which may [affect] the mineral interests and [to] share all communications and contracts with all other Parties.” At the time the parties executed the purchase agreement and mineral deed in 2005, “none of the parties or their agents had ever considered whether the Mineral Estate as defined in the 2005 Mineral Deed included fossils, and none of the parties or their agents had or expressed any specific intent about who would be entitled to ownership of any fossils found on the Subject Property.”

Shortly thereafter, in Fall 2005, the Murrays discovered a “spike cluster” fossil on the property, but did not consider this discovery significant. Id. Several valuable fossil discoveries have followed. These discoveries include the complete fossilized remains of a Tyrannosaurus rex, the fossilized remains of two dinosaurs locked in combat (the “Dueling Dinosaurs”), a large Triceratops skull, and a Triceratops foot. According to BEJ and RTWF, the Murrays first notified the other mineral titleholders of the fossil discoveries in 2008. BEJ and RTWF asserted an ownership interest based on their status as mineral titleholder in 2013.

The Murrays filed a complaint on May 22, 2014, in Montana's Sixteenth Judicial District Court, Garfield County, seeking a declaratory judgment that fossils found on the property are owned solely by the Murrays. BEJ and RTWF removed the case to federal district court on August 21, 2014, on the basis of diversity jurisdiction. BEJ and RTWF filed a counterclaim, seeking a declaratory judgment that the fossils are properly classified as minerals under Montana law, and an order directing the Murrays to provide a full accounting detailing all fossils found, expenses incurred, profits gained, and contracts formed regarding said fossils.

The parties moved for summary judgment, and the district court granted the Murrays’ motion, declaring the Murrays, as owners of the surface estate, the sole owners of the dinosaur fossils. Murray I, 187 F. Supp. 3d at 1212. Copies of the district court decision and panel opinion are attached.

BEJ and RTWF timely appealed. A majority of a three judge panel of our Court reversed the district court, deciding the Montana state law question in a precedential opinion that bound the federal district courts in Montana, where many of these property interest disputes were likely to be litigated on the basis of diversity jurisdiction. The Murrays filed a petition for rehearing and rehearing en banc. BEJ and RTWF filed a response. We granted leave to various parties to file amicus briefs. Upon a majority vote of the active, non-recused judges, we granted rehearing en banc, and by separate order designated Murray II as non-precedential. Because of the importance of the state law question, and the potential of different outcomes in federal and state courts, we have elected to certify the issue to the Montana Supreme Court.

2

The Montana Supreme Court has not decided the question of whether dinosaur fossils belong to the owner of surface estate or the owner of the mineral estate in Montana. The Montana Supreme Court has twice employed the “ordinary and natural meaning” test, first articulated by the Supreme Court of Texas, to determine whether a mineral deed encompasses a particular mineral. Farley v. Booth Bros. Land & Livestock Co., 270 Mont. 1, 890 P.2d 377, 380 (1995) (applying the test first articulated in Heinatz v. Allen, 147 Tex. 512, 217 S.W.2d 994, 997 (1949)); Hart v. Craig, 352 Mont. 209, 216 P.3d 197, 198 (2009) (same). The Montana cases to apply Heinatz considered whether scoria useful for constructing roadways, Farley, 890 P.2d at 380, and sandstone used in landscaping, Hart, 216 P.3d at 198, constituted minerals reserved by the instruments there at issue. The Montana Supreme Court has never applied the Heinatz test in the context of dinosaur fossils, nor have other state courts to apply the test resolved this question.

On April 16, 2019, the Governor of Montana signed into law a bill declaring that dinosaur “fossils are not minerals and that fossils belong to the surface estate.” H.B. 229, 66th Leg. (Mont. 2019) (as transmitted to the Governor). H.B. 229 “does not affect penalties that were incurred or proceedings in courts that were begun” before the law takes effect, like the instant matter. Id. at § 5. In addition, the question of whether H.B. 229 applies retroactively has not been litigated.

3

In light of the foregoing, we respectfully certify the following question to the Montana Supreme Court:

Whether, under Montana law, dinosaur fossils constitute “minerals” for the purpose of a mineral reservation?

We acknowledge that, as the receiving court, the Montana Supreme Court may reformulate the certified question. Mont. R. App. P. 15(6)(a)(iii).

The names and addresses of counsel for the parties, as required by Mont. R. App. P. 15(6)(a)(iv), are as follows:

Harlan B. Krogh and Eric Edward Nord, Crist, Krogh & Nord, PLLC, 2708 First Avenue North, Suite 300, Billings, MT 59101, for Appellees Mary Ann and Lige M. Murray.

Brian C. Lake and Shane Ray Swindle, Perkins Coie LLP, 2901 North Central Avenue, Suite 2000, Phoenix, AZ 85012-2788, for Appellants BEJ Minerals, LLC and RTWF, LLC.

4

The Clerk shall forward a certified copy of this certification order, under official seal, to the Montana Supreme Court. The Clerk is also ordered to transmit a copy of the Excerpts of Record filed in this appeal to the Montana Supreme Court and, if requested by the Montana Supreme Court, provide all or part of the district court record not included in the Excerpts of Record. Mont. R. App. P. 15(5). The Clerk is further directed to forward a copy of the briefs filed by the parties, the petition for rehearing en banc, the response to the petition for rehearing en banc, and the amicus briefs filed concerning rehearing en banc.

Submission of this appeal for decision is vacated and deferred pending the Montana Supreme Court's final response to this certification order. The Clerk is directed to administratively close this docket, pending further order. The parties shall notify the Clerk of this court within fourteen days of the Montana Supreme Court's acceptance or rejection of certification, and again, if certification is accepted, within fourteen days of the Montana Supreme Court's issuance of a decision.

QUESTION CERTIFIED; PROCEEDINGS STAYED.

APPENDIX

THOMAS, Chief Circuit Judge: