Reistad v. Burman

23CA1532 Reistad v Burman 07-11-2024

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA1532

Weld County District Court No. 23CV30277

Honorable Todd Taylor, Judge

Reistad Consult AS, a Norwegian Registered Company,

Plaintiff-Appellant,

v.

Dale N. Burman; Loretta M. Burman; Melanie Anne Martin f/k/a Melanie Anne

Luark; Ivan D. Ansel; Kim M. Ansel; and PDC Energy, Inc., a Delaware

corporation,

Defendants-Appellees.

JUDGMENT AFFIRMED

Division V

Opinion by JUDGE BROWN

Harris and Lum, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced July 11, 2024

Glade Voogt Lopez Smith Felser PC, Herbet A. Delap, Andrew J. Felser, Denver,

Colorado, for Plaintiff-Appellant

Coan, Payton & Payne, LCC, Brett Payton, Greeley, Colorado, for Defendants-

Appellees Dale N. Burman and Loretta M. Burman

Root Law, LLC, John D. Root, Fort Collins, Colorado, for Defendant-Appellee

Melanie Anne Martin f/k/a Melanie Anne Luark

Lawrence Custer Grasmick Jones & Donovan LLP, Jacklyn Patricia Gunn,

Richard LiPuma, Johnstown, Colorado, for Defendants-Appellees Ivan D. Ansel

and Kim M. Ansel

Davis Graham & Stubbs LLP, James R. Henderson, Denver, Colorado, for

Defendant-Appellee PDC Energy, Inc., a Delaware corporation

1

¶ 1 Plaintiff, Reistad Consult AS (Reistad), appeals the district

court’s judgment dismissing its complaint against defendants, Dale

N. Burman, Loretta M. Burman, Melanie Anne Martin f/k/a

Melanie Anne Luark, Ivan D. Ansel, Kim M. Ansel (collectively, the

landowners), and PDC Energy, Inc. (PDC). We affirm.

I. Factual Background

¶ 2 In 1980, Ole Reistad Jr. (Reistad Jr.) entered into an oil and

gas lease agreement with PDC’s predecessor, granting it exclusive

rights to explore and develop the minerals under Reistad Jr.’s

eighty-five-acre property in Weld County, Colorado.

¶ 3 On June 30, 1995, Reistad Jr. conveyed his property to Dale

and Loretta Burman. Although the Burmans and Reistad Jr.

initially signed contract documents that specified “NO oil, gas or

mineral rights are to be conveyed with the property,” the deed

Reistad Jr. ultimately executed (through an attorney-in-fact) and

recorded did not include a reservation of the mineral rights.

¶ 4 In 1999, the Burmans subdivided the property. The Burmans

then conveyed five separate lots to Luark,

1

the Ansels, and three

1

Like the parties, we refer to Melanie Anne Martin f/k/a Melanie

Anne Luark as Luark.

2

other grantees who are not parties to the appeal. None of the deeds

conveying property from the Burmans to any subsequent purchaser

reserved any mineral rights to Reistad Jr.

¶ 5 Even though the deed conveying the property to the Burmans

did not reserve any interest in the mineral estate, Reistad Jr.

received royalty payments from PDC and its predecessor until his

death in 2018. After Reistad Jr.’s death, his successor-in-interest

— Reistad — continued to receive royalty payments from PDC until

2020, when a dispute arose as to who owned the mineral rights and

PDC placed the royalties in suspense.

II. Procedural Background

¶ 6 In 2023, Reistad filed a complaint asserting claims for

declaratory judgment to reform the deed, breach of lease, and quiet

title under C.R.C.P. 105. To justify reformation, Reistad alleged

that the failure to reserve the mineral rights in the 1995 deed was

the result of a mutual mistake resulting in a scrivener’s error

because the contract evidenced the parties’ clear intent not to

convey the mineral estate.

¶ 7 The Burmans filed a motion to dismiss for failure to state a

claim under C.R.C.P. 12(b)(5). They argued that Reistad was bound

3

by the terms of the deed. The district court denied the Burmans’

motion because the “complaint ma[d]e plausible allegations here

that if proved to be true would support a finding of mutual mistake

based on a scrivener’s error.”

¶ 8 Luark also filed a motion to dismiss under C.R.C.P. 12(b)(5),

arguing that Reistad’s claims were time barred and that she and the

other landowners besides the Burmans were bona fide purchasers

for value without notice of any alleged defect in the original deed.

The court granted Luark’s motion on both grounds and dismissed

Reistad’s complaint with prejudice. The court also vacated its prior

order denying the Burmans’ motion to dismiss and granted that

motion for the same reasons. The court later confirmed that its

order on Luark’s motion dismissed the entire complaint and thus

resolved all claims against all remaining defendants.

III. C.R.C.P. 12(b)(5) Dismissal

¶ 9 Reistad contends that the district court erred by dismissing

the complaint because (1) the landowners could not raise

affirmative defenses in a motion to dismiss; (2) its claims were

timely asserted; (3) whether the landowners were considered bona

fide purchasers against whom the claims could not survive was a

4

factual dispute; and (4) the court did not address whether PDC

breached the lease. We reject Reistad’s first two contentions and,

consequently, need not address the third or fourth.

A. Standard of Review

¶ 10 A motion to dismiss under C.R.C.P. 12(b)(5) for failure to state

a claim upon which relief can be granted tests the formal

sufficiency of the claim. Lavarato v. Branney, 210 P.3d 485, 488

(Colo. App. 2009). To survive such a motion, “a plaintiff must state

a claim for relief that is plausible (not speculative) on its face.”

Hess v. Hobart, 2020 COA 139M2, ¶ 11; see also Warne v. Hall,

2016 CO 50, ¶ 9.

¶ 11 We review de novo a trial court’s ruling on a C.R.C.P. 12(b)(5)

motion to dismiss. Hess, ¶ 11. We apply the same standards as

the trial court, accepting the factual allegations in the complaint as

true and viewing those allegations in the light most favorable to the

plaintiff. Id.; Patterson v. James, 2018 COA 173, ¶ 16. We need not

accept as true legal conclusions couched as factual allegations.

Woodall v. Godfrey, 2024 COA 42, ¶ 8. And we may consider only

the facts that are alleged in the pleadings and any documents that

are attached as exhibits or incorporated by reference. Hess, ¶ 11.

5

B. C.R.C.P. 8(c)

¶ 12 Reistad first contends that the district court erred by granting

the landowners’ motions to dismiss because affirmative defenses

are governed by C.R.C.P. 8(c) and may not be raised in motions filed

pursuant to C.R.C.P. 12(b)(5). We disagree.

¶ 13 True, an affirmative defense ordinarily must be raised in an

answer to a complaint rather than in a motion to dismiss. Prospect

Dev. Co. v. Holland & Knight, LLP, 2018 COA 107, ¶ 13; see C.R.C.P.

8(c) (requiring affirmative defenses to be raised in a responsive

pleading); C.R.C.P. 12(b) (“Every defense, in law or in fact, to a

claim for relief in any pleading . . . shall be asserted in the

responsive pleading thereto if one is required,” except for the

defenses listed in C.R.C.P. 12(b)(1)-(6), which do not include

affirmative defenses.). This general rule exists because “a plaintiff

has no obligation to anticipate an affirmative defense in the

complaint and include allegations intended to negate it.” Bristol

Bay Prods., LLC v. Lampack, 2013 CO 60, ¶ 41.

¶ 14 However, there is an exception to the general rule: an

affirmative defense may be raised in a C.R.C.P. 12(b)(5) motion

when it is clear from the bare allegations of the complaint that the

6

affirmative defense applies. See id. at ¶¶ 44-45; Prospect Dev. Co.,

¶ 14. This exception is consistent with the general rule because it

does not require a plaintiff to anticipate an affirmative defense and

plead facts to negate it but instead “merely permits a plaintiff to

‘plead itself out of court by alleging (and thus admitting) the

ingredients of a defense.’” Prospect Dev. Co., ¶ 14 (quoting Bristol

Bay Prods., ¶ 44).

¶ 15 For the reasons discussed below, it is clear from the bare

allegations of the complaint that Reistad’s claims are barred by the

statute of limitations. As a result, it was proper for the landowners

to raise these affirmative defenses in their motions to dismiss.

C. Statute of Limitations

¶ 16 Reistad contends that the district court erred by granting the

landowners’ motions to dismiss because the statute of limitations

did not begin to run until PDC ceased making royalty payments in

2020, which is when Reistad discovered the error in the deed. We

disagree.

¶ 17 Equitable claims “are technically subject to an equitable

laches rather than a legal statute of limitations analysis.” Interbank

Invs., L.L.C. v. Vail Consol. Water Dist., 12 P.3d 1224, 1229-30

7

(Colo. App. 2000). But absent extraordinary circumstances not

present here, we apply the statute of limitations relating to similar

actions at law. See id.; see also Sterenbuch v. Goss, 266 P.3d 428,

436-37 (Colo. App. 2011). A reformation claim, sounding in

contract, is governed by a three-year statute of limitations.

2

See

§ 13-80-101(1)(a), C.R.S. 2023; see also Jackson v. Am. Fam. Mut.

Ins. Co., 258 P.3d 328, 332-33 (Colo. App. 2011).

¶ 18 Whether a claim is time barred generally presents a question

of fact, but we may decide the question as a matter of law when the

material facts are undisputed and clearly show that the plaintiff

had or should have had the requisite information as of a particular

date. Wagner v. Grange Ins. Ass’n, 166 P.3d 304, 307 (Colo. App.

2007); see also § 13-80-108(1), C.R.S. 2023 (“[A] cause of action . . .

shall be considered to accrue on the date both the injury and its

cause are known or should have been known by the exercise of

reasonable diligence.”).

¶ 19 The district court determined that Reistad’s claims are time

barred because Reistad Jr. was presumed to know the contents of

2

The parties do not dispute that the three-year statute of

limitations applies to Reistad’s claims.

8

the deed his attorney-in-fact signed, such that he knew or should

have known of the failure to reserve the mineral interests in 1995.

It also determined that Reistad had constructive notice of the

unrestricted conveyance when the deed was recorded in the Weld

County property records. See § 38-35-106(1), C.R.S. 2023 (“Any

written instrument required or permitted to be acknowledged

affecting title to real property, whether acknowledged,

unacknowledged, or defectively acknowledged, after being

recorded . . . shall be notice to all persons or classes of persons

claiming any interest in said property.”).

¶ 20 Reistad argues that the court erred because, even if parties do

not read a deed they signed, a court may reform the deed if it

contains a mutual mistake of fact that does not express the parties’

true intent. See Dennett v. Mt. Harvard Dev. Co., 43 Colo. App. 422,

425, 604 P.2d 699, 701 (1979) (“If the description in the deed does

not express the true intent of the parties, reformation is a proper

remedy.”). Reistad further argues that, because the error arose

from a mutual mistake and because Reistad continued to receive

royalties until 2020, it had no reason to know of the error until

royalty payments ceased.

9

¶ 21 Reistad is correct that a court may reform a deed to correct a

mutual mistake. Id.; see also Md. Cas. Co. v. Buckeye Gas Prods.

Co., 797 P.2d 11, 13 (Colo. 1990) (“Reformation of a written

instrument is appropriate only when the instrument does not

represent the true agreement of the parties and the purpose of

reformation is to give effect to the parties’ actual intentions.”). But

a claim for such relief is nonetheless subject to the statute of

limitations, which accrues when a party knew of the error or should

have known of the error by the exercise of reasonable diligence. See

§ 13-80-108(1); Skyland Metro. Dist. v. Mountain W. Enter., LLC, 184

P.3d 106, 127 (Colo. App. 2007) (a claim accrues when the claimant

should know, in the exercise of reasonable diligence, all material

facts relevant to the elements of a cause of action).

¶ 22 Parties are presumed to know the contents of the documents

they sign. Bell v. Land Title Guarantee Co., 2018 COA 70, ¶ 12;

People v. Madison, 176 P.3d 793, 805 (Colo. App. 2007). So if there

is an error in a signed document, a party is presumed to know of

the error upon execution. In other words, the party knew or — at a

minimum — should have known, in the exercise of reasonable

diligence, of the error at that time. See Skyland Metro Dist., 184

10

P.3d at 127. As a result, the statute of limitations on a claim for

reformation of a deed on the ground that it does not accurately

reflect the parties’ agreement accrues on the date the deed is

signed.

¶ 23 In Bell, ¶ 4, the Bells sold real property pursuant to a contract

that excluded “all oil, gas, and mineral rights in the property.” The

title company who prepared the deed, however, did not include

language reserving the mineral estate to the Bells. Id. at ¶ 3. For

over nine years, the Bells continued to receive royalty payments

under an oil and gas lease on the property. Id. at ¶ 4. But when

the lessee oil and gas company learned that the Bells no longer

owned the mineral rights to the property, it began sending the

royalty payments to the buyer. Id. The Bells sued the title

company for negligence and breach of contract. Id. at ¶ 5.

¶ 24 The district court dismissed the Bells’ complaint as time

barred, relying on the legal principle that one who signs a document

is presumed to know its contents to conclude that the Bells should

have known of the defect in the deed, in the exercise of reasonable

diligence, upon execution. Id. at ¶ 12. A division of this court

reversed, concluding that the presumed-to-know principle did not

11

conclusively establish the accrual date for negligence or breach of

contract claims. Id. at ¶¶ 16-18. In so doing, the division reiterated

the applicability of the presumed-to-know principle to claims

seeking to avoid the effect of the executed document “to preserve

the integrity and sanctity of written documents.” Id. at ¶ 15. The

division explained that “if this case involved simply the Bells’ failure

to read an easily understood deed and the Bells were asking to

rescind it to recover their mineral rights, the presumed-to-know

principle would undoubtedly apply.” Id. at ¶ 17.

¶ 25 Reistad did not assert claims for negligence or breach of

contract against any third party involved in preparing the deed.

Instead, Reistad seeks to avoid the effect of the deed itself. Thus,

the presumed-to-know principle applies to determine when its

cause of action accrued. See id. at ¶17.

¶ 26 “It is well established that a conveyance of land by general

description, without any reservation of a mineral interest, passes

title to both the land and the underlying mineral deposits.” O’Brien

v. Vill. Land Co., 794 P.2d 246, 249 (Colo. 1990). And it is

undisputed that the 1995 deed did not reserve any mineral

interests to Reistad Jr.

12

¶ 27 Reistad Jr.’s attorney-in-fact signed the deed on his behalf.

The attorney-in-fact is presumed to have read the deed and to have

known, in the exercise of reasonable diligence, that it did not

reserve the mineral estate to Reistad Jr. The attorney-in-fact’s

knowledge was imputed to Reistad Jr. See Moffett v. Life Care Ctrs.

of Am., 187 P.3d 1140, 1144 (Colo. App. 2008) (“[E]xecution of a

power of attorney creates a principal-agent relationship.”), aff’d,

219 P.3d 1068 (Colo. 2009); Stortroen v. Beneficial Fin. Co. of Colo.,

736 P.2d 391, 396 (Colo. 1987) (“Notice to an agent given in the

course of a transaction which is within the scope of the agency is

notice to the principal.”).

3

And as Reistad Jr.’s successor, Reistad

can assert no greater rights than Reistad Jr. Cf. Tivoli Ventures,

Inc. v. Bumann, 870 P.2d 1244, 1248 (Colo. 1994) (“[A]n assignee

stands in the shoes of the assignor” and “has the same rights as the

assignor in determining whether a claim is barred by the statute of

limitations.”).

¶ 28 Consequently, the statute of limitations on Reistad’s cause of

action for reformation began to run in 1995 when the deed was

3

Reistad has not argued that Reistad Jr.’s attorney-in-fact acted

outside the scope of the principal-agent relationship.

13

executed.

4

Reistad filed its complaint in April 2023 — almost

twenty-eight years later. Therefore, Reistad’s claim for reformation

of the deed is untimely. See § 13-80-101(1)(a).

¶ 29 Still, relying on In re Estate of Scott, 735 P.2d 924, 925-27

(Colo. App. 1986), Reistad argues that it had no reason to question

the language of the deed until it stopped receiving royalty

payments. In Scott, a deed conveying property from the decedent’s

estate contained a mistake in the legal description. Id. at 925. The

grantees filed claims against the estate, seeking to reform the

deeds, but the estate argued that section 15-12-803(2)(a), C.R.S.

2023, a nonclaim statute that bars any claim against a decedent’s

estate if not brought within four months after it arises, barred the

action. Id. at 925-26.

¶ 30 The division did not identify an applicable statute of

limitations, resting its analysis on laches alone. Id. at 926. It

4

At oral argument, Reistad’s counsel argued for the first time that

Reistad should have had an opportunity to explore facts regarding

equitable tolling of the statute of limitations. But because Reistad

did not raise this argument below, we do not address it. See

Giguere v. SJS Fam. Enters., Ltd., 155 P.3d 462, 470 (Colo. App.

2006) (we do not address arguments raised for the first time on

appeal).

14

explained that laches typically “cannot be imputed to one who has

the right to the relief, until he discovers the fraud or mistake upon

which his claim is based, and has a reasonable time thereafter

within which to seek relief.” Id. It noted that in “certain situations”

a party to an instrument is not required to assert their right to

reformation until such time as the assertion of an adverse claim

arises. Id.

¶ 31 Because the nonclaim statute’s “time is so short and the bar of

the statute absolute,” the division reasoned that it “must be strictly

construed in favor of permitting consideration of all legitimate

claims.” Id. Under the circumstances presented, the division held

that “the performance due by the personal representative was not

the original issuance of the deeds, but rather, it was the duty to

reform the deeds, or otherwise correct the error, upon discovery of

the mutual mistake” and that the claim did not arise until the

mistake was discovered, less than four months before the claim was

filed. Id. at 927.

¶ 32 We are not bound by Scott, see Chavez v. Chavez, 2020 COA

70, ¶ 13 (“[D]ivisions are not bound by the decisions of other

divisions . . . .”), and we are not persuaded that it controls our

15

disposition. Reistad’s claim is not governed by a four-month

nonclaim statute; we have identified an applicable three-year

statute of limitations. We are not concerned with the same brevity

and absoluteness the Scott division was. And Scott did not tackle

the presumed-to-know principle or whether under that principle a

party should know, in the exercise of reasonable diligence, of a

patent error in a deed.

5

¶ 33 In the end, we conclude that Reistad’s claim for reformation of

the deed is time barred. Because Reistad’s remaining claims — for

PDC’s breach of lease for failing to pay it royalties as the owner of

the mineral interest and to quiet title to the mineral estate in itself

6

— only succeed if the deed is reformed to reserve the mineral estate

to Reistad Jr., they necessarily fail. And because of our disposition,

5

It is worth noting that the grantees in Scott made the claim

against the estate within three years of deed execution. See In re

Estate of Scott, 735 P.2d 924, 927 (Colo. App. 1986) (the deeds were

executed February 17 and June 9, 1982, and the claim was brought

September 11, 1984).

6

At oral arguments, Reistad’s counsel argued that its quiet title

claim required the district court to adjudicate every party’s relative

interest in the mineral estate, even if Reistad was determined to

have no interest, and that the court failed to do so. But because

Reistad did not raise this argument below, we do not address it.

See Giguere, 155 P.3d at 470.

16

we need not decide whether the district court also properly

dismissed Reistad’s complaint against the landowners other than

the Burmans because they were bona fide purchasers for value.

IV. Remaining Contentions

A. District Court’s Discretion to Revisit Prior Rulings

¶ 34 Reistad contends that the district court erred by reinstating

the Burmans’ motion to dismiss and then granting it. We disagree.

¶ 35 “In general, ‘[e]very ruling or order made in the progress of an

on-going proceeding may be rescinded or modified during that

proceeding upon proper grounds.’” S. Cross Ranches, LLC v. JBC

Agric. Mgmt., LLC, 2019 COA 58, ¶ 43 (quoting Broyles v. Fort Lyon

Canal Co., 695 P.2d 1136, 1144 (Colo. 1985)); see C.R.C.P. 54(b)

(Any order not made final “is subject to revision at any time before

the entry of judgment adjudicating all the claims . . . .”). A trial

court’s action in doing so must “be within the bounds of discretion.”

S. Cross Ranches, LLC, ¶ 44. A court abuses its discretion when its

decision is manifestly arbitrary, unreasonable, or unfair, or when it

misapplies the law. People v. Johnson, 2021 CO 35, ¶ 16.

¶ 36 Here, the district court explained that it vacated its prior order

denying the Burmans’ motion to dismiss for the reasons set forth in

17

the order granting Luark’s motion to dismiss, which included that

Reistad’s claims were barred by the statute of limitations.

Cf. S. Cross Ranches, LLC, ¶¶ 46-48 (trial court abused its

discretion when it gave an inconsistent ruling without explanation

and its second order did not mention the first order). We perceive

no abuse of discretion.

B. C.R.C.P. 54(b) Certification

¶ 37 Finally, Reistad claims that the district court erred by denying

its motion for certification of final judgment pursuant to C.R.C.P.

54(b) because its claim against PDC to recover royalties was not

addressed in the court’s order granting Luark’s motion to dismiss.

We disagree.

¶ 38 C.R.C.P. 54(b) creates an exception to the general requirement

that an entire case must be resolved by a final judgment before an

appeal may be brought. Colo. Cmty. Bank v. Hoffman, 2013 COA

146, ¶ 18. Certification of a final judgment under C.R.C.P. 54(b) is

only necessary when more than one claim for relief is presented in

an action, or when multiple parties are involved and claims or

counterclaims remain unresolved. Bd. of Cnty. Comm’rs v. Roberts,

159 P.3d 800, 810 (Colo. App. 2006). When a judgment resolves all

18

claims and counterclaims, the judgment is final and there is no

need for certification under C.R.C.P. 54(b). Id.

¶ 39 Because the court expressly dismissed Reistad’s entire

complaint with prejudice when it ruled on Luark’s motion to

dismiss, no claims remained unresolved and C.R.C.P. 54(b)

certification was not necessary.

V. Disposition

¶ 40 We affirm the district court’s judgment.

JUDGE HARRIS and JUDGE LUM concur.