Great Plains Royalty Corporation v. Earl Schwartz Company, et al.

Great Plains Royalty Corp. appealed the dismissal of its complaint and deciding ownership of certain real property in favor of Earl Schwartz Co. (“ESCO”); Basin Minerals, LLC; SunBehm Gas, Inc.; and other defendants. In 1968, Great Plains’ creditors initiated a bankruptcy case by filing an involuntary petition under Chapter 11 of the Bankruptcy Code. The bankruptcy court ruled Great Plains was “a bankrupt,” and the case was converted to a liquidation proceeding under Chapter 7 of the Bankruptcy Code. The trustee received permission to sell the estate’s assets, an auction sale was held, and Earl Schwartz was the winning bidder. An order confirming sale of the assets was entered; the order stated Schwartz entered into an agreement with SunBehm to purchase certain properties in the bankruptcy estate, and title was transferred on those properties directly from the estate to SunBehm. The trustee did not collect sufficient funds from the auction to pay all creditors in full. The bankruptcy case was closed in 1974. In 2013, the bankruptcy case was reopened, and a successor trustee was appointed. The successor trustee collected funds sufficient to pay “a 100 percent dividend” to the estate’s creditors, and he attempted to disburse the funds to the unpaid creditors. While the case was open various adversary proceedings were brought, including some to determine ownership of certain properties. Some of the adversary proceedings were decided, and others were dismissed for lack of jurisdiction. The bankruptcy court discharged the trustee and closed the bankruptcy case in May 2016. In December 2016, Great Plains sued ESCO, Basin, and SunBehm to quiet title to oil, gas, and other minerals in and under three properties located in McKenzie County, North Dakota. ESCO and Basin were successors in interest to Schwartz. Great Plains argued the district court erred by finding the bankruptcy trustee intended to sell all of Great Plains’ assets, including those not listed in the auction sale notice, to Earl Schwartz. The North Dakota Supreme Court concluded the district court’s decision to quiet title in favor of the defendants was based on its misapplications of the law and findings that were not supported by the evidence. The Court considered the remaining issues and arguments and concluded they were either without merit or are unnecessary to its decision. Because the court’s findings were clearly erroneous, the Supreme Court reversed the district court’s judgment deciding ownership of certain properties and dismissing Great Plains’ complaint with prejudice. The matter was remanded for further proceedings to determine the parties’ claims and ownership of the properties. View "Great Plains Royalty Corporation v. Earl Schwartz Company, et al." on Justia Law