Purchase and Sale Agreement: Settlement Agreement Court Jurisdiction, Procedure and Review: Interpleader

摘要

In 2010, Vaughn and Saba Zi file a settlement agreement relating to a dispute as to Vaughn's rights to receive benefits relating to the purchase by Saba Zi of certain mineral interests in Montana. Two years later, Saba Zi sells those interests and files an interpleader action depositing $255,101.10 into the registry of the court and conveying an overriding royalty interest. Saba Zi seeks a release and discharge from all liability arising from that settlement agreement. At trial. Vaughn disputes various deductions being taken by Saba Zi in the calculation of the amount owed. The trial court finds that some of the deductions are not warranted and increases Vaughn's monetary payment to $562,957 and increases the size of the overriding royalty interest. Held: affirmed, as modified. Saba Zi argues that the trial court erroneously placed the burden of proof on it to show that the expenses it deducted complied with the settlement agreement. The court concludes that the issue relating to deductions arises from Vaughn's counterclaim relating to breach of contract rather than Saba Zi's interpleader action. While concluding that the trial court should have placed the burden of proof on Vaughn, that mistake constitutes harmless error due in part to the court's interpretation of the settlement agreement and how both the monetary payment and size of the overriding royalty interest are to be determined. As with any contract, the settlement agreement is to be interpreted using the traditional canons of construction. The court finds the settlement agreement to be unambiguous. As to the two contested deductions, one involving a management fee and the other involving a capital raise, the trial court's interpretation was correct which led to an increase in the amount owed to Vaughn. That is the basis for the court's harmless error conclusion as to the mis-allocation of the burden of proof. The court does, however, modify the trial court's judgment as to the size of the overriding royalty interest because there is no evidence to support the trial court's conclusion that a prior transfer of another overriding royalty interest was fraudulent.