Unpublished Disposition, 928 F.2d 1137 (9th Cir. 1991)

MEMORANDUM^* 

This is a dispute over the impoundment of royalties from oil and gas leases in northern Montana. In 1981, royalty payments to the estate of Anna Alstad were halted after legal title to the royalties was questioned by operators of the leases. The personal representative, Joann Karhu, sued the operators of the leases in state court in 1981 to recover the withheld royalties. Upon discovering that Flying J Petroleums, a producer, also withheld royalties, she brought this action in 1987, alleging that it improperly impounded royalties due the estate.

Flying J maintained that Karhu initially requested that the payments be withheld pending the outcome of the state litigation and that its actions were authorized under Montana law. The district court agreed and dismissed Karhu's claims on summary judgment. We affirm.

* Karhu argues that Flying J committed the tort of conversion when it impounded royalty funds between 1982 and 1987. To sustain an action for conversion, the plaintiff's ownership of the allegedly converted property must be clear and her right to possession must be "immediate." See Gebhardt v. D.A. Davidson & Co., 661 P.2d 855, 858 (Mont.1983); Bethel v. Giebel, 55 P.2d 1287, 1288 (Mont.1936).

Legal title to the royalties was the subject of protracted and bitter litigation in state court between 1981 and 1988. The court never ruled on the ownership question as the suit was settled in 1988. Summary judgment was appropriate because Karhu failed to produce evidence establishing the existence of an essential element of her claim: the ownership and right to immediate possession of the royalty funds at the time they were allegedly converted.¹  See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Karhu next argues that the reason Flying J impounded funds was that it could not locate Ms. Alstad after receiving a royalty check returned "addressee unknown."²  The sole evidence offered to substantiate this claim is a passing reference in the deposition testimony of Karhu's attorney, Robert Johnson. Johnson admitted at oral argument that his testimony concerned a royalty check that pertained to a lease that is unrelated to this litigation, the "Combs" lease. This lease is administered by a separate corporation, Flying J Exploration and Production.

Affidavits submitted by Flying J disavow any relationship between the decision to suspend funds on the "Combs" lease in 1978 and the decision to impound funds on the disputed leases in 1982. Karhu asks this court to infer that Flying J's decision to impound funds in 1982 was a direct consequence of a decision about an unrelated royalty that was made in a separate office by a separate company four years earlier. We conclude that no rational trier of fact, looking at the record as a whole, could find for Karhu from this evidence. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1987).

Because Karhu did not prevail on any claims, the court's assessment of costs against her was proper.

II

We also affirm the district court's dismissal of Flying J's counterclaim and third-party complaint. The counterclaim was resolved by the dismissal of Karhu's claims. The district court properly dismissed the third-party complaint which expressly stated it would be pursued "solely in the event that ... Flying J Petroleums may be held liable to [Karhu]."

AFFIRMED.