Legal Case Summary

Please the court. My name is Scott DeWolf and I represent Harvey Morton, the chapter 11 trustee, the appellant in this case. In the limited time that I have today, I really would like to focus on one issue and that issue is this whether the district court aired in finding that the issue of whether the trustee can raise the lack of Navajo Nation approval of the overriding royalty interest is moot because he affirmed the bankruptcy judge's exclusion of the November 10th, 2010 letter from the Navajo Nation. Respectfully, I think the court aired that is not moot if you exclude the November 10th, 2010 letter for this reason. There is still a live controversy between the parties, even if that letter is excluded

. And the reason is essentially, in my view, twofold. First, the Navajo Nation code section at issue section 605 provides that no overriding royalty may be created by any transfer authorized hereby without the consent of the Minerals Department of the Navajo Nation. Nor shall such overriding royalty be approved if it's determined by the Minerals Department that it will have an adverse impact that prevents full recovery of the mineral resources. Here, Judge Hauser and the bankruptcy court ruled that that language is clear and unambiguous and nobody has channelled the challenge that finding and I don't think anyone would

. That is clear. You cannot create an overriding royalty interest without approval of the Minerals Department of Navajo Nation. There's no dispute. It's stipulated in this case that the appellees have never sought nor obtained the approval of the Navajo Nation for the overriding royalty interest that they received from Briggs Cockerham

. The trustee is the was the owner of the Hogback lease under an approved assignment by both the Navajo Nation and the Bureau of Indian Affairs. This litigation is about trying to quiet title to this claims of these overrides given by Briggs Cockerham. In that situation, the trustee should be able to raise those issues because the cases relied upon by Judge Hauser and Judge Lindsay are distinguishable and I really don't think they apply. I believe this is an issue of first impression

. There is no case directly on point deciding who has standing to raise the lack of Navajo Nation approval under the Navajo Nation code. The cases that were relied upon in both the bankruptcy court and in Judge Lindsay's opinion affirming Judge Hauser are principally three. The first case is the Chuska Energy Case 854 F. Second 727 out of the fifth circuit

. That case, my position, is not addressing who has standing to raise the lack of approval of an assignment under federal law. That case was a jurisdictional question of whether the case could be removed based on the affirmative defense of mobile that the assignment of the oil and gas lease on Indian land had never been approved by the Secretary of the Interior. The court and the fifth circuit expressly said that there's no jurisdiction here but mobile can in state court raise its defense of illegality for the lack of approval. Now the language that is cited against the trustee is why we don't have standing to raise the lack of approval is in the section dealing with preemption and what the court as I read is the language that cited against us what the court I believe is saying there is that while the Secretary of the Interior or the Navajo Nation or any other Indian nation that has an issue with an unapproved assignment could bring a federal cause of action under those statutes that is why they would have to bring it in federal court because it's a federal issue but a party in the Chuska case could raise illegality in state court

. I don't think the federal that that opinion is saying the trustee doesn't have standing. Let me ask you a question to what extent is the not and I will say this is a very complex case factually and legally we don't get many involving the Navajo Nation approval statute and it obviously was the judge House or but to what extent is this question of Navajo approval similar to any other condition precedent? I believe that the the issue here is different in this sense. That's a friendly question because what you know this fellow goes off and starts selling these overriding royalty in this before and after the bankruptcy and you know in a sense that none of them has that approval level of approval. Why is that any different from if he had sold overriding royalties but they never paid for him so they have that you know they have a piece of paper in hand but they never in fact even paid the fraudster for them and then who would have quote standing to raise that's a bare piece of paper and you basically stole it

. I mean why is this different from that circumstance or would it be different? I'm going to take your hypothetical in two parts why is it different I believe is this because the interesting question these overrides don't exist. All of the cases that are tied upon what the courts have held is we're not going to let a party to the transaction who's assigning the lease that needs to be approved try to attack it for the lack of approval because in all those cases they hold the actual interest the only gas least has been approved and can be assigned but needs that approval. Well it can't be attacked by the individual by the direct parties. Yeah right and the difference here though is you're not a direct party

. Well I'm not a direct party. I do think that is one distinguishing factor. I apologize for interrupting. The big distinction though is as we sit here today these overriding royalty interests that have been purportedly sold don't exist

. The statute says you cannot create one without approval. This is in all of the cases that are in here the underlying lease was valid. The question was is the assignment of the courts uniformly say those questions are voidable those those transactions are voidable because the underlying lease is fine you just have to go get approval. Here there is no overriding royalty interest that it has ever been approved by the Navajo Nation

. That's what the bankruptcy court held that the without consent the overrides are void. Yes, Your Honor. In Judge Houser's ruling she states and is if I am wrong that that that trusty Morton can actually raise the lack of approval then the outcome is these are void because they never meant and that's what I think the big distinguishing factor is here is that this statute says you can't create them. So what is being transferred here doesn't exist. This breaks cock her hand is trying to create an interest in property that doesn't exist now and the second way I'd answer your hypothetical is this why is this why should the trustee have standing to raise this on these facts the trustee is is trying to quiet title to property in the estate why would any any other owner of property not be able to raise that the interest somebody is claiming is invalid when they're trying to clean up the title. This is not a circumstance like any of the cases that have been used in the opinions we're appealing where we're a party to the transaction the trustee didn't make the assignments the debtor didn't make the assignments of the overriding royalty interest and what the debtor assigned was not the lease he assigned an override that by Navajo Nation Code requires their approval and that's that's really I believe despositive of this appeal and and that's why I believe that the court Judge Lindsey respectfully aired when he determined after excluding the October 12th 2010 letter that this issue is moot it cannot be moot in our view because you still have a live controversy between the parties and in order in that you have to still go through the analysis all of the cases are distinguishable and I believe that for that for that reason I'll yield the rest of my time and we would respectfully request that you request thank you Mr. DeWolf Barton representing the office will hear from you may I please the court the district courts ruling sitting as an appellate court that it was not necessary to decide the standing issue was practical and it held the trustee to his own position the bankruptcy court held that Briggs Cockerham who I'll refer to as BC that BC had tied it that the assignment into BC BC was then the grantor to all of the Ori assignments that the assignment into BC was valid and lessened until it was not approved the trustee did not challenge that ruling in this appeal the district courts ruling about standing necessarily also recognizes that the Ori assignments can only be invalidated by proof that Navajo Nation approval was sought and was denied the trustee's own argument was that the November 10th letter for Mr. Johnson is the only evidence that the Navajo Nation will not consent to the Ori assignments in the future but I thought I thought the statute said that the override can't be created without their approval or these interests can't be created without their approval that's correct and your and your party you know neither has sought nor obtained their approval that's correct in what Judge Houser recognizes I think a fundamental problem with the trustee's argument is the trustee is saying well if I can raise the lack of consent then I win and that's exactly not what Judge Houser held well she said if she was wrong on the first point he wins no she did the the alternative holding by Judge Houser recognized that approval could be sought and obtained in the future and that the there is no deadline in the Ori assignments for seeking Navajo approval but that you know that really is doesn't make any sense because I mean assuming unless these leases are totally undeveloped if they're developed and producing money is gushing out every minute of every day and the money for an override either has to be put in escrow forever for your for your owners or more likely they would like to get their hands on it so you know you just can't use this leave this up in the air for the sake of this litigation it makes no sense the trustee is saying I get to unilaterally decide that if there's not consent as of the date of trial then the assignments are void and Judge Houser said no that's not correct what she held was that the mineral interest have not yet been created but the trustee ignores the distinction between the contractual and equitable rights and title that are under the agreements on the one hand versus the mineral interest itself that will ultimately be created up once the Navajo Nation approves it and so if you read why didn't why didn't you as soon as you got so you'd go out and get their approval because of the circumstances of the fact that you didn't know whether you had title because the title was at issue and and it was prudent to wait until there was a determination a court order like Judge Houser's opinion that says that the orry assignments are valid until they are not approved but it doesn't mean that they are void at this time and if you look at Judge Houser's opinion it is not that okay if the trustee does not have standing then the Apple East wind but if the trustee does have standing then the trustee wins that's not what her opinion is at all she ultimately holds that whether or not there is standing the trustee is not entitled to an order that the orry assignments are void well and I do not well I have a preliminary question and that is as I understood it she said that the the the trustees right to the hogback lease is based on a contingent reversionary interest that's right and you're not you didn't appeal that and has that been cleared up have they got more than a contingent reversionary interest in the hogback lease at this point I don't believe so your honor and and and that's an important point because the trustees only the only property of the estate was this contingent interest so the question becomes where's where's the rest of the title and the bankruptcy court held that it was in BC who then made these overriding royalty assignments and what the bankruptcy court held is that the the mineral interest themselves have not yet been created but she clearly was holding that the lack of consent on the date of trial just was not dispositive and whether the trustee has standing or not does not result in an opinion that the orry assignments are void and I think the district court in sitting as an appellate court looks at the full context and extent of the bankruptcy court's opinion and says well if there's no evidence that the Navajo nation will not consent to the overriding royalty interest in the future then there's no need to decide the standing issue and and as the court held that it just was not necessary for the district court to affirm but and I want to back up a minute to because I think I may have not fully addressed your question the you indicated earlier that these were conditioned precedents and what Judge Houser Hill was the opposite that the approval requirements operate as a condition subsequent the rule of construction that was in the hurtsle case that the bankruptcy court relied on is that a statute that declares an act void for the protection of a certain class of parties is only voidable because that class of parties can ratify or otherwise approve of the act and so Judge Houser is looking at these agreements as being valid unless and until they are void looking at the approval requirement as being a condition subsequent and her opinion and the the transcript of some of the hearings clearly indicates that Judge Houser was looking at it as being a condition subsequent and that's why Judge Houser holds that well okay as of the date of trial the mineral interests have not yet been created but that was not despositive because there's no deadline for obtaining the consent and and therefore because it is a condition subsequent the trustee was not entitled to an order that they were just void ab initio now there is a fund of money involved here right there is a fund of money million some dollars that has as I understand it has been escrowed with respect to those ory assignments like numbers 28 through 66 that the Judge Houser actually avoided those but then granted the lien and you mean the prepotition ones no your honor the the there was a and one of the elements of the defense was that there be proof of fair equivalent value and and so what Judge Houser held was that as to ory numbers 28 through 66 I believe not including Mr

. This breaks cock her hand is trying to create an interest in property that doesn't exist now and the second way I'd answer your hypothetical is this why is this why should the trustee have standing to raise this on these facts the trustee is is trying to quiet title to property in the estate why would any any other owner of property not be able to raise that the interest somebody is claiming is invalid when they're trying to clean up the title. This is not a circumstance like any of the cases that have been used in the opinions we're appealing where we're a party to the transaction the trustee didn't make the assignments the debtor didn't make the assignments of the overriding royalty interest and what the debtor assigned was not the lease he assigned an override that by Navajo Nation Code requires their approval and that's that's really I believe despositive of this appeal and and that's why I believe that the court Judge Lindsey respectfully aired when he determined after excluding the October 12th 2010 letter that this issue is moot it cannot be moot in our view because you still have a live controversy between the parties and in order in that you have to still go through the analysis all of the cases are distinguishable and I believe that for that for that reason I'll yield the rest of my time and we would respectfully request that you request thank you Mr. DeWolf Barton representing the office will hear from you may I please the court the district courts ruling sitting as an appellate court that it was not necessary to decide the standing issue was practical and it held the trustee to his own position the bankruptcy court held that Briggs Cockerham who I'll refer to as BC that BC had tied it that the assignment into BC BC was then the grantor to all of the Ori assignments that the assignment into BC was valid and lessened until it was not approved the trustee did not challenge that ruling in this appeal the district courts ruling about standing necessarily also recognizes that the Ori assignments can only be invalidated by proof that Navajo Nation approval was sought and was denied the trustee's own argument was that the November 10th letter for Mr. Johnson is the only evidence that the Navajo Nation will not consent to the Ori assignments in the future but I thought I thought the statute said that the override can't be created without their approval or these interests can't be created without their approval that's correct and your and your party you know neither has sought nor obtained their approval that's correct in what Judge Houser recognizes I think a fundamental problem with the trustee's argument is the trustee is saying well if I can raise the lack of consent then I win and that's exactly not what Judge Houser held well she said if she was wrong on the first point he wins no she did the the alternative holding by Judge Houser recognized that approval could be sought and obtained in the future and that the there is no deadline in the Ori assignments for seeking Navajo approval but that you know that really is doesn't make any sense because I mean assuming unless these leases are totally undeveloped if they're developed and producing money is gushing out every minute of every day and the money for an override either has to be put in escrow forever for your for your owners or more likely they would like to get their hands on it so you know you just can't use this leave this up in the air for the sake of this litigation it makes no sense the trustee is saying I get to unilaterally decide that if there's not consent as of the date of trial then the assignments are void and Judge Houser said no that's not correct what she held was that the mineral interest have not yet been created but the trustee ignores the distinction between the contractual and equitable rights and title that are under the agreements on the one hand versus the mineral interest itself that will ultimately be created up once the Navajo Nation approves it and so if you read why didn't why didn't you as soon as you got so you'd go out and get their approval because of the circumstances of the fact that you didn't know whether you had title because the title was at issue and and it was prudent to wait until there was a determination a court order like Judge Houser's opinion that says that the orry assignments are valid until they are not approved but it doesn't mean that they are void at this time and if you look at Judge Houser's opinion it is not that okay if the trustee does not have standing then the Apple East wind but if the trustee does have standing then the trustee wins that's not what her opinion is at all she ultimately holds that whether or not there is standing the trustee is not entitled to an order that the orry assignments are void well and I do not well I have a preliminary question and that is as I understood it she said that the the the trustees right to the hogback lease is based on a contingent reversionary interest that's right and you're not you didn't appeal that and has that been cleared up have they got more than a contingent reversionary interest in the hogback lease at this point I don't believe so your honor and and and that's an important point because the trustees only the only property of the estate was this contingent interest so the question becomes where's where's the rest of the title and the bankruptcy court held that it was in BC who then made these overriding royalty assignments and what the bankruptcy court held is that the the mineral interest themselves have not yet been created but she clearly was holding that the lack of consent on the date of trial just was not dispositive and whether the trustee has standing or not does not result in an opinion that the orry assignments are void and I think the district court in sitting as an appellate court looks at the full context and extent of the bankruptcy court's opinion and says well if there's no evidence that the Navajo nation will not consent to the overriding royalty interest in the future then there's no need to decide the standing issue and and as the court held that it just was not necessary for the district court to affirm but and I want to back up a minute to because I think I may have not fully addressed your question the you indicated earlier that these were conditioned precedents and what Judge Houser Hill was the opposite that the approval requirements operate as a condition subsequent the rule of construction that was in the hurtsle case that the bankruptcy court relied on is that a statute that declares an act void for the protection of a certain class of parties is only voidable because that class of parties can ratify or otherwise approve of the act and so Judge Houser is looking at these agreements as being valid unless and until they are void looking at the approval requirement as being a condition subsequent and her opinion and the the transcript of some of the hearings clearly indicates that Judge Houser was looking at it as being a condition subsequent and that's why Judge Houser holds that well okay as of the date of trial the mineral interests have not yet been created but that was not despositive because there's no deadline for obtaining the consent and and therefore because it is a condition subsequent the trustee was not entitled to an order that they were just void ab initio now there is a fund of money involved here right there is a fund of money million some dollars that has as I understand it has been escrowed with respect to those ory assignments like numbers 28 through 66 that the Judge Houser actually avoided those but then granted the lien and you mean the prepotition ones no your honor the the there was a and one of the elements of the defense was that there be proof of fair equivalent value and and so what Judge Houser held was that as to ory numbers 28 through 66 I believe not including Mr. Pugh's ory number 57 or whatever his that as to those there was not evidence of fair equivalent value and therefore under section 549c even though the the assignments are avoided that those purchasers are entitled to a lien for the amount that was actually that they were paid that they pay okay so that fund as I understand it just applies to those ory numbers one through 27 didn't have that issue and so they actually have in their interests their contractual and equitable those aren't an issue up here right they are with respect to the standing issue okay well I guess my question is it or my comment is it is so counterintuitive to me as regards numbers one through 27 for the court to hold in essence those rights have not even been created but if the trustee loses here they're going to get the royalties well the cut right well the the issue is they have the right to seek the approval correct what happens to the money yeah so what happens to the money which is in presumably escrow somewhere well and I if they if the Navajo Nation but does never gives approval right and I you know I don't know why it would but anyway right well they might because any any interest granted to the ory assignments is not going to come out of the less orers interest it's carved out of the the less ease interest and so it the Navajo's it's not going to reduce the royalty paid to the Navajo well put it that way but in answer to your question I don't know that the record reflects that the deep formation that these ory assignments apply to or even being produced it's my understanding that the lease is held by production on a shower or interest there may be production contemplated and that sort of thing I think the operator at that point you know would have the the ability to to hold the commence another lawsuit no just hold that money in suspense until you commence another loss until it's ultimately resolved but in looking at what was before Judge Halzer there's just no error in her holding that that the ory assignments are not void either because the trustee does not have the right to raise the lack of statutory approval the trustee is trying to enforce a statutory provision and about do you agree that all the cases that that you rely on are that are the two parties to the deal and not an not an outside party no I think some of the cases are like that the hurts all cases an example of a case where Mr. Herzl was actually a non-party to the agreement that he was trying to say was void for lack of approval and the court applied the same standing principle in Cheska Cheska this court's holding in Cheska is helpful because because of the context in which it was raised it was a state court lawsuit that was removed to federal court and the basis of removal as I understand the opinion was that the the Assignee was claiming that the assignment was void for lack of approval under one of the statutes one of the United States statutes and therefore was saying it was a federal question because of that statute in addition that assignment was conditioned the it was actually a condition precedent case where the assignment says this is conditioned on getting approval from the I think it was the BIA in that case and so there were two issues one the right to raise the lack of statutory approval and then secondly the right to say that the condition in the contract had not been complied with what what this court held in Cheska is that will just because the Navajo Nation and the Secretary of Interior would have standing in federal court to challenge the failure to comply with the statute does and then went on to say does not confer that similar right to a non-tribal litigant that the statute was not designed to protect which is like the trustee in this case then the court further went on to say that contractual defiance the the failure of the condition preceded that can be raised in state court but it but as to the right to enforce a statute this court's holding in Cheska applies and is persuasive because that was the context in that case and then we've cited the court to the San Xavier case apologies for the pronunciation and the Rosebud suitcase both of which were instances where you had parties trying to claim that agreements were void because of the lack of obtaining approval that's required under a statute and those cases say no relying on this court's opinion in Cheska that because those statutes are not designed to protect these non-tribal parties they don't have standing and you know that standing principle it's similar to the rule that's applied in negligence per se cases a party cannot claim that the violation of a statute constitute negligence per se if he's not in the class of persons that sought to be protected by that statute. You're talking about titled real property you know and it seems to me not fair at the very least to say that somebody who's claiming they're in the chain of title doesn't have to raise it doesn't able to raise a title defect of another person. And I think one of the distinctions in that is that the trustees not trying to raise contractual issues related to his title he's trying to enforce a statute the lack of consent of a statute

. Pugh's ory number 57 or whatever his that as to those there was not evidence of fair equivalent value and therefore under section 549c even though the the assignments are avoided that those purchasers are entitled to a lien for the amount that was actually that they were paid that they pay okay so that fund as I understand it just applies to those ory numbers one through 27 didn't have that issue and so they actually have in their interests their contractual and equitable those aren't an issue up here right they are with respect to the standing issue okay well I guess my question is it or my comment is it is so counterintuitive to me as regards numbers one through 27 for the court to hold in essence those rights have not even been created but if the trustee loses here they're going to get the royalties well the cut right well the the issue is they have the right to seek the approval correct what happens to the money yeah so what happens to the money which is in presumably escrow somewhere well and I if they if the Navajo Nation but does never gives approval right and I you know I don't know why it would but anyway right well they might because any any interest granted to the ory assignments is not going to come out of the less orers interest it's carved out of the the less ease interest and so it the Navajo's it's not going to reduce the royalty paid to the Navajo well put it that way but in answer to your question I don't know that the record reflects that the deep formation that these ory assignments apply to or even being produced it's my understanding that the lease is held by production on a shower or interest there may be production contemplated and that sort of thing I think the operator at that point you know would have the the ability to to hold the commence another lawsuit no just hold that money in suspense until you commence another loss until it's ultimately resolved but in looking at what was before Judge Halzer there's just no error in her holding that that the ory assignments are not void either because the trustee does not have the right to raise the lack of statutory approval the trustee is trying to enforce a statutory provision and about do you agree that all the cases that that you rely on are that are the two parties to the deal and not an not an outside party no I think some of the cases are like that the hurts all cases an example of a case where Mr. Herzl was actually a non-party to the agreement that he was trying to say was void for lack of approval and the court applied the same standing principle in Cheska Cheska this court's holding in Cheska is helpful because because of the context in which it was raised it was a state court lawsuit that was removed to federal court and the basis of removal as I understand the opinion was that the the Assignee was claiming that the assignment was void for lack of approval under one of the statutes one of the United States statutes and therefore was saying it was a federal question because of that statute in addition that assignment was conditioned the it was actually a condition precedent case where the assignment says this is conditioned on getting approval from the I think it was the BIA in that case and so there were two issues one the right to raise the lack of statutory approval and then secondly the right to say that the condition in the contract had not been complied with what what this court held in Cheska is that will just because the Navajo Nation and the Secretary of Interior would have standing in federal court to challenge the failure to comply with the statute does and then went on to say does not confer that similar right to a non-tribal litigant that the statute was not designed to protect which is like the trustee in this case then the court further went on to say that contractual defiance the the failure of the condition preceded that can be raised in state court but it but as to the right to enforce a statute this court's holding in Cheska applies and is persuasive because that was the context in that case and then we've cited the court to the San Xavier case apologies for the pronunciation and the Rosebud suitcase both of which were instances where you had parties trying to claim that agreements were void because of the lack of obtaining approval that's required under a statute and those cases say no relying on this court's opinion in Cheska that because those statutes are not designed to protect these non-tribal parties they don't have standing and you know that standing principle it's similar to the rule that's applied in negligence per se cases a party cannot claim that the violation of a statute constitute negligence per se if he's not in the class of persons that sought to be protected by that statute. You're talking about titled real property you know and it seems to me not fair at the very least to say that somebody who's claiming they're in the chain of title doesn't have to raise it doesn't able to raise a title defect of another person. And I think one of the distinctions in that is that the trustees not trying to raise contractual issues related to his title he's trying to enforce a statute the lack of consent of a statute. He's trying to clear his title by making sure that yours isn't a competing title. Yes but not on the basis of any contractual right that he would have he's he's trying to enforce a statute that was not designed to protect him. Well it's like the recording statute you know somebody with an unrequited you know it's saying you're in the recorded chain of title and someone with an unrequited interest from Papa Joe comes in and you're you're saying I can attack that because it's not in the chain of title. Well and I understand the court's struggling with it I think it's important and I may run out of time if you'll allow me to get this out related to that title issue

. He's trying to clear his title by making sure that yours isn't a competing title. Yes but not on the basis of any contractual right that he would have he's he's trying to enforce a statute that was not designed to protect him. Well it's like the recording statute you know somebody with an unrequited you know it's saying you're in the recorded chain of title and someone with an unrequited interest from Papa Joe comes in and you're you're saying I can attack that because it's not in the chain of title. Well and I understand the court's struggling with it I think it's important and I may run out of time if you'll allow me to get this out related to that title issue. I think it's important that what the trustee is is really asking the court to do is to give him preferential treatment over any other litigant because of what he calls unique circumstances and I think it's important for the court to to note that there it's really not unique here the circumstances of this case including the title conundrum is the result of the trustees own lack of diligence. The bankruptcy court held that the trustee ignored storm warnings that would have alerted the trustee to the existence of transfers out of BC had the trustee exercise diligence. If the trustee had done a title search upon being appointed he would have learned of the BC assignment and of the recording of the very first or the assignment. Had the trustee filed a copy of the bankruptcy petition in the deed records

. I think it's important that what the trustee is is really asking the court to do is to give him preferential treatment over any other litigant because of what he calls unique circumstances and I think it's important for the court to to note that there it's really not unique here the circumstances of this case including the title conundrum is the result of the trustees own lack of diligence. The bankruptcy court held that the trustee ignored storm warnings that would have alerted the trustee to the existence of transfers out of BC had the trustee exercise diligence. If the trustee had done a title search upon being appointed he would have learned of the BC assignment and of the recording of the very first or the assignment. Had the trustee filed a copy of the bankruptcy petition in the deed records. Most of the ory purchasers would have been put on constructive notice of the bankruptcy but instead of exercising diligence the trustee proposed a plan to sell the leases that did not account for the existence of the ory assignments and that's not the kind of circumstance that warrants. Let me just ask you this one question though and maybe it's a stupid question but the the trustee has prevailed over BC has it not. Well in regard to the list of assignment of the of the lease to BC in late oh six right from a title perspective. Yeah well the trustee the bankruptcy court made it clear that because the BC assignment because BC had title title had to get back to the estate for the estate to be able to sell it and what Judge Houser basically held is that when that happens the trustee argued a trial that it had already happened and Judge Houser disagreed with that but but basically

. Most of the ory purchasers would have been put on constructive notice of the bankruptcy but instead of exercising diligence the trustee proposed a plan to sell the leases that did not account for the existence of the ory assignments and that's not the kind of circumstance that warrants. Let me just ask you this one question though and maybe it's a stupid question but the the trustee has prevailed over BC has it not. Well in regard to the list of assignment of the of the lease to BC in late oh six right from a title perspective. Yeah well the trustee the bankruptcy court made it clear that because the BC assignment because BC had title title had to get back to the estate for the estate to be able to sell it and what Judge Houser basically held is that when that happens the trustee argued a trial that it had already happened and Judge Houser disagreed with that but but basically. But clearly what she was saying your honor is that once title okay why don't we begin. Why down a little bit here. I know but let me just pursue my point is that it was my impret maybe we have to take it up and about my impression was that the the debt are prevailed over BC because BC was attempting to take that take the asset and get it away from creditors I presume that being the case again it seems real counterintuitive the people who took from the person who took from the bankruptcy estate have suddenly made this by alchemy into enforceable rights that's my final comment. Okay I think we will

. But clearly what she was saying your honor is that once title okay why don't we begin. Why down a little bit here. I know but let me just pursue my point is that it was my impret maybe we have to take it up and about my impression was that the the debt are prevailed over BC because BC was attempting to take that take the asset and get it away from creditors I presume that being the case again it seems real counterintuitive the people who took from the person who took from the bankruptcy estate have suddenly made this by alchemy into enforceable rights that's my final comment. Okay I think we will. I take it you disagree I do and I'd be happy to respond but I don't I'll give you one minute to respond to her one minute but we've got to move the saying on now. Yes, your. What Judge Houser held is that because BC had title BC had title to make these worry assignments so when the trustee and BC settled in the bankruptcy settled their claims what what the opinion is saying is that title still has to get back to the trustee out of BC and that when that happens that the trustee will then take title subject to what BC did with it in the you know all right with thank you thank you. And now we'll have just I'm in Mr

. I take it you disagree I do and I'd be happy to respond but I don't I'll give you one minute to respond to her one minute but we've got to move the saying on now. Yes, your. What Judge Houser held is that because BC had title BC had title to make these worry assignments so when the trustee and BC settled in the bankruptcy settled their claims what what the opinion is saying is that title still has to get back to the trustee out of BC and that when that happens that the trustee will then take title subject to what BC did with it in the you know all right with thank you thank you. And now we'll have just I'm in Mr. Wolf we'll have a little bottle from. In answer to your question Judge Jones yes the trustee has gotten the lease back from Briggs Calcamer or any claimed interest based on the settlement in the plan and Judge Houser's ruling in the opinion makes clear that Briggs Calcamer can never seek approval of these assignments of these orries because of the plan and so that's why this issue is also not moot when the appellees argue that BC holds title I would respectfully disagree that's not what Judge Houser said what she took issue is that there had been a transfer and there's this contingent reverse reverse interest at the time of the petition that could have given or that did give the Valesito an interest and make it property of the estate now what she held though was given what happened subsequently during the case and the approvals by the Navajo Nation and the BIA of the assignment from Tiffany the original unquestionable holder of the lease to the debtor Valesito was that the debtor received or had all the titles to the lease and then this issue came up on trying to close the sale under the plan what I would say and so the the appellees in this lack of diligence issue on the title though respectfully this is an at least an Indian land according to federal regulations the only place to check title is in the land title office created under the federal regulations 25 CFR 15.3 recording in the county which is a state line of title does no good and so we respectfully disagree with that but I will leave you with this to decide why this is this right case and the circumstances justify the trustee being able to raise that they don't have approval consider the situation a little differently let's say that Briggs Cockerham received the lease which there was a transfer out here and let's say that the trustee had to avoid that transfer of the lease under chapter five of 547 a preference 548 a fraudulent transfer a state law fraudulent transfer during the pendency of that litigation Briggs Cockerham continues to make assignments of overriding royalty interest when the trustee recovers and if he were to elect to recover the property under 550 rather than money he gets the lease back and then he realizes there are all these people that claim they have an interest the trustee then would have to institute litigation to quiet title why is it unfair that the trustee can't say hey you can't create an override therefore what I got back was a lease that is unencumbered other than the burden under the lease with an abhonation the facts here very confusing but when you boil it down that's why the different there's a distinction here the the assignor Briggs Cockerham tried to create an interest in real property that you're not allowed to do he didn't try to assign an existing right to real property so when a trustee wants to quiet title to property he has gotten in the estate he should be able to raise your interest is not valid and you are in he is within that zone this is not the same thing of the cases where parties to the transaction or even if you want to go so far as to say that somebody couldn't raise the lack of approval of the lease this not the same thing because the underlying lease in all those cases was always valid finally the hurts will case in hurt so I think the distinguishing factor there is you see all of the leases were valid the assignments were approved and you have an actor who took action that the court held was equitably inappropriate for him to be able to raise these lack of approvals that's the protection of why what we're arguing doesn't go too far if somebody in the trustees position not the trustee did something to prevent the approval of prevent this in appropriately there would be available the equitable a stop a defense which is what the court invoked in hurt so against mr. hurtsle who you know did a couple things after he lost in state court to try and kind of have a heads I win tails you lose situation thank you for your time I appreciate it thank you very much

. Wolf we'll have a little bottle from. In answer to your question Judge Jones yes the trustee has gotten the lease back from Briggs Calcamer or any claimed interest based on the settlement in the plan and Judge Houser's ruling in the opinion makes clear that Briggs Calcamer can never seek approval of these assignments of these orries because of the plan and so that's why this issue is also not moot when the appellees argue that BC holds title I would respectfully disagree that's not what Judge Houser said what she took issue is that there had been a transfer and there's this contingent reverse reverse interest at the time of the petition that could have given or that did give the Valesito an interest and make it property of the estate now what she held though was given what happened subsequently during the case and the approvals by the Navajo Nation and the BIA of the assignment from Tiffany the original unquestionable holder of the lease to the debtor Valesito was that the debtor received or had all the titles to the lease and then this issue came up on trying to close the sale under the plan what I would say and so the the appellees in this lack of diligence issue on the title though respectfully this is an at least an Indian land according to federal regulations the only place to check title is in the land title office created under the federal regulations 25 CFR 15.3 recording in the county which is a state line of title does no good and so we respectfully disagree with that but I will leave you with this to decide why this is this right case and the circumstances justify the trustee being able to raise that they don't have approval consider the situation a little differently let's say that Briggs Cockerham received the lease which there was a transfer out here and let's say that the trustee had to avoid that transfer of the lease under chapter five of 547 a preference 548 a fraudulent transfer a state law fraudulent transfer during the pendency of that litigation Briggs Cockerham continues to make assignments of overriding royalty interest when the trustee recovers and if he were to elect to recover the property under 550 rather than money he gets the lease back and then he realizes there are all these people that claim they have an interest the trustee then would have to institute litigation to quiet title why is it unfair that the trustee can't say hey you can't create an override therefore what I got back was a lease that is unencumbered other than the burden under the lease with an abhonation the facts here very confusing but when you boil it down that's why the different there's a distinction here the the assignor Briggs Cockerham tried to create an interest in real property that you're not allowed to do he didn't try to assign an existing right to real property so when a trustee wants to quiet title to property he has gotten in the estate he should be able to raise your interest is not valid and you are in he is within that zone this is not the same thing of the cases where parties to the transaction or even if you want to go so far as to say that somebody couldn't raise the lack of approval of the lease this not the same thing because the underlying lease in all those cases was always valid finally the hurts will case in hurt so I think the distinguishing factor there is you see all of the leases were valid the assignments were approved and you have an actor who took action that the court held was equitably inappropriate for him to be able to raise these lack of approvals that's the protection of why what we're arguing doesn't go too far if somebody in the trustees position not the trustee did something to prevent the approval of prevent this in appropriately there would be available the equitable a stop a defense which is what the court invoked in hurt so against mr. hurtsle who you know did a couple things after he lost in state court to try and kind of have a heads I win tails you lose situation thank you for your time I appreciate it thank you very much

Please the court. My name is Scott DeWolf and I represent Harvey Morton, the chapter 11 trustee, the appellant in this case. In the limited time that I have today, I really would like to focus on one issue and that issue is this whether the district court aired in finding that the issue of whether the trustee can raise the lack of Navajo Nation approval of the overriding royalty interest is moot because he affirmed the bankruptcy judge's exclusion of the November 10th, 2010 letter from the Navajo Nation. Respectfully, I think the court aired that is not moot if you exclude the November 10th, 2010 letter for this reason. There is still a live controversy between the parties, even if that letter is excluded. And the reason is essentially, in my view, twofold. First, the Navajo Nation code section at issue section 605 provides that no overriding royalty may be created by any transfer authorized hereby without the consent of the Minerals Department of the Navajo Nation. Nor shall such overriding royalty be approved if it's determined by the Minerals Department that it will have an adverse impact that prevents full recovery of the mineral resources. Here, Judge Hauser and the bankruptcy court ruled that that language is clear and unambiguous and nobody has channelled the challenge that finding and I don't think anyone would. That is clear. You cannot create an overriding royalty interest without approval of the Minerals Department of Navajo Nation. There's no dispute. It's stipulated in this case that the appellees have never sought nor obtained the approval of the Navajo Nation for the overriding royalty interest that they received from Briggs Cockerham. The trustee is the was the owner of the Hogback lease under an approved assignment by both the Navajo Nation and the Bureau of Indian Affairs. This litigation is about trying to quiet title to this claims of these overrides given by Briggs Cockerham. In that situation, the trustee should be able to raise those issues because the cases relied upon by Judge Hauser and Judge Lindsay are distinguishable and I really don't think they apply. I believe this is an issue of first impression. There is no case directly on point deciding who has standing to raise the lack of Navajo Nation approval under the Navajo Nation code. The cases that were relied upon in both the bankruptcy court and in Judge Lindsay's opinion affirming Judge Hauser are principally three. The first case is the Chuska Energy Case 854 F. Second 727 out of the fifth circuit. That case, my position, is not addressing who has standing to raise the lack of approval of an assignment under federal law. That case was a jurisdictional question of whether the case could be removed based on the affirmative defense of mobile that the assignment of the oil and gas lease on Indian land had never been approved by the Secretary of the Interior. The court and the fifth circuit expressly said that there's no jurisdiction here but mobile can in state court raise its defense of illegality for the lack of approval. Now the language that is cited against the trustee is why we don't have standing to raise the lack of approval is in the section dealing with preemption and what the court as I read is the language that cited against us what the court I believe is saying there is that while the Secretary of the Interior or the Navajo Nation or any other Indian nation that has an issue with an unapproved assignment could bring a federal cause of action under those statutes that is why they would have to bring it in federal court because it's a federal issue but a party in the Chuska case could raise illegality in state court. I don't think the federal that that opinion is saying the trustee doesn't have standing. Let me ask you a question to what extent is the not and I will say this is a very complex case factually and legally we don't get many involving the Navajo Nation approval statute and it obviously was the judge House or but to what extent is this question of Navajo approval similar to any other condition precedent? I believe that the the issue here is different in this sense. That's a friendly question because what you know this fellow goes off and starts selling these overriding royalty in this before and after the bankruptcy and you know in a sense that none of them has that approval level of approval. Why is that any different from if he had sold overriding royalties but they never paid for him so they have that you know they have a piece of paper in hand but they never in fact even paid the fraudster for them and then who would have quote standing to raise that's a bare piece of paper and you basically stole it. I mean why is this different from that circumstance or would it be different? I'm going to take your hypothetical in two parts why is it different I believe is this because the interesting question these overrides don't exist. All of the cases that are tied upon what the courts have held is we're not going to let a party to the transaction who's assigning the lease that needs to be approved try to attack it for the lack of approval because in all those cases they hold the actual interest the only gas least has been approved and can be assigned but needs that approval. Well it can't be attacked by the individual by the direct parties. Yeah right and the difference here though is you're not a direct party. Well I'm not a direct party. I do think that is one distinguishing factor. I apologize for interrupting. The big distinction though is as we sit here today these overriding royalty interests that have been purportedly sold don't exist. The statute says you cannot create one without approval. This is in all of the cases that are in here the underlying lease was valid. The question was is the assignment of the courts uniformly say those questions are voidable those those transactions are voidable because the underlying lease is fine you just have to go get approval. Here there is no overriding royalty interest that it has ever been approved by the Navajo Nation. That's what the bankruptcy court held that the without consent the overrides are void. Yes, Your Honor. In Judge Houser's ruling she states and is if I am wrong that that that trusty Morton can actually raise the lack of approval then the outcome is these are void because they never meant and that's what I think the big distinguishing factor is here is that this statute says you can't create them. So what is being transferred here doesn't exist. This breaks cock her hand is trying to create an interest in property that doesn't exist now and the second way I'd answer your hypothetical is this why is this why should the trustee have standing to raise this on these facts the trustee is is trying to quiet title to property in the estate why would any any other owner of property not be able to raise that the interest somebody is claiming is invalid when they're trying to clean up the title. This is not a circumstance like any of the cases that have been used in the opinions we're appealing where we're a party to the transaction the trustee didn't make the assignments the debtor didn't make the assignments of the overriding royalty interest and what the debtor assigned was not the lease he assigned an override that by Navajo Nation Code requires their approval and that's that's really I believe despositive of this appeal and and that's why I believe that the court Judge Lindsey respectfully aired when he determined after excluding the October 12th 2010 letter that this issue is moot it cannot be moot in our view because you still have a live controversy between the parties and in order in that you have to still go through the analysis all of the cases are distinguishable and I believe that for that for that reason I'll yield the rest of my time and we would respectfully request that you request thank you Mr. DeWolf Barton representing the office will hear from you may I please the court the district courts ruling sitting as an appellate court that it was not necessary to decide the standing issue was practical and it held the trustee to his own position the bankruptcy court held that Briggs Cockerham who I'll refer to as BC that BC had tied it that the assignment into BC BC was then the grantor to all of the Ori assignments that the assignment into BC was valid and lessened until it was not approved the trustee did not challenge that ruling in this appeal the district courts ruling about standing necessarily also recognizes that the Ori assignments can only be invalidated by proof that Navajo Nation approval was sought and was denied the trustee's own argument was that the November 10th letter for Mr. Johnson is the only evidence that the Navajo Nation will not consent to the Ori assignments in the future but I thought I thought the statute said that the override can't be created without their approval or these interests can't be created without their approval that's correct and your and your party you know neither has sought nor obtained their approval that's correct in what Judge Houser recognizes I think a fundamental problem with the trustee's argument is the trustee is saying well if I can raise the lack of consent then I win and that's exactly not what Judge Houser held well she said if she was wrong on the first point he wins no she did the the alternative holding by Judge Houser recognized that approval could be sought and obtained in the future and that the there is no deadline in the Ori assignments for seeking Navajo approval but that you know that really is doesn't make any sense because I mean assuming unless these leases are totally undeveloped if they're developed and producing money is gushing out every minute of every day and the money for an override either has to be put in escrow forever for your for your owners or more likely they would like to get their hands on it so you know you just can't use this leave this up in the air for the sake of this litigation it makes no sense the trustee is saying I get to unilaterally decide that if there's not consent as of the date of trial then the assignments are void and Judge Houser said no that's not correct what she held was that the mineral interest have not yet been created but the trustee ignores the distinction between the contractual and equitable rights and title that are under the agreements on the one hand versus the mineral interest itself that will ultimately be created up once the Navajo Nation approves it and so if you read why didn't why didn't you as soon as you got so you'd go out and get their approval because of the circumstances of the fact that you didn't know whether you had title because the title was at issue and and it was prudent to wait until there was a determination a court order like Judge Houser's opinion that says that the orry assignments are valid until they are not approved but it doesn't mean that they are void at this time and if you look at Judge Houser's opinion it is not that okay if the trustee does not have standing then the Apple East wind but if the trustee does have standing then the trustee wins that's not what her opinion is at all she ultimately holds that whether or not there is standing the trustee is not entitled to an order that the orry assignments are void well and I do not well I have a preliminary question and that is as I understood it she said that the the the trustees right to the hogback lease is based on a contingent reversionary interest that's right and you're not you didn't appeal that and has that been cleared up have they got more than a contingent reversionary interest in the hogback lease at this point I don't believe so your honor and and and that's an important point because the trustees only the only property of the estate was this contingent interest so the question becomes where's where's the rest of the title and the bankruptcy court held that it was in BC who then made these overriding royalty assignments and what the bankruptcy court held is that the the mineral interest themselves have not yet been created but she clearly was holding that the lack of consent on the date of trial just was not dispositive and whether the trustee has standing or not does not result in an opinion that the orry assignments are void and I think the district court in sitting as an appellate court looks at the full context and extent of the bankruptcy court's opinion and says well if there's no evidence that the Navajo nation will not consent to the overriding royalty interest in the future then there's no need to decide the standing issue and and as the court held that it just was not necessary for the district court to affirm but and I want to back up a minute to because I think I may have not fully addressed your question the you indicated earlier that these were conditioned precedents and what Judge Houser Hill was the opposite that the approval requirements operate as a condition subsequent the rule of construction that was in the hurtsle case that the bankruptcy court relied on is that a statute that declares an act void for the protection of a certain class of parties is only voidable because that class of parties can ratify or otherwise approve of the act and so Judge Houser is looking at these agreements as being valid unless and until they are void looking at the approval requirement as being a condition subsequent and her opinion and the the transcript of some of the hearings clearly indicates that Judge Houser was looking at it as being a condition subsequent and that's why Judge Houser holds that well okay as of the date of trial the mineral interests have not yet been created but that was not despositive because there's no deadline for obtaining the consent and and therefore because it is a condition subsequent the trustee was not entitled to an order that they were just void ab initio now there is a fund of money involved here right there is a fund of money million some dollars that has as I understand it has been escrowed with respect to those ory assignments like numbers 28 through 66 that the Judge Houser actually avoided those but then granted the lien and you mean the prepotition ones no your honor the the there was a and one of the elements of the defense was that there be proof of fair equivalent value and and so what Judge Houser held was that as to ory numbers 28 through 66 I believe not including Mr. Pugh's ory number 57 or whatever his that as to those there was not evidence of fair equivalent value and therefore under section 549c even though the the assignments are avoided that those purchasers are entitled to a lien for the amount that was actually that they were paid that they pay okay so that fund as I understand it just applies to those ory numbers one through 27 didn't have that issue and so they actually have in their interests their contractual and equitable those aren't an issue up here right they are with respect to the standing issue okay well I guess my question is it or my comment is it is so counterintuitive to me as regards numbers one through 27 for the court to hold in essence those rights have not even been created but if the trustee loses here they're going to get the royalties well the cut right well the the issue is they have the right to seek the approval correct what happens to the money yeah so what happens to the money which is in presumably escrow somewhere well and I if they if the Navajo Nation but does never gives approval right and I you know I don't know why it would but anyway right well they might because any any interest granted to the ory assignments is not going to come out of the less orers interest it's carved out of the the less ease interest and so it the Navajo's it's not going to reduce the royalty paid to the Navajo well put it that way but in answer to your question I don't know that the record reflects that the deep formation that these ory assignments apply to or even being produced it's my understanding that the lease is held by production on a shower or interest there may be production contemplated and that sort of thing I think the operator at that point you know would have the the ability to to hold the commence another lawsuit no just hold that money in suspense until you commence another loss until it's ultimately resolved but in looking at what was before Judge Halzer there's just no error in her holding that that the ory assignments are not void either because the trustee does not have the right to raise the lack of statutory approval the trustee is trying to enforce a statutory provision and about do you agree that all the cases that that you rely on are that are the two parties to the deal and not an not an outside party no I think some of the cases are like that the hurts all cases an example of a case where Mr. Herzl was actually a non-party to the agreement that he was trying to say was void for lack of approval and the court applied the same standing principle in Cheska Cheska this court's holding in Cheska is helpful because because of the context in which it was raised it was a state court lawsuit that was removed to federal court and the basis of removal as I understand the opinion was that the the Assignee was claiming that the assignment was void for lack of approval under one of the statutes one of the United States statutes and therefore was saying it was a federal question because of that statute in addition that assignment was conditioned the it was actually a condition precedent case where the assignment says this is conditioned on getting approval from the I think it was the BIA in that case and so there were two issues one the right to raise the lack of statutory approval and then secondly the right to say that the condition in the contract had not been complied with what what this court held in Cheska is that will just because the Navajo Nation and the Secretary of Interior would have standing in federal court to challenge the failure to comply with the statute does and then went on to say does not confer that similar right to a non-tribal litigant that the statute was not designed to protect which is like the trustee in this case then the court further went on to say that contractual defiance the the failure of the condition preceded that can be raised in state court but it but as to the right to enforce a statute this court's holding in Cheska applies and is persuasive because that was the context in that case and then we've cited the court to the San Xavier case apologies for the pronunciation and the Rosebud suitcase both of which were instances where you had parties trying to claim that agreements were void because of the lack of obtaining approval that's required under a statute and those cases say no relying on this court's opinion in Cheska that because those statutes are not designed to protect these non-tribal parties they don't have standing and you know that standing principle it's similar to the rule that's applied in negligence per se cases a party cannot claim that the violation of a statute constitute negligence per se if he's not in the class of persons that sought to be protected by that statute. You're talking about titled real property you know and it seems to me not fair at the very least to say that somebody who's claiming they're in the chain of title doesn't have to raise it doesn't able to raise a title defect of another person. And I think one of the distinctions in that is that the trustees not trying to raise contractual issues related to his title he's trying to enforce a statute the lack of consent of a statute. He's trying to clear his title by making sure that yours isn't a competing title. Yes but not on the basis of any contractual right that he would have he's he's trying to enforce a statute that was not designed to protect him. Well it's like the recording statute you know somebody with an unrequited you know it's saying you're in the recorded chain of title and someone with an unrequited interest from Papa Joe comes in and you're you're saying I can attack that because it's not in the chain of title. Well and I understand the court's struggling with it I think it's important and I may run out of time if you'll allow me to get this out related to that title issue. I think it's important that what the trustee is is really asking the court to do is to give him preferential treatment over any other litigant because of what he calls unique circumstances and I think it's important for the court to to note that there it's really not unique here the circumstances of this case including the title conundrum is the result of the trustees own lack of diligence. The bankruptcy court held that the trustee ignored storm warnings that would have alerted the trustee to the existence of transfers out of BC had the trustee exercise diligence. If the trustee had done a title search upon being appointed he would have learned of the BC assignment and of the recording of the very first or the assignment. Had the trustee filed a copy of the bankruptcy petition in the deed records. Most of the ory purchasers would have been put on constructive notice of the bankruptcy but instead of exercising diligence the trustee proposed a plan to sell the leases that did not account for the existence of the ory assignments and that's not the kind of circumstance that warrants. Let me just ask you this one question though and maybe it's a stupid question but the the trustee has prevailed over BC has it not. Well in regard to the list of assignment of the of the lease to BC in late oh six right from a title perspective. Yeah well the trustee the bankruptcy court made it clear that because the BC assignment because BC had title title had to get back to the estate for the estate to be able to sell it and what Judge Houser basically held is that when that happens the trustee argued a trial that it had already happened and Judge Houser disagreed with that but but basically. But clearly what she was saying your honor is that once title okay why don't we begin. Why down a little bit here. I know but let me just pursue my point is that it was my impret maybe we have to take it up and about my impression was that the the debt are prevailed over BC because BC was attempting to take that take the asset and get it away from creditors I presume that being the case again it seems real counterintuitive the people who took from the person who took from the bankruptcy estate have suddenly made this by alchemy into enforceable rights that's my final comment. Okay I think we will. I take it you disagree I do and I'd be happy to respond but I don't I'll give you one minute to respond to her one minute but we've got to move the saying on now. Yes, your. What Judge Houser held is that because BC had title BC had title to make these worry assignments so when the trustee and BC settled in the bankruptcy settled their claims what what the opinion is saying is that title still has to get back to the trustee out of BC and that when that happens that the trustee will then take title subject to what BC did with it in the you know all right with thank you thank you. And now we'll have just I'm in Mr. Wolf we'll have a little bottle from. In answer to your question Judge Jones yes the trustee has gotten the lease back from Briggs Calcamer or any claimed interest based on the settlement in the plan and Judge Houser's ruling in the opinion makes clear that Briggs Calcamer can never seek approval of these assignments of these orries because of the plan and so that's why this issue is also not moot when the appellees argue that BC holds title I would respectfully disagree that's not what Judge Houser said what she took issue is that there had been a transfer and there's this contingent reverse reverse interest at the time of the petition that could have given or that did give the Valesito an interest and make it property of the estate now what she held though was given what happened subsequently during the case and the approvals by the Navajo Nation and the BIA of the assignment from Tiffany the original unquestionable holder of the lease to the debtor Valesito was that the debtor received or had all the titles to the lease and then this issue came up on trying to close the sale under the plan what I would say and so the the appellees in this lack of diligence issue on the title though respectfully this is an at least an Indian land according to federal regulations the only place to check title is in the land title office created under the federal regulations 25 CFR 15.3 recording in the county which is a state line of title does no good and so we respectfully disagree with that but I will leave you with this to decide why this is this right case and the circumstances justify the trustee being able to raise that they don't have approval consider the situation a little differently let's say that Briggs Cockerham received the lease which there was a transfer out here and let's say that the trustee had to avoid that transfer of the lease under chapter five of 547 a preference 548 a fraudulent transfer a state law fraudulent transfer during the pendency of that litigation Briggs Cockerham continues to make assignments of overriding royalty interest when the trustee recovers and if he were to elect to recover the property under 550 rather than money he gets the lease back and then he realizes there are all these people that claim they have an interest the trustee then would have to institute litigation to quiet title why is it unfair that the trustee can't say hey you can't create an override therefore what I got back was a lease that is unencumbered other than the burden under the lease with an abhonation the facts here very confusing but when you boil it down that's why the different there's a distinction here the the assignor Briggs Cockerham tried to create an interest in real property that you're not allowed to do he didn't try to assign an existing right to real property so when a trustee wants to quiet title to property he has gotten in the estate he should be able to raise your interest is not valid and you are in he is within that zone this is not the same thing of the cases where parties to the transaction or even if you want to go so far as to say that somebody couldn't raise the lack of approval of the lease this not the same thing because the underlying lease in all those cases was always valid finally the hurts will case in hurt so I think the distinguishing factor there is you see all of the leases were valid the assignments were approved and you have an actor who took action that the court held was equitably inappropriate for him to be able to raise these lack of approvals that's the protection of why what we're arguing doesn't go too far if somebody in the trustees position not the trustee did something to prevent the approval of prevent this in appropriately there would be available the equitable a stop a defense which is what the court invoked in hurt so against mr. hurtsle who you know did a couple things after he lost in state court to try and kind of have a heads I win tails you lose situation thank you for your time I appreciate it thank you very muc