Ultra Resources, Inc., a Wyoming Corporation

IN THE SUPREME COURT, STATE OF WYOMING
2015 WY 40
OCTOBER TERM, A.D. 2014
March 19, 2015
ULTRA RESOURCES, INC., a Wyoming
Corporation,
Appellant
(Defendant),
v. S-14-0006, S-14-0141
DOYLE and MARGARET M.
HARTMAN, JOHN H. HENDRIX
CORPORATION, MICHAEL L. KLEIN
and JEANNE KLEIN, RONNIE H.
WESTBROOK and KAREN
WESTBROOK,
Appellees
(Plaintiffs).
SWEPI LP, a Delaware Limited
Partnership,
Appellant
(Defendant),
v. S-14-0007, S-14-0142
DOYLE and MARGARET M.
HARTMAN, JOHN H. HENDRIX
CORPORATION, MICHAEL L. KLEIN
and JEANNE KLEIN, RONNIE H.
WESTBROOK and KAREN
WESTBROOK,
Appellees
(Plaintiffs).
LANCE OIL & GAS COMPANY, a
Delaware Corporation,
Appellant
(Defendant),
v. S-14-0008
DOYLE and MARGARET M.
HARTMAN, JOHN H. HENDRIX
CORPORATION, MICHAEL L. KLEIN
and JEANNE KLEIN, RONNIE H.
WESTBROOK and KAREN
WESTBROOK,
Appellees
(Plaintiffs).
Appeal from the District Court of Sublette County
The Honorable Norman E. Young, Judge
Representing Appellant Ultra Resources, Inc.:
Douglas J. Mason of Mason & Mason, P.C., Pinedale, Wyoming; Michael J.
Gallagher, Shannon Wells Stevenson, Natalie West of Davis Graham & Stubbs LLP,
Denver, Colorado. Argument by Ms. Stevenson.
Representing Appellant SWEPI, LP:
Patrick J. Murphy, Erica Day of Williams, Porter, Day & Neville, Casper, Wyoming;
Phillip D. Barber of Phillip D. Barber, P.C., Denver, Colorado. Argument by Mr.
Murphy.
Representing Appellant Lance Oil & Gas Company:
Paul J. Hickey of Hickey & Evans, Cheyenne, Wyoming; Ezekiel James Williams of
Lewis Bess Williams & Weese, P.C., Denver, Colorado.
Representing Appellees:
John A. Masterson, Michael J. Sullivan of Lewis Roca Rothgerber LLP, Casper,
Wyoming; Jake Eugene Gallegos, Michael J. Condon of the Gallegos Law Firm, P.C.,
Santa Fe, New Mexico. Argument by Mr. Sullivan and Mr. Condon.
Before BURKE, C.J., and HILL, KITE, DAVIS, JJ., and GOLDEN, J., retired.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made
before final publication in the permanent volume.
KITE, Justice.
[¶1] Appellants/Defendants Ultra Resources, Inc. (Ultra), SWEPI, LP (SWEPI) and
Lance Oil & Gas Co. (Lance Oil)1 appeal from the district court’s orders after
Appellees/Plaintiffs Doyle and Margaret Hartman, et. al. filed a motion to enforce a
judgment and net profits contract (NPC) pertaining to oil and gas leases in Sublette
County, Wyoming. 2 The defendants claim the district court did not have jurisdiction to
rule on the issues presented in the plaintiffs’ motion to enforce. They also contest the
district court’s decision on the merits of the motion to enforce and its award of attorney
fees to the plaintiffs. We conclude the district court had jurisdiction over the issues
presented, it correctly interpreted its prior judgment and the defendants’ accounting
responsibilities under the NPC, and it properly granted the plaintiffs’ request for attorney
fees, although we do order a minor revision of the award.
[¶2] We affirm with revision.
ISSUES
[¶3] The issues3 on appeal are:
1
Lance Oil did not file a separate brief. Instead, it joined the arguments presented in Ultra’s and
SWEPI’s briefs, with the exception of their arguments on the attorney fee award which did not apply to
Lance Oil because it was a non-operator working interest owner.
2
Initially, there were two additional appeals related to this matter. Supreme Court Case No. S-14-0009
was an appeal brought by defendants WPX Energy RM Company, f/k/a Williams Production Rocky
Mountain Co., and Arrowhead Resources (U.S.A.), Ltd. We dismissed the appeal for want of prosecution
when the appellants’ brief was not filed in a timely manner and refused to reinstate the appeal on a later
petition. Supreme Court Case. No. S-14-0010 was a cross-appeal brought by the plaintiffs which was
voluntarily dismissed.
3
We restate the issues presented in the parties’ opening briefs, but do not include the “issues” presented
by defendants in their reply brief. W.R.A.P. 7.03 governs reply briefs:
Appellant may file a brief in reply which shall comply with the requirements of
W.R.A.P. 7.01(a), (b), (c), (f), (g), (h), and (i). In lieu of any statement of the issues, the
reply brief shall precisely and concisely set forth on the first page those new issues and
arguments raised by the brief of the appellee which are addressed in the reply brief. A
reply brief is limited to such new issues and arguments, and a failure to comply with
these requirements may subject the party to sanctions under these rules.
In large part, the defendants’ reply brief simply includes further argument on the issues included in their
opening briefs. “Presenting argument in a reply brief is not equivalent to framing the issues in an opening
brief. A reply brief is not a second chance to raise an issue or present argument that the appellant had the
responsibility, but failed, to address in its opening brief.” Ferrell v. Knighten, 2013 WY 37, ¶ 11, n.1, 298
1. Did the district court have jurisdiction to consider the plaintiffs’ motion to
enforce the judgment and the NPC?
2. Did the district court err by ruling that defendants were not entitled to credit
for expenses which were invoiced prior to 2007 because they should have been charged
against the net profits interest (NPI) during the time period at issue in the trial?
3. Did the district court err by ruling that, under the terms of the NPC,
expenses had to be charged against the NPI in the month following the month the
expenses were invoiced?
4. Did the district court err by rejecting the defendants’ argument, based upon
the principles of estoppel and finality, that the plaintiffs had agreed and the district court
had previously ordered expenses would be charged against the NPI when billed to other
working interest owners in joint interest bills (JIBs)?
5. Did the district court err in awarding attorney fees to plaintiffs?
FACTS
[¶4] The parties own interests in certain oil and gas leases in Sublette County,
Wyoming. Ultra Resources, Inc. v. Hartman, 2010 WY 36, ¶ 10, 226 P.3d 889, 902
(Wyo. 2010) (Ultra I). Defendants Ultra and SWEPI4 are working interest owners and
operators of the leases, defendant Lance Oil is a non-operator working interest owner,
and the plaintiffs own a NPI in the leases. Id., ¶ 11, 226 P.3d at 902-03. In the
underlying litigation, the district court entered a declaratory judgment recognizing the
existence of the NPI and delineating the operators’ NPC accounting responsibilities. It
also granted a monetary judgment against the defendants for the amount due to the
plaintiffs for the NPI through December 31, 2006. Id., ¶¶ 14, 17, 226 P.3d at 903-04.
With a few exceptions not relevant here, we affirmed the district court’s decision in Ultra
I. After our mandate issued, the district court entered an amended judgment and the
defendants paid the monetary judgment.
[¶5] In July 2010, the plaintiffs filed a motion to enforce judgment, claiming the
defendants were not properly accounting to them as required by the earlier declaratory
P.3d 161, 163, n.1 (Wyo. 2013), quoting Ultra Resources, Inc. v. McMurry Energy Co., 2004 WY 121, ¶
11, 99 P.3d 959, 963 (Wyo. 2004).
4
At the time of the trial, Shell Rocky Mountain Production, LLC was an operator and SWEPI was a non-
operator working interest owner. Ultra I, ¶ 11, 226 P.3d at 902-03. On December 31, 2008, Shell
merged into SWEPI and SWEPI took Shell’s position as operator of the relevant leases.
2
judgment and the NPC. The defendants asserted the district court did not have
jurisdiction to consider the matters raised in the plaintiffs’ motion to enforce and the
plaintiffs should have commenced a new action instead. The district court concluded it
had jurisdiction and issued a number of orders on the merits of the plaintiffs’ motion to
enforce.
[¶6] The primary order at issue here pertains to the defendants’ attempts to charge pre-
2007 expenses to calculate the NPI starting January 1, 2007. The district court ruled that
the NPI had been fully calculated through December 31, 2006 at trial, and the NPC
required expenses to be charged to the NPI in the month following the date the expenses
were invoiced. Consequently, the district court refused to allow the defendants to charge
expenses invoiced prior to January 1, 2007, when calculating the 2007 NPI. The district
court also concluded the plaintiffs were the prevailing parties in the enforcement
proceeding pursuant to the Wyoming Royalty Payment Act (WRPA), segregation of the
attorney fees between claims was not required and the operating defendants were
required to pay the plaintiffs’ attorney fees.
[¶7] The defendants appealed the district court’s decisions on the merits and its order
on attorney fees. We will provide additional factual background as relevant to the issues
discussed below.
DISCUSSION
1. Jurisdiction
[¶8] The defendants maintain the district court did not have subject matter jurisdiction
to decide the issues raised in the plaintiffs’ motion to enforce and the plaintiffs should
have commenced a new civil action to have the matters heard. “The existence of subject
matter jurisdiction is a question of law that we review de novo.” Madsen v. Bd. of
Trustees of Memorial Hospital of Sweetwater County, 2011 WY 36, ¶ 9, 248 P.3d 1151,
1153 (Wyo. 2011), citing Cantrell v. Sweetwater County School Dist. No. 2, 2006 WY
57, ¶ 6, 133 P.3d 983, 985 (Wyo. 2006). See also Stephens v. Lavitt, 2010 WY 129, ¶ 9,
239 P.3d 634, 637 (Wyo. 2010).
[¶9] In Ultra I, the case was remanded to the district court for further proceedings
consistent with our decision. The defendants argue the district court’s jurisdiction over
the action ended when the district court entered an amended judgment consistent with our
mandate and they satisfied the monetary judgment. Thus, they claim the district court did
not have jurisdiction to consider the issues raised in the plaintiffs’ motion to enforce. The
two aspects of the district court’s order challenged by the defendants are the district
3
court’s exclusion of the pre-2007 expenses from the 2007 NPI accounting and its
interpretation of the NPC deadlines for the operators’ expense reports.5
[¶10] Courts have inherent power to enforce their own judgments. In Hurd v. Nelson,
714 P.2d 767 (Wyo. 1986), we affirmed the district court’s post-judgment order
enforcing a property settlement in a divorce action. Speaking to the district court’s
enforcement powers, we stated:
“Courts have inherent power to enforce their own
judgments and should see to it that such judgments are
enforced when they are called upon to do so. To deprive a
court of power to execute its judgments is to impair its
jurisdiction, and the general rule is that every court having
jurisdiction to render a particular judgment has inherent
power and authority to enforce it and to exercise equitable
control over such enforcement. Thus, a court of equity has
inherent power to enforce its decrees. A court of equity
retains and possesses the power to control the manner of the
execution of its decree, and has the inherent right to modify,
by a subsequent order, the manner in which it shall be
enforced. * * * ” 46 Am.Jur.2d Judgments § 898, p. 1032
(1969).
Id. at 771.
[¶11] A court also has inherent power to interpret its judgments and clarify ambiguous
terms. 46 Am. Jur. 2d Judgments § 73 (2015) states:
Trial courts have the inherent authority to interpret and
clarify their judgments. The mere interpretation of a judgment
involves no challenge of its validity, or an attack on it, and a
clarification of an ambiguous judgment is not a modification
or amendment of the judgment. An order clarifying a
judgment explains or refines rights already given, and it
neither grants new rights nor extends old ones. Unlike a
modification, amendment, or alteration to a judgment, which
must be accomplished under the court rules or some other
5
The district court entered other post-judgment orders including an order confirming exclusion of
division expenses, an order approving a set of reporting forms, and an order regarding the plaintiffs’
rights to access the defendants’ accounting records. Although parties may not confer jurisdiction on a
court by agreement when it does not exist, White v. Bd. of Land Comm’rs, 595 P.2d 76, 79 (Wyo. 1979),
the defendants do not contest those rulings on appeal and we will not specifically discuss them.
4
exception to preclusion, a clarification of a judgment can be
accomplished at any time.
(footnotes omitted). See also Ladwig v. Chatters, 623 N.W.2d 266 (Minn. Ct. App.
2001) (trial court had jurisdiction to interpret, clarify and enforce its earlier judgment).
[¶12] In Zaloudek v. Zaloudek, 2010 WY 169, 245 P.3d 336 (Wyo. 2010), we addressed
the husband’s post-judgment motions to clarify his obligations under the property
division provisions of a divorce decree and to extend his deadline for compliance with a
cash award to the wife. The district court denied the husband’s motions, entered a
judgment in favor of the wife for interest accrued since the original decree and ordered
the husband to satisfy the judgment within five days. Id., ¶ 6, 245 P.3d at 339. Relying
on Hurd, supra, we concluded the district court’s post-judgment rulings were authorized
because they fell within the court’s inherent authority to enforce its own judgments. Id.,
¶ 13, 245 P.3d at 341.
[¶13] The defendants argue that Hurd does not provide authority for the district court’s
actions in this case because it was a divorce action and the legislature specifically granted
courts continuing jurisdiction in such cases. Wyo. Stat. Ann. § 20-2-203 (LexisNexis
2013) grants courts continuing jurisdiction to enforce and modify orders concerning the
care, custody and visitation of children after a divorce decree. However, Hurd addressed
property division issues and § 20-2-203 does not grant continuing jurisdiction to courts to
modify property divisions in divorce decrees. Glover v. Crayk, 2005 WY 143, ¶ 6, 122
P.3d 955, 957 (Wyo. 2005).
[¶14] Instead, Hurd specifically addressed the court’s inherent power to enforce its own
orders. The power is, of course, limited to interpretation and clarification of orders and
enforcement of their terms. In doing so, the court must stay true to the earlier judgment.
In Eddy v. First Wyoming Bank, 713 P.2d 228, 235 (Wyo. 1986), this Court confirmed
that the district court may interpret an earlier judgment pursuant to a post-judgment
motion to clarify. We stated the court may take additional evidence at a post-judgment
hearing to effectuate the original intent of the order. Id. See also Glover, ¶ 13, 122 P.3d
at 958 (interpreting motion to amend or modify a divorce decree as a motion to correct a
clerical mistake under W.R.C.P. 60(a)). The district court in the case at bar, therefore,
had inherent authority to interpret, clarify and enforce its judgment in accordance with its
original intent.
[¶15] In contesting the district court’s jurisdiction over the post-judgment proceedings,
the defendants also fail to recognize the significance of the declaratory judgment aspects
of the original decision. The trial judgment stated:
98. The defendants remain obligated to and shall
perform the required NPI accounting on a consolidated basis
5
and make payments monthly to the plaintiffs commencing
with production month January 2007, and shall do so in
accordance with the terms of the Net Profits Contract and its
Accounting Procedure and in compliance with the Court’s
Findings of Fact, 25-30, supra.
The referenced findings of fact stated:
25. Proper accounting for the NPI involves
expenses and revenues allocable to operations under the
Exhibit A leases to the Net Profits Contract and more recently
the Subject Leases . . .
26. The plaintiffs’ NPI is 4.98%, rather than 5.0%,
because of the small interest owned by a non-plaintiff.
27. The Net Profits Contract sets forth the terms to
be applied and honored in order to perform proper
computation of any payable net profits. The accounting
requirements are set forth in the body of the Net Profits
Contract, in Exhibit A listing the permitted royalty and
overriding royalty burdens on the leases, and in Exhibit C-1,
which is an Accounting Procedure.
28. The Net Profits Contract Accounting Procedure
may not be amended without the consent or approval of Novi
or its successors in interest, including plaintiffs or their
successors in interest. The Net Profits Accounting Procedure
has never been amended.
29. The Net Profits Contract and the Net Profits
Accounting Procedure establish principles to be followed in
performing the proper accounting of the NPI as follows:
(a) Plaintiffs’ net profits [interest] equals 4.98% of
cumulative gross revenue less cumulative expenses on a
consolidated basis associated with the operation of NPI
leases and wells on those leases;
(b) The NPI is to be calculated each month and the
incremental net profits for that month, if positive, is to be
paid as soon as practicable after the end of any month in
which net profits have been realized;
(c) Gross revenue is based on proceeds from wellhead gas
6
and oil sales and on fair market value for other sales;
(d) Deductible expenses are those that are reasonable and
customary in connection with the operation and
development of oil and gas properties. These expenses
are properly chargeable against the NPI leases and are
limited by amounts specified in the Accounting Procedure
unless and until that procedure is amended as provided
therein;
(e) Expenses that are not reasonable and customary and not
properly chargeable in connection with the operation and
development of NPI leases and therefore, not deductible,
include, among others, federal income tax, interest on
capital and other expenses, depreciation, acquisition costs,
accrual accounts, and future asset retirement accounts;
(f) The Accounting Procedure limits the amount of deductible
labor expense (including employee benefits), Pinedale
district office expense, well overhead rates, and legal
expenses; and
(g) Deductible expenditures that benefit both NPI and non-
NPI wells are allocated based on the ratio of the operators’
end-of-year NPI well count to total well count.
30. In performing the NPI accounting, the only permitted
burden deductions from gross revenues are the overriding
royalty and landowners’ royalties set forth in the listing of
leases on Exhibit A to the Net Profits Contract. The
permissible burdens on the Subject Leases are depicted on
Exhibit B attached and incorporated herein.
[¶16] The Uniform Declaratory Judgments Act, as adopted in Wyoming at Wyo. Stat.
Ann. § 1-37-101 through § 1-37-115 (LexisNexis 2013), has a provision that specifically
authorizes “further relief” in a declaratory judgment action. Section 1-37-110 states:
§ 1-37-110. Supplemental relief
Further relief based on a declaratory judgment may be
granted. Application therefor shall be by petition to a court
having jurisdiction to grant the relief. If the application is
sufficient the court, on reasonable notice, shall require any
adverse party whose rights have been adjudicated by the
declaratory judgment to show cause why further relief should
not be granted.
7
[¶17] Section 1-37-110 has been cited as authority for courts’ post-declaratory judgment
determinations in various contexts for many years. In In re General Adjudication of All
Rights to Use Water in the Big Horn River System, 835 P.2d 273 (Wyo. 1992), the tribes
filed a motion for order to show cause why the state engineer should not be held in
contempt for failing to follow an earlier declaratory judgment concerning tribal water
rights. While sorting out various orders that had previously been entered in the case, we
addressed the state engineer’s duty to follow and implement earlier declaratory judgment
rulings. We cited § 1-37-110 as authority for the following statement:
When . . . it is impossible to determine if the tribal right is
being violated because the right itself is in some respect ill-
defined, the state engineer should promptly seek clarification
from the district court so that appropriate remedial action, if
needed, may be undertaken. See Wyo. Stat. §§ 1–37–106 &
1– 37– 110 (1988).
Id. at 283. This statement contains an implicit recognition of the district court’s
jurisdiction to grant further relief in declaratory judgment actions. See also Beatty v.
Chicago, B. & Q. R. Co., 52 P.2d 404, 409 (Wyo. 1935) (stating statute allowing for
further declaratory relief permits post-judgment assessment of damages).
[¶18] Learned treatises and decisions from other jurisdictions also demonstrate the
courts’ broad powers under the Uniform Declaratory Judgments Act.
In a proceeding for a declaratory judgment, the court may
properly grant declaratory and nondeclaratory relief in a
single action, when such relief is requested in the pleadings
by the parties, or where the request for nondeclaratory relief
is found to be supplemental to the declaratory relief. A court
generally has jurisdiction to grant further and necessary or
proper relief, including any relief essential to effectuate the
declaratory judgment entered by the court. A court has the
power, for example, to retain jurisdiction and grant further
relief where it has entered a declaratory judgment declaring
the rights of the parties under a contract. In such a case, the
court may enter such supplemental judgments and orders,
from time to time, as are necessary to the supervision of the
contract.
....
Under a statute authorizing supplemental relief, the court
may be permitted to reserve the right to make such further
orders as might be necessary to effectuate the judgment, even
8
though no separate proceeding is initiated to obtain such
relief.
24 C.J.S. Declaratory Judgments § 171 (2015) (footnotes omitted and emphasis
added).
[¶19] The Restatement (Second) of Judgments § 33 (1982, updated 2014) discusses the
flip side of the court’s power to grant supplemental declaratory relief, i.e., the preclusive
effect of a declaratory judgment is not as broad as in other civil actions. While an issue
that was actually considered and decided in a declaratory judgment act is conclusive in a
subsequent action between the parties as to the specific matters declared, the “further
relief” provision of the act allows for additional or supplemental relief to be granted
between the same parties on the same claim. Id. The reason for the departure from the
usual preclusion rules “‘is that the losing party in a declaratory judgment action can
normally be expected to recognize the rights declared by the judgment and act
accordingly, but that if he fails to do so, the court should have ample power to enforce the
judgment by subsequent coercive orders, whether or not such relief was sought in the
original action.’” Alsheikh v. Arabian Nat’l Shipping Corp., 2009 WL 884795, * 2 (Tex
Ct. App. 2009), citing Valley Oil Co. v. City of Garland, 499 S.W.2d 333, 336 (Tex. Ct.
App. 1973).
[¶20] In Horn & Hardart Co. v. Nat’l Rail Passenger Corp., 843 F.2d 546 (D.C. Cir.
1988), the landlord sought “further relief” in a declaratory judgment action involving the
termination of a commercial lease. In the original action, the district court upheld the
landlord’s right to terminate the lease but ordered it to compensate the tenant under the
early termination clause, and the circuit court affirmed that decision. When the tenant did
not vacate the premises after the declaratory judgment was entered, the landlord brought
an action for “further relief” under the Declaratory Judgments Act, seeking payment
under the “end-of-term holdover and cost-on-default clauses” of the lease. The district
court granted the landlord’s request for further relief and the tenant appealed, claiming
the district court lost jurisdiction over the matter after the original order was appealed.
[¶21] The D.C. Circuit Court rejected that assertion, stating:
The “further relief” provisions of both state and federal
declaratory judgment statutes clearly anticipate ancillary or
subsequent coercion to make an original declaratory judgment
effective. Neither a completed appeal, nor a considerable
period of delay after the trial court ruling terminates this
authority. [The further relief provision’s] retained authority,
commentators have noted, “merely carries out the principle
that every court, with few exceptions, has inherent power to
enforce its decees and to make such orders as may be
9
necessary to render them effective.” Borchard, Declaratory
Judgments 441 (2d ed.1941)[.]
Horn, 843 F.2d at 548 (footnotes and some citations omitted). See also Casa Balcona
Terrace Cooperative v. Lyod, 2009 WL 1221257 (Mich. Ct. App. 2009).
[¶22] A Montana district court granted further relief after an earlier declaration in a
property boundary dispute between adjacent landowners. Goodover v. Lindey’s Inc., 843
P.2d 765 (Mont. 1992). While the original declaratory judgment action was pending, one
of the landowners placed improvements upon the land which was eventually declared to
belong to the other. Id. at 767-68. After the judgment was entered, the burdened
landowner brought an action for supplemental declaratory relief requesting the court to
order removal of the encroachments and seeking damages for loss of use of the property.
Pursuant to its supplemental relief jurisdiction, the district court ordered the encroaching
party to submit a work plan detailing the removal of the encroachment and ordered that
party to pay damages to the burdened party. Id. at 768. The Montana Supreme Court
upheld the district court’s actions and ruled that, under the Declaratory Judgments Act,
the district court retained jurisdiction to grant relief necessary to enforce its order. This
continuing jurisdiction gave the court authority to grant monetary damages and order
coercive action to provide complete relief in the declaratory judgment action. Id. at 770.
[¶23] The further relief provision of the Declaratory Judgments Act does, however, have
limitations. In Oklahoma Alcoholic Beverage Control Bd. v. Central Liquor Co., 421
P.2d 244 (Okla. 1966), the Oklahoma Supreme Court considered whether the trial court
had jurisdiction under the further relief provision of the Declaratory Judgments Act to
address an entirely new issue that was not raised in the initial action. The court stated
that the further relief “provision was not intended to give the court continuing jurisdiction
to resolve subsequent disputes between the parties over matters not involved in the
original litigation.” Id. at 247. See also Port Everglades Authority v. International
Longshoremen’s Assoc., Local 1922-1, 652 So. 2d 1169 (Fla. Ct. App. 1995) (holding that
trial court’s retention of jurisdiction under the Declaratory Judgments Act was overly
broad because it extended well beyond the sunshine law violation originally alleged and
ruled upon in the original declaratory judgment action).
[¶24] This precedent makes it abundantly clear that a district court maintains jurisdiction
to consider and order further relief on matters addressed in a declaratory judgment action.
As a practical matter, if a court has no jurisdiction to enforce its declaratory judgment,
the judgment would have no true legal effect. A declaratory judgment is, by its nature,
abstract. The purpose of the Declaratory Judgments Act is “to settle and to afford relief
from uncertainty and insecurity with respect to legal relations, and [the Act] is to be
liberally construed and administered.” Wyo. Stat. Ann. § 1-37-114. In order to serve the
purposes of the act, the district court must have power to enforce its ruling when the
parties actually put it into effect.
10
[¶25] The defendants also claim the NPC is a divisible installment contract which
requires separate actions for different time periods. In Sagebrush Dev., Inc. v. Moehrke,
604 P.2d 198, 204 (Wyo. 1979), this Court ruled prospective damages could not be
awarded for future breaches of a contract requiring separate payments or performance;
instead, a separate action must be brought after the plaintiff has actually sustained the
damages. Here, the district court’s trial judgment awarded the plaintiffs NPI damages for
the time period of March 2006 through December 2006 and included a declaratory
judgment that the defendants continue to account to the plaintiffs and make payments in
accordance with the NPC. In the enforcement action, the district court determined
whether the pre-2007 expenses were, or should have been, included within the earlier
trial proceedings and the propriety of the defendants’ methods of complying with its
ongoing accounting requirements under the declaratory judgment.
[¶26] Notably, the district court did not determine the amount of net profits due for any
period after December 31, 2006, even though the plaintiffs presented evidence showing
the calculation of the post-trial NPI. The district court’s refusal to calculate the NPI in
subsequent periods was a proper recognition of the limits of its jurisdiction. See
generally, Oklahoma Alcoholic Beverage and Port Everglades, supra. By limiting the
scope of its post-judgment order, the district court also avoided a violation of the legal
principles pertaining to installment or divisible contracts. The district court properly
interpreted its former judgment and supplemented the declaration contained therein.
[¶27] One additional matter merits our attention before we leave the jurisdictional issue.
The defendants claim they were denied due process as a result of the plaintiffs’ failure to
commence a new action to address the issues raised in the motion to enforce. In
particular, they lament the absence of the procedures available under the rules of civil
procedure when a new action is commenced, including the discovery provisions. As our
description of Wyoming precedent on motions to clarify and/or enforce judgments
indicates, commencing a new action was not required. Section 1-37-110 provides that
the request for further relief be made by a petition to the district court which will, if
appropriate, require the defendant to show cause why further relief should not be granted.
Neither the plaintiffs nor the district court strictly followed the process set out in the
statute. Instead of filing a petition for further relief under the Declaratory Judgments Act,
the plaintiffs filed a motion to enforce the judgment and the district court did not issue an
order to show cause.6
6
At one point, there was discussion of a possible order to show cause as to why the defendants should not
be held in contempt of court. The contempt process was later abandoned by the district court and the
plaintiffs when they realized there was no factual basis for concluding the defendants had willfully
violated a clear term of a court order. See generally, Greene v. Finn, 2007 WY 47, ¶¶ 14-15, 153 P.3d
945, 951 (Wyo. 2007).
11
[¶28] While it would have been preferable for the statutory procedure to be followed, the
failure did not impact the defendants’ procedural opportunities to contest the motion.
The defendants countered the plaintiffs’ motion to enforce with various responses; the
parties conducted some discovery during the post-judgment proceedings, including taking
the experts’ depositions; and the district court held several hearings to address the
outstanding matters. It should be noted that the defendants’ appellate argument
suggesting they needed the discovery protections offered by a new action ignores the fact
that the relevant accounting information was in their possession. Furthermore, the
defendants actually objected in 2011 to the plaintiffs’ efforts to obtain additional
discovery in the post-judgment proceedings. Although the defendants make a vague
argument that they did not receive adequate process, they do not demonstrate how their
due process rights to notice and the opportunity to be heard were violated.
[¶29] Cases from other jurisdictions establish that “further relief” under the Declaratory
Judgments Act may be granted through a variety of procedural mechanisms. In Juban v.
Schermer, 751 A.2d 1190, 1191-92 (Pa. Super. 2000), the court entered a declaratory
judgment on the validity of a land title transfer and the petitioner subsequently filed a
petition seeking damages as a result of the respondent’s use of the property while the
declaratory action was pending. Although the Pennsylvania statute set out a procedure
similar to ours with a petition for further relief followed by an order to show cause, there
is no indication that the trial court specifically issued an order to show cause. It appears
that the matter proceeded after the respondents objected to the petition. Id.
[¶30] Some other states’ declaratory judgment statutes simply require reasonable notice
and a hearing, without having the district court issue an order to show cause. See, e.g.,
Casa Balcona and Horn, supra. There is no question that the defendants received notice
and the opportunity to be heard in this case. We, therefore, conclude the district court
had jurisdiction to consider the specific issues presented in this matter under its inherent
authority to interpret and enforce its own judgment and the further relief provision of the
Declaratory Judgments Act.7 Section 1-37-110.
2. Pre-2007 Expenses/Timing of Expense Reporting
[¶31] The next three issues all pertain to the district court’s interpretation of its judgment
from the 2007 trial and the defendants’ ongoing NPC accounting responsibilities,
particularly the timing of expense reporting. The district court held an evidentiary
hearing and set out its decision with findings of fact and conclusions of law. We,
therefore, review its findings of fact under the clearly erroneous standard and its
conclusions of law de novo.
7
The parties stipulated the post-judgment proceedings would conclude after resolution of the pre-2007
expense issue. They agreed other issues pertaining to the accounting and calculation of the NPI from
January 1, 2007, forward would not be addressed in the motion to enforce proceedings but would be
reserved for a future lawsuit.
12
We do not substitute ourselves for the trial court as a
finder of facts; instead, we defer to the trial court’s
findings unless they are unsupported by the record or
erroneous as a matter of law. Deroche v. R.L. Manning
Co., 737 P.2d 332, 336 (Wyo.1987). Although the factual
findings of a trial court are not entitled to the limited
review afforded a jury verdict, the findings are
presumptively correct. Piroschak v. Whelan, 2005 WY 26,
¶ 7, 106 P.3d 887, 890 (Wyo.2005).
This Court may examine all of the properly admissible
evidence in the record, but we do not reweigh the
evidence. Forshee, et ux. v. Delaney, et ux., 2005 WY
103, ¶ 6, 118 P.3d 445, 448 (Wyo.2005). Due regard is
given to the opportunity of the trial judge to assess the
credibility of the witnesses. We accept the prevailing
party’s evidence as true and give to that evidence every
favorable inference which may fairly and reasonably be
drawn from it. Harber v. Jensen, 2004 WY 104, ¶ 7, 97
P.3d 57, 60 (Wyo.2004) (quoting Life Care Centers of
America, Inc. v. Dexter, 2003 WY 38, ¶ 7, 65 P.3d 385,
389 (Wyo.2003)). Findings may not be set aside because
we would have reached a different result. Harber, ¶ 7, 97
P.3d at 60 (citing Double Eagle Petroleum & Mining
Corp. v. Questar Exploration & Production Co., 2003
WY 139, ¶ 6, 78 P.3d 679, 681 (Wyo.2003)). A finding
will only be set aside if, although there is evidence to
support it, this Court on the entire evidence is left with the
definite and firm conviction that a mistake has been
committed. Mullinnix LLC v. HKB Royalty Trust, 2006
WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo.2006)
....
We review questions of law de novo. Y–O Investments, Inc. v.
Emken, 2006 WY 112, ¶ 8, 142 P.3d 1127, 1130 (Wyo.2006).
Ultra I, ¶ 97, 226 P.3d at 922-23, quoting Snelling v. Roman, 2007 WY 49, ¶¶ 7–9, 154
P.3d 341, 345 (Wyo. 2007).
[¶32] In order to understand the expense issue, it is necessary to provide some context.
Under the NPC, the defendants (successors to the First Parties) have accounting and
payment obligations to the plaintiffs (successors to Novi).
13
1. NET PROFITS INTEREST—
Subject to the conditions hereinafter set forth, First Parties
agree to pay to Novi a sum or sums representing 5% of the
net profits (as hereinafter defined), herein referred to as “said
net profits interest,” resulting from operations for oil and gas
by First Parties, or any of them, under those certain leases[.]
2. COMPUTATION—
Net profits shall be computed on the basis of all
operations under the Pinedale Unit applicable to said leases . .
..
Net profits as used herein shall mean the gross revenue
(not required for payment of the overriding royalties shown
on Exhibit A and landowners’ royalties) from unit operations
allocable to said leases after deduction of all expenses of unit
operations (unit operations being construed to include all
operations of any of First Parties under said leases) except
those charged to the working interest owners, if any, under
the said unit other than First Parties.
Expenses shall include by way of illustration but not by way
of limitation, expenses incurred in connection with the
preparation for the drilling of and drilling of wells, whether
productive or dry; the equipping, completing, plugging and
abandoning of wells; the producing of wells and treatment,
storage and marketing of production therefrom; the building
of roads, campsites and the making of improvements in
connection with unit operations; expenses incurred in
connection with exploratory work conducted in connection
with operations hereunder; expenses incurred in connection
with the examining and perfecting of and defense of titles to
said leases, including attorneys’ fees incurred in connection
therewith; losses, damages or liabilities sustained or incurred
in connection with unit operations; gross production and ad
valorem taxes or any tax measured by production; premiums
paid for workmen’s compensation insurance, public liability,
fire, wind, tornado or other insurance; and any other expenses
and charges that are reasonable and customary in connection
with the operation and development of oil and gas properties
14
and which are properly chargeable against the leasehold
interests. Without limiting the foregoing, the accounting with
respect to unit operations shall be in accordance with the
Accounting Procedure attached hereto and marked “Exhibit
C–1” and made a part hereof to the extent that such exhibit is
applicable and not inconsistent with the foregoing provisions
and including the overhead charges provided for in said
exhibit.
3. PAYMENT—
Inasmuch as the Operator in charge of operations under said
leases and under the said Pinedale Unit Agreement will either
be Continental or El Paso, or both, the responsibility for
handling the accounting for net profits and making payments
hereunder to Novi for its share thereof shall be the
responsibility of Continental and El Paso, such parties (or
either of them) being hereinafter sometimes referred to for
convenience as “Operator.”
Novi shall be entitled to receive its percentage of net
profits at the end of any month whenever it shall appear at the
end of such month that net profits have been realized as a
result of operations under said leases, taking into
consideration all expenses theretofore incurred in connection
with such operations and all accounts payable or receivable
with regard thereto at the end of said month and all payments
of net profits theretofore made to Novi. In making the
foregoing computations, deficits shall be carried over from
month to month and the accumulated total thereto applied
against subsequent earnings before profits will be considered
to have accrued. Payment of such net profits shall be made as
soon as practicable after the end of any month in which net
profits have been so realized. Notwithstanding that there may
be separate operations under said leases relating to separate
deposits of oil and gas (whether conducted by Continental or
El Paso or some by Continental and some by El Paso), all
accounting for the purpose of determining net profits
hereunder shall be upon a consolidated basis involving all
operations under said leases and the said Pinedale Unit.
Operator shall keep an accurate record of all accounts
hereunder, showing the costs and expenses incurred and
15
charges made and all receipts and credits received, which
record shall be available at all reasonable times for the
examination and inspection of Novi or its duly authorized
representative. Within one (1) month after the close of each
calendar month, Operator shall furnish to Novi a statement of
costs and expenses incurred and charges made and all receipts
and credits received during such calendar month.
(Emphasis added.)
[¶33] At the time of the 2007 trial, the defendants denied the continued existence of the
NPI and had never properly accounted to the plaintiffs under the terms of the NPC. The
information used to calculate the NPI at trial was not provided by the defendants pursuant
to timely reporting under the NPC but was, instead, provided in the litigation discovery
process. The district court’s judgment, which was affirmed in all relevant respects by this
Court, included an award of net profits from March 2006 through December 2006.8 The
district court made a number of determinations as to what expenses were properly
deductible in calculating the NPI, generally relying upon the calculation performed by the
plaintiffs’ expert accounting witness, David Johnson. In total, over $2 billion in expenses
were allowed as deductions in calculating the net profits at trial, including $888.4 million
for 2006. The excluded expenses included Ultra’s “accrual accounts” of $77,752,958 and
Shell’s accumulator accounts of $59,212,079.
[¶34] Little was known about the accrual and accumulator accounts at trial. Mr.
Johnson testified that he did not believe the expenses in the accounts were properly
deductible at the time of trial because Ultra represented the amounts in the accrual
accounts were “estimates,” suggesting that no invoices had been received for the
expenses, and Shell indicated the expenses in the accumulator accounts could not be
specifically tied to NPI wells. The defendants did not provide any detail on the expenses
included in the challenged accounts, so there was no evidence of the activity date (the
date the goods or services were provided to the operators), the invoice date, or the date of
payment. Given the defendants’ characterization of the expenses in the accounts and the
lack of information about them, the district court rejected the defendants’ efforts to
deduct the accrual and accumulator accounts from the revenues to determine the net
profit for trial. The defendants did not appeal the district court’s rejection of the accrual
and accumulation accounts after the first trial and, consequently, we did not address that
ruling in Ultra I.
8
Although net profits had been earned beginning in May 2005, the defendants were not obligated to pay
the plaintiffs until March 2006 because the plaintiffs did not give notice of their ownership of the NPI, as
required by the NPC, until February 2006. Ultra I, ¶¶ 66-67, 73, 226 P.3d at 916-17.
16
[¶35] As we stated above in Paragraph 14, the district court also ruled after the 2007 trial
that the defendants were required to perform an ongoing “NPI accounting on a
consolidated basis and make payments monthly to the plaintiffs commencing with
production month January 2007,” in accordance with the terms of the NPC and the
judgment. After we affirmed the district court’s decision, the defendants provided
accounting statements to the plaintiffs which indicated they were charging expenses with
activity dates prior to January 1, 2007 to the 2007 NPI accounting. When the plaintiffs
questioned the defendants about the pre-2007 expenses, the defendants claimed the
expenses were properly included in the 2007 accounting because they had been excluded
from the trial accounting as accrual and accumulator accounts.
[¶36] In a series of hearings on the plaintiffs’ motion to enforce starting in 2010 and
continuing through April 2013, the parties argued about whether the expenses prior to
January 1, 2007, should be included in the 2007 accounting. The plaintiffs generally
advanced two arguments against including the pre-2007 expenses in the post-trial
accounting. The first was that the trial in 2007 was intended to determine a complete NPI
accounting through December 31, 2006, and the defendants were obligated to provide all
of their pre-2007 expenses for deduction from the trial NPI. The plaintiffs’ second
argument was the NPC required the defendants to report expenses within one month after
the month they were incurred. They argued that an expense was “incurred” for purposes
of the NPC when it was invoiced by a third party supplier or service provider to the
operators.
[¶37] The defendants argued the invoice date was irrelevant and the pre-2007 expenses
reported in the 2007 accounting were timely because they were reported to the NPI
owners at the same time the operators billed them to the other working interest owners
through the joint interest billing (JIB) process. In other words, according to the
defendants, expenses were “incurred” for NPC purposes when they were “jibbed.” The
defendants also argued the expenses were properly included in the 2007 accounting
because the NPC envisioned a cumulative accounting which included all expenses from
inception of the NPI forward.
[¶38] The district court issued a detailed order on the plaintiffs’ motion to enforce. It
reviewed the evidence and rulings from the trial and the evidence about the pre-2007
expenses produced in the post-judgment proceedings, interpreted its earlier judgment and
the relevant provisions of the NPC and ruled that all expenses which were invoiced
before January 1, 2007 were excluded from the post-trial accounting. In general, the
district court agreed with the plaintiffs that the trial NPI determination was a full
accounting of the NPI through December 31, 2006. The district court also found that an
expense was “incurred” under the NPC when it was invoiced. Applying this definition,
the district court decided that Section 3 of the NPC required the operators to charge
expenses to the NPI account within one month after the close of the calendar month in
which the invoice was dated. Thus, the district court’s decision relies upon two legal
17
concepts—the finality of the trial judgment and the tardiness of the defendants’ expense
reporting.
[¶39] The trial judgment specifically stated net profits were awarded to the plaintiffs for
the period of March through December 2006. In its order on the motion to enforce, the
district court entered the following findings of fact and conclusions of law regarding the
scope of the trial judgment:
[Findings of Fact] 25. Ultra and SWEPI did not
follow the NPC terms in reporting trial NPI expenses. The
individuals responsible for revenue and expense reporting
testified they were not familiar with, or guided by, the NPC
terms when they assembled and reported expense and revenue
information to the Plaintiffs for the 2007 trial.
26. Witnesses for Ultra and SWEPI testified they
reported all NPI expenses for the trial calculation. SWEPI
witness, Jeannine Nieder, testified she instructed their experts
to include all accumulator accounts in the trial expenses,
including non-NPI wells, because she would rather include
them and have them challenged rather than exclude them and
lose some costs.
....
[Conclusions of Law] 2. Defendants were solely
responsible for the NPI expenses reported for the 2007 trial
calculation. To the extent Defendants incurred but failed to
properly present evidence of pre-2007 expenses at trial, they
are precluded by the Judgment from doing so in the NPI
accounting beginning January, 2007.
[¶40] The district court specifically excluded the expenses in the accrual and
accumulator accounts from the NPI accounting approved at trial and the defendants did
not appeal that decision. We discussed the preclusive effect of a party’s failure to appeal
a decision in Triton Coal Co. v. Husman, Inc., 846 P.2d 664, 667-68 (Wyo. 1993) and
noted that, while the legal concept that a non-appealed issue is final may be part of the
law of the case doctrine, it is more correctly classified as a type of waiver:
Under the “law of the case” doctrine, a court’s decision on
an issue of law made at one stage of a case becomes a binding
precedent to be followed in successive stages of the same
litigation. 1B JAMES W. MOORE, JO DESHA LUCAS &
THOMAS S. CURRIER, MOORE'S FEDERAL PRACTICE
¶ 0.404[1] (2d ed. 1983). The “law of the case” is a doctrine
18
designed to avoid repetitious litigation and to promote
consistent decision making. As such, it is in the same family
as res judicata, collateral estoppel, and stare decisis. In their
treatise, Professors Wright, Miller, and Cooper identify four
situations in which the “law of the case” may arise. 18
CHARLES ALAN WRIGHT, ARTHUR R. MILLER &
EDWARD H. COOPER, FEDERAL PRACTICE AND
PROCEDURE § 4478 (1981). Most commonly, the “law of
the case” requires a trial court to adhere to its own prior
rulings, adhere to the rulings of an appellate court, or adhere
to another judge’s rulings in the same case or a closely related
case. Id. Triton, however, relies upon a fourth and much less
utilized aspect of the rule in which a court’s ruling on an issue
that could have been appealed, but was not, will be given
preclusive effect. Tom Beuchler Construction, Inc. v. City of
Williston, 413 N.W.2d 336, 339 (N.D.1987). Although some
courts label this fourth category as the “law of the case,” it is
something of a misfit. Generally, the “law of the case” arises
because a court has ruled on a matter and that ruling is to be
applied to subsequent proceedings in the litigation. However,
in the fourth category relied upon by Triton, it is the litigant’s
failure to raise an issue on appeal which gives rise to the
preclusive effect of the lower court’s ruling, not a court
ruling. Allan D. Vestal, Law of the Case: Single–Suit
Preclusion, 11 UTAH L.REV. 1 (1967). The underlying
rationale of the fourth category of the “law of the case” is that
a litigant can argue to an appellate court only those issues
which he raised on appeal. Id. at 21. The idea that a litigant is
limited to arguing those issues he raised on appeal is, in
essence, the concept of waiver.
The general rule concerning waiver is:
[Q]uestions assigned as error are deemed to have been
abandoned or waived where they are not urged or discussed
on appeal by brief or argument, or are not sufficiently so
discussed; and the same rule applies to cross errors. 5B
C.J.S. Appeal and Error § 1803 at 98 (1958). This Court has
consistently applied this long-standing rule in prior cases.
Dworkin v. L.F.P., Inc., 839 P.2d 903 (Wyo.1992); Schaffer
v. Standard Timber Company, 79 Wyo. 137, 331 P.2d 611
(1958).
19
Applying the waiver concept in the case at bar, the defendants waived any objection to
the district court’s determination that the accrual and accumulator accounts could not be
included in the trial net profit calculation because they did not appeal that aspect of the
decision.
[¶41] With regard to the completeness of the trial accounting, the district court stated the
witnesses for Ultra and SWEPI testified they reported all NPI expenses for the trial
calculation. These findings are supported by the record. Jeannine Nieder, Shell’s
financial representative for its Rocky Mountain assets, testified she was responsible for
gathering information about the NPI for the 2007 trial calculation and admitted she did
not use the NPC to guide her in determining what expenses to include. She repeatedly
stated that she “included all expense items” up through December 31, 2006, for the NPI
calculation. The accumulator accounts prepared under her direction included expenses
that she believed were at least partially allocable to NPI wells and leases, but, at the time
of trial, she was not sure.
[¶42] After the trial, SWEPI started compiling information to meet its NPC reporting
requirements. The March 2007 expenses reported by SWEPI were unusually high,
including $43 million of pre-2007 expenses. Contrary to SWEPI’s representation of the
nature of the accumulator account expenses at trial, the district court found in the post-
judgment order that at least some of the expenses could have been allocated to the NPI
wells prior to trial:
18. SWEPI disclosed its March, 2007 expenses
were abnormally high because $43 million in pre-2007
expenses from the accumulator account was charged to NPI
wells in March, 2007. SWEPI charged certain of the
accumulator expenses to NPI wells prior to trial but did not
report the accumulator expenses as incurred expenses.
SWEPI records reflect the accumulator expenses were
invoiced prior to January 1, 2007.
The defendants do not establish this factual finding was clearly erroneous.
[¶43] At the hearing on the motion to enforce, Ms. Nieder testified about the process
SWEPI used in early 2007 to move the pre-2007 expenses from the accumulator accounts
to the NPI account. She was questioned as to why the amounts in the accumulator
accounts invoiced prior to December 31, 2006, had not been reported as incurred NPI
expenses for the October 2007 trial. Ms. Nieder stated SWEPI had not finished its NPI
accounting so, even though the expenses could have been charged to NPI wells prior to
trial, they were just put in an accumulator account.
20
[¶44] Kristen Marron, Ultra’s controller until April 2007, testified at her June 2007
deposition that she had been instructed to compile all accounting data for the relevant
leases. She stated that she had provided all revenue and expense information “as
requested.” Ms. Marron testified the trial data included all costs to “drill and complete
the wells,” lease operating expenses, and the G & A (general and administrative costs)
allocation. She stated the only expenses excluded were those that did not pertain to the
relevant wells. Mr. Johnson later testified that he had understood from Ms. Marron’s
deposition in June 2007 that “all expenses were provided.”
[¶45] As the district court noted, the trial accounting was meant to be final through
December 2006. Given the defendants were the only parties with access to the expense
information and the parties understood the trial accounting was final through December
2006, the defendants should have provided all expenses applicable to the NPI leases
through the end of 2006 for determination of the NPI at trial. A reasonable inference
from the evidence presented at the post-judgment hearing is that the defendants simply
failed to perform their accounting obligations and did not properly identify and report all
of the pre-2007 expenses for trial. Having failed to report the expenses for trial, the
defendants sought to include them in a later accounting period without regard for the
finality of the pre-2007 accounting or the trial judgment.9 The district court’s findings as
to the scope of the trial accounting are supported by the record. It properly concluded
that all expenses deductible from the NPI calculation for 2006 should have been included
in the defendants’ trial evidence.
[¶46] The defendants argue that since the expenses were not allowed at the trial, they
should be allowed in the post-trial NPI calculations. This argument requires us to assume
the excluded accrual and accumulator accounts were the same pre-2007 expenses they
now seek to include in the 2007 accounting. The defendants did not make a clear
connection between the trial accrual accounts and the pre-2007 expenses they sought to
include in the 2007 accounting at the post-judgment hearings. The most obvious
difference is the amounts did not match. The excluded trial expenses included $77.7
million in Ultra’s accrual accounts and $59.2 million in SWEPI accumulator accounts,
while the expenses at issue in the post-trial accounting with activity dates before January
1, 2007, included $60.8 million for Ultra and $70.5 million for SWEPI.
[¶47] During the post-judgment proceedings, Ultra’s controller Garland Shaw10 was
asked about the relationship between the $77.7 million in Ultra’s accrual account that was
9
Furthermore, some of the pre-2007 expenses claimed by Shell in its 2007 NPI accounting did not even
pertain to NPI wells, even though they had supposedly been confirmed as expenses allocable to the NPI in
the post-trial accounting process.
10
Mr. Shaw testified that he started as Ultra’s corporate controller in October 2006. Apparently there was some
overlap between Mr. Shaw’s and Ms. Marron’s tenures, as she testified that she was Ultra’s controller until March
2007.
21
excluded from the trial accounting and the $60.8 million of pre-2007 expenses that Ultra
was seeking to deduct from the post-trial NPI calculation. He confirmed there was no
direct correlation between the amounts and stated, “we’re sort of talking about apples and
oranges when we talk about the 60 million and we talk about the 77 million.” When
asked whether Ultra could have tied the pre-2007 expenses currently in dispute to the
accruals excluded at trial, Mr. Shaw stated they “could have made a determination” but
they did not because “[t]here’s no reason to do that. The accruals were disallowed at
trial.” The amounts in the trial accrual accounts were not supported by source
documents, which would have shown detail such as the activity date, invoice date or
payment date. Therefore, the defendants’ current argument that it was wrong to exclude
the former accrual expenses from the post-trial accounting after they had been excluded
at trial is not supported by the record because there was no evidence the trial accrual
expenses were the same as the pre-2007 expenses the defendants wish to include in the
2007 accounting.
[¶48] The district court also relied upon the terms of the NPC in excluding from the
2007 NPI accounting expenses that were incurred prior to December 31, 2006. To
reiterate, Paragraph 98 of the judgment states:
The defendants remain obligated to and shall perform the
required NPI accounting on a consolidated basis and make
payments monthly to the plaintiffs commencing with
production month January 2007, and shall do so in
accordance with the terms of the Net Profits Contract and its
Accounting Procedure.
[¶49] The contractual provision establishing the deadline for the operators to report
expenses to the net profit owners is located in Section 3 of the NPC and states:
Within one (1) month after the close of each calendar
month, Operator shall furnish to Novi a statement of costs
and expenses incurred and charges made and all receipts
and credits received during such calendar month.
Under this provision and others in the contract, the proper time for charging an expense
to the NPI is when it is “incurred” by the operator.
[¶50] The plaintiffs argued, and the district court agreed, an expense is incurred under
the contract when a third party provides an invoice for goods or services related to the
NPI leases to the operator. The defendants argued, however, that a cost is incurred for
NPC purposes when it was billed to the joint interest partners in a JIB or, in other words,
“jibbed.” We apply our typical rules of contract interpretation to this issue.
22
The initial question of whether the contract is capable of
being understood in only one way is a question of law for the
court. If the court determines that the contract is capable of
being understood in only one way, then the language used in
the contract expresses and controls the intent of the parties. In
such case, the next question, what is that understanding or
meaning, is also a question of law. . . .
M & M Auto Outlet v. Hill Inv. Corp., 2010 WY 56, ¶ 12, 230
P.3d 1099, 1104 (Wyo.2010), quoting Examination Mgmt.
Servs., Inc. v. Kirschbaum, 927 P.2d 686, 689 (Wyo.1996)
(internal citations omitted).
Davidson Land Co. v. Davidson, 2011 WY 29, ¶ 13, 247 P.3d 67, 71 (Wyo. 2011).
[¶51] To determine the meaning of contract terms, we focus on the parties’ intent.
When the language is clear and unambiguous, we determine that intent from the contract
language. We give the words used in the contract their plain and ordinary meaning and
consider the agreement as a whole, giving effect to each provision. Davidson, ¶¶ 14, 34,
247 P.3d at 71, 76; Hall v. Perry, 2009 WY 83, ¶ 13, 211 P.3d 489, 494 (Wyo. 2009).
We resort to rules of contract construction only when a contract is ambiguous. Davidson,
¶ 14, 247 P.3d at 71. See also Christensen v. Christensen, 2008 WY 10, ¶ 13, 176 P.3d
626, 629 (Wyo. 2008); Cathcart v. State Farm Mut. Auto. Ins. Co., 2005 WY 154, ¶ 18,
123 P.3d 579, 587 (Wyo. 2005).
[¶52] The deadline for the timely reporting of expenses by the operators to the net profit
owners is triggered when the operator incurs an expense. The plain and ordinary
meaning of “incur” is: “to become liable or subject to: bring down upon oneself ” Merriam-Webster Dictionary 250 (2005). See also Fix v. Forelle, 2014 WY
79, ¶ 17, 327 P.3d 745, 749 (Wyo. 2014) (defining incur with dictionary definition). The
usual understanding of when a party becomes liable or subject to an actual expense is
when a third party vendor or service provider gives notice of the amount charged and
when payment is due. That information is commonly communicated with an invoice or a
bill.
[¶53] The district court accepted the common usage when it rejected the defendants’
position that an expense is incurred when it is “jibbed” and, instead, adopted the
plaintiffs’ argument that the invoice date is the date of incurrence:
21. The appropriate date for when an expense is
incurred for purposes of the NPI accounting is the date of an
invoice for work or material provided on a NPI well or lease.
The invoice date provides an operator with the date of a
23
charge by a third party for work performed or materials
furnished for a NPI well. The invoice also provides the
operator with a sum to be paid and the date payment is due.
28. The NPC does not contemplate expense
reporting based on the operators’ discretionary internal
accounting process after an invoice has been received, after it
has been approved for payment, and when it is reflected on a
joint interest billing to the working interest owners in a NPI
well. Such a procedure could result in posting an expense to
the NPI account several months after the expense was
incurred.
The district court explained that adopting the invoice date as the date of incurrence is
consistent with the contract language and is “a workable standard. Utilizing the invoice
date reduces uncertainty and further reduces the opportunity for manipulation of the NPI
account as to the timing of charges to the NPI account.”
[¶54] The defendants assert the district court’s interpretation of the contract language
ignores other provisions of the NPC including the provisions referencing expenses that
are “reasonable and customary” and “properly chargeable against the leasehold interest”
in Section 2 of the contract and the cumulative nature of the NPC accounting set out in
Section 3. The “reasonable and customary” and “properly chargeable” language is part
of the definition of expenses in Section 2. It describes the scope of the expenses to be
included in the NPI calculation and does not address the timing of the reporting
requirement. The deadline for reporting expenses is set out in the “incurred” language of
Section 3. The defendants are correct that Section 3 of the NPC requires calculation of
the net profits on the basis of cumulative revenues and expenses over the life of the
contract. That does not mean, however, the defendants were free to disregard the timing
provisions of the contract. The contract requires the operators to report the expenses to
the net profit interest owners within one month after the month an expense is invoiced.
[¶55] The district court’s interpretation that the defendants are obligated to charge
expenses to the NPI within the NPC’s deadline gives full effect to all of the terms of the
contract and accurately reflects the rulings from the trial judgment. The defendants
would have received the benefit of the cumulative accounting for expenses had they
reported them to the plaintiffs within the contract timeline. As the district court
recognized, if the operators can decide when a cost is incurred by picking the time to
include it on the JIB, the net profit interest, which is payable in any month that shows a
net profit, would be subject to manipulation and the reporting deadlines would essentially
be meaningless. There would be no reason for the contract to require the operators to
report on a monthly basis if they can decide when to apply the expenses using the JIB
process.
24
[¶56] The district court also properly considered the circumstances surrounding the
execution of the NPC in 1954 in determining that the original parties did not intend to use
the JIB date as the date of incurrence. As we have stated before, even when a contract is
unambiguous, evidence of the circumstances surrounding its execution may be
considered to determine the parties’ intent. “Relevant considerations may include the
relationship of the parties, the subject matter of the contract, and the parties’ purpose in
making the contract.” Davidson, ¶ 14, 247 P.3d at 72, quoting Ecosystem Res., L.C. v.
Broadbent Land & Res., L.L.C., 2007 WY 87, ¶ 10, 158 P.3d 685, 688 (Wyo. 2007). The
district court explained:
29. At the time the NPC was negotiated and executed,
El Paso was the original operator of the subject properties.
Continental and MALCO were non-operating working
interest owners. Had the parties intended to provide that an
expense is incurred for the NPI accounting based on when the
operator decided to charge the joint interest owners, they
could have done so, but they did not.
In other words, the contracting parties were familiar with the JIB process but did not
expressly incorporate that accounting time into the NPC terms. Instead, the original
parties adopted a reporting deadline based upon when the operator incurs an expense, i.e.,
when an expense is invoiced, thereby making the recipient liable for the amount due.
[¶57] The arbitrariness of using the JIB date as the date of incurrence was aptly
demonstrated in Ms. Nieder’s testimony about Shell’s method of expense reporting. She
actually agreed with plaintiffs’ counsel at the March 2013 hearing that when Shell
received an invoice it had incurred an expense. However, she testified Shell’s charge
against the NPI did not follow the “incurrence” language.
Q. . . . So your classification of inclusion in the net
profits is something other than an incurrence of an expense?
Are we to understand that?
A. That’s correct.
Ms. Neider stated that her understanding of the NPC was that a charge is “billable to the
NPI when that charge is posted to a well associated with the NPI,” as part of the JIB
process. She confirmed that the operator was in charge of posting the expenses and
stated the following with regard to the timing of the posting:
Q. [I]s it typical that the posting happens in the month
following the expense being incurred?
25
A. It could happen in the month following. It could
happen subsequent to that.
Q. So whatever time that is, a month, two months, three
months, it’s your opinion, what you’re offering as opinion is
that’s when it gets charged to the net profits account?
A. Yes.
Ultra’s financial witness, Mr. Shaw, also admitted that “[a]ccording to the true definition
of what is incurred,” an expense is incurred when invoiced.
[¶58] Notwithstanding the plain meaning of the contract language, Ultra and SWEPI
assert that the plaintiffs agreed to use the JIB date as the date to charge expenses to the
net profits account, the district court confirmed that agreement, and the plaintiffs should,
therefore, be bound under the principles of judicial estoppel, collateral estoppel and/or the
law of the case. Application of these principles are matters of law; consequently, our
review is de novo. Tarver v. City of Sheridan Bd. of Adjustments, 2014 WY 71, ¶¶ 10-
11, 327 P.3d 76, 80 (Wyo. 2014). We provided a comprehensive definition of judicial
estoppel in Bredthauer v. TSP, 864 P.2d 442, 445 (Wyo. 1993) as:
a doctrine which estops a party to play fast and loose with
the courts or to trifle with judicial proceedings. It is an
expression of the maxim that one cannot blow hot and
cold in the same breath. A party will just not be allowed to
maintain inconsistent positions in judicial proceedings * *
*.
Allen [v. Allen], 550 P.2d [1137], 1142 [(Wyo. 1976)]. In
[Matter of Paternity of] JRW, [814 P.2d 256 (Wyo. 1991)] we
stated that under the doctrine of judicial estoppel:
“[A] party who by his pleadings, statements or
contentions, under oath, has assumed a particular position
in a judicial proceeding is estopped to assume an
inconsistent position in a subsequent action.”
JRW, 814 P.2d at 1265–66 (quoting Black’s Law Dictionary
761 (5th ed. 1979)).
[¶59] As we mentioned earlier, the law of the case doctrine guards the consistency of
judicial decisions and states that “a court’s decision on an issue of law at one stage of a
26
proceeding is binding in successive stages of the litigation.” Lieberman v. Mossbrook,
2009 WY 65, ¶ 28, 208 P.3d 1296, 1305 (Wyo. 2009), citing Triton, 846 P.2d at 667.
Similarly, collateral estoppel is a preclusion doctrine that bars the relitigation of
previously litigated issues. Tarver, ¶¶ 10-11, 327 P.3d at 80.
[¶60] The defendants direct us to two instances they say demonstrate the plaintiffs and
district court adopted the JIB date as the date of incurrence. The first is a November 23,
2010, letter from plaintiffs’ counsel to defendants’ counsel complaining about the
operators’ failure to provide complete accounting information. The letter began: “We are
near the end of 2010 and the companies responsible for accounting for the [NPI] have not
completed the accounting for 2007-2008.” To move the accounting process forward, the
plaintiffs attached a one-page proposed procedure for NPI reporting. The proposal
contained a broad outline of what information should be included in monthly revenue and
expense reports. It also provided that each company would designate a representative to
act as a contact for the plaintiffs to obtain additional information. The basic NPI revenue
information identified in the proposal included well identification, volumes of oil and gas
produced and gross revenues. Their proposal for NPI expense information was even less
detailed, stating only: “Lease Operating Expenses and capital expenditures charged to
joint account by operators on Joint Interest Bills on NP wells.” (Emphasis in original).
[¶61] The district court rejected the defendants’ claim that the letter amounted to an
agreement to use the JIB date as the date of incurrence, and its finding is supported by the
record. The November 2010 proposal included only general outlines of the information
that should be included in the monthly reporting. It specifically noted that other
resources should be made available to the plaintiffs as part of the accounting process,
including source documents and a contact person at each company so the plaintiffs could
request additional information. When questioned about the effect of the November 2010
proposal, the plaintiffs’ expert testified that the reference to the JIB expenses did not
pertain to the timing of the expense reporting but rather what expenses should be
included in the reports. In a later letter dated February 8, 2011, plaintiffs’ counsel stated
that, under the NPC, the defendants were obligated to report expenses “within 30 days
after the calendar month when they are incurred.” Clearly, the 2010 proposed accounting
procedure was not an express adoption by the plaintiffs of the JIB date as the date of
incurrence for NPC expense reporting.
[¶62] The second piece of evidence the defendants assert shows the plaintiffs and district
court adopted the JIB date as the date of incurrence is the NPI reporting statement, which
was stipulated to by the plaintiffs and approved by the district court. The NPI reporting
statement was actually a series of seven forms showing various expense and revenue
summaries about the NPI wells on a monthly basis.
[¶63] The record does not support the defendants’ claim that the plaintiffs and district
court adopted the JIB date as the date of incurrence when the NPI reporting statement
27
was agreed upon and approved. Two of the forms included in the approved statement
refer to the JIB dates, but the other five do not. The approved monthly statement includes
only general summaries of expenses and revenues. The defendants are also providing
source documents to the plaintiffs, which include other details about the expenses like the
invoice dates. Although the information about when expenses were jibbed presumably
assists the parties in tracking the expenses, the statement contains no express adoption of
the JIB date as the date expenses are incurred under the NPC. The defendants do not
direct us to any evidence in the record showing that the parties intended to change the
plain meaning of the contract language by adopting the NPI reporting statement.
Furthermore, the district court’s order approving the NPI statement says nothing about
when costs are incurred for purposes of the NPC reporting deadline.
[¶64] Without a more definitive statement that the parties and the court intended to rely
on the JIB date as the date of incurrence, we certainly cannot say the district court’s
decision that no such agreement existed was clearly erroneous. Given there was no
agreement or order requiring use of the JIB date as the date of incurrence under the NPC,
the preclusion and equitable doctrines of judicial estoppel, collateral estoppel, and/or law
of the case do not apply.
[¶65] Finally, the defendants claim the district court’s order creates an improper
forfeiture and the exclusion of the expenses is unfair and inequitable. Their forfeiture
argument is misplaced. The law does not favor forfeiture of contract rights, see, e.g.,
Reynolds v. Milatzo, 2007 WY 104, ¶ 15, 161 P.3d 509, 513 (Wyo. 2007); however, this
case does not involve a true forfeiture of contract rights. Instead, we are concerned with
concepts of judgment finality and interpretation of the scope of the judgment and the
terms of the NPC help guide that interpretation. The defendants had a fair opportunity to
present their expenses at trial and either did not do so or mischaracterized the nature of
the expenses.
[¶66] The defendants also argue that the district court’s order will result in a forfeiture of
any future (or post-2006) expenses which are not reported within the time limits of the
NPC. We do not read the order that way and neither do the plaintiffs. The court did not
make any express ruling on what remedies would be proper for future violations of the
contract reporting requirements. The plaintiffs state in their brief:
[Ultra] complains that under the Judgment, if defendants do
not charge an expense in the first report following the month
in which the expense is incurred, it is forever forfeited. The
Order Regarding Pre-2007 Expenses does not compel that
result. Defendants would be entitled to normal adjustments
of the NPI account for the period beginning January 2007, for
these accounts are not subject to the finality of a Judgment.
28
They reiterated this position at oral argument. The plaintiffs properly recognize that the
order at issue in this case was based upon the dual considerations of finality of the trial
judgment and interpretation of the terms of the NPC.
[¶67] The defendants’ argument that the district court’s decision was unfair and
inequitable also rings hollow for other reasons. There were actually $131 million in
expenses at issue in the post-judgment proceedings. The district court carefully
considered the expenses using the December 31, 2006, invoice date as the cutoff. It
disallowed approximately $102 million in expenses, but allowed expenses of
approximately $29 million that were invoiced later. The district court’s thorough review
of the proposed expenses supports its decision and undermines the defendants’ fairness
arguments.
[¶68] Furthermore, although the plaintiffs and the district court were led to believe at
trial that Ultra’s accrual accounts contained only estimates, the post-trial information
showed that the majority of the expenses had actually been invoiced and, in many
instances, paid prior to December 31, 2006. In fact, some of the pre-2007 expenses the
defendants wanted to include in the 2007 accounting had been invoiced and paid several
years before. If the trial accrual amounts had truly been field estimates, the actual
amounts would have been invoiced later and would have been proper 2007 deductions.
[¶69] The defendants persistently argue that interpreting the NPC to require them to
report expenses in the month after they are invoiced imposes an unduly heavy burden
upon them. They insist it is easier to report to the NPI owners at the same time they bill
their joint interest partners. Perhaps that is true; however, that is not what the NPC
requires.11 We are not at liberty to amend or modify a contract under the guise of
interpretation. Fayard v. Design Committee of the Homestead Subdivision, 2010 WY 51,
¶ 18, 230 P.3d 299, 304 (Wyo. 2010), citing Brumbaugh v. Mikelson Land Co., 2008 WY
66, ¶ 28, 185 P.3d 695, 704 (Wyo. 2008). Additionally, we note that oil and gas
leaseholders and operators are subject to different reporting and payment deadlines under
11
Although the parties do not address this development, we note that they agreed in a February 25, 2013, document
entitled, “Stipulation Concerning Remaining Post-Judgment Issues and March 5-6, 2013 Hearing” as follows:
2. Operator Defendants shall continue to provide the information concerning the Novi
account that was ordered by the Court in its “Order Approving Monthly Net Profits Reporting
Forms” dated December 17, 2012.
3. Plaintiffs have raised issues regarding the [Operator] Defendants’ alleged non compliance
with the timing of the monthly NPI report as provided in Section 3 of the [NPC]. [Operator]
Defendants agree that, beginning with production month February 2013, the Defendants will
provide Plaintiffs with the approved monthly reporting form and supporting documents within
ninety (90) days from the last of the production month. For instance, the monthly NPI report for
February 2013 production month, March 2013 NPI month, would be due on or before May 31,
2013.
29
various statutes and contracts, including federal mineral royalties, state severance taxes,
the WRPA, joint interest billing, etc. The NPC simply imposed an additional reporting
requirement upon the operators. There is nothing inherently unfair or unconscionable
about that. The district court aptly addressed the defendants’ argument:
A consistent theme from the Defendants with respect
to the accounting requirements of the net profits interest is
the requirements are impractical and difficult to comply with
given their current business practices. The Court observes
the Defendants have made enormous profits from operations
on the leases subject to the net profits interest. Their
obligation is to conform their accounting procedures to
accommodate their contractual and Court ordered obligations
under the provisions of the net profits contract not the net
profits contract to their accounting procedures and business
practices.
[¶70] This statement by the district court also applies to another equitable argument
propounded by the defendants. They emphasize the large amount of money invested in
the leases for which they did not receive credit and argue the plaintiffs received a
windfall of approximately $102 million. That is, of course, an enormous amount of
money. However, the defendants’ argument disregards the context. The amount of
money changing hands as a result of the NPI leases is almost unfathomable. At the trial,
the court was considering total expenses of over $2 billion and even greater revenues.
Ultra I, ¶ 16, 226 P.3d at 904. The parties indicate those amounts have grown
considerably in the ensuing years. The $102 million in expenses is but a small fraction of
the totals. Also, it is important to keep in mind that the NPI is concerned with slightly
less than five percent of the total revenues and expenses, so the actual amount which the
defendants lost in deductions was only approximately $5 million out of the more than $2
billion total trial expenses. Ultra I, ¶ 11, 226 P.3d at 902-03. Finally, the defendants
should keep in mind that without the original assignment of the leases by the plaintiffs’
predecessors in exchange for the net profit interest, they would not have acquired the
leases in the first place. Id., ¶ 3, 226 P.3d at 899. The defendants simply have not
convinced this Court that the result in this case is inequitable or unfair.
3. Attorney Fees
[¶71] Wyoming follows the American rule on attorney fees which states that each party
is responsible for its own attorney fees unless there is express contractual or statutory
authority for an award of fees. Ultra I, ¶ 151, 226 P.3d at 936; Stafford v. JHL, Inc., 2008
WY 128, ¶ 16, 194 P.3d 315, 318 (Wyo. 2008). The remedy provisions of the WRPA are
broad and provide:
30
(a) Any lessee or operator, purchaser or other party legally
responsible for payment who violates the provisions of this
article is liable to the person or persons legally entitled to
proceeds from production for the unpaid amount of such
proceeds, plus interest at the rate of eighteen percent (18%)
per annum on the unpaid principal balance from the due date
specified in W.S. 30-5-301(a).
(b) The district court for the county in which a well producing
oil, gas or related hydrocarbons is located has jurisdiction
over all proceedings brought pursuant to this article and the
prevailing party in any proceedings brought pursuant to this
article shall be entitled to recover all court costs and
reasonable attorney’s fees.
(c) Any person who fails to provide royalty information as
provided in W.S. 30-5-305(b) is liable to the affected royalty,
overriding royalty or other nonworking interest owner in the
amount of one hundred dollars ($100.00) per month that
complete reporting is not provided to the interest owner.
Wyo. Stat. Ann. § 30-5-303 (LexisNexis 2013).
[¶72] The defendants argue the district court’s order awarding attorney fees to the
plaintiffs was erroneous. Their first argument depends upon a reversal by this Court of
the district court’s rulings on jurisdiction or its interpretation of the NPC. In that event,
the defendants maintain, they would be the prevailing parties and, consequently, entitled
to an award of attorney fees. Given we have affirmed the district court’s rulings on those
issues, the defendants are not entitled to an attorney fees award.
[¶73] The defendants also claim that even if the plaintiffs were entitled to an attorney
fees award, the district court erred by allowing the plaintiffs’ entire request. We review a
district court’s attorney fees award for abuse of discretion.
A court abuses its discretion only when it acts in a manner
which exceeds the bounds of reason under the
circumstances. The burden is placed upon the party who is
attacking the trial court's ruling to establish an abuse of
discretion, and the ultimate issue is whether the court could
reasonably conclude as it did.
We have said that “[j]udicial discretion is a composite of
many things, among which are conclusions drawn from
31
objective criteria; it means a sound judgment exercised
with regard to what is right under the circumstances and
without doing so arbitrarily or capriciously.” If the record
includes sufficient evidence to support the district court's
exercise of discretion, we uphold its decision.
[Mueller v. Zimmer, 2007 WY 195, ¶ 11, 173 P.3d 361, 364
(Wyo. 2007)], quoting Hayzlett v. Hayzlett, 2007 WY 147, ¶
7, 167 P.3d 639, 641–42 (Wyo.2007) (internal citations
omitted).
Ultra I, ¶ 149, 226 P.3d at 935.
[¶74] The defendants assert the district court abused its discretion by failing to require
the plaintiffs to segregate their fees between the WRPA claims they prevailed upon and
other claims. In the post-judgment proceedings, the plaintiffs initially requested the
district court award them fees of $1,177,305.50. The defendants evaluated the plaintiffs’
attorney fees submission and determined that only 641.9 hours, valued at $189,620, were
properly awardable to the plaintiffs under the WRPA. The district court did not require
the plaintiffs to segregate the fees and awarded the plaintiffs their full attorney fees
request.
[¶75] In general, “[s]egregation of fees between multiple clients and/or multiple claims
is required when it is possible.” Cline v. Rocky Mountain, Inc., 998 P.2d 946, 952 (Wyo.
2000). However, we explained in Ultra I, ¶¶ 153, 226 P.3d at 936:
Section 30–5–303(b) provides that the prevailing party “in
any proceedings brought pursuant to this article” is entitled to
a fee award. The plain meaning of the term “proceedings” is
broad, especially when phrased in the plural. Black's Law
Dictionary 1324 (9th ed.2009) defines “proceeding” as “[t]he
regular and orderly progression of a lawsuit, including all acts
and events between the time of commencement and the entry
of judgment. Similarly, Webster's Third New Int'l Dictionary
1807 (2002) defines “proceeding” in the context of law as
“[l]egal action; litigation.”
In Ultra I, ¶ 157, 266 P.3d at 937, we rejected the defendants’ claim that the plaintiffs
were entitled to fees only for the discrete WRPA claims. We concluded that many of the
claims for which the defendants sought segregation were inextricably intertwined with
their WRPA claims. Id., citing City of Gillette v. Hladky Constr., Inc., 2008 WY 134, ¶
110, 196 P.3d 184, 212 (Wyo. 2008).
32
[¶76] Ultra asserts the plaintiffs were only entitled to fees associated with two post-
judgment issues, the pre-2007 expenses and division expenses. According to Ultra, fees
should not have been allowed for the plaintiffs’ abandoned or unsuccessful efforts to:
obtain broader access to the defendants’ accounting documents; obtain access to
documents from a former defendant who ultimately settled; obtain a determination of the
fair market value of SWEPI’s gas because that issue was not finally decided; and enforce
the Supplemental Accounting Agreement.
[¶77] Diverging from Ultra on this issue, SWEPI argues the plaintiffs were entitled to an
award against it only as to the pre-2007 expense issue because SWEPI never tried to
include division expenses in its post-trial NPI calculations. SWEPI also claims the
district court abused its discretion by failing to exclude from the award fees pertaining to
general investigation, evaluation of monthly NPI reports, and entries related to
correspondence with non-parties, including those with whom the plaintiffs settled.
[¶78] The district court ruled the WRPA applied to the post-judgment proceedings, the
plaintiffs were the prevailing parties, and they were entitled to an award of reasonable
attorney fees and costs. The district court rejected the defendants’ argument that the
plaintiffs were required to segregate their fees related to the discrete WRPA issues,
explaining:
The Court believes defendants have misapprehended
the language of the WRPA and misapplied the obligation to
segregate fees and expenses among defendants and/or claims.
The Court agrees with plaintiffs[’] characterization of the
proceedings related to their motion, specifically that all issues
(i.e. claims) in the current matter before the Court, and on
appeal,12 relate to a common nexus, a common cause, that
being to enforce their judgment and the requirement that the
defendants properly account for and pay the net profits
interest pursuant to the Court’s judgment and the Net Profits
Contract. In this endeavor, they were the prevailing party in
that they improved their position markedly in terms of the
accounting procedures and reporting requirements and in the
proper calculation of the amount ultimately due. In this
respect the Court agrees with the language from Hensley v.
Eckerhart, 461 U.S. 425, 435 (1982) cited in support of a
comprehensive fee award.
12
This reference to issues “on appeal” recognizes that the district court’s attorney fee decision was
entered after the defendants had already appealed the decision on the merits. The district court had
continuing jurisdiction, after the defendants appealed its order on the merits, to consider and award
attorney fees. W.R.C.P. 58; Shindell v. Shindell, 2014 WY 51, ¶ 28, n.2, 322 P.3d 1270, 1277, n.2 (Wyo.
2014).
33
“Many civil rights cases will present only a single claim. In
other cases the plaintiff's claims for relief will involve a
common core of facts or will be based on related legal
theories. Much of counsel’s time will be devoted generally to
the litigation as a whole, making it difficult to divide the
hours expended on a claim-by-claim basis. Such a lawsuit
cannot be viewed as a series of discrete claims. Instead the
district court should focus on the significance of the overall
relief obtained by the plaintiff in relation to the hours
reasonably expended on the litigation.”
(footnote added).
[¶79] The district court also stated that, although the post-judgment proceedings were
not as long or complicated as the original trial, the proceedings were comparable and
noted that this Court approved its $3.9 million attorney fee award in the first action. It
compared the affidavits submitted by the parties as to the reasonableness of the plaintiffs’
attorney fees submission and stated that, applying the lodestar factors, 13 the $1,177,305
requested for the post judgment proceedings was “reasonable and appropriate in view of
the nature, complexity and extent of the entire litigation undertaken by plaintiffs in
support of their efforts to enforce their judgment.”
[¶80] The WRPA specifically addresses the requirements for reporting to oil and gas
interest owners and provides remedies for reporting failures, including attorney fees to
prevailing parties. Wyo. Stat. Ann. §§ 30-5-303 & 305. The defendants did not properly
report to the plaintiffs at the beginning of the post-judgment period. The NPC report
provided by the defendants on July 23, 2010, was a simple two-page High Level
Summary. After the plaintiffs filed their motion to enforce, the defendants began to
provide more information and the parties were eventually able to agree on a set of
reporting forms. This agreement satisfied some of the issues in the post-judgment
proceedings, although the plaintiffs continued to question whether the defendants were
properly applying the NPC accounting formula with regard to certain expenses.
[¶81] Given the post-judgment issues focused on the defendants’ responsibilities under
the WRPA, the NPC and the judgment based upon the act and the contract, the district
court’s refusal to require segregation of fees between WRPA and non-WRPA claims in
the post-judgment proceedings was consistent with our decision in Ultra I. For example,
the plaintiffs’ efforts to obtain information about the NPI accounting and their evaluation
13
The lodestar test requires a determination of whether: “1) the fee charged represents the product of
reasonable hours times a reasonable rate; and 2) other factors of discretionary application should be
considered to adjust the fee upward or downward.” Ultra I, ¶ 162, 266 P.3d at 938. See Wyo. Stat. Ann.
§ 1–14–126(b) (listing factors considered in awarding attorney fees).
34
of that information were certainly intertwined with enforcing the contract and the
defendants’ on-going reporting and payment obligations and clearly fell within the
parameters of the WRPA. Other matters, including correspondence with non-parties, etc.
are not so readily characterized as WRPA litigation. However, “[t]he burden is placed
upon the party who is attacking the district court’s ruling to establish an abuse of
discretion, and the ultimate issue is whether the court could reasonably conclude as it
did.” Joe’s Concrete & Lumber, Inc. v. Concrete Works of Colorado, Inc., 2011 WY 74,
¶ 12, 252 P.3d 445, 448 (Wyo. 2011). The defendants have not satisfied that burden.
Instead, they simply list examples of items they claim should not have been approved in
the attorney fees award and refer us to their district court filings. In most respects, the
defendants’ argument is insufficient to establish the district court abused its discretion.
[¶82] Nevertheless, we have determined the district court’s attorney fees award should
be modified in one regard. The plaintiffs stated, in their reply to the defendants’
opposition to their fee request, that they did not contest a “reduction of fees associated
with clerical and filing matters.” The plaintiffs, therefore, revised their fee request by
eliminating those fees, making their total request $1,153,430.50. Despite the plaintiffs’
concession on the fees associated with clerical and filing activities, the district court
awarded the plaintiffs their original request of $1,177,305.50. The district court should
have acknowledged the plaintiffs’ revision of their fees request and eliminated the
associated fees. We, therefore, rule that the attorney fees award should be revised to
reflect the plaintiffs’ agreement and reduced to $1,153,430.50.
CONCLUSION
[¶83] We conclude the district court properly assumed jurisdiction in this matter
pursuant to its inherent court powers and the Declaratory Judgments Act. In addition, we
conclude the district court’s interpretation of the scope of the 2007 trial NPI
determination is supported by the record and its interpretation of when expenses are
“incurred” under the language of the NPC was correct. Finally, with one exception, the
defendants have not demonstrated the district court abused its discretion in awarding the
plaintiffs attorney fees.
[¶84] Affirmed, as revised.
35