830 F.3d 1171 (10th Cir. 2016), 13-4012, Trans-Western Petroleum, Inc. v. United States Gypsum Co.

Docket Nº:13-4012, 13-4021
Citation:830 F.3d 1171, 95 Fed.R.Serv.3d 406
Opinion Judge:KELLY, Circuit Judge.
Party Name:TRANS-WESTERN PETROLEUM, INC., a Colorado corporation, Plaintiff - Appellant/Cross-Appellee, v. UNITED STATES GYPSUM COMPANY, an Illinois corporation, Defendant - Appellee/Cross-Appellant
Attorney:Stephen K. Christiansen, (Sam Meziani and Kelley M. Marsden of Van Cott, Bagley, Cornwall & McCarthy, on the briefs), Salt Lake City, Utah, for Plaintiff - Appellant-Cross Appellee. Matthew J. Ball (and Patricia W. Christensen of Parr, Brown, Gee & Loveless, P.C., on the briefs), Salt Lake City, ...
Judge Panel:Before KELLY, LUCERO, and HOLMES, Circuit Judges.
Case Date:July 26, 2016
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1171

830 F.3d 1171 (10th Cir. 2016)

95 Fed.R.Serv.3d 406

TRANS-WESTERN PETROLEUM, INC., a Colorado corporation, Plaintiff - Appellant/Cross-Appellee,

v.

UNITED STATES GYPSUM COMPANY, an Illinois corporation, Defendant - Appellee/Cross-Appellant

Nos. 13-4012, 13-4021

United States Court of Appeals, Tenth Circuit

July 26, 2016

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH. (D.C. No. 2:06-CV-00801-TS).

AFFIRMED IN PART and REMANDED.

Stephen K. Christiansen, (Sam Meziani and Kelley M. Marsden of Van Cott, Bagley, Cornwall & McCarthy, on the briefs), Salt Lake City, Utah, for Plaintiff - Appellant-Cross Appellee.

Matthew J. Ball (and Patricia W. Christensen of Parr, Brown, Gee & Loveless, P.C., on the briefs), Salt Lake City, Utah, for Defendant - Appellee/Cross Appellant.

Before KELLY, LUCERO, and HOLMES, Circuit Judges.

OPINION

KELLY, Circuit Judge.

This diversity case involves a 2004 oil and gas lease with a five-year term between Trans-Western Petroleum, Inc. (" Trans-Western" ) and United States Gypsum Co. (" USG" ). In a prior appeal, we determined Trans-Western held a valid oil and gas lease. Trans-Western Petroleum, Inc. v. United States Gypsum Co., 584 F.3d 988 (10th Cir. 2009). Thereafter, the district court granted partial summary judgment in favor of Trans-Western, held a bench trial on damages and awarded Trans-Western nominal damages. Both parties appealed. Trans-Western appealed the district court's nominal damage award. USG cross-appealed the district court's denial of its Fed.R.Civ.P. 56(d) motion, grant of partial summary judgment in favor of Trans-Western, and nominal damages award.

After oral argument, we certified one question to the Utah Supreme Court: How should expectation damages be measured for the breach of an oil and gas lease? In light of the Utah Supreme Court's resolution of this question, we now affirm the district court's grant of partial summary judgment, and remand the case for a proper determination of the amount of damages. Our jurisdiction arises under 28 U.S.C. § 1291.

Background

USG owns the oil and gas underlying 1,700 acres of land in Sevier County, Utah. In 1995, USG entered into an oil and gas lease with Dale E. Armstrong (" Armstrong" ), who subsequently assigned the lease to Wolverine Oil & Gas Corp. (" Wolverine" ). Aplt. App. 592. The Wolverine lease was extended to nine years, through August 17, 2004. Aplt. App. 592.

In 2004, Douglas Isern (" Isern" ), the owner and sole officer of Trans-Western, heard rumors that Wolverine had discovered oil in the area. Aplt. App. 591, 593. After researching county records, Isern found the Armstrong lease and called USG, expressing interest in leasing the land upon expiration of the Wolverine assignment. Aplt. App. 593. Isern followed up by sending USG a proposed lease, with a term of five years beginning August 17, 2004 at $19/acre (or $32,680) along with the right of assignment. Aplt. App. 593-94. The proposed lease was accompanied by a draft in the amount of $32,680. Aplt. App. 594. On September 15, 2004, USG executed the lease. Aplt. App. 594.

Soon after, on October 1, 2004, both Trans-Western and USG received a letter from Wolverine protesting the recording of the lease. Wolverine claimed that its lease with Armstrong remained valid under pooling and unitization provisions contained in that lease. Aplt. App. 594. USG responded by rescinding the lease with Trans-Western both orally, through a phone conversation with Isern, and in writing, via a letter to Isern dated October 7, 2004. Aplt. App. 595. The value of Trans-Western's lease did not change during the three weeks from the date of its execution to the date of its rescission. Aplt. App. 595.

Two years later, in 2006, Trans-Western brought suit against Wolverine, seeking a declaratory judgment that Wolverine's lease with USG had expired on August 17, 2004. Aplt. App. 595. The district court determined that the Wolverine lease had expired. Aplt. App. 595. It then granted the parties' stipulated joint motion for Rule 54(b) certification and stay. Aplt. App. 117. The district court was subsequently affirmed on appeal. Trans-Western Petroleum, Inc., 584 F.3d at 994. Thereafter, as part of...

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