K & H Well Service, Inc. v. Tcina, Inc.

• Decision Date: 02 July 2002
• Docket Number: No. 93,451.,93,451.
• Citation: 2002 OK 62,51 P.3d 1219
• Parties: K & H WELL SERVICE, INC., Plaintiff/Appellant, v. TCINA, INC. and Tcina Holding Co., Ltd., Defendants/Appellees.
• Court: Oklahoma Supreme Court

51 P.3d 1219

2002 OK 62

K & H WELL SERVICE, INC., Plaintiff/Appellant, v. TCINA, INC. and Tcina Holding Co., Ltd., Defendants/Appellees.

No. 93,451.

Supreme Court of Oklahoma.

July 2, 2002.

Thomas A. Thompson, Shawnee, OK, for appellant.

Larry Jay McMains of Johnston & McMains, Seminole, OK, for appellees.

LAVENDER, J.

¶ 1 Today's cause requires review of the process employed by K & H Well Service, Inc. [lien claimant or K & H] to secure a money judgment against named leasehold owners, to establish the validity of its 42 O.S.1991 § 144¹ oil and gas well liens, and to foreclose the same.

I FACTS AND PROCEDURAL HISTORY

¶ 2 K & H provided materials, supplies and well services in the reworking and drilling of several oil and gas wells in Seminole and Pottawatomie counties during a period beginning in July 1998 and ending in November 1998. K & H alleges that it was hired to perform this work by Tcina, Inc., the wells' operator. Upon not being paid for the rendered services K & H filed (in early December 1998) "oil and gas well lien statements" covering the respective wells in the county clerk's office of either Pottawatomie or Seminole County, depending upon where the specific well which was worked on was located. Each lien statement contained a legal description of the lands against which it was intended to be impressed.

¶ 3 On December 10, 1998 K & H brought suit in Seminole County District Court seeking a money judgment and to foreclose its liens. Tcina, Inc., as operator, and Tcina Holding Co., Ltd. [Tcina or defendants], among others, were named as defendants. After the suit's initiation but before trial commenced, the liens on all wells but the Salma Wells Nos. 3 and 4² were discharged by payment of the claimed amounts.

¶ 4 The appealed-from judgment addresses the legal efficacy and effect to be given to K & H's lien statement filed in Book 7453, Page 62 in the Seminole County Clerk's office. The challenged lien purports to encumber the following described land:

The Fleet Osborn Gilcrease Unit

W/2 NW/4 and N/2 SW/4 and S/2 Lot 2, Lot 4, Lot 5, Lot 6, all in Sec. 25-T5N-R7E, and E/2 NE/4 and NW/4 NE/4 and East 20 acres of Lot 1, Lot 4, Lot 5, all in Section 25-T5N-R7E, including all riparian rights all in Seminole County, State of Oklahoma.

The Salma Well No. 3 — per a filed Oklahoma Corporation Commission report — was recompleted in the SE/4 NW/4 NW/4 of section 25-T5N-R7E to the Booch formation; and the Salma Well No. 4 — per a filed Oklahoma Corporation Commission report — was recompleted in the W/2 NE/4 SW/4 NW/4 of section 25-T5N-R7E to the Wapanucka formation. The defendants did not contest that K & H performed the work which is the subject of the above lien or the amount charged.

¶ 5 At trial Tcina, Inc. alleged that although it was the contract operator of the Salma wells, it did not possess an interest in the leases covering the lands subject to the lien. Berry Doyal (the principal owner of both Tcina, Inc. and Tcina Holding Co., Ltd.) represented that when negotiating with K & H for the well work to be performed he disclosed (1) that Tcina, Inc. was an agent for the owners of the leasehold estate upon which the well work was to be done and (2) the leasehold owners were going to pay for the requested rework. Tcina, Inc. asserts that its status as a non-leasehold owner and an agent for disclosed principals precludes its liability for the work which K & H performed on the Salma wells.

¶ 6 Tcina Holding Co., Ltd., claims that it owns no interest in the leasehold estate against which K & H's liens were impressed. Nonetheless, there is recorded in the Seminole County Clerk's office an assignment, dated December 1, 1997, of an undivided 5% interest in leases (covering the same mineral estates as the leasehold estate against which K & H's lien was impressed) from Grant Oil and Gas Corporation to Tcina Holding Co., Ltd. At trial Tcina Holding Co., Ltd., asserted that the acquired interest was only a carried working interest.³ However, the allocation of expenses traditionally associated with a carried interest is nowhere reflected in the assignment's terms. At trial Tcina Holding Co., Ltd., introduced an unrecorded "Disclaimer and Assignment Without Warranty," dated May 4, 1999, of its interests in the Salma Wells nos. 3 and 4 to the record owners. Also, Tcina Holding Co., Ltd.'s leasehold interest in formations — other than those formations in which the Salma wells were completed — were apparently reserved by Tcina Holding Co., Ltd. as they were excluded from the disclaimer and assignment's scope.

¶ 7 After trial judgment was entered in favor of the Tcina entities on K & H's (a) claim for a money judgment and (b) attempt to foreclose its lien. The trial court also awarded an attorney fee to Tcina, Inc. and Tcina Holding Co., Ltd. K & H appealed and the Court of Civil Appeals [COCA] reversed the trial court's judgment and remanded the cause. The COCA found that Tcina, Inc. was merely a contract operator of the wells subject to the lien in issue, had disclosed the principals for which it was the agent to K & H, and owned no leasehold interests in the lands subject to K & H's lien. It concluded that Tcina, Inc. was correctly found to have no liability. Nonetheless, the COCA held that Tcina Holding Co., Ltd. did possess a leasehold interest in the wells subject to the lien and remanded the case with instructions to allow the foreclosure to proceed. It also determined that K & H was the prevailing party in the action and vacated the trial court's attorney-fee award.

¶ 8 The Tcina entities sought certiorari which was granted.

II THE STANDARD OF REVIEW

¶ 9 The judgment presented for review is a compilation of both findings of facts and conclusions of law.⁴ When, as here, the case is tried to the court, its determination of facts are accorded the same force as those made by a well-instructed jury.⁵ If any competent evidence supports the trial court's findings of fact, the same will be affirmed.⁶ Whether a lien is perfected under applicable statutes — i.e., whether the facts (once established) demonstrate substantial compliance with applicable statutory requirements — is largely a question of law for the trial court to resolve.⁷ Issues of law are reviewed de novo since an appellate court has plenary, independent and non-deferential authority to reexamine a trial court's legal rulings. Lastly, the trial court's decision not to allow amendment of the plaintiff's lien statement will be reviewed under an abuse-of-discretion standard.⁸ Unless the record clearly discloses that the trial court abused its discretion, its decision will not be disturbed.

III SINCE K & H'S PERFORMANCE OF THE CONTRACT AND THE AMOUNT OWED IS UNDISPUTED, THE TRIAL COURT SHOULD HAVE AWARDED A MONEY JUDGMENT AGAINST THE NAMED LEASEHOLD OWNER

¶ 10 The following facts were not controverted at trial: (a) that K & H provided labor and services for the Salma Wells nos. 3 and 4 pursuant to an oral contract with Tcina, Inc. as agent for the leasehold owners and (b) the correctness of the amount charged for the labor and services provided. Rather, the defendants contested who was liable for the same. Tcina, Inc. and Tcina Holding Co., Ltd.'s defenses to liability were primarily alike — i.e., that neither owned a leasehold interest in the lands subject to the lien in issue.⁹

¶ 11 Subsumed in the trial court's judgment denying liability on Tcina, Inc.'s part is necessarily a finding that Tcina, Inc. owned no leasehold interest in the lands covered by K & H's lien for the work done on the Salma wells. A review of the record and appellate paperwork discloses no basis for challenging the trial court's finding on this factual issue. There is credible evidence in the record which supports Tcina, Inc.'s claims that (1) it was the contract operator of the wells in question and (2) it disclosed those for whom it was agent¹⁰ when it negotiated the work (recompletion of the Salma wells) the subject of K & H's lien. Also, no evidence was adduced by K & H which would establish that Tcina, Inc. possessed record title to a leasehold interest in the lands covered by the Salma-wells lien. Hence, we decline to reverse the trial court's judgment denying Tcina, Inc.'s liability for the claimed indebtedness.

¶ 12 The same result does not follow as to Tcina Holding Co., Ltd. The record discloses an absolute assignment of a 5% interest in the oil and gas leases covering the mineral estate on which the Salma wells nos. 3 and 4 were drilled, recorded in the Seminole County Clerk's office, from Grant Oil and Gas Corporation to Tcina Holding Co., Ltd. The recorded assignment bore no terms relating to payment of expenses attributable to the interest assigned. Tcina Holding Co., Ltd.'s attempt to restrict the recorded assignment's effect by its introduction at trial of an unrecorded disclaimer and assignment to the "record owners" of the leases is not persuasive for several reasons.

¶ 13 First, when Tcina Holding Co., Ltd. executed the (unrecorded) disclaimer and assignment quitclaiming its interest in the Salma wells nos. 3 and 4 to the "record owners", it was itself one of the record owners of the leasehold estate in question. Hence, the legal effect of the assignment language employed by Tcina, Inc. would be a reconveyance to itself of some quantum of interest in the leasehold estate covering the Salma wells nos. 3 and 4. Even if its attempted disclaimer and assignment were effective, it would have remained a leasehold owner.

¶ 14 Second, Tcina Holding Co., Ltd was assigned of record a five percent (5%) interest in various leases covering the lands subject to K & H's lien. A recorded conveyance imparts constructive notice on and after the date it is recorded to the assignee's [here Tcina Holding Co., Ltd.] creditors [here K & H] that it owns an interest in the oil and gas leases the subject of the assignment.¹¹ The assignment to Tcina Holding Co., Ltd....