Amoco Production Co. v. Board of County Com'rs of County of Sweetwater

Decision Date16 October 2002
Docket NumberNo. 01-141.,01-141.
Citation55 P.3d 1246,2002 WY 154
PartiesAMOCO PRODUCTION COMPANY, Appellant (Defendant), v. BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF SWEETWATER, Appellee (Plaintiff).
CourtWyoming Supreme Court

Algirdas M. Liepas, of Algirdas M. Liepas P.C., Cheyenne, WY; and Frederick W. Bradley, Nicole Crighton, and Andre Burvant of Oreck, Bradley, Crighton, Adams & Chase, New Orleans, LA, Representing Appellant. Argument by Mr. Bradley.

Nancy D. Freudenthal and John C. McKinley of Davis & Cannon, Cheyenne, WY, Representing Appellee. Argument by Ms. Freudenthal.

Before HILL, C.J., and GOLDEN, LEHMAN,1 KITE, and VOIGT, JJ.

LEHMAN, Chief Justice.

[¶ 1] This is an appeal from the entry of summary judgment by the district court concerning the attempt by appellee Board of County Commissioners of the County of Sweetwater ("Sweetwater County") to collect the proportional share of ad valorem tax and interest owed by appellant Amoco Production Company ("Amoco") concerning its undisputed ownership interest in certain real property within Sweetwater County for 1980 through 1985. We affirm.

ISSUES

[¶ 2] Amoco sets forth the following summarized issues:

1. Did the trial court commit manifest error in failing to hold that the County's claim against Amoco in this suit was barred by principles of res judicata and judicial estoppel?
2. Did the trial court act improperly in holding that Amoco was now precluded from challenging the correctness of the alleged tax debt?
3. Did the trial court commit error in holding that UPRC (Union Pacific Resources Company) was Amoco's agent for purposes of the County's present tax claim?
4. Did the trial court err in granting summary judgment where its ruling was based on so many unalleged, unsubstantiated and incorrect assertions of fact?
5. Did the trial court properly grant summary judgment in favor of the County?
6. Should the trial court have awarded interest that accrued during that period?

Sweetwater County phrases the issues much more succinctly on appeal as:

1. Is Amoco Production Company (Amoco) liable to Sweetwater County for its proportional share of ad valorem tax and interest on increased mineral value determined by the Department of Revenue attributable to Amoco's undisputed ownership interest?
2. Does a genuine issue of material fact exist to preclude summary judgment for collecting the delinquent ad valorem taxes and interest from Amoco?
FACTS AND HISTORICAL BACKGROUND

[¶ 3] From 1980 through 1985, Union Pacific Resources Company or its predecessor, Champlin Petroleum Company (UPRC), was Amoco's unit operator for the Higgins Unit, the Brady Unit, the Bruff field and the Siberia Ridge field located within Sweetwater County (Properties). During this time frame, the mineral tax system in Wyoming required unit operators, through self reporting, to report for assessment all oil and gas produced and remit all ad valorem taxes due on such production for all owners. DOR Rules, ch. IX, § 4 (1980) and § 7 (1982). Thus, Amoco did not file any reports with the State and received no tax notices directly from the State or Sweetwater County for the Properties as such business was being transacted through the State or Sweetwater County and UPRC.

[¶ 4] In 1985, State regulations concerning the Wyoming mineral tax system were amended and, in part, allowed take-in-kind owners, like Amoco with respect to the Properties, to file their own reports with the State and directly pay related taxes.2 DOR Rules, ch. XXI, § 7(c). In addition, in 1989, the State of Wyoming, Department of Audit (DOA) was created to supervise the Wyoming mineral tax system. Wyo. Stat. Ann. § 9-2-2003. Upon its institution, the DOA began to perform oil and gas audits. Likewise, separate from these audits, other counties within Wyoming, including Sweetwater County, began to conduct their own audits primarily through contract arrangements. The contract auditor retained by Sweetwater County reviewed production reports for the Properties and found significant volumes of unreported production for the years 1980 through 1985. These findings were sent to the State of Wyoming, Department of Revenue (DOR) for review and assessment.

[¶ 5] As a result of the audits being conducted by the counties, UPRC filed a declaratory judgment action seeking to preclude or limit these county audits. The named counties in this lawsuit, including Sweetwater County, responded and filed a counterclaim against UPRC requesting judgment for the additional ad valorem tax amounts due for underreported and undervalued production uncovered by the various county audits. This litigation (UPRC litigation) resulted in a judgment, which, in part, upheld the counties' ability to hire tax auditors and conduct oil and gas audits. This court affirmed that part of the judgment entered in the UPRC litigation through issuance of its opinion in Union Pacific Resources Co. v. State, 839 P.2d 356 (Wyo.1992).

[¶ 6] DOR then issued the first additional assessment and a Notice of Valuation Change (NOVC) pertaining to the Higgins Unit to UPRC. Subsequently, this court issued its opinion in Wyoming State Tax Comm'n v. BHP Petroleum Co., Inc., 856 P.2d 428 (Wyo.1993), which held that ad valorem taxes could be assessed against a unit operator as the agent for all working interest owners. However, BHP Petroleum also held that the State and counties could not collect the related taxes owed from the other working interest owners by forcing such payment to be made from the involved unit operator. Instead, they were required to collect the owed tax amounts directly from each working interest owner. The issuance of this opinion was followed by DOR issuing the assessments and related NOVCs regarding the Brady Unit, the Bruff field and the Siberia Ridge field to UPRC.

[¶ 7] UPRC timely appealed the assessments for the Properties with the State of Wyoming, Board of Equalization (SBOE) and moved the district court to dismiss the counterclaims of the counties in the UPRC litigation contending that the counties had not joined all working interest owners as indispensable parties. On UPRC's motion to dismiss, the district court ruled that the counties were required to join all working interest owners or were required to restrict their claims for recovery to only those sums owed by UPRC. The counties chose the latter option; and, in 1994, Sweetwater County and UPRC settled the claims concerning the Properties against UPRC and all its working interest owners, explicitly except Amoco. This settlement specified Sweetwater County retained the right to pursue Amoco for its share of those involved taxes and interests owed regarding the Properties. Given this settlement, the related appeals before the SBOE and the UPRC litigation were dismissed.

[¶ 8] Amoco did not timely appeal or join UPRC in its appeal concerning the NOVCs issued to Sweetwater County concerning the Properties for the years of 1980 through 1985 before the SBOE. Further, although Amoco was aware of the UPRC litigation, it did not participate in that litigation or join in the settlement reached as mentioned above.

[¶ 9] Beginning in 1995, Sweetwater County approached Amoco with respect to the tax and interest owed by Amoco for the years of 1980 through 1985 concerning the Properties. This effort continued until 1999 with no success. After an updated demand was sent to Amoco to pay the amounts owed to which Amoco failed to respond, this action was filed by Sweetwater County against Amoco. The complaint of Sweetwater County alleged Amoco owed unpaid ad valorem taxes and interest on Amoco's proportionate share of mineral value certified by DOR for oil and gas produced from the Properties from 1980 through 1985. While Amoco answered this complaint and disputed that it owed these taxes, Amoco did admit its percentage ownership in each of the Properties. Amoco then filed a motion to dismiss based on jurisdictional issues. Sweetwater County also filed a motion for summary judgment. Ultimately, the motion to dismiss was denied by the district court. However, the district court granted Sweetwater County's motion for summary judgment, and this appeal followed.

STANDARD OF REVIEW

[¶ 10] Our standard of review is well established. We recently reiterated this standard of review in the case of Bevan v. Fix, 2002 WY 43, ¶ 13, 42 P.3d 1013, ¶ 13 (Wyo. 2002):

Summary judgment is appropriate if the record, viewed in the light most favorable to the non-moving party, reveals that no genuine issues of material fact exist and the prevailing party is entitled to judgment as a matter of law. Worley v. Wyoming Bottling Co., Inc., 1 P.3d 615, 620 (Wyo. 2000); Terry v. Pioneer Press, Inc., 947 P.2d 273, 275 (Wyo.1997); Davis v. Wyoming Medical Center, Inc., 934 P.2d 1246, 1250 (Wyo.1997); W.R.C.P. 56(c). A fact is material if it establishes or refutes an essential element of a claim or defense. Tidwell v. HOM, Inc., 896 P.2d 1322, 1324 (Wyo.1995). In evaluating summary judgment, we apply the same standards as the trial court, without affording any deference to the trial court's decisions on issues of law. Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 216 (Wyo.1994).

We also recognized in Bevan v. Fix, at ¶ 26 (citing In re HC, 983 P.2d 1205, 1209 (Wyo. 1999) and Ahearn v. Anderson-Bishop Partnership, 946 P.2d 417, 422 (Wyo.1997)), we may uphold the grant of summary judgment upon any proper legal ground finding support in the record.

DISCUSSION
Res Judicata/Judicial Estoppel

[¶ 11] Initially, Amoco argues the district court erred in failing to hold Sweetwater County's claim against Amoco was barred by the principles of res judicata and judicial estoppel. In essence, Amoco contends Sweetwater County was estopped from bringing this action against Amoco because the County's counterclaim in the UPRC litigation was dismissed with prejudice upon settlement. Thereby, Amoco asserts Sweetwater County is precluded from...

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