EOG Res., Inc. v. JJLM Land, LLC

• Citation: 522 P.3d 605
• Decision Date: 28 December 2022
• Docket Number: S-22-0095
• Parties: EOG RESOURCES, INC., a Delaware corporation, Appellant (Defendant), v. JJLM LAND, LLC, a Wyoming limited liability company, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

522 P.3d 605

EOG RESOURCES, INC., a Delaware corporation, Appellant (Defendant),

v.JJLM LAND, LLC, a Wyoming limited liability company, Appellee (Plaintiff).

S-22-0095

Supreme Court of Wyoming.

December 28, 2022

Representing Appellant: Isaac Sutphin, P.C., Jeffrey S. Pope, Holland & Hart LLP, Cheyenne, Wyoming. Argument by Mr. Pope.

Representing Appellee: Kendal R. Hoopes, Yonkee & Toner, LLP, Sheridan, Wyoming. Argument by Mr. Hoopes.

Before FOX, C.J., and KAUTZ, BOOMGAARDEN, GRAY, and FENN, JJ.

KAUTZ, Justice.

[¶1] JJLM Land, LLC (JJLM) sued EOG Resources, Inc. (EOG) for breach of the parties’ surface use and damage agreements and sought double damages under Wyo. Stat. Ann. § 30-5-405(b) (LexisNexis 2021) (part of what we have referred to as the Wyoming Split Estate Act, Wyo. Stat. Ann. §§ 30-5-401 to 30-5-410 (LexisNexis 2021) ). JJLM asserted EOG underpaid its obligations under the surface use and damage agreements. EOG admitted underpayment but argued the double damages statute did not apply because it had paid a portion of the amount owed. The district court granted summary judgment to JJLM. It concluded the double damages provision in § 30-5-405(b) applies when an oil and gas operator underpays an installment under a surface use and damage agreement and JJLM's claim for double damages was not barred by the statute of limitations or laches. The court denied EOG's subsequent motion to alter or amend judgment under Wyoming Rule of Civil Procedure (W.R.C.P.) 59(e). We affirm the district court's summary judgment decision. We lack jurisdiction to review the court's denial of EOG's Rule 59(e) motion. We grant JJLM's request for its attorney fees and costs on appeal.

ISSUES

[¶2] The dispositive issues are:

1. Did the district court err by deciding § 30-5-405(b) applies when an oil and gas operator underpays an installment owed to a surface owner under a surface use and damage agreement?

2. Did the district court err by concluding JJLM's claim for double damages was not barred by the statute of limitations?

3. Did the district court abuse its discretion by determining JJLM's claim for double damages was not barred by laches?

4. Do we have jurisdiction to review the district court's denial of EOG's Rule 59(e) motion?

5. Is JJLM entitled to its attorney fees and costs on appeal?

FACTS

[¶3] In February 2011, JJLM's predecessor, the Drake Family Revocable Land Trust (Trust), entered into a "Surface and Damage Agreement" (2011 SDA) with EOG's predecessor, Yates Petroleum Corporation (Yates). Under this agreement, the Trust granted Yates the right to enter and use the Trust's ranch lands in Campbell County for its oil and gas operations; in exchange, Yates agreed to compensate the Trust for any damage caused by its operations, including making annual rental payments to the Trust for each surface disturbance drilled or constructed on the lands (e.g., wells, access roads, and pipelines). The parties amended the 2011 SDA three times between September 2013 and November 2015. The amendments added land to be covered by the 2011 SDA and increased the amounts of the annual rental payments owed by Yates to the Trust.

[¶4] Sometime between September 2013 and September 2015, the Trust transferred the ranch lands to JJLM. In October 2016, EOG took over Yates’ oil and gas operations on the ranch lands, including its payment obligations under the 2011 SDA. In November 2019, JJLM and EOG executed a new "Surface Use and Damage Agreement" (2019 SUA), which superseded the 2011 SDA and created new annual payment obligations for EOG.

[¶5] After the 2019 SUA went into effect, JJLM began closely monitoring EOG's annual payments and determined they did not comply with the 2019 SUA. In July and August 2020, JJLM asked EOG to correct the payments. When EOG did not respond to JJLM's concerns, JJLM sent EOG a "Notice Pursuant to Wyo. Stat. Ann. § 30-5-405(b)" (notice of default) which asserted EOG was in default under the 2019 SUA and demanded EOG timely cure the default or JJLM would file a lawsuit seeking double damages under § 30-5-405(b). EOG received the notice of default on September 14, 2020.

[¶6] On December 8, 2020, after EOG failed to timely cure the default, JJLM sued EOG for breach of contract and double damages under § 30-5-405(b). EOG answered the complaint and asserted various affirmative defenses, including that JJLM's claim for double damages was barred by the statute of limitations and laches. In March 2021, EOG admitted it owed $377,978.91 to JJLM under both the 2011 SDA and the 2019 SUA and filed a motion to deposit that amount with the court pursuant to W.R.C.P. 67 ("If any part of the relief sought is a money judgment or the disposition of a sum of money ..., a party -- on notice to every other party and by leave of court -- may deposit with the court all or part of the money ..., whether or not that party claims any of it."). It disputed, however, JJLM's claim for double damages under § 30-5-405(b). The district court granted EOG's Rule 67 motion, and EOG deposited the funds with the court.

[¶7] JJLM filed a motion for summary judgment on its breach of contract claim and claim for double damages. JJLM argued that, because EOG admitted to owing $377,978.91 for breaching the parties’ surface use and damage agreements and failed to cure the default after notification, it was entitled to an additional $377,978.91 in damages under § 30-5-405(b).

[¶8] In response, EOG claimed that during Summer 2020, it had completed an audit of the payments made to JJLM between 2016 and 2020 and determined it had sometimes underpaid, had on a few occasions overpaid, and missed three payments entirely. It blamed the payment errors on the transition from Yates’ accounting system to its own, a land swap by JJLM, and the new payment obligations created by the 2019 SUA. After netting out the overpayments, EOG admitted it owed $377,978.91. It argued, however, that JJLM was not entitled to double that amount under § 30-5-405(b) because the statute applies only when an operator does not pay any portion of an installment owed under a surface use and damage agreement, not when an operator does not pay enough. Because it had only missed three payments totaling $50,528.50, EOG maintained JJLM was only entitled to receive that amount under § 30-5-405(b). Even assuming § 30-5-405(b) applied to underpayments, EOG argued JJLM's claim for double damages was barred by the one-year statute of limitations contained in Wyo. Stat. Ann. § 1-3-105(a)(v)(D) (LexisNexis 2021) and/or laches.

[¶9] The district court granted summary judgment to JJLM on its breach of contract claim and its entire claim for double damages under § 30-5-405(b). It determined it was undisputed that the 2011 SDA and 2019 SUA were enforceable contracts, EOG did not make the required payments under those agreements, and JJLM suffered damages in the amount of $377,978.91 due to EOG's breach. The court also decided JJLM was entitled to double damages on the entire delinquency because § 30-5-405(b) applies not only when an operator does not pay an installment owed under a surface use and damage agreement but also when an operator underpays an installment. It rejected EOG's statute of limitations and laches defenses and awarded JJLM $755,957.82 in total damages.

[¶10] EOG subsequently filed a motion to alter or amend the judgment under Rule 59(e) seeking to reduce the damages awarded to JJML by $59,370.00. It claimed that although it agreed it owed $377,978.91, that amount included ten payments, totaling $59,370.00, which were not yet due when JJLM sent EOG the notice of default. According to EOG, the district court erred in awarding double damages for those payments because JJLM had no basis to demand payment for amounts not yet due. The next day, EOG supplemented its Rule 59(e) motion, claiming it found additional payments that were not due until after JJLM sent the notice of default, and therefore damages should be reduced by $180,878.19. The district court summarily denied EOG's Rule 59(e) motion.

[¶11] While its Rule 59(e) motion was pending, EOG filed a notice of appeal from the district court's summary judgment decision. After the district court denied its Rule 59(e) motion, EOG did not amend its notice of appeal to include the court's denial of its Rule 59(e) motion.

STANDARD OF REVIEW

[¶12] "We review a district court's summary judgment ruling de novo." Statzer v. Statzer , 2022 WY 117, ¶ 10, 517 P.3d 574, 578 (Wyo. 2022) (citing Spence v. Sloan , 2022 WY 96, ¶ 22, 515 P.3d 572, 579 (Wyo. 2022), and Miller v. Sweetwater Cnty. Sch. Dist. #1 , 2021 WY 134, ¶ 13, 500 P.3d 242, 246 (Wyo. 2021) ). We also review de novo the district court's interpretation of § 30-5-405(b) and its determination that JJLM's claim for double damages under § 30-5-405(b) was not barred by the statute of limitations. Guy v. Lampert , 2016 WY 77, ¶ 13, 376 P.3d 499, 502-03 (Wyo. 2016) (statutory interpretation) (citation omitted); Inman v. Boykin , 2014 WY 94, ¶ 21, 330 P.3d 275, 281 (Wyo. 2014) (statute of limitations) (citations omitted). We review for an abuse of discretion the district court's laches decision. Seherr-Thoss v. Teton Cnty. Bd. of Cnty. Comm'rs , 2014 WY 82, ¶ 60, 329 P.3d 936, 955 (Wyo. 2014) (laches) (citation omitted). " ‘A court abuses its discretion when it acts in a manner which exceeds the bounds of reason under the circumstances. The party who is attacking the trial court's ruling has the burden to establish an abuse of discretion, and the ultimate issue is whether the court could reasonably conclude as it did.’ " Meiners v. Meiners , 2019 WY 39, ¶ 9, 438 P.3d 1260, 1266 (Wyo. 2019) (quoting McBride-Kramer v. Kramer , 2019 WY 10, ¶ 11, 433 P.3d 529, 532 (Wyo. 2019), and Three Way, Inc. v. Burton Enters., Inc. , 2008 WY 18, ¶ 16, 177 P.3d 219, 225 (Wyo. 2008) ). "Whether this Court has jurisdiction is a question of law that we review de novo."

Martin v. Hart , 2018 WY 123, ¶ 17, 429 P.3d 56, 62 (Wyo. 2018) (cit...