Hopeful v. Etchepare, LLC

• Decision Date: 20 April 2023
• Docket Number: S-22-0171
• Citation: 2023 WY 33
• Parties: HOPEFUL, a Wyoming partnership consisting of Edward F. Murray, Jr., Donald F. Murray, William M. Murray, Mary Ann Kulas f/k/a Mary Ann Hollis, and Ted Simola; HOPEFUL LTD., a Wyoming partnership consisting of Edward F. Murray, Jr., Donald F. Murray, William M. Murray, Mary Ann Hollis, and Ted Simola; and TED SIMOLA, an individual, Petitioners, v. ETCHEPARE, L.L.C., a Wyoming limited liability company; NED MURRAY CO., a Wyoming partnership; GBK INVESTMENTS, L.L.C., an Oklahoma limited liability company; and EOG RESOURCES, INC., a Delaware corporation, Respondents.
• Court: Wyoming Supreme Court

1

2023 WY 33

HOPEFUL, a Wyoming partnership consisting of Edward F. Murray, Jr., Donald F. Murray, William M. Murray, Mary Ann Kulas f/k/a Mary Ann Hollis, and Ted Simola; HOPEFUL LTD., a Wyoming partnership consisting of Edward F. Murray, Jr., Donald F. Murray, William M. Murray, Mary Ann Hollis, and Ted Simola; and TED SIMOLA, an individual, Petitioners, v. ETCHEPARE, L.L.C., a Wyoming limited liability company; NED MURRAY CO., a Wyoming partnership; GBK INVESTMENTS, L.L.C., an Oklahoma limited liability company; and EOG RESOURCES, INC., a Delaware corporation, Respondents.

No. S-22-0171

Supreme Court of Wyoming

April 20, 2023

Original Proceeding Petition for Writ of Review District Court of Laramie County The Honorable Peter H. Froelicher Judge

Representing Petitioners: Bernard Q. Phelan, The Phelan Law Firm, Cheyenne, Wyoming. Argument by Mr. Phelan.

Representing Etchepare, L.L.C. and Ned Murray Co.: Jason D. Wasserburger and Rio D. Smith, WSH Law, P.C., Cheyenne, Wyoming. Argument by Mr. Wasserburger.

Representing GBK Investments, L.L.C.: Amanda K. Roberts and J. Kyle Hendrickson, Lonabaugh and Riggs, LLP, Sheridan, Wyoming.

Representing EOG Resources, Inc.: Lori A. McMullen, Lindsay A. Woznick, and Amanda M. Good, Crowley Fleck PLLP, Cheyenne, Wyoming. Argument by Ms. Good.

Before FOX, C.J., and KAUTZ, GRAY, and FENN, JJ., and PEASLEY, D.J.

GRAY JUSTICE.

[¶1] Hopeful partnership, Hopeful Ltd. (together, Hopeful entities), and Ted Simola, an individual, (Petitioners) filed a Petition for Writ of Review with this Court seeking interlocutory review of the district court's orders denying their motion to dismiss and motion to set aside default. Petitioners claim the district court lacked subject matter jurisdiction and personal jurisdiction in the underlying declaratory judgment action because all parties were served by publication and no summons were issued. We find the district court had subject matter jurisdiction. The district court erred, however, in finding the service by publication conferred personal jurisdiction over the defendants with a known address. While the Hopeful entities waived their objections to personal jurisdiction by voluntarily submitting to the jurisdiction of the district court, the district court abused its discretion in denying their motion to set aside the default judgment. Affirmed in part and reversed in part.

ISSUES

[¶2] We phrase the issues as:

1. Does the failure to issue a summons to parties served by publication deprive the district court of subject matter jurisdiction and/or personal jurisdiction?

2. Did service by publication on parties with a known address in Wyoming confer personal jurisdiction?

3. Did Hopeful partnership, Hopeful Ltd., and Ted Simola waive personal service?

4. Did the district court err in entering a default judgment and denying the motion to set aside default?

FACTS

[¶3] On March 26, 2021, Etchepare, a Wyoming limited liability company, filed a Petition for Quiet Title and Declaratory Judgment naming Hopeful partnership and Hopeful Ltd., two Wyoming entities, and fourteen other entities, individuals and unknown claimants as defendants. The partners in both Hopeful entities consisted of the same individuals, Edward F Murray, Jr., Donald F. Murray, William M. Murray, Mary Ann Kulas (nee Hollis),^[1] and Ted Simola.^[2] The petition sought to establish ownership of mineral interests located in Laramie County, Wyoming.

[¶4] In conjunction with the filing of its petition, Etchepare filed an Affidavit for Service by Publication. The affidavit stated that the address of one defendant, a Pennsylvania entity, could not be ascertained after a reasonable and diligent search and that there were unknown putative defendants with claims against the identified mineral interests. The affidavit declared, "All other defendants have addresses which are known or through reasonable diligence were ascertained." The affidavit did not contain the known addresses of the defendants but asserted that "after the first publication" "the notice of publication . . . will be mailed to each defendant whose address is known by certified mail." On March 31, Notice of Complaint and Service by Publication, signed by the district court clerk, was sent by certified mail to all defendants with a known address. Etchepare filed Proof of Service and Proof of Publication on May 6, 2021. Service by publication was completed on May 21, 2021, which was the last date of publication. No defendant was personally served and no summons were issued.

[¶5] Etchepare filed two Applications for Entry of Default, one on May 24, 2021, and the other on May 26, 2021. Together, these applications requested an entry of default against ten defendants but did not request entry of default against the Hopeful entities or Ted Simola. Each application was granted by the district court on the same day it was filed. On June 8, 2021, Ned Murray Co. and Etchepare filed a Joint Motion and Stipulation to Realign Parties asking that Ned Murray Co. be removed as a Defendant and named as a Plaintiff on the grounds that Ned Murray Co. agreed with Etchepare's claims regarding the current mineral interests. The same day, Ned Murray Co. and Etchepare filed a Motion to Bifurcate the claims against the Hopeful entities from the other defendants stating:

Etchepare and Ned Murray Co. are in agreement with the allegations Etchepare made in its [petition] regarding the mineral interests owned by Hopeful and Hopeful Ltd. . . . Issues have arisen regarding the distribution of the mineral interests of Hopeful and Hopeful Ltd. between the current partners Ned Murray Co.,^[3] Ted Simola, and Mary Ann Kulas . . . . These issues do not concern Etchepare nor involve the mineral interests to which Etchepare seeks to quiet title to and obtain a declaratory judgment . . . . Defendant Ted Simola has raised concerns regarding ownership of the partnership interests, distribution of the mineral interests to the current partners, payment of proceeds of production, and several other issues that remain unresolved.

Etchepare and Ned Murray Co. requested the bifurcation so that claims against the other parties might proceed while the Hopeful entities addressed their unique claims in a separate proceeding.

[¶6] On June 14, 2021, Mary Ann Kulas and Ted Simola filed a joint Answer of Defendants in their individual capacities.^[4] They affirmatively asserted the Hopeful entities dissolved as a matter of law in March 1990 upon the death of William M. Murray and that Ms. Kulas and Mr. Simola now held the mineral interests, together with certain other parties, as tenants in common.

[¶7] The district court granted the motion to realign the parties on July 2, 2021, and on August 23, 2021, issued its order granting the bifurcation of the proceedings.^[5] On September 16, 2021, the district court entered an order granting a Partial Decree for Quiet Title and Declaratory Judgment. The order determined the interests of all defendants, including the Hopeful partnership, Hopeful Ltd., and Mr. Simola, subject to the issues addressed in the Order to Bifurcate.

[¶8] The next relevant procedural event occurred on January 5, 2022, when the Hopeful entities, Ms. Kulas, and Mr. Simola filed a Motion to Amend Answer Clarifying the Status of the Partnerships; Asserting Counterclaims for Quiet Title, and Conversion of Funds and Cross Claims for Quiet Title and Trespass and Third Party Action for Conversion (Motion to Amend). Ned Murray Co. filed an objection to the Hopeful entities' Motion to Amend asserting the Hopeful entities had not answered the Petition or entered an appearance.

[¶9] A hearing was set for March 23, 2022. On the morning of the hearing, Etchepare and Ned Murray Co. filed an Application for Entry of Default against the Hopeful entities for failure to timely answer the petition. The court orally denied the Hopeful entities' Motion to Amend finding they had never filed an answer, no attorney had previously entered an appearance on behalf of Hopeful partnership or Hopeful Ltd and as a result, there was no answer to amend. The district court entered default against the Hopeful entities following the hearing.

[¶10] Two days later, the Hopeful entities filed an objection to the entry of default. They claimed they had never been served a summons, were not properly served, and had no obligation to answer. The Hopeful entities averred that they were amenable to accepting personal service, and if service of process was accomplished, they were ready to proceed with this matter. In an alternative request for relief, they requested the matter be dismissed for lack of jurisdiction.

[¶11] Five days after the Hopeful entities' motion to set aside default, the district court issued an Order Granting [Mr.] Simola's and [Ms.] Kulas' Motion to Amend Answer. This order did not address the motion to set aside default against the Hopeful entities.

[¶12] On April 13, 2022, the district court entered its written partial order denying the Hopeful entities' motion to amend. On April 19, 2022, the Hopeful entities renewed their motion to dismiss the case based on jurisdictional defects.

[¶13] The district court held a hearing on the Hopeful entities' Motion to Set Aside Default on June 1, 2022. During the Hopeful entities' argument, the district court read the following statement from JAG v. State:

In order for a court to acquire jurisdiction over a defendant, that defendant must be properly served or must "voluntarily" appear. A judgment entered without the court having jurisdiction is null and void. A defendant may waive his right to challenge a court's jurisdiction. Such a challenge should be made at the defendant's soonest opportunity. Failure to timely broach the

...