Patterson v. Bp America Production Co.

Decision Date04 May 2006
Docket NumberNo. 04CA2344.,04CA2344.
Citation159 P.3d 634
PartiesDavid PATTERSON, Philip McCoy, Donald Kanzler, and Shirley Kanzler, Plaintiffs-Appellants, v. BP AMERICA PRODUCTION COMPANY, f/k/a Amoco Production Company, Defendants-Appellees.
CourtColorado Court of Appeals

Charles Carpenter, Denver, Colorado; Law Offices of George A. Barton, P.C., George A. Barton, Kansas City, Missouri, for Plaintiffs-Appellants.

Holland & Hart, LLP, Scott S. Barker, Marcy G. Glenn, Denver, Colorado, for Defendants-Appellees.

TAUBMAN, J.

In this putative class action concerning royalty payments on the sale of natural gas, plaintiffs, David Patterson, Philip McCoy, Donald Kanzler, and Shirley Kanzler (Royalty Owners), appeal the trial court's summary judgment in favor of defendant, BP America Production Company (BP), formerly known as Amoco Production Company (Amoco). We reverse and remand for further proceedings.

In 1970 and 1972, the Royalty Owners entered into lease agreements with Amoco which obligated Amoco to pay them royalties for natural gas extracted from their wells. In November 1997, Amoco sold its interests in the natural gas leases to another company, and BP, as successor to Amoco, has not paid royalties to the Royalty Owners since January 1998.

On December 19, 2003, the Royalty Owners filed a complaint alleging that BP underpaid royalties under the leases between 1971 and November 1997 by using the "netback" method instead of the percentage of sale price method provided for in the leases.

Under the netback method, a proportionate share of the costs incurred to make the gas marketable is deducted before royalties are paid. In this case, BP deducted fees and charges for gathering, dehydration, compression, transportation, fuel, treatment, and processing before paying royalties to the Royalty Owners. The leases, however, provided for royalty payments of one eighth of the price received on the sale of the gas at the first commercial market.

BP moved for partial summary judgment, asserting that the Royalty Owners' complaint was untimely under the six-year statute of limitations in § 13-80-103.5(1)(a), C.R.S. 2005. The trial court granted BP's motion and held that the Royalty Owners' claims were time-barred.

Shortly thereafter, the trial court granted the Royalty Owners' unopposed motion for entry of final judgment. This appeal followed.

I. Statute of Limitations

The Royalty Owners contend that the trial court erred in holding that § 13-80-108(4), C.R.S.2005, instead of § 13-80-108(6), C.R.S.2005, determined the accrual date for their royalty claims. We agree.

We review a trial court's order granting summary judgment de novo. Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294 (Colo.2003). A summary judgment order must be reversed if a review of the record shows that a dispute of material fact remains. Redmond v. Chains, Inc., 996 P.2d 759 (Colo. App.2000).

A.

Section 13-80-103.5(1)(a) establishes a six-year statute of limitations for:

All actions to recover a liquidated debt or an unliquidated, determinable amount of money due to the person bringing the action, all actions for the enforcement of rights set forth in any instrument securing the payment of or evidencing any debt, and all actions of replevin to recover the possession of personal property encumbered under any instrument securing any debt . . . .

Section 13-80-108, C.R.S.2005, determines the date a cause of action will accrue. Harrison v. Pinnacol Assurance, 107 P.3d 969 (Colo.App.2004).

Section 13-80-108(4) states that a "cause of action for debt, obligation, money owed, or performance shall be considered to accrue on the date such debt, obligation, money owed, or performance becomes due." However, § 13-80-108(6) states that a "cause of action for breach of any express or implied contract, agreement, warranty, or trust shall be considered to accrue on the date the breach is discovered or should have been discovered by the exercise of reasonable diligence." (Emphasis added.)

When construing statutes, we conduct a de novo review and look first to the plain language, always striving to give effect to the General Assembly's intent and chosen legislative scheme. McGee v. Hardina, 140 P.3d (Colo.App. 2005). In the absence of a clear expression of legislative intent to the contrary, a statute of limitations specifically addressing a particular class of cases will control over a more general or catch-all statute of limitations. Mortgage Invs. Corp. v. Battle Mountain Corp., 70 P.3d 1176 (Colo.2003).

However, where there is a substantial question as to which of two or more statutes of limitations should apply, that doubt should be resolved in favor of the statute containing the longer limitations period. Reg'l Transp. Dist. v. Voss, 890 P.2d 663 (Colo.1995) (citing Thiel v. Taurus Drilling Ltd., 218 Mont. 201, 212, 710 P.2d 33, 40 (1985)).

Whether a statute of limitations bars a particular claim is usually a question of fact, but if the undisputed facts clearly show that the plaintiff had, or should have had, the requisite knowledge as of a particular date, the issue may be decided as a matter of law. Sulca v. Allstate Ins. Co., 77 P.3d 897 (Colo. App.2003).

Here, the parties agree that the applicable statute of limitations is the six-year statute of limitations found in § 13-80-103.5(1)(a). However, they disagree on which statute governs the date the Royalty Owners' claims began to accrue.

The Royalty Owners argue that § 13-80-108(6) is the applicable accrual provision and therefore, that the claims began to accrue when they became aware of BP's breach of the lease agreements in November and December 2003. BP argues that § 13-80-108(4) is the applicable accrual provision and consequently, that the claims began to accrue on the various dates it allegedly underpaid the royalties, ending in January 1998, the date the last royalty payment was made after it sold its interest in the leases. We agree with the Royalty Owners.

The plain language of §§ 13-80-108(6) and 13-80-108(4) is broad and overlapping. Section 13-80-108(4) applies to causes of action for debt, obligation, money owed, or performance. This language could include virtually every conceivable breach of contract claim, rendering § 13-80-108(6), which applies to any express or implied contract, agreement, warranty, or trust, superfluous and meaningless. In virtually every case involving an alleged breach of contract, one party claims that the other breached the agreement between them by failing to pay a debt, obligation, or money owed, or by failing to perform the particular service promised.

BP argues that § 13-80-108(4) is the applicable accrual provision because its language tracks the language in § 13-80-103.5(1)(a). Similarly, BP argues that § 13-80-108(6) is inapplicable here because its language tracks that of the three-year statute of limitations found in § 13-80-101(1)(a), C.R.S. 2005. We disagree.

Although the statute of limitations in § 13-80-103.5(1)(a) applies to actions to recover a "liquidated debt or an unliquidated, determinable amount of money due," and § 13-80-108(4) governs the accrual of causes of action for "debt, obligation, money owed, or performance," we are not persuaded that the language in these statutes is parallel; at most, the language is similar. If the General Assembly had intended to link these two statutes, it could have done so by drafting parallel language or by expressly stating in § 13-80-103.5(1)(a) that § 13-80-108(4) is the governing accrual provision.

Likewise, § 13-80-108(6) is not exclusively linked to § 13-80-101(1)(a), despite the fact that § 13-80-108(6) governs the accrual of "[a] cause of action for breach of any express or implied contract" and the statute of limitations in § 13-80-101(1)(a) applies to "[a]ll contract actions." If the General Assembly had intended to link these statutes, it could have drafted parallel rather than similar language or specifically stated in the text of § 13-80-101(1)(a) that § 13-80-108(6) is the governing accrual provision.

Thus, although § 13-80-108(4) could apply here, it is not because the plain language of that provision limits it to the "specific" type of contract action in § 13-80-103.5(1)(a), because it "tracks" the plain language of that statute. Rather, the potential applicability of § 13-80-108(4) is merely based on the fact that its language is sufficiently broad to encompass the alleged underpayment of royalties.

On the other hand, § 13-80-108(6) extends to any express or implied contract, agreement, warranty, or trust, as mentioned above. Therefore, because the Royalty Owners' royalty claims are based on the alleged breach of lease agreements, the language in § 13-80-108(6) also seems to apply here.

Accordingly, we cannot rely on the rule of specificity in Mortgage Investments Corp., supra, to determine which statutory accrual provision applies because neither statutory accrual provision is more specific than the other.

Although the parties cite several cases, none of them specifically addresses the issues before us. BP cites Green Tree Financial Servicing Corp. v. Short, 10 P.3d 721 (Colo. App.2000), Interbank Investments, L.L.C. v. Vail Valley Consolidated Water District, 12 P.3d 1224 (Colo.App.2000), and Aull v. Cavalcade Pension Plan, 988 F.Supp. 1360 (D.Colo.1997), for its proposition that § 13-80-108(4) is the applicable accrual provision.

Although a division of this court in Green Tree held that § 13-80-108(4) governed the accrual of the statute of limitations in § 13-80-103.5(1)(a) for an action for replevin of a motor home, it did not compare that accrual provision with § 13-80-108(6). Therefore, Green Tree does not address the dispute between these two overlapping accrual provisions.

In Interbank, a division of this court held that § 13-80-108(4) was the applicable accrual provision for a breach of contract action for the quarterly reimbursement of costs associated with the...

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