Wolter v. Equitable Resources Energy Co., Western Region
| Decision Date | 14 May 1999 |
| Docket Number | No. 98-299,98-299 |
| Parties | George P. WOLTER, Jr.; Margarite Wolter; Wolter Oil Company; The William L. Hershelman Trust; Ann M. Cunningham; Mary Ann Reinhardt; Jerry D. Busch; and Elizabeth M. Kessler, Appellants (Plaintiffs), v. EQUITABLE RESOURCES ENERGY COMPANY, WESTERN REGION, Appellee (Defendant). |
| Court | Wyoming Supreme Court |
William H. Everett and Kevin D. Huber of Williams, Porter, Day & Neville, P.C., Casper, Wyoming, for Appellants.
Neil J. Short, Casper, Wyoming, for Appellee.
Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN and HILL, JJ.
Appellants George Wolter, Jr., Margarite Wolter, Wolter Oil Company, the William L. Hershelman Trust, Ann Cunningham, Mary Ann Reinhardt, Jerry Busch, and Elizabeth Kessler (hereinafter referred to as the royalty owners) appeal from the district court's order which granted a partial summary judgment in favor of Appellee Equitable Resources Energy Company, Western Region.
We affirm.
The royalty owners present the following issues for our consideration:
A. Did the District Court err in not granting the Royalty Owners summary judgment on the issue of whether the Royalty B. Did the District Court err in excluding evidence of the circumstances and usage at the time of the reservation of those overriding royalty interests in determining whether or not the language of the reservation was ambiguous, so as to truly determine the intent of the parties?
Owners should be paid their proportionate share of the proceeds of sales of production from the oil and gas lease in which they own overriding royalty interests on a "lease" basis, rather than a "unit" basis?
C. Did the District Court err in refusing to rule in the Royalty Owners' favor on their motions for judgment on the issue of conversion by the Company of the Royalty Owners' share of casinghead gas production from the oil and gas lease in which they own overriding royalty interests?
In 1970, Wyco, Inc. assigned its interest in two federal oil and gas leases to Diamond Shamrock Corporation and Texas Gas Exploration Corporation. George Wolter, Jr. was the president of Wyco at the time of the assignment, and he executed the assignment on its behalf. In the assignment, Wyco reserved an overriding royalty interest. The relevant part of the reservation language stated:
Said overriding royalty, which is reserved in this assignment, shall be computed and paid on the same basis, in the same manner, at the same time and on the same products, substances and elements, as is the royalty payable to the Lessor.
The lessor referred to in the reservation language is the United States government. The royalty owners are the owners of the overriding royalty.
Portions of the federal leases were included within the North Grieve Field, a producing oil and gas field in Natrona County. The North Grieve Field was unitized, but the royalty owners did not commit their interests to the unit.
Since July 1974, the federal government's royalty payments have been computed and paid in accordance with the terms of the unit agreement. The royalty owners, however, have been paid on the basis of the actual production from the leases rather than under the terms of the unit agreement. After January 1995, Equitable Resources--the operator of the North Grieve Field and unit--began depositing the overriding royalty payments into an escrow account.
The royalty owners filed an action in the Natrona County district court, seeking payment for the production that was attributable to their overriding royalty interests. The royalty owners maintained that Equitable Resources did not have the right to place the royalty payments which were due to them in an escrow account and that they were entitled to relief under Wyoming's royalty payment act, Wyo. Stat. Ann. §§ 30-5-301 to -305 (Michie 1997). They also presented a claim for conversion because Equitable Resources had not accounted to them for the casinghead gas it produced.
Equitable Resources answered and filed two counterclaims. It sought a declaratory judgment on the meaning of the reservation language, claiming that the reservation language provided that the royalty owners were to be paid on the same basis as the lessor and that, because the federal government was paid in accordance with the unit agreement, the overriding royalty payments should also have been calculated with reference to the unit agreement. Equitable Resources also filed a counterclaim against the royalty owners, seeking repayment of more than a million dollars that it claimed the royalty owners had been overpaid. Equitable Resources maintained further that it did not convert the casinghead gas because it reinjected the gas into the formation to maintain reservoir pressure.
The parties filed several dispositive motions. After holding hearings on the motions, the district court issued a decision letter on August 13, 1996, and granted a partial summary judgment in favor of Equitable Resources on its declaratory judgment claim. It determined that the reservation language was clear and unambiguous and that the language mandated that the royalty owners be paid on the same basis as the lessor. The district court concluded, therefore The royalty owners filed a motion for reconsideration. The district court denied the motion and certified that the order granting a partial summary judgment was a final, appealable order under W.R.C.P. 54(b). The royalty owners subsequently perfected their appeal to the Wyoming Supreme Court.
that, like the federal government, the royalty owners must be paid in accordance with the unit agreement. It also determined that Equitable Resources was not authorized to place the uncontested payments which were due to the royalty owners into an escrow account and granted relief to the royalty owners under Wyoming's royalty payment act. The district court found that genuine issues of material fact existed with regard to the remainder of the claims in the case and declined to grant a summary judgment on those issues.
A summary judgment is appropriate when no genuine issue as to any material fact exists and when the prevailing party is entitled to have a judgment as a matter of law. Covington v. W.R. Grace-Conn., Inc., 952 P.2d 1105, 1106 (Wyo.1998); see also W.R.C.P. 56(c). We evaluate the propriety of a summary judgment by employing the same standards and by using the same materials as the lower court employed and used. Kirkwood v. CUNA Mutual Insurance Society, 937 P.2d 206, 208 (Wyo.1997). We do not accord deference to the district court's decisions on issues of law. Kanzler v. Renner, 937 P.2d 1337, 1341 (Wyo.1997). In cases requiring the interpretation of a contract, a summary judgment is appropriate only if the contract is clear and unambiguous. Kirkwood, 937 P.2d at 208; Treemont, Inc. v. Hawley, 886 P.2d 589, 592 (Wyo.1994).
The royalty owners maintain that the district court erred by granting a summary judgment in favor of Equitable Resources. They claim that the reservation language was ambiguous and that the district court should have considered extrinsic evidence to determine the true intent of the contracting parties. Equitable Resources contends that the district court's decision was correct. We agree with Equitable Resources.
The reservation language at issue in this case was included in an assignment of an oil and gas lease. An assignment of an oil and gas lease is a contract. See Moncrief v. Harvey, 816 P.2d 97, 103 (Wyo.1991); Farr v. Link, 746 P.2d 431, 433 (Wyo.1987). We will, therefore, examine the reservation language in accordance with our general principles of contract interpretation. Id. Our prime focus in construing or interpreting a contract is to determine the parties' intent. Woods Petroleum Corporation v. Hummel, 784 P.2d 242, 243 (Wyo.1989). Our initial inquiry centers on whether the language of the contract is clear or ambiguous. See Treemont, Inc., 886 P.2d at 592. Courts make that determination as a matter of law. Svalina v. Split Rock Land and Cattle Company, 816 P.2d 878, 881 (Wyo.1991). "An ambiguous contract is one which has language conveying a double or obscure meaning." Treemont, Inc., 886 P.2d at 592.
When the contract language is clear and unambiguous, we secure the parties' intent from the words of the agreement as they are expressed within the four corners of the document. Treemont, Inc., 886 P.2d at 592; Svalina, 816 P.2d at 881. This Court looks at the plain meaning of the words employed in a clear and unambiguous contract to determine the parties' intent. See Woods Petroleum Corporation, 784 P.2d at 243-44. We turn to extrinsic evidence and rules of contract construction only when the contract language is ambiguous and its meaning is doubtful or uncertain. Svalina, 816 P.2d at 881. A disagreement between the parties as to the contract's meaning does not give rise to an ambiguity which justifies the use of extrinsic evidence. Id.
The royalty owners contend that the district court erred by refusing to consider extrinsic evidence of the circumstances surrounding the 1970 adoption of the reservation language. They insist that the district court could not determine the parties' true intent without resorting to such evidence. The royalty owners claim that the extrinsic evidence showed that the purpose of the reservation language, which stated that the royalty owners were to be paid on the same basis as the federal government, was to prevent the operator from refusing to pay the royalty owners in an appropriate manner. They insist that, when the assignment was executed, many operators did not properly pay royalty owners.
Although the royalty owners' contention is interesting, we agree with the district court that the reservation language was clear and unambiguous and that the use of extrinsic evidence to determine the parties' intent was not justified. The reservation...
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