Kennedy Oil v. LANCE OIL & GAS COMPANY

2006 WY 9, 126 P.3d 875, 2006 Wyo. LEXIS 12, 2006 WL 93098
CourtWyoming Supreme Court
DecidedJanuary 17, 2006
Docket05-95
StatusPublished
Cited by11 cases

This text of 2006 WY 9 (Kennedy Oil v. LANCE OIL & GAS COMPANY) is published on Counsel Stack Legal Research, covering Wyoming Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kennedy Oil v. LANCE OIL & GAS COMPANY, 2006 WY 9, 126 P.3d 875, 2006 Wyo. LEXIS 12, 2006 WL 93098 (Wyo. 2006).

Opinion

VOIGT, Justice.

[¶ 1] In a quiet title dispute involving mineral interest lessees, the district court relied upon the relation-back doctrine in granting summary judgment to the appel-lees. We affirm, but on the related doctrine of after-acquired title or estoppel by deed.

FACTS

[¶2] In pursuing their respective summary judgment motions in the district court, the parties entered into a Joint Stipulation of Facts, from which we have gleaned the following information:

[¶ 3] As of 1975, members of the Harriet and Marton families (collectively Harriet-Marton) owned the oil, gas, and other minerals, except coal, lying in and under the Nl/2 of Section 19, Township 48 North, Range 78 West, 6th P.M., in Johnson County, Wyoming (the subject property). On December 11, 1975, HarrieL-Marton executed a lease in favor of William D. Gibbs, Sophia D. Gibbs, *877 Robert M. Gibbs, and Martha W. Gibbs (collectively Gibbs), in which Harriet-Marton averred that they owned and could provide marketable title to all of the oil and gas in and under the subject property. 1 In exchange for rights under the lease, Gibbs obligated themselves to commence drilling an exploratory well into the Shannon Formation. Upon completion of the well, Gibbs was to receive the oil and gas as lessee for three years and as long thereafter as oil and gas was produced in paying quantities. In addition, the lease agreement spelled out the parties’ rights and obligations regarding expenses and production, and the effects of non-production. Although the lease agreement was not recorded, a memorandum referring to it was recorded on March 30,1976. Pursuant to this lease agreement, the Catherine No. 1 and Catherine No. 2 wells were completed as productive on April 1,1976, and May 12,1977, respectively.

[¶ 4] Upon William D. Gibbs’ death, his estate was probated in Johnson County. On September 23, 1991, Harriet-Marton filed creditors’ claims in the probate proceedings based upon the 1975 lease agreement, seeking an accounting of income received and expenses paid, and payment of any sums due in regard to the Catherine No. 1 well. Those creditors’ claims were settled on June 7, 1994, in an Agreement Concerning Creditor’s Claims entered into between the personal representatives of the estate and the then-current Harrieb-Marton entities. The gist of that agreement was that Harriet-Marton were not entitled to a share of the production proceeds because expenses ($552,397.17) exceeded production ($283,803.42), but that Harriet-Marton might in the future be entitled to distributions in the event Gibbs’ successors recovered costs and production continued. To ensure such distributions, the personal representatives obligated the estate’s distributees to provide HarrieWMarton an annual accounting concerning the well. The settlement terms were made part of the estate’s distribution plan.

[¶ 5] On May 21, 1998, the appellees (Lance-Williams) obtained, through their agent, Baseline Minerals, Inc., oil and gas leases from Harrieb-Marton covering the subject property. The lessors were the same as, or the successors in interest to, the Har-rieb-Marton mineral owners that were parties to the 1975 lease agreement with Gibbs. In each of the four separate 1998 leases, Harrieb-Marton struck the following form language: “Lessor hereby warrants and agrees to defend the title to said land.” The primary term of the leases was five years, subject to extension for an additional two years. A concurrent title opinion prepared for Baseline indicated that there were no current unreleased oil and gas leases of record covering the property.

[¶ 6] On. October 17, 2002, Harriet-Mar-ton recorded with the Johnson County Clerk a “Notice of Claim of Interest in Real Property.” The notice, signed under oath by John P. Marton, declared that HarrieU-Mar-ton claimed an interest in the subject property based upon the 1975 lease agreement and the Gibbs distributees’ failure to abide by the terms and conditions of the probate settlement agreement. The notice indicated that it was given pursuant to Wyo. Stat. Ann. §§ 34-10-107 and 34-11-101 (LexisNexis 2005). 2 A few months later, Harrieb-Marton filed a civil action against the Gibbs distribu-tees, with the verified complaint containing the following factual allegations and legal conclusions:

1. The plaintiffs are the successors in interest to the Harriet-Marton interests under the 1975 lease.
2. Upon Gibbs’ drilling of the Catherine No. 1 well, the oil and gas in and under the subject property was leased to Gibbs for three years and as long thereafter as such was produced in paying quantities.
*878 3. If production ceased, Gibbs’ interest would not terminate if Gibbs commenced additional drilling or reworking operations within sixty days. Furthermore, if there was no production at the end of the primary term of the lease, the agreement would remain in effect only so long as Gibbs continued drilling or reworking operations with no cessation thereof for more than thirty days.
4. Gibbs was required under the lease agreement to keep and make available to Harriet-Marton an accurate record of costs, expenses, charges, and credits.
5. The 1975 lease agreement has “terminated by reason of the fact that the primary term of the lease of three (3) years has expired and that neither oil nor gas is being produced in paying quantities from the Nl/2 of said Section 19.”
6. The 1975 lease agreement “has terminated according to its terms and [the Gibbs distributees] have no further interest therein.”
7. The 1975 lease agreement has terminated because, “[a]fter initial discovery of oil in the Catherine No. l[w]ell, the production thereof has ceased and [the Gibbs distributees] have not commenced additional drilling or reworking operations within sixty (60) days after the cessation of production.”
8. The 1975 lease agreement has terminated because the Gibbs distributees have failed to maintain the records and to provide to Harriet-Marton the information required in the probate settlement agreement.

[¶ 7] Finally, as the concluding paragraph in three separate causes of action, the Verified Complaint stated as follows:

[Harriet-Marton] are entitled to a declaration of the respective legal rights of [HarrieMVEarton] and [the Gibbs distribu-tees] and [to] a determination that the 1975 Agreement between [Harriet-Marton and the Gibbs distributees] is terminated ... and [the Gibbs distributees] have no further right, claim or title under the terms of said 1975 Agreement; nor to the oil, gas or other minerals lying in or under the [subject property].

[¶ 8] During the pendency of their lawsuit against the Gibbs distributees, Harriet-Marton formed a limited liability company called Catherine No. 1, LLC. The members of Catherine No. 1, LLC are either the original- mineral owners or the successors in interest to the original mineral owners who signed the 1975 lease agreement, and are either the original lessors or- the successors in interest to the original lessors who signed the 1998 Baseline leases.

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Bluebook (online)
2006 WY 9, 126 P.3d 875, 2006 Wyo. LEXIS 12, 2006 WL 93098, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kennedy-oil-v-lance-oil-gas-company-wyo-2006.