Lon V. Smith Foundation v. Devon Energy Corp.

2017 WY 121, 403 P.3d 997
CourtWyoming Supreme Court
DecidedOctober 10, 2017
DocketS-17-0021; S-17-0022; S-17-0023
StatusPublished
Cited by3 cases

This text of 2017 WY 121 (Lon V. Smith Foundation v. Devon Energy Corp.) 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
Lon V. Smith Foundation v. Devon Energy Corp., 2017 WY 121, 403 P.3d 997 (Wyo. 2017).

Opinion

FOX, Justice.

[¶1] Thirty-four years ago, a California court issued a probate order distributing the estate of Lon V. Smith. A couple' of years later, a Wyoming court'entered an ancillary probate order to distribute Mr. Smith’s Wyoming property, including the Carbon County overriding royalty interest (ORRI) that is the subject of this dispute. It is undisputed that Mr. Smith’s intent, as expressed in his will (Will), was for the ORRI to be distributed to his wife, Marguerite B. Smith, for her life, and then to be distributed to the Lon V. Smith Foundation (Foundation). That is. not, however, what the courts ordered in the California and Wyoming probates.

[¶2] The Foundation sued Devon Energy Corporation and Devon Energy Production Company L.P. (collectively, Devon) and the Marguerite Brown Smith Trust (Trust), claiming the ORRI payments should have been made to the Foundation. The-district court found that, regardless of Mr. Smith’s intent, the probate orders governed, and they distributed the ORRI to Mrs. Smith under the Will’s residuary clause. The district court granted summary judgment to Devon and the Trust (the beneficiary under Mrs. Smith’s will), - ruling that the Trust owned the ORRI, not the Foundation. The district court also denied requests from both the Foundation and Devon for attorney fees and costs pursuant to the Wyoming Royalty Payment Act’s (WRPA) fee provision. The Foundation appeals, challenging the district court’s interpretation of the probate orders and its conclusion that they govern over the terms of the Will, and the ruling on attorney fees. Devon appeals the denial of attorney fees. We affirm.

ISSUES

[¶8] We restate the issues as follows:

1. Did the district court correctly determine as a matter of law that the 1983 California probate order and the 1985 Wyoming ancillary probate order govern, and that the Trust is the owner of the ORRI at issue?
2. Did the district court properly dismiss the Foundation’s claim that Devon violated Wyo. Stat. Ann. § 30-5-302 when it is undisputed that Devon held ORRI ■ proceeds in Devon’s own “suspense account” and not in an interest-bearing • account in a Wyoming financial institution?
3. Is either party entitled to attorney fees under the WRPA?

FACTS

The parties

[¶4] The Foundation is a charitable foundation organized under the California Nonprofit Public Benefit Corporation Law. It operates for charitable and educational purposes, and “provides grants for a number of causes, including health organizations, medical research, and youth organizations.” The Foundation was created by Mr. Smith and is a named beneficiary under his Will.

[¶5] The Trust is a California testamentary trust that was created pursuant to the will of Marguerite Brown Smith, the wife of Mr. Smith. The Trust is a beneficiary under Mrs. Smith’s will. At times, Trust management has overlapped with that of the Foundation, however, there is no overlap between the Foundation and Trust beneficiaries.

[¶6] Devon is an oil and gas producer headquartered in Oklahoma City, Oklahoma. Devon was the lessee and operator of the oil and gas lease at issue in this case between 1982 and December of 2014. Devon sold its interest to Linn Operating, Inc. (Linn), effective April i; 2014.

Lon V. Smith’s Will and the California Probate Order

[¶7] The facts in this case are undisputed. In 1973, Mr. Smith obtained a federal BLM oil and gas lease in Carbon County, Wyoming, and in 1974 he assigned the lease to J.D. Simmons, Inc., reserving a 5% ORRI. Mr. Smith died on June 5,1979.

[¶8] Mr. Smith’s Will provided that all of his oil and gas interests, including the ORRI, are to be transferred to his wife as a life estate, and then to the Foundation upon- her death. Mr. Smith’s estate was probated in California, and on April 6, 1983, the California court entered its Order Settling First and Final Report, Petition for Statutory Attorney’s Fee and Extraordinary Attorney’s Fee and Petition for Distribution Upon Waiver of Accounting (the California probate order). The California probate order distributes oil and gas interests as follows:

B) To Marguerite B. Smith a Life Estate in and to all mineral interests, oil and gas leases and properties, royalties, rentals, contracts, covering or affecting properties of the said Estate wherever situated together with all income of every sort thereon during her lifetime, .the remainder interest therein, after the death of Marguerite B. Smith, to vest in and be' distributed to Lon V. Smith Foundation, all as described as follows:

The next 94 pages of the California probate order describe oil and gas and mineral interests owned by Mr. Smith, but do not include the Wyoming ORRI. The order then goes on to state that after the Marguerite B. Smith life estate, the listed oil and gas interests are to pass to the Foundation:

E) To Lon V. Smith Foundation, a nonprofit California corporation, the remainder interest after the death of said Marguerite B. Smith, in and to all mineral interests, oil and/or gas leases, properties, royalties, rentals and contracts, all as more particularly described in Pages 11 through 105 of this Order.

Again, the Wyoming ORRI is not included in the inventory of the California probate order. The California probate order also provides:

F) To Marguerite B. Smith all the rest, residue and remainder of said Estate, both real and personal, and wherever situated, together with the income thereon received after date of distribution of said Estate, whether described herein or not.
G) That all other and after-discóvéred property which may be found to belong to said Estate be distributed in accordance with decedent’s said Last Will to the said Marguerite B. Smith.

[¶9], The parties do not dispute that the terms of Mr, Smith’s Will provided that the ORRI, along with all of Mr. Smith’s other oil and gas interests, would be transferred to his wife, Mrs. Smith, as a life estate, with the remainder interest to the Foundation. They also do not dispute that the California probate order specifically listed each of the oil and gas interests to be passed to Mrs. Smith as life estates and that the ORRI was not included on that list. Finally, they do not dispute that the California probate order also indicated that the remainder interest in only the listed oil and gas interests that passed to Mrs. Smith as life estates, was to pass to the Foundation upon her death. Thus, the California probate order did not distribute the ORRI in accordance with the Will.

[¶10] The Wyoming ancillary probate order distributing Mr. Smith’s Wyoming property ordered that the California probate order be “admitted to this Court and [] be considered and treated as original proceedings of this Court and as conclusive evidence of the facts therein shown.” Thus, the Wyoming probate order, recorded in Carbon County in March of 1985, also omitted any specific reference to the Wyoming ORRI.

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Cite This Page — Counsel Stack

Bluebook (online)
2017 WY 121, 403 P.3d 997, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lon-v-smith-foundation-v-devon-energy-corp-wyo-2017.