Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 1 FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT July 14, 2025 _________________________________ Christopher M. Wolpert Clerk of Court TEAR DROP CATTLE COMPANY LLC, a Wyoming limited liability company,
Plaintiff - Counterclaim Defendant - Appellee,
v. No. 24-8001 (D.C. No. 2:20-CV-00164-ABJ) DEVON ENERGY PRODUCTION (D. Wyo.) COMPANY LP, an Oklahoma limited partnership,
Defendant - Counterclaimant - Appellant. _________________________________
ORDER AND JUDGMENT* _________________________________
Before MATHESON, MORITZ, and FEDERICO, Circuit Judges. ________________________________
This appeal centers on a series of agreements allowing Devon Energy
Production Company LP (Devon) to extract coalbed methane gas from land
belonging to Tear Drop Cattle Company LLC (Tear Drop). Devon assigned those
agreements to other entities that then failed to make annual payments to Tear Drop.
As a result, Tear Drop sued Devon for breach of contract, and Devon counterclaimed,
seeking a declaratory judgment that the assignment extinguished its liability.
* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. But it may be cited for its persuasive value. See Fed. R. App. P. 32.1(a); 10th Cir. R. 32.1(A). Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 2
While Devon’s counterclaim remained pending, the assignees paid their debt
to Tear Drop. As a result, the district court dismissed Tear Drop’s claims against
Devon as moot, but it granted summary judgment for Tear Drop on the counterclaim,
concluding Devon remained bound under the agreements.
Devon appeals. Because we discern no error, we affirm.
Background
Devon and Tear Drop entered into a series of agreements between 2000 and
2008 that authorized Devon to perform coalbed methane operations on Tear Drop’s
lands and entitled Tear Drop to payment for use of its lands.1 In 2016, Devon
assigned the agreements to U.S. Realm Powder River, LLC f/k/a Moriah Powder
River, LLC (Moriah) and Moriah’s affiliate Carbon Creek Energy, LLC (Carbon
Creek). Moriah and Carbon Creek initially paid the amounts outlined in the
agreements, but payments stopped in May 2019. Moriah filed for bankruptcy in
October 2019.
In an effort to collect the missed payments, Tear Drop sent a notice of default
to Devon in February 2020. When Devon failed to pay, Tear Drop filed suit against it
in Wyoming state court to recover missed payments, seeking a monetary judgment
and statutory penalties. Devon removed the case to federal court and filed a
1 Collectively referred to as “the agreements,” these included the (1) surface- use agreement, (2) treatment-site agreement, (3) produced-water agreement, (4) discharge-line-road agreement, and (5) road-use agreement. The surface-use agreement was the primary document allowing Devon to perform coalbed methane operations, while the others were secondary agreements created to facilitate that oil and gas extraction. 2 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 3
counterclaim against Tear Drop and Carbon Creek.2 Devon’s counterclaim sought,
among other things, a declaratory judgment that “Carbon Creek assumed and is
responsible for all obligations and payments under the [a]greements” and that Carbon
Creek must “indemnify and hold harmless [Devon] for all damages and costs
incurred in this action and for any future obligations arising out of the [a]greements.”
App. vol. 1, 59. Devon also sought declarations “that [it] is not liable for any future
liabilities or breaches arising from the [a]greements,” that Tear Drop “is precluded
from bringing any such claims against [Devon],” and that the agreements were
“cancelled and terminated . . . as to [Devon].” Id. In support, Devon contended that it
“is not using, operating, or damaging the surface, roads, wells, pipelines, reservoirs,
and facilities located on and under the lands owned by [Tear Drop] or covered by the
[a]greements.” Id.
Tear Drop moved for summary judgment on its claims against Devon. The
district court granted that motion in February 2022 and entered final judgment. But
the district court later rescinded its judgment after realizing that other claims
remained pending. Tear Drop then moved for summary judgment on Devon’s
counterclaim. While that motion was pending, Carbon Creek paid the amounts due to
Tear Drop under the agreements. Devon subsequently moved to dismiss both Tear
Drop’s claims and its own counterclaim as moot. Based on its view that the case was
2 Devon also filed a third-party complaint against Moriah and Carbon Creek for breach of contract and contractual indemnity. The district court granted summary judgment to Devon on those claims, which are not at issue in this appeal. 3 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 4
moot, Devon also requested vacatur of the February 2022 summary-judgment order.
The district court granted Devon’s motion to dismiss Tear Drop’s claims as
moot. But the court denied Devon’s motion to dismiss its own counterclaim as moot,
holding the counterclaim remained a live controversy. And because the counterclaim
was viable, the district court denied Devon’s motion to vacate the February 2022
summary-judgment order, noting that the prior order was “relevant, and ultimately
dispositive, in addressing Devon’s live counterclaim.” App. vol. 5, 123. That same
day, the district court granted Tear Drop’s motion for summary judgment on Devon’s
counterclaim, holding that Devon remained liable for future payments due under the
agreements, including statutory late-payment penalties.
Devon appeals each of these orders.
Analysis
Devon first challenges the district court’s jurisdiction over its counterclaim,
arguing that the district court erred in denying its motion to dismiss its counterclaim
as moot. Further, Devon argues the district court erred in refusing to vacate its prior
orders addressing these moot claims. We start there, and, agreeing with the district
court that the counterclaim remained live, then delve into Devon’s challenges to the
merits of the summary-judgment order.
I. Mootness and Vacatur
We review mootness challenges de novo. Rio Grande Silvery Minnow v.
Bureau of Reclamation, 601 F.3d 1096, 1109 (10th Cir. 2010). And we review
denials of motions to vacate for abuse of discretion. Id. at 1129.
4 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 5
A. Mootness
A federal court has jurisdiction only where there is a live case or
controversy—in other words, where the claims are not moot. Id. at 1109. “A case
becomes moot ‘when the issues presented are no longer live or the parties lack a
legally cognizable interest in the outcome.’” Smith v. Becerra, 44 F.4th 1238, 1247
(10th Cir. 2022) (cleaned up) (quoting City of Erie v. Pap’s A.M., 529 U.S. 277, 287
(2000)). On the other hand, a claim is live if a court’s resolution of the issue would
“have some effect in the real world.” Id. (quoting Citizens for Responsible Gov’t
State Pol. Action Comm. v. Davidson, 236 F.3d 1174, 1182 (10th Cir. 2000)); see
also Jordan v. Sosa, 654 F.3d 1012, 1025 (10th Cir. 2011) (noting plaintiff “must be
seeking more than a retrospective opinion that [they were] wrongly harmed by the
defendant”).
Two more points about mootness are relevant to the case at hand. First,
“[d]eclaratory[-]judgment actions must be sustainable under the same mootness
criteria that apply to any other lawsuit.” Rio Grande, 601 F.3d at 1109. Declaratory-
relief claims remain live if judicial intervention will “affect[] the behavior of the
defendant toward the plaintiff.” Id. at 1110 (quoting Cox v. Phelps Dodge Corp., 43
F.3d 1345, 1348 (10th Cir. 1994)); see also Cox, 43 F.3d at 1348 (noting plaintiff in
declaratory judgment action must “demonstrate a good chance of being likewise
injured by the defendant in the future” (cleaned up) (quoting Facio v. Jones, 929 F.2d
541, 544 (10th Cir. 1991))). Second, even if a court determines that certain claims in
a suit are moot and dismisses them, counterclaims may remain live. United States v.
5 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 6
Jenks, 129 F.3d 1348, 1352–53 (10th Cir. 1997); see also Powell v. McCormack, 395
U.S. 486, 497 (1969) (“Where one of the several issues presented becomes moot, the
remaining live issues supply the constitutional requirement of a case or
controversy.”).
Here, although the district court dismissed Tear Drop’s breach-of-contract
claims against Devon as moot, it found Devon’s counterclaim remained live because
it sought broader relief than payment of past amounts owed under the agreements. On
appeal, Devon argues the district court erred in refusing to dismiss its counterclaims
as moot because there were no outstanding payments owed under the agreements, and
therefore, a declaratory judgment would lack “effect in the real world.” Rio Grande,
601 F.3d at 1110.
But unlike Tear Drop’s breach-of-contract claims, Devon’s counterclaim is not
limited to the past-due payments. Instead, recall that Devon sought a broad
declaration that “the [a]greements [are] cancelled and terminated as to [Devon].”
App. vol. 1, 59. Resolving whether Devon is entitled to this declaration has an effect
in the real world and will affect Tear Drop’s behavior towards Devon in the future
because, depending on the outcome of the counterclaim, Tear Drop and Devon may
remain in a contractual relationship. See Guardian Life Ins. Co. of Am. v. Kortz, 151
F.2d 582, 585 (10th Cir. 1945) (finding “actual controversy” on declaratory-judgment
claim where parties disputed “whether there is now an existing contract”).
Indeed, Devon’s counterclaim itself recognizes that such a declaration will
impact Tear Drop’s future behavior toward it: the counterclaim expressly seeks, in
6 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 7
addition to cancellation, a related declaration that Tear Drop “is precluded from”
suing Devon under the agreements. App. vol. 1, 59. And Devon even argued as much
below, asserting that resolution of Tear Drop’s claims focused on past payments and
“did not address the broader questions [in the counterclaim] involving: successive
and future payments; whether [Devon] can be held liable for those obligations and
amounts; or [Devon’s] ability to terminate or stop access under the [a]greements.”
App. vol. 4, 151.
Under these circumstances, the counterclaim is more than a “retrospective
opinion” that Devon wronged Tear Drop by failing to pay in the past. Jordan, 654
F.3d at 1025. In fact, the record reflects “a good chance” that Tear Drop could sue
Devon under the agreements again in the future, despite Devon’s position that it is no
longer party to the agreements, considering that Carbon Creek again failed to make
payments due in October 2022 and that Moriah remains embroiled in bankruptcy
proceedings. Cox, 43 F.3d at 1348 (quoting Facio, 929 F.2d at 544); see also In re
U.S. Realm Powder River, LLC f/k/a Moriah Powder River, LLC, No. 19-20699
(Bankr. D. Wyo.). In sum, Carbon Creek’s payment on the prior outstanding claims,
despite mooting Tear Drop’s breach-of-contract claims, is irrelevant to the question
raised by Devon’s counterclaim: whether Devon and Tear Drop currently are parties
to an existing contract. Devon’s counterclaim is therefore not moot.3
3 The district court noted that even if the counterclaim was moot, it would likely meet the capable-of-repetition-yet-evading-review exception to mootness. See Weinstein v. Bradford, 423 U.S. 147, 149 (1975) (explaining exception is met where “(1) the challenged action was in its duration too short to be fully litigated prior to its 7 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 8
B. Vacatur
Devon relatedly seeks vacatur of (1) the district court’s order granting Tear
Drop summary judgment on its breach-of-contract claims; (2) the district court’s
order granting Tear Drop summary judgment on Devon’s counterclaim; and (3) the
final judgment. A judgment should be vacated if a district court lacked subject-matter
jurisdiction to enter it. Rio Grande, 601 F.3d at 1128. Since, as outlined above,
Devon’s counterclaim presents a live controversy, the district court had jurisdiction
to grant Tear Drop summary judgment on that claim and enter the amended final
judgment. Those orders should not be vacated.
Neither should the earlier February 2022 summary-judgment order addressing
Tear Drop’s breach-of-contract claims, even though those claims have become moot.
For its argument to the contrary, Devon relies on our decision in Rio Grande, where
we discussed a district court’s equitable discretion to vacate interlocutory orders in
cases that become moot. Id. at 1129–32. There, we recognized that “the
appropriateness of vacatur must be determined ‘on the basis of the particular
circumstances.’” Id. at 1129 (quoting McClendon v. City of Albuquerque, 100 F.3d
863, 868 (10th Cir. 1996)). One circumstance in which vacatur may be appropriate is
“when mootness results from happenstance or the actions of the prevailing party,”
rather than from the party seeking vacatur. Id. (quoting Wyoming v. U.S. Dep’t of
cessation or expiration[] and (2) there was a reasonable expectation that the same complaining party would be subjected to the same action again”). Because we conclude that the counterclaim is live, we need not reach this issue. 8 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 9
Agric., 414 F.3d 1207, 1213 (10th Cir. 2005)). In such an instance, vacatur can
“‘clear[] the path for future relitigation of the issues between the parties’ and
diminish[] the chances that the prior orders can be used for their persuasive value
against any of the parties in subsequent proceedings.” Id. at 1133 (quoting
McClendon, 100 F.3d at 868).
Here, as Devon points out, Tear Drop’s case became moot due not to its own
actions or to Devon’s actions, but because a third party paid the debt—a kind of
happenstance that could support vacatur. See id. However, that happenstance did not
compel the district court to vacate the prior order. Instead, the district court could
exercise its discretion based on the “particular circumstances” involved. Id. at 1129
(quoting McClendon, 100 F.3d at 868). It did so here, declining to vacate its
summary-judgment order because it was “relevant, and ultimately dispositive, in
addressing Devon’s live counterclaim.” App. vol. 5, 123. Devon fails to explain how
or why this rationale was unreasonable. Under these circumstances, the district court
did not abuse its discretion when it declined to vacate its prior order granting Tear
Drop summary judgment on its breach-of-contract claim.
II. Summary Judgment on the Counterclaim
Because the counterclaim is not moot, we turn to its merits. We review
summary-judgment orders “de novo, applying the same standard that the district
court is to apply.” Doe v. Univ. of Denver, 952 F.3d 1182, 1189 (10th Cir. 2020)
(quoting Singh v. Cordle, 936 F.3d 1022, 1037 (10th Cir. 2019)). Summary judgment
is appropriate where, viewing the facts in a light most favorable to the nonmoving
9 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 10
party, “there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Id. (quoting Evans v. Sandy City, 944 F.3d 847, 852
(10th Cir. 2019)).
Devon contends summary judgment was inappropriate here because questions
of fact remain as to whether assignment or novation relieved Devon of its obligations
under the surface-use agreement. Devon further maintains it is not subject to the
statutory penalties of Wyoming’s Split Estate Act.4 We address each argument in
turn.
A. Assignment
Devon first argues the district court erred in concluding that the assignments
did not relieve Devon of its obligations under the agreements. In Devon’s view, it
properly delegated its obligations under the surface-use agreement to Carbon Creek,
so Tear Drop had no contractual right to seek payment from Devon. The parties agree
that Wyoming law governs, so we turn to general Wyoming contract-interpretation
principles.
Under Wyoming law, the court’s “primary purpose is to determine the true
4 We recognize that the district court addressed this issue as part of its analysis of Tear Drop’s breach-of-contract claims—claims that we agree are moot. In its February 2022 order, the district court awarded damages to Tear Drop under the Wyoming Split Estate Act, which applies to oil and gas operators that fail to timely pay landowners. Wyo. Stat. Ann. § 30-5-405(b). Although these damages have been paid, the dispute remains live because Devon’s counterclaim sought a declaratory judgment that Carbon Creek would indemnify Devon “for all damages and costs incurred in this action and for any future obligations arising out of the agreements” and that Devon “is not liable for any future liabilities or breaches.” App. vol. 1, 59. 10 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 11
intent and understanding of the parties at the time and place the agreement was
made.” Pennaco Energy, Inc. v. KD Co., 363 P.3d 18, 25 (Wyo. 2015) (Pennaco I). If
the contract is clear and unambiguous, “we limit our inquiry to the four corners of the
document, giving the words contained therein their ordinary meaning.” Id. at 25–26
(quoting Davidson Land Co. v. Davidson, 247 P.3d 67, 71 (Wyo. 2011)).
“[S]ummary judgment is appropriate only if the contract is clear and unambiguous.”
Comet Energy Serv., LLC v. Powder River Oil & Gas Ventures, LLC, 185 P.3d 1259,
1263 (Wyo. 2008) (quoting Wolter v. Equitable Res. Energy Co., W. Region, 979
P.2d 948, 951 (Wyo. 1999)). Otherwise, “[t]he meaning of specific terms and
conditions and the intent of the parties generally are questions of fact to be resolved
by the fact-finder.” Id.
Also relevant for our purposes here is a critical distinction between contracts
and servitudes. “Well[-]established principles of contract law dictate that a party who
assigns [or] delegates a contractual duty remains responsible for performance of that
duty.” Pennaco I, 363 P.3d at 23. On the other hand, a servitude (such as an
easement) creates obligations that “run with the land.” Id. at 24. That means “the
transfer of the land connected with the duty carries that duty to the assignee[] and
relieves the assignor of future responsibility.” Id.
Applying these legal principles, the district court relied primarily on two
Wyoming Supreme Court cases holding that surface-use agreements related to oil and
gas extractions were contracts with obligations that the oil and gas operators could
not delegate to assignees. See Pennaco I, 363 P.3d at 29; Pennaco Energy, Inc. v.
11 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 12
Sorensen, 371 P.3d 120, 130 (Wyo. 2016) (Pennaco II). We recite the details of those
decisions below, then apply them to the facts of this case.
In Pennaco I, the Wyoming Supreme Court identified several factors that
indicate parties intended to create nondelegable contractual obligations instead of
delegable servitudes. 363 P.3d at 29. First, Pennaco I noted that in the agreements at
issue, the parties’ rights and obligations were time-limited, indicating they were
contracts, because servitudes are often perpetual. Id. Second, the agreements had no
language indicating the operator’s obligations would end upon assignment, which
also suggested they were nondelegable contracts. Id. Third, the agreements were like
mineral leases, and “leases continue to bind the original lessor even after an
assignment.” Id. Fourth, the operator made annual payments to the landowner that
were “logically connected with the entire contract and project[,]” rather than “only
the last assignee’s use of the land.” Id. Last, the operator’s obligation to pay the
landowner and reclaim5 the land were connected to the operator’s financial ability, so
it was unreasonable to assume the parties would allow the operator to assign its
obligations to “an entity of unknown financial ability.” Id. at 29–30. In sum, these
factors demonstrated that the parties created contractual obligations, not servitudes,
and did not intend to relieve the operator of liability upon assignment.
5 Reclamation occurs once oil and gas operations end, at which point the operator “restore[s] the land as nearly as possible to its prior condition.” Pennaco I, 363 P.3d at 20. 12 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 13
Pennaco II also held that a surface-use agreement like the one at issue here
was a contract, not a servitude. 371 P.3d at 129. The parties disagree about whether
Pennaco II established a bright-line rule treating surface-use agreements like oil and
gas leases. But as the district court noted, Pennaco II does contain language which
could reasonably be interpreted to adopt such a bright-line rule: “oil and gas leases
and surface agreements are of the same breed of contract.” Id. at 130. Because surface-
use agreements resemble oil and gas leases, Pennaco II explained that an operator
may assign away liability only if (1) the agreement contains an exculpatory clause or
(2) the landowner agrees to a novation. Id. at 130–31.
Based “on the straightforward application of Pennaco II,” the district court
determined that Devon remains liable to Tear Drop despite Devon’s assignment to
third parties because (1) the agreement lacks an exculpatory clause, and (2) Tear
Drop did not agree to a novation. App. vol. 4, 42. Resisting this straightforward
approach, Devon points out that the Pennaco II court also applied a Pennaco I-type
analysis, carefully parsing the contract language to determine the parties’ intent.
Devon thus suggests that the district court erred by treating Pennaco II as a bright-
line rule.
Devon’s argument is unavailing. That’s because the district court, like the
Pennaco II court, conducted Pennaco I’s “more in-depth analysis” to conclude “the
intent of the parties was not to create a servitude running with the land.” Id.
Specifically, the court noted that Devon’s rights and obligations were time-limited
and that the agreement contained no language indicating Devon’s obligations ended
13 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 14
upon assignment. Most importantly, the court explained, Devon’s payment
obligations were to continue until reclamation, showing that Tear Drop relied on
Devon’s financial position when entering the agreement.
Nevertheless, Devon argues that a question of fact remains under Pennaco I
about whether the parties intended for Devon to remain liable post-assignment.
Devon first highlights that the agreement lacks any discussion about obligations
ending after assignment. See Pennaco I, 363 P.3d at 29. According to Devon, this
absence demonstrates that “the inquiry is one of unexpressed intent” such that
“reasonable minds could differ as to the parties’ intent.” Aplt. Br. 23. We disagree.
Rather than suggesting ambiguity, the omission of such language cuts the other way.
Pennaco I expressly stated that if the parties wanted both rights and obligations to be
transferrable, “we presume they would have included language to that effect in their
agreement.” 363 P.3d at 29; see also Pennaco II, 371 P.3d at 130 n.16 (“We can only
enforce the intent reflected in the language of the agreement.”). That no such
language appears in the surface-use agreement thus suggests a nondelegable contract.
See Pennaco I, 363 P.3d at 29.
Straining to avoid liability, Devon maintains that the parties intended to
release it from obligations upon assignment because some of the agreements
explicitly allow for assignment. For example, the surface-use agreement expressly
allows for assignment and amendment by an assignee, while several others permit
assignment with Tear Drop’s written consent. But as we’ve discussed, “a party who
assigns [or] delegates a contractual duty remains responsible for performance of that
14 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 15
duty.” Id. at 23. So merely allowing for assignment doesn’t demonstrate an intent to
release Devon from liability as a result of such assignment.
The remaining Pennaco I factors also indicate that the parties intended to bind
Devon. Many of the rights and obligations have specific ending dates, suggesting the
agreements are contractual in nature. See id. at 29. For example, the treatment-site
agreement prescribes a term of four years, while the surface-use agreement sets an
initial term of two years. Additionally, the obligation to make annual payments is
“logically connected to the obligor’s financial ability and willingness to fulfill those
responsibilities.” Id. In fact, it would be illogical for Tear Drop to enter an agreement
that Devon could later dodge through assignment to an entity “with an unknown
financial ability.” Id. Further, the agreements are based on oil and gas operations,
rather than on land ownership, which also suggests they do not run with the land and,
instead, are nondelegable contracts.6 See id.
Finally, Devon attempts to distinguish Pennaco I by highlighting that the
surface-use agreement requires annual payments to be made while the property is in
use, rather than until it is reclaimed. To be sure, one of the agreements at issue in
6 Devon notes that some of the agreements outline easements and rights of way, “categorical servitudes” that would be logically connected to only a current operator. Aplt. Br. 25. However, the fact that some agreements include language about easements is not dispositive, as the same was true of at least one of the agreements at issue in Pennaco I. See 363 P.3d at 31. Additionally, as the district court pointed out, that language must be read in context with the surface-use agreement itself because the other agreements “exist because of the overall operations created by” it. App. vol. 4, 41. And nothing in the surface-use agreement indicates an intent to enter into anything other than a traditional, nondelegable contract. 15 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 16
Pennaco I required the operator to make annual payments until reclamation was
complete, rather than payments based on continued use. Id. But another surface-use
agreement at issue in that case required payment until “the well permanently cease[d]
production or the [o]perator ha[d] permanently ceased to use the road.” Id. at 27. So
just like Devon’s contract with Tear Drop, the payments were tied to use—yet the
Pennaco I court concluded that the original operator remained liable.
In sum, the district court correctly applied the Pennaco decisions to conclude
that no factual issues about intent remained to preclude summary judgment.
B. Novation
Devon next argues the district court erred in granting summary judgment when
questions of fact remained about whether a novation discharged Devon from its
obligations. Pennaco I held that an operator could be “discharged from obligations
. . . by novation, in which it transfers its duties to a third party with the landowner’s
consent.” 363 P.3d at 37. “‘[N]ovation is never presumed’; it must be affirmatively
‘pleaded and proven’ by the party asserting it.” TEP Rocky Mountain LLC v. Record
TJ Ranch Ltd. P’ship, 516 P.3d 459, 475 (Wyo. 2022) (quoting Scott v. Wyo. Oils,
Inc., 75 P.2d 764, 771 (Wyo. 1938)). The elements of novation are “(1) a previous
valid obligation; (2) an agreement of all parties to a new contract; (3) extinguishment
of the prior contract; and (4) validity of the new contract.” Lewis v. Platt, 837 P.2d
91, 92 (Wyo. 1992).
As the elements above illustrate, a landowner’s consent to assignment,
standing alone, does not release the original operator. See id. At the same time,
16 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 17
however, a new formal agreement is not necessary; courts may infer novation based
on the parties’ conduct. Id. If a new operator is substituted in, the landowner must
“make a clear manifestation of assent to the substitution of the new [operator] and
release of the original [operator].” TEP Rocky Mountain, 516 P.3d at 475–76
(quoting 58 Am. Jur. 2d Novation § 13 (2022)). In some instances, whether a
novation occurred is a question of fact, but it can be a question of law if the evidence
demonstrates that no reasonable factfinder could conclude that a novation occurred.
Lewis, 837 P.2d at 92–93.
Seeking to demonstrate that a fact question remains about novation, Devon
relies on Tear Drop’s cooperation with Moriah and Carbon Creek for years after
assignment. However, as the district court held, no reasonable factfinder could
conclude that a novation occurred in this case. See id. Devon bears the burden to
demonstrate novation. See TEP Rocky Mountain, 516 P.3d at 475. And Devon has
adduced no evidence of “an agreement of all parties to a new contract.” Lewis, 837
P.2d at 92. Nor has Devon adduced any evidence to suggest “extinguishment of a
prior contract.” Id. Rather, Devon has shown only that Moriah and Carbon Creek
adhered to the original agreement. And that does not meet the necessary elements of
novation.
Nor could a reasonable factfinder infer novation by conduct. Devon has
adduced no evidence demonstrating the “clear manifestation of assent” required by
Wyoming law when a new operator is substituted for an original operator. See TEP
Rocky Mountain, 516 P.3d at 475–76 (quoting 58 Am. Jur. 2d Novation § 13 (2022)).
17 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 18
To the contrary, for the assignments requiring consent, Tear Drop explicitly stated it
would sign off only if Devon agreed to remain liable.7 And Tear Drop’s conduct after
assignment further demonstrates its belief that Devon was bound. When an annual
payment was late, Tear Drop contacted Devon. It did the same with a notice of
default. Based on these facts, the district court did not err in concluding that Devon
failed to carry its summary-judgment burden to demonstrate a dispute of material fact
as to the existence of an express or implied novation.
C. Wyoming Split Estate Act
Last, Devon asserts the district court erred in finding that Devon remains
subject to double-payment penalties under Wyoming law. The Wyoming Split Estate
Act provides that “[a]n oil and gas operator who fails to timely pay an installment
under any annual damage agreement negotiated with a surface owner is liable for . . .
twice the amount of the unpaid installment if the” amount is not paid within 60 days
of notice of failure to pay. Wyo. Stat. Ann. § 30-5-405(b). It defines an “operator” as
“a person in engaged in oil and gas operations [or] his[ or her] designated agents,
contractors[,] and representatives.” Id. § 30-5-401(a)(v) (emphasis added). According
to Devon, by using this language, the legislature intended to capture only entities
currently engaged in operations—and the statute therefore does not capture Devon, a
7 For these assignments, Devon relatedly argues that Tear Drop failed to expressly deny consent or declare breach, thereby waiving any provisions requiring written consent and effectively discharging Devon. Like many of its other arguments, this proceeds from Devon’s flawed premise that assignment alone is sufficient to discharge an obligor from liability. 18 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 19
former operator.
The Wyoming Supreme Court has not yet weighed in on this question of
statutory interpretation. In such instances, we “may seek guidance from decisions
rendered by lower courts in the relevant state” to predict how the state supreme court
would rule. Wade v. EMCASCO Ins. Co., 483 F.3d 657, 665–66 (10th Cir. 2007).
Tear Drop has submitted several decisions from lower Wyoming state courts showing
that the courts consistently apply the Act to parties in the same position as Devon.
See, e.g., Tear Drop Cattle Co. v. Andarako B&P Onshore LLC, No. CV-2020-0046,
slip op. at 9–10 (Wyo. Dist. Ct. Dec. 21, 2020) (holding defendant liable under Act
even though it was not a current operator) (available at App. vol. 2, 179–92); William
P. Maycock II v. Anadarko E&P Onshore LLC, No. 39277, slip op. at 6 (Wyo. Dist.
Ct. Feb. 1, 2021) (same) (available at App. vol. 2, 194–200).
We agree with that approach. On matters of statutory interpretation, Wyoming
courts examine “the ordinary and obvious meaning of the words employed according
to their arrangement and connection.” Cabot Oil & Gas Corp. v. Followill, 93 P.3d
238, 240 (Wyo. 2004) (quoting Parker Land & Cattle Co. v. Wyo. Game & Fish
Comm’n, 845 P.2d 1040, 1042 (Wyo. 1993)). And, under Wyoming law, “[a] statute
is not interpreted in a way that renders a portion of it meaningless or adds language
to it.” Wyodak Res. Dev. Corp. v. Wyo. Dep’t of Revenue, 387 P.3d 725, 732 (Wyo.
2017).
Here, Devon’s interpretation would require us to insert the word “currently”
before the phrase “engaged in oil and gas operations.” § 30-5-401(a)(v). Sparing
19 Appellate Case: 24-8001 Document: 43-1 Date Filed: 07/14/2025 Page: 20
Devon from the Act also overlooks the statute’s definition of “oil and gas
operations,” which includes “the full range of development activity from exploration
through production and reclamation of the disturbed surface.” § 30-5-401(a)(iv).
Considering Devon cannot delegate its obligations and is ultimately responsible for
reclamation, it fits comfortably within the definition of an operator. And, as the
district court explained, Devon’s interpretation contravenes public policy: the
damages provision would become “practically obsolete if an oil and gas operator
could escape double damages by simply leaving their operation prior to intended
default or assigning their interests to an insolvent.” App. vol. 4, 47. Therefore, the
district court correctly concluded that Devon is subject to the Wyoming Split Estate
Act.
Conclusion
The district court properly denied Devon’s motion to dismiss its own
counterclaim as moot. Further, the district court did not abuse its discretion by
denying Devon’s motion to vacate its prior orders. Finally, the district court properly
granted summary judgment to Tear Drop on Devon’s counterclaim based on its
conclusion that the agreements are nondelegable contracts, that no novation occurred,
and that the Wyoming Split Estate Act applies to Devon.
Entered for the Court
Nancy L. Moritz Circuit Judge