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Universal Drilling Company, LLC, A Wyoming Limited Liability v. R & R Rig Service

March 1, 2012

UNIVERSAL DRILLING COMPANY, LLC, A WYOMING LIMITED LIABILITY COMPANY, APPELLANT (DEFENDANT),
v.
R & R RIG SERVICE, LLC., APPELLEE (PLAINTIFF). R & R RIG SERVICE, LLC, APPELLANT (PLAINTIFF),
v.
UNIVERSAL DRILLING COMPANY, LLC, A WYOMING LIMITED LIABILITY COMPANY, APPELLEE (DEFENDANT).



Appeal from the District Court of Washakie County The Honorable Robert E. Skar, Judge S-11-0079 S-11-0080

The opinion of the court was delivered by: Kite, Chief Justice.

Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made before final publication in the permanent volume.

[¶1] R & R Rig Service, LLC (R & R) moved Universal Drilling Company, LLC's (Universal) drilling rig in May 2007 under a time and materials contract. Universal refused to pay R & R's invoice, claiming that it should only have to pay the amount it paid to have the rig moved a few weeks later by a different company. R & R brought suit for payment for the services it rendered, and Universal counterclaimed on the basis of fraud and breach of the implied covenant of good faith and fair dealing. The district court held a bench trial and generally ruled in favor of R & R and against Universal, although it refused to grant R & R's request for pre-judgment interest. Both parties appealed. We affirm in part and reverse and remand in part.

ISSUES

[¶2] In Case No. S-11-0079, Universal challenges the district court's judgment in favor of R & R on the following grounds:

1. Did the trial court adopt an erroneous methodology for calculating the amount due to R & R for the rig move when it superimposed its determination o f "reasonableness" rather than the appropriate methodology for calculating damages under a time and materials contract?

2. Did the trial court make a clearly erroneous ultimate finding that fraud in the execution and fraud in the inducement had not been proven when its basic findings included findings constituting a concurrence of several indicia or "badges" of fraud?

3. Did the trial court reach an incorrect conclusion that breach of the implied covenant of good faith and fair dealing was not proven where the trial court's findings supporting that conclusion showed that R & R systematically and pervasively overcharged Universal and then sought to enforce its invoice containing those overcharges for over two years without any attempt to reconcile its own records until this matter went to trial?

4. Did the trial court erroneously fail to consider Universal's affirmative defense of estoppel?

5. Do the computational and arithmetical errors in the trial court's findings related to R & R's daily work tickets render the trial court's determination of the amount due to R & R for the rig move clearly erroneous?

R & R restates the issue generally as:

Are any of the trial court's findings entered in this matter clearly erroneous and was the judgment rendered a correct application of the law?

In Case No. S-11-0080, R & R articulates the following issue:

Was it error and abuse of discretion for the trial court judge to refuse to award prejudgment interest on any part of the amount the trial court found was due and owing R & R Rig Service by Universal Drilling Company, LLC?

Universal states the issue as:

In a payment dispute arising from an oral, time and materials contract where the evidence showed multiple billing discrepancies and the trial court itself undertook the task of reconciling the plaintiff's billing records, was it an abuse of discretion for the trial court to refuse to award prejudgment interest on an amount tendered by Universal but refused by R & R, given the record in this case?

FACTS

[¶3] In May 2007, Universal employed R & R to move its drilling rig in Washakie County on a time and materials basis. R & R hired two subcontractors for the move- CC&T Trucking, which was affiliated with R & R because it had common ownership, and DFI, which was an independent company. R & R equipment operators prepared daily work tickets, showing the equipment in use, personnel, work activities and hours worked. R & R co-owner Randy Woodward supervised the move and prepared tickets for his own work and also for subcontractor DFI. Mr. Woodward and the other operators presented their tickets to the Universal supervisors at the end of each day for signature, acknowledging "that the personnel and equipment were actually on site and working." DFI also prepared its own tickets and invoiced R & R after the move.

[¶4] The move took seven days, from May 7 through May 14, 2007. On May 15, 2007, R & R bookkeeper Sharon Mosbrucker prepared an invoice for the Universal move, using R & R's daily work tickets. She added in the applicable hourly rates for equipment and personnel and totaled the amount due for each ticket. Neither the DFI work tickets nor R & R's employee time sheets were available when she prepared the invoice. R & R invoiced Universal a total of $208,616.50 for the move.

[¶5] Before Universal paid R & R, it arranged for the rig to be moved again. This time, Universal requested bids, and another rig moving company, Bar S, bid $65,000 plus crane charges to move the rig. Universal employed Bar S, and its final bill for the second rig move was $97,499.

[¶6] Universal tendered a check to R & R in the amount of $97,500 as full payment for R & R's services in moving the rig. Universal stated it considered $97,500 "the fair value" for R & R's rig moving services based upon the amount billed by Bar S. R & R refused Universal's tender and demanded full payment on the invoice, plus interest.

[¶7] When Universal refused to pay the invoiced amount, R & R brought suit seeking full payment. Universal counterclaimed for fraud and breach of the implied covenant of good faith and fair dealing. It also asserted estoppel as an affirmative defense to R & R's claim. The matter was heard in a bench trial in June 2010. The district court considered extensive evidence of the charges and costs associated with the move, including R & R's and DFI's daily tickets and R & R's employee time sheets. The district court carefully compared all of the documentation, considered the witness testimony and ordered Universal to pay R & R $188,301.50 for the time and materials associated with the rig move. The district court stated that it considered that amount to be "the reasonable value of the services rendered to Universal . . . ." The district court also ruled against Universal on its fraud and breach of the implied covenant of good faith and fair dealing claims, but it did not directly address Universal's estoppel defense. The district court denied R & R's request for prejudgment interest. Both parties appealed.

STANDARD OF REVIEW

[¶8] The district court held a bench trial in this case. Accordingly, we apply the following standard of review:

The factual findings of a judge are not entitled to the limited review afforded a jury verdict. While the findings are presumptively correct, the appellate court may examine all of the properly admissible evidence in the record. Due regard is given to the opportunity of the trial judge to assess the credibility of the witnesses, and our review does not entail re-weighing disputed evidence. Findings of fact will not be set aside unless they are clearly erroneous. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.

Mullinnix LLC v. HKB Royalty Trust, 2006 WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo. 2006) (citations omitted).

[W]e assume that the evidence of the prevailing party below is true and give that party every reasonable inference that can fairly and reasonably be drawn from it. We do not substitute ourselves for the trial court as a finder of facts[.]

Comet Energy Servs., LLC v. Powder River Oil & Gas Ventures, LLC, 2010 WY 82, ¶ 9, 239 P.3d 382, 386 (Wyo. 2010), quoting Cook v. Eddy, 2008 WY 111, ¶ 6, 193 P.3d 705, 708 (Wyo. 2008). The district court's conclusions of law are reviewed de novo. Lieberman v. Mossbrook, 2009 WY 65, ¶ 40, 208 P.3d 1296, 1308 (Wyo. 2009).

DISCUSSION

A. Damages

[¶9] Two of Universal's issues pertain to the district court's calculation of damages. In its first issue, Universal claims that the district court incorrectly superimposed a "reasonableness" standard rather than appropriately calculating damages under the parties' time and materials contract. In its fifth issue, Universal claims that the district court's findings with regard to damages were clearly erroneous because of computational errors and because the district court did not adopt, in their entirety, the calculations presented by R & R in a revised invoice admitted into evidence at trial.

[ΒΆ10] Universal challenges the district court's reference to the "reasonable value" of R & R's services in its decision, as ...


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