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Berthel Land and Livestock, A Wyoming Limited Partnership v. Rockies Express Pipeline LLC Fka Entrega Gas Pipeline LLC

April 10, 2012

BERTHEL LAND AND LIVESTOCK, A WYOMING LIMITED PARTNERSHIP, APPELLANT (PLAINTIFF),
v.
ROCKIES EXPRESS PIPELINE LLC FKA ENTREGA GAS PIPELINE LLC, AND
KINDER MORGAN NATGAS OPERATOR LLC, BOTH ORGANIZED UNDER THE LAW OF DELAWARE, APPELLEES (DEFENDANTS). ROCKIES EXPRESS PIPELINE LLC FKA ENTREGA GAS PIPELINE LLC, AND KINDER MORGAN NATGAS OPERATOR LLC, BOTH ORGANIZED UNDER THE LAWS OF DELAWARE, APPELLANTS (DEFENDANTS)
v.
BERTHEL LAND AND LIVESTOCK, A WYOMING LIMITED PARTNERSHIP, APPELLEE (PLAINTIFF).



Appeal from the District Court of Laramie County The Honorable Edward Grant, Judge, Retired, and The Honorable Thomas T.C. Campbell, Judge

The opinion of the court was delivered by: Golden, 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 any typographical or other formal errors so that correction may be made before final publication in the permanent volume.

[¶1] Berthel Land and Livestock (Berthel) entered into a Pipeline Easement Agreement (Agreement) with Rockies Express Pipeline (Rockies Express). After completion of the pipeline, Berthel filed an action against Rockies Express asserting claims for breach of contract and fraudulent inducement. The breach of contract claims alleged a failure to remove rock from the property and a failure to provide required as-built drawings of the completed pipeline, and the fraudulent inducement claim alleged that Rockies Express never intended to remove the rock as required by the Agreement.

[¶2] The district court granted Berthel summary judgment as to liability on the breach of contract claims, but required a trial on damages on those claims, and denied summary judgment on the fraudulent inducement claim. After a bench trial, the district court found that Berthel had not proven its fraudulent inducement claim or its damages for the rock removal breach. The district court awarded damages for the as-built drawings breach, but at a lesser amount than Berthel requested. Berthel appealed, and Rockies Express cross-appealed.

[¶3] We affirm the district court's decision on the fraudulent inducement claim and rock removal damages. We affirm in part and reverse in part the award of damages for the as-built drawings breach.

ISSUES

[¶4] Berthel presents the following issues on appeal:

I. Did the district court err as a matter of law by interpreting that the pipeline easement agreement ¶8(m), requires removal of "surface" rocks only?

II. Are the district court's factual determinations concerning damages for ¶8(m), rock removal, and/or ¶8(q), as-built survey, clearly erroneous?

III. Is the district court's conclusion that fraudulent inducement was not committed clearly erroneous?

[¶5] In its cross-appeal, Rockies Express presents these issues:

1. Did the trial court commit error by granting summary judgment for Berthel on the issue of liability for failure to provide Berthel with an as-built survey?

2. Did the trial court commit error by granting summary judgment for Berthel on the issue of liability for failure to remove rocks from the easement?

3. Did the trial court commit error by allowing evidence of "bids" from Berthel's contractors and engineers that failed to reflect the correct measure of damages?

FACTS

[¶6] Berthel owns an 11,192-acre ranch located between Laramie and Cheyenne, Wyoming. In 2006, Berthel and Rockies Express entered into a Pipeline Easement Agreement (Agreement), which, in exchange for $200,000, granted Rockies Express an approximately 3.5-mile easement through Berthel's land for the construction and operation of a natural gas pipeline. The Agreement provided for a 125-foot wide temporary easement during construction and a 50-foot wide permanent easement after construction.

[¶7] Rockies Express completed construction of the pipeline in late summer of 2007. In September 2007, Berthel filed the present action alleging that Rockies Express failed to remove rock from the premises, as required by the Agreement, and failed to provide an as-built survey that would allow Berthel to determine the full distance covered by the pipeline, also as required by the Agreement. Berthel also alleged a claim for fraudulent inducement, contending that Rockies Express never intended to remove rock from the premises and fraudulently induced Berthel to sign the Agreement with its false representation that it would remove the rock.

[¶8] The parties filed cross-motions for summary judgment, and the district court, the Honorable Edward Grant presiding, granted those motions in part and denied them in part. The court found no genuine issue of material fact as to whether Rockies Express violated the rock removal and as-built survey provisions of the Agreement. In so ruling, the district court did not explain the basis for its decision or provide its interpretation of the applicable Agreement provisions. The district court found genuine issues of fact as to the fraudulent inducement claim and ordered that the fraudulent inducement claim and Berthel's damages with respect to all of its claims be set for a bench trial.

[¶9] Upon Judge Grant's retirement, the Honorable Thomas Campbell presided over the case, and on January 19-21, 2010, a bench trial was held. At the conclusion of the bench trial, the district court entered a decision letter ruling as follows:

► With respect to the rock removal claim, the court interpreted the Agreement to require removal of only the surface rock greater than two inches in diameter. The court agreed with Berthel that the measure of damages should be the cost of repairs, but it awarded no damages because Berthel had failed in its proof. The court found that Berthel had offered damages evidence only on the cost of removing both surface rock and subsurface rock to a depth of two feet, without separating out the cost of removing just the surface rock, and there was therefore no evidence from which the court could calculate damages.

► With respect to the as-built survey claim, the court also based its damages calculation on the cost of repair, or, that is, the cost to Berthel to have an as-built survey completed. Berthel presented evidence that that cost would be $75,284.65, and that was the amount it requested in damages for the as-built survey breach. The court concluded, though, that Berthel's proposed approach of having a backhoe dig 245 holes down to a natural gas pipeline to determine its depths and contours was dangerous and unreasonable. The court thus eliminated that cost item from the damages, substituted the cost of an alternative pipeline detection method, and awarded damages of $42,820.00.

► With respect to the fraudulent inducement claim, the district court concluded that Berthel had failed to prove any element of its claim and entered judgment for Rockies Express.

STANDARD OF REVIEW

[¶10] Because this case was tried to the court, we apply the following standard of review:

Following a bench trial, this court reviews a district court's findings and conclusions using a clearly erroneous standard for the factual findings and a de novo standard for the conclusions of law. Piroschak v. Whelan, 2005 WY 26, ¶ 7, 106 P.3d 887, 890 (Wyo. 2005).

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.

Piroschak, ¶ 7, 106 P.3d at 890. Findings may not be set aside because we would have reached a different result. Harber v. Jense, 2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo. 2004). Further, we 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.

Id.

Pennant Service Co., Inc. v. True Oil Co., LLC, 2011 WY 40, ¶ 7, 249 P.3d 698, 703 (Wyo. 2011) (quoting Hofstad v. Christie, 2010 WY 134, ¶ 7, 240 P.3d 816, 818 (Wyo. 2010) (some citations omitted)). We review the district court's conclusions of law de novo. Lieberman v. Mossbrook, 2009 WY 65, ¶ 40, 208 P.3d 1296, 1308 (Wyo. 2009).

[¶11] Because Rockies Express challenges the grant of summary judgment on the liability issues, we must also consider our standard for reviewing summary judgment orders. Motions for summary judgment come before the trial court pursuant to Rule 56(c) of the Wyoming Rules of Civil Procedure, which provides that [t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Formisano v. Gaston, 2011 WY 8, ¶ 3, 246 P.3d 286, 288 (Wyo. 2011). We review a grant of summary judgment as follows:

We review a summary judgment in the same light as the district court, using the same materials and following the same standards. [Snyder v. Lovercheck, 992 P.2d 1079, 1083 (Wyo. 1999)]; 40 North Corp. v. Morrell, 964 P.2d 423, 426 (Wyo. 1998). We examine the record from the vantage point most favorable to the party opposing the motion, and we give that party the benefit of all favorable inferences that may fairly be drawn from the record. Id. A material fact is one which, if proved, would have the effect of establishing or refuting an essential element of the cause of action or defense asserted by the parties. Id. If the moving party presents supporting summary judgment materials demonstrating no genuine issue of material fact exists, the burden is shifted to the non-moving party to present appropriate supporting materials posing a genuine issue of a material fact for trial. Roberts v. Klinkosh, 986 P.2d 153, 155 (Wyo. 1999); Downen v. Sinclair Oil Corp., 887 P.2d 515, 519 (Wyo. 1994). We review a grant of summary judgment deciding a question of law de novo and afford no deference to the district court's ruling. Roberts v. Klinkosh, 986 P.2d at 156; Blagrove v. JB Mechanical, Inc., 934 P.2d 1273, 1275 (Wyo. 1997).

Lindsey v. Harriet, 2011 WY 80, ¶ 18, 255 P.3d 873, 880 (Wyo. 2011).

DISCUSSION

I. BREACH OF AGREEMENT CLAIMS

[¶12] Review of the rock removal and as-built survey claims requires consideration of the Agreement according to our rules of interpreting easements.

Easements are reviewed under the same principles that have been established for interpretation of contracts. Lozier v. Blattland Investments, LLC, [2004 WY 132, ¶ 9,] 100 P.3d 380, 383-384 (Wyo. 2004); Klutznick v. Thulin, 814 P.2d 1267, 1270 (Wyo. 1991). The primary goal is to determine the intention of the parties from a close reading of the document language and by interpreting the terms of the document according to their plain and ordinary meaning. Comet Energy Services, LLC v. Powder River Oil & Gas Ventures, LLC, [2008 WY 69, ¶ 6,] 185 P.3d 1259, 1261-1262 (Wyo. 2008). Determination of the parties' intentions requires common sense and good faith; it also requires consideration of the context within which the contract was made. Double Eagle Petroleum & Min. Corp. v. Questar Exploration & Production Co., [2003 WY 139, ¶ 8,] 78 P.3d 679, 681-682 (Wyo. 2003). If necessary, the reviewing court may also look to the circumstances surrounding the contract, as well as its subject matter and the purpose of the contract to glean the intent of the agreement. Id. Any examination of the context within which the contract was drawn is limited to ascertaining the intent of the parties in making the agreement. Id. The context "cannot be invoked to contradict the clear meaning of the language used, and those extraneous circumstances do not justify a court in proceeding to insert therein a provision other than or different from that which the language used clearly indicates, and thereby, in effect, make a contract for the parties." Lozier v. Blattland Investments, LLC, 100 P.3d 380, 383-384 (Wyo. 2004).

Davison v. Wyo. Game & Fish Comm'n, 2010 WY 121, ¶ 9, 238 P.3d 556, 560 (Wyo. 2010).

[¶13] In interpreting contracts, we have also said that the "language of the parties expressed in their contract must be given effect in accordance with the meaning which the language would convey to reasonable persons at the time and place of its use." Union Pacific Railroad Co. v. Caballo Coal Co., 2011 WY 24, ¶ 15, 246 P.3d 867, 872 (Wyo. 2011) (quoting Moncrief v. Louisiana Land & Exploration Co., 861 P.2d 516, 524 (Wyo. 1993)). The contract as a whole should be considered, taking into consideration the relationship between the various parts. Moncrief, 861 P.2d at 524. Courts may consider the circumstances surrounding execution of the agreement to determine the parties' intention, even in reviewing unambiguous contracts. Ultra Res., Inc. v. Hartman, 2010 WY 36, ¶ 22, 226 P.3d 889, 905 (Wyo. 2010); Mullinnix LLC v. HKB Royalty Trust, 2006 WY 14, ¶ 6, 126 P.3d 909, 915 (Wyo. 2006); Caballo Coal Co. v. Fidelity Expl. & Prod. Co., 2004 WY 6, ¶ 11, 84 P.3d 311, 314-15 (Wyo. 2004).

[¶14] As with a contract, if the language of an easement is ambiguous, we may use extrinsic evidence in an effort to determine the intentions of the parties. Davison, ¶ 9, 238 P.3d at 560. A contract is ambiguous if it can be read in more than one way. Dwan v. Indian Springs Ranch Homeowners Ass'n, Inc., 2008 WY 74, ¶ 9, 186 P.3d 1199, 1202 (Wyo. 2008). The determination of whether a contract is ambiguous is a question of law for the ...


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