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Questar Exploration and Production Co. v. Rocky Mountain Resources, LLC

Supreme Court of Wyoming

February 1, 2017

QUESTAR EXPLORATION AND PRODUCTION COMPANY, now known as QEP ENERGY COMPANY, a Texas corporation; WEXPRO COMPANY, a Utah corporation; Appellants (Defendants),
v.
ROCKY MOUNTAIN RESOURCES, LLC, Appellee (Plaintiff).

         Appeal from the District Court of Sublette County The Honorable Marvin L. Tyler, Judge

          Representing Appellants: Shawn T. Welch, Holland & Hart, LLP, Salt Lake City, Utah; Jere C. (Trey) Overdyke, III, and Susan L. Combs, Holland & Hart, LLP, Jackson, Wyoming. Argument by Mr. Welch.

          Representing Appellee: Steven F. Freudenthal, Freudenthal & Bonds, PC, Cheyenne, Wyoming; Greg Weisz, Pence and MacMillan, LLC, Laramie, Wyoming; Paul F. Simpson, McGinnis, Lochridge & Kilgore, LLP, Houston, Texas; Patton G. Lochridge and J. Derrick Price, McGinnis, Lochridge & Kilgore, LLP, Austin, Texas. Argument by Mr. Simpson.

          Representing Wyoming Office of State Lands and Investments, Amicus Curiae in Support of QEP Energy Company: Peter K. Michael, Attorney General; Ryan T. Schelhaas, Deputy Attorney General; Mackenzie Williams, Senior Assistant Attorney General; Megan L. Nicholas, Senior Assistant Attorney General.

          Before BURKE, C.J., and HILL, DAVIS, and KAUTZ, JJ., and FENN, D.J.

          FENN, DISTRICT JUDGE.

         [¶1] Appellants, QEP Energy Company ("QEP") and Wexpro Company ("Wexpro") appeal the district court's decision on cross summary judgment motions, the verdict and final judgment that found them liable for more than thirty million dollars in unpaid royalties, and the district court's denial of their motion for a new trial. We reverse and remand.

         ISSUES

         [¶2] Appellants phrase the issues as follows:

1. Whether the district court erred in concluding as a matter of law that the State of Wyoming's oil and gas lease assignment form contains an anti-washout clause that vested a past state lessee with title to an overriding royalty in a future state lease sold by public auction.
2. Whether the district court erred in concluding as a matter of law that the State of Wyoming did not have to approve an overriding royalty to be valid in a state oil and gas lease even though state approval is required under law.
3. Whether the district court erred in concluding as a matter of law that Wyoming's rule against perpetuities did not bar plaintiff's claim to an overriding royalty interest in a future state oil and gas lease.
4. Whether the district court's Jury Instruction No. 8 improperly instructed the jury without legal or evidentiary support and prejudiced the defense at trial.
5. Whether the district court abused its discretion in denying a motion for a new trial including where the jury verdict determined the causes of action accrued on the date the complaint was filed.

         Appellee phrases the issues as follows:

1. Did a 4% overriding royalty interest reserved in assignments of oil and gas leases that extended it to "any renewal lease, substitute lease, or new lease issued in lieu thereof, " extend as a matter of law to a subsequent lease covering the same land, issued within weeks after the original leases were surrendered, and promptly acquired by the same working interest owner that surrendered the prior leases?
2. Did the State Land Board have to approve that 4% overriding royalty a second time for it to apply to a subsequent lease under the extension clause in the initial assignment that the Board had already approved?
3. Does a 4% overriding royalty that extends to a future lease under an anti-washout clause violate the Rule against Perpetuities, as a matter of law?
4. Did Jury Instruction No. 8 improperly instruct the jury?
a. If so, was it an abuse of discretion that prejudiced QEP/Wexpro's statute of frauds defense?
b. If so, was it an abuse of discretion that prejudiced QEP/Wexpro's bona fide purchaser defense?
c. If so, was it an abuse of discretion that prejudiced QEP/Wexpro's limitations defense?
5. Were the jury's findings as to when Rocky Mountain Resources and Robert Floyd knew or reasonably should have known that they had a right to sue to enforce the rights to the 4% overriding royalty unsupported by the evidence or contrary to law?

         Our resolution of this case makes it unnecessary for us to consider all of the issues presented. We rephrase the issues presented ...


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