LON V. SMITH FOUNDATION, a California non-profit corporation, Appellant (Plaintiff),
DEVON ENERGY CORPORATION, an Oklahoma corporation; DEVON ENERGY PRODUCTION COMPANY L.P., an Oklahoma limited partnership; and ANDREW KEAN, as Trustee of the Marguerite Brown Smith Trust, a California testamentary trust, Appellees (Defendants). DEVON ENERGY CORPORATION, an Oklahoma corporation; and DEVON ENERGY PRODUCTION COMPANY L.P., an Oklahoma limited partnership, Appellants (Defendants),
LON V. SMITH FOUNDATION, a California non-profit corporation, Appellee (Plaintiff). LON V. SMITH FOUNDATION, a California non-profit corporation, Appellant, (Plaintiff),
DEVON ENERGY CORPORATION, an Oklahoma corporation; and DEVON ENERGY PRODUCTION COMPANY L.P., an Oklahoma limited partnership, Appellees, (Defendants).
from the District Court of Carbon County The Honorable Wade
E. Waldrip, Judge
Representing Lon V. Smith Foundation: Kristopher C. Koski,
Thomas N. Long, and Rebecca J. Zisch of Long Reimer Winegar
Beppler LLP, Cheyenne, Wyoming; Drake D. Hill, Hill Law Firm,
LLC, Cheyenne, Wyoming. Argument by Messrs. Koski and Long.
Representing Devon Energy Corporation and Devon Energy
Production Company: Jeffery J. Oven, Clayton H. Gregersen,
and Victoria A. Marquis of Crowley Fleck PLLP, Billings,
Montana. Argument by Mr. Oven.
Representing Andrew Kean: Brett M. Godfrey and Anne E.
Zellner of Godfrey Johnson, P.C., Englewood, Colorado.
Argument by Mr. Godfrey.
BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.
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.
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
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
3. Is either party entitled to attorney fees under the WRPA?
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.
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.
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 1, 2014.
V. Smith's Will and the California Probate
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.
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:
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 non-profit 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.
the Wyoming ORRI is not included in the inventory of the
California probate order. The California probate order also
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
G) That all other and after-discovered 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.
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.
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
Over the years, the parties have taken differing positions
regarding who is entitled to payments of Lon V. Smith's
ORRI. It is undisputed that Devon has made payments to both
the Trust and the Foundation at different times and with
respect to different wells covered by the ORRI. In July of 2014,
Devon sent a letter to the Trust, copying the Foundation,
which explained its position at that time that the Foundation
and not the Trust was entitled to royalty payments on certain
The [Trust] received $747, 273.07 during the period from
12/15/2004 through 11/15/2011 in connection with the ORRI on
the Standard Draw Wells. As explained below, the Trust was
not entitled to these funds, and Devon requests that the
Trust immediately repay these funds to Devon so that they may
be credited to the proper owner.
Trust did not repay the allegedly erroneous royalty payments
to Devon, and soon thereafter the Foundation brought this
lawsuit against Devon, its successor, Linn, and the Trust,
claiming that under the terms of the Will, it is entitled to
the ORRI payments.
The Foundation sought to recover royalty payments that Devon
made to the Trust, an accounting, recovery of statutory
assessments for the improper reporting and retaining of oil
and gas proceeds, and damages for conversion of royalty
proceeds. Additionally, the Foundation sought a
constructive trust for the royalty payments received by the
Trust. Devon asserted counterclaims against the Foundation
and cross-claims against the Trust, seeking declaratory
judgment on the ownership of the ORRI and seeking
indemnification by the Trust. Devon contended that payments
on the ORRI are governed by the California probate order,
which was adopted in Wyoming in the ancillary probate
proceeding, and that the Trust, not the Foundation, is
entitled to royalty payments. The Trust has indicated that it
is not adverse to the Foundation's position that the
Foundation is the owner of the ORRI, but that it does not
believe it owes the Foundation any royalty payments that
Devon wrongfully paid the Trust in the past.
Both the Foundation and Devon filed motions for summary
judgment. The district court held that the ORRI passed to the
Trust and that the Foundation was not "entitled to
receive royalty payments in question." Consequently, the
Foundation's other claims failed as well. The Foundation
and Devon sought recovery of attorney fees and costs, both
claiming they were the prevailing party entitled to fees
under the WRPA, Wyo. Stat. Ann. § 30-5-303 (LexisNexis
2017). The district court concluded that the WRPA was
inapplicable and neither party was entitled to an award of
The parties filed several appeals which have been
consolidated for review. The Foundation contends that the
district court erred when it concluded that the ORRI belongs
to the Trust, when it granted summary judgment on the
Foundation's statutory claims, and when it denied the
Foundation's request for attorney fees. Devon appeals the
district court's denial of its motion for attorney fees.
Additional facts will be discussed as they become relevant to
the issues addressed below.
Summary judgment is appropriate when there are no genuine
issues of material fact and the moving party is entitled to
judgment as a matter of law. W.R.C.P. 56(a). This Court
considers the record from the viewpoint most favorable to the
party opposing the motion, and gives all favorable inferences
to be drawn from the facts contained in materials appearing
in the record to the ...