FINLEY RESOURCES, INC., a Texas corporation, Appellant (Plaintiff),
EP ENERGY E&P COMPANY, L.P., d/b/a EL PASO E&P COMPANY, L.P., a Delaware limited partnership, Appellee (Defendant).
from the District Court of Converse County The Honorable F.
Scott Peasley, Judge
Representing Appellant: Scott P. Klosterman and Thomas F.
Reese, Williams, Porter, Day & Neville, P.C., Casper,
Wyoming. Argument by Mr. Klosterman.
Representing Appellee: Matthew L. Crockett and Jeffrey M.
Lippa, Greenberg Traurig, LLP, Denver, Colorado. Argument by
DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.
Finley Resources, Inc. (Finley) appeals the district
court's dismissal of its Complaint against EP Energy
E&P Company (EP Energy). The district court determined
the forum-selection clause contained in the contract between
the parties required Finley to file its suit in Texas. Finley
contends the district court erred because its claims for
quiet title, declaratory judgment, and adverse possession
were not subject to the forum-selection clause. We affirm.
Did the district court err when it decided the
forum-selection clause required Finley's lawsuit to be
brought in Texas?
On December 28, 2007, Finley and EP Energy entered into a
Purchase and Sale Agreement (Agreement) for the sale of oil
and gas leases located in Converse and Niobrara Counties,
Wyoming. Finley's principal place of business is in Fort
Worth, Texas, and EP Energy's principal place of business
is in Houston, Texas. Both entities conduct oil and gas
activities in Wyoming. According to the First Amended
Complaint, the Agreement required EP Energy to assign all of
its interests under various leases to Finley, without limit
to the depths and formations. EP Energy, however, failed to
do so despite Finley's "repeated requests and
demands." The dispute crystalized on September 13, 2017,
when EP Energy sent an e-mail to Finley stating EP Energy
retained the deep rights in certain lands described in the
leases assigned to Finley.
Finley filed this lawsuit against EP Energy in the Wyoming
District Court for the Eighth Judicial District. The First
Amended Complaint set forth five claims for relief: (1) quiet
title; (2) declaratory judgment; (3) breach of contract; (4)
breach of the implied covenant of good faith and fair
dealing; and (5) adverse possession. EP Energy filed a motion
to dismiss seeking to enforce the choice-of-law and
forum-selection clauses contained in the Agreement.
Section 13.10 of the Agreement provides:
Governing Law; Jurisdiction; Waiver of Trial by Jury.
(a) This Agreement is governed by the Laws of the State of
Texas, excluding any choice of law rules that may direct the
application of the Laws of another jurisdiction.
(b) The Parties agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the
transaction contemplated hereby shall be brought in the
United States District Court for the Southern District of
Texas or any Texas state court sitting in Houston, so long as
one of such courts shall have subject matter jurisdiction
over such suit, action or proceeding, and that any cause of
action arising out of this Agreement shall be deemed to have
arisen from a transaction of business in the State of Texas,
and each of the parties hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by Law,
any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding . . .
has been brought in an inconvenient forum.
(First emphasis in original; later emphases added.)
In its Motion to Dismiss, EP Energy argued Finley's
entire First Amended Complaint fell within the constraints of
the forum-selection clause and must be dismissed. The
district court applied Texas law and concluded, because the
non-contract claims "certainly implicate the terms of
the contract," the claims fell within the scope of the
forum-selection clause. The district court granted EP
Energy's Motion to Dismiss.
We review the district court's construction and
interpretation of the forum-selection clause de novo.
Larson v. Burton Constr., Inc., 2018 WY 74, ¶
16, 421 P.3d 538, 544 (Wyo. 2018) ("Contract
interpretation presents questions of law which we review de
novo."). A district court's decision to decline
jurisdiction based on a forum-selection clause freely entered
into by the parties to a contract is discretionary.
Venard v. Jackson Hole Paragliding, LLC, 2013 WY 8,
¶ 6, 292 P.3d 165, 168 (Wyo. 2013). A court abuses its
discretion when it reasonably could not have concluded as it
did. Id. "An abuse of discretion can exist if
the wrong law has been applied, the correct law has been
applied but incorrectly interpreted, or if the correct law
has been improperly applied." Grove v. Pfister,
2005 WY 51, ¶ 6, 110 P.3d 275, 278 (Wyo. 2005).
Finley asserts the district court abused its discretion when
it dismissed Finley's lawsuit because: (1) the
declaratory judgment,  quiet title and adverse
possession claims (equitable causes of action) do not
arise from the Agreement; and (2) even if the equitable
causes of action arose from the Agreement, the Texas courts
lack subject matter jurisdiction to consider the claims.
Consequently, the claims are excluded from the application of
the forum-selection clause. We address both arguments below.
The parties agree Texas law applies. The Agreement provides:
"This Agreement is governed by the Laws of the State of
Texas, excluding any choice of law rules that may direct the
application of the Laws of another jurisdiction."
(Emphasis omitted.) Wyoming courts will enforce choice-of-law
provisions and apply foreign law when doing so is not
"contrary to the law, public policy, or the general
interests of Wyoming's citizens." See Res. Tech.
Corp. v. Fisher Sci. Co., 924 P.2d 972, 975 (Wyo. 1996).
We will apply Texas law.
Claims and the Agreement
The parties agree Finley's contractual claims fall within
the forum-selection clause. However, Finley argues the
forum-selection clause excludes its equitable causes of
action because they arise independent of the Agreement.
Instead, Finley contends its equitable claims arise from
Finley's open, notorious, exclusive, and continuous: (1)
exercise of ownership over lands covered by the Lease and
lands not included in the assignment; (2) operation of all
oil and gas wells located on lands covered by the Lease as
well as those located on lands not included in the
assignment; and (3) receipt of all proceeds generated from
these wells. According to Finley, EP Energy's 2017 e-mail
claiming ownership of the deep rights in the Kaye Teapot
Sandstone Unit located on lands covered by the leases- an
e-mail received nearly ten years after the Agreement was
signed-was the impetus for this action.
[¶11] Under Texas law, a "forum-selection clause
should be denied force only if the facts alleged in support
of the claim stand alone, are completely independent of the
contract, and the claim could be maintained without reference
to the contract." Pinto Tech. Ventures, L.P. v.
Sheldon, 526 S.W.3d 428, 440 (Tex. 2017), reh'g
denied (Sept. 22, 2017) (quotations omitted); AutoNation
USA Corp. v. Leroy, 105 S.W.3d 190, 195 (Tex. App.
2003). Whether a given claim falls "within the
forum-selection clause's scope depends on the
parties' intent . . . and a 'common-sense
examination' of the substantive factual
allegations." Pinto, 526 S.W.3d at 437 (citing
In re Int'l Profit Assocs., Inc., 274 S.W.3d
672, 677 (Tex. 2009)); see also JFP Servs., L.L.C. v.
Torans, No. SA-17-CV-00210-FB, 2018 WL 3326841, at *6
(W.D. Tex. Apr. 30, 2018), report and recommendation adopted
sub nom. JFP Servs., LLC v. Torans, No.
SA-17-CA-210-FB, 2018 WL 4343439 (W.D. Tex. July 2,
2018); Braspetro Oil Servs. Co. v. Modec (USA),
Inc., 240 Fed.Appx. 612, 616 (5th Cir. 2007) (The court
"look[s] to the language of the parties' contract
to determine which causes of action are governed by the forum
selection clause.") (citation omitted).
Here, the forum-selection clause applies to "any suit .
. . based on any matter arising out of or in connection with,
this Agreement or the transaction contemplated."
(Emphasis added.) Finley claims this language should be read
narrowly because the Agreement's later requirement of
subject matter jurisdiction ...