Case Title: Amoco Production Co. v. EM Nominee Partnership Co.

Citation: 

Docket Number: 94-76

State: wyoming

Court: Wyoming Supreme Court

Date: 1994-12-02T00:00:00Z

Document:
Amoco Production Co. v. EM Nominee Partnership Co.1994 WY 135886 P.2d 265Case Number: 94-76Decided: 12/02/1994Supreme Court of Wyoming
AMOCO PRODUCTION 
COMPANY,

Appellant 
(Plaintiff),

 v.

 EM NOMINEE PARTNERSHIP 
COMPANY, a/k/a Energy Methods Nominee Partnership Company, a Colorado 
Partnership, Hallwood Energy, Inc., and E.D.P. Operating, 
Ltd.,

Appellees 
(Defendants).

 

Appeal from The District 
Court of Sweetwater County, Jere Ryckman, J.

 

David D. Uchner, 
Cheyenne, Peter A. Bjork and Gregory R. Danielson of Bjork, Seavy, Lindley & 
Danielson, Denver, CO, for appellant.

J. Kent 
Rutledge, Cheyenne, Thomas J. Kimmell, Englewood, CO, for 
appellees.

 

Before 
GOLDEN, C.J., and THOMAS, MACY, TAYLOR, and LEHMAN, 
JJ.

LEHMAN, 
Justice.

[¶1]      This appeal is 
the result of a dismissal by the district court of an action by Amoco Production 
Company against EM Nominee Partnership Company, et al. on the grounds that the 
State of Wyoming lacked personal jurisdiction over the 
defendant.

[¶2]      We 
reverse.

[¶3]      A single issue is 
presented for review:

Whether the Trial Court 
properly concluded that the Defendants lacked sufficient minimum contacts so as 
not to be properly subject to in personam jurisdiction in the State of 
Wyoming.

I. 
FACTS

[¶4]      The plaintiff, 
Amoco Production Company (Amoco), is the owner of a leasehold working interest 
covering lands in Sweetwater County, Wyoming. The leasehold was the subject of a 
Brady (Deep) Unit Agreement, which dictated the allocation of royalties within 
the unit. The defendants, EM Nominee Partnership Company a/k/a Energy Methods 
Nominee Partnership Company, Hallwood Energy, Inc., and E.D.P. Operating, Ltd. 
(collectively EM), own an overriding royalty interest on land which was 
initially within the unit. EM acquired the interest as part of a purchase from 
G.L.M. Oil and Gas Company in 1984. As the working interest owner, Amoco 
remitted to EM its royalty payments.

[¶5]      On May 2, 1989, 
the Bureau of Land Management reduced the unit size, resulting in the exclusion 
of the land on which EM's royalty belonged. The BLM's decision was made 
effective March 1, 1985. Amoco then requested reimbursement of the royalties 
paid between March 1, 1985, and May 2, 1989, pursuant to the terms of the unit 
agreement. EM declined to return the money, and Amoco filed this suit in 
Sweetwater County raising claims of breach of contract, unjust enrichment and 
conversion.

[¶6]      EM moved to 
dismiss based on a lack of personal jurisdiction. The district court reviewed 
the parties' contacts with this state and found the following: EM is not 
conducting business and has never conducted business in Wyoming; it has no 
offices, agents or employees here; the only property owned in Wyoming by EM is 
the overriding royalty interest at issue here; the contracts relating to this 
matter were not executed or entered into in Wyoming; the royalties were paid out 
of Amoco's Tulsa, Oklahoma office and sent to EM's office in Denver; and EM is 
not currently receiving any payments attributable to the royalty interest. The 
district court then concluded:

This cause of action has 
very little to do with any of defendants' local activities, since there are 
essentially none. Defendants' activities in Wyoming, as related to this case, 
cannot properly be described as "substantial," "important," "extensive," or 
"significant." The consequences of defendants' activities within Wyoming are 
negligible. Thus, this cause of action does not arise from the consequences in 
Wyoming of the defendants' actions. Further, the activities of defendants and 
the consequences of these activities do not have a substantial connection with 
Wyoming to make the exercise of jurisdiction over these defendants 
reasonable.

EM's motion to 
dismiss was granted, and Amoco now appeals.

II. 
DISCUSSION

[¶7]      The courts of 
Wyoming are authorized by statute to exercise personal jurisdiction over 
defendants on any basis which is not inconsistent with the Wyoming or United 
States constitutions. W.S. 5-1-107(a) (1977). So long as the exercise of 
jurisdiction does not offend the Due Process Clause of the Fourteenth Amendment 
to the United States Constitution, the courts of this state have jurisdiction 
over a defendant. Markby v. St. Anthony Hosp. Sys., 647 P.2d 1068, 1070 
(Wyo. 1982).

[¶8]      Due process 
requires that the defendant have certain "minimum contacts" with the forum state 
such that the exercise of jurisdiction over him does not offend "traditional 
notions of fair play and substantial justice." Int'l Shoe Co. v. 
Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945); 
Markby, 647 P.2d  at 1070. In First Wyoming Bank, N.A., Rawlins v. 
Trans Mountain Sales & Leasing, Inc., we adopted a three-part test for 
defining the outer limits of personal jurisdiction based on a single 
act:

First, the defendant must 
purposefully avail himself of the privilege of acting in the forum state or of 
causing important consequences in that state. Second, the cause of action must 
arise from the consequences in the forum state of the defendant's activities. 
Finally, the activities of the defendant or the consequences of those activities 
must have a substantial enough connection with the forum state to make the 
exercise of jurisdiction over the defendant reasonable.

602 P.2d 1219, 
1221 (Wyo. 1979) (quoting State ex rel. White Lumber Sales, Inc. v. 
Sulmonetti, 252 Or. 121, 448 P.2d 571, 574 (1968)); see also Markby, 
647 P.2d  at 1073. The determination of whether the exercise of jurisdiction is 
reasonable must be evaluated in light of several factors, including the burden 
on the defendant, the forum's interest in adjudicating the dispute, the 
plaintiff's interest in obtaining effective relief in a convenient forum if that 
interest cannot be adequately protected by his power to select the forum, the 
interstate judicial system's interest in the efficient resolution of conflicts, 
and in the shared interests of the states in furthering fundamental substantive 
social policies. Markby, 647 P.2d  at 1073 (quoting World-Wide 
Volkswagon Corp. v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490 (1980)); see also Asahi Metal Indus. Co., Ltd. v. Superior Court 
of California, 480 U.S. 102, 113-14, 107 S. Ct. 1026, 1033, 94 L. Ed. 2d 92 
(1987). "These considerations sometimes serve to establish the reasonableness of 
jurisdiction upon a lesser showing of minimum contacts than would otherwise be 
required" if the defendant has purposefully availed himself of the privilege of 
acting in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 
477, 105 S. Ct. 2174, 2184, 85 L. Ed. 2d 528 (1985).

[¶9]      The burden is on 
the plaintiff, once the defendant has contested the court's jurisdiction over 
him, to make a prima facie showing that the defendant is subject to personal 
jurisdiction in the state. McAvoy v. Dist. Court, 757 P.2d 633, 634 
(Colo. 1988); Allen v. Columbia Financial Management, Ltd., 297 S.C. 481, 
377 S.E.2d 352, 354 (S.C. App. 1988); see Morrison v. Reilly, 511 P.2d 970, 972 (Wyo. 1973) (burden of proof is on party asserting affirmative of any 
issue). The court may consider any allegations set forth in the complaint and 
any evidence which may be introduced in a hearing on the issue. McAvoy, 
757 P.2d  at 634-35. The defendant then must present a compelling case that the 
presence of some other considerations would make the exercise of jurisdiction 
unreasonable. Burger King, 471 U.S.  at 477, 105 S. Ct.  at 
2184-85.

[¶10]   The United States Supreme Court has 
distinguished between "general" and "specific" personal jurisdiction. "Specific" 
jurisdiction is when a state exercises jurisdiction over a defendant in a suit 
arising out of or related to that defendant's contacts with the forum. 
Helicopteros Nacionales De Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 
8, 104 S. Ct. 1868, 1872, n. 8, 80 L. Ed. 2d 404 (1984); see Eddy v. Oukrop, 
784 P.2d 610, 612-14 (Wyo. 1989) (jurisdiction exercised over defendants because 
suit arose out of defendants' contacts with Wyoming). In contrast, "general" 
jurisdiction is when a state exercises jurisdiction over the defendant in a suit 
not arising out of or related to that defendant's contacts with the state. 
Helicopteros Nacionales, 466 U.S.  at 414 n. 9, 104 S. Ct.  at 1872; see 
Markby, 647 P.2d  at 1074 (defendant's contacts with the state not 
sufficient to create personal jurisdiction in Wyoming where defendant's contacts 
with the state were not related to the suit). Even if a single act arises out of 
or is related to the suit, a state may not have jurisdiction if the nature of 
the act creates only an "attenuated" connection with the forum. Burger 
King, 471 U.S.  at 475 n. 18, 105 S. Ct.  at 2184 n. 8.

[¶11]   In the instant case, EM has two 
contacts with the State of Wyoming. First, it owns an interest in real property 
in Sweetwater County. Connaghan v. Eighty-Eight Oil Co., 750 P.2d 1321, 1324 (Wyo. 1988) (overriding royalty interest is an interest in land). Second, 
as alleged by Amoco in its complaint, EM became a party to the unit agreement 
when it purchased its royalty interest. The basis of Amoco's cause of action is 
that EM breached the unit agreement when it refused to reimburse Amoco for the 
royalties paid to it during the time period when the unit was retroactively 
reduced in size. Thus, Amoco's suit clearly "arises out of" one of EM's contacts 
with Wyoming - the unit agreement. EM's other contact with Wyoming is "related 
to" Amoco's suit in the sense that the overriding royalty interest is the 
subject matter of the contract. Amoco is, therefore, asserting "specific" 
personal jurisdiction; and we now confront the question of whether EM's contacts 
are sufficient for this state's courts to exercise personal jurisdiction over 
it.

Whether EM 
purposefully availed itself of the privilege of acting in Wyoming or caused 
important consequences in the state.

[¶12]            
Amoco insists that EM has purposefully availed itself of acting in 
Wyoming by purchasing an interest in land here and by accepting benefits (the 
royalties) under the unit agreement. EM, on the other hand, argues that it did 
not purposefully avail itself of acting in Wyoming because its ownership of the 
royalty was completely passive - all it did was accept payments, nothing more. 
EM claims that ownership of property is not, by itself, sufficient to justify 
Wyoming exercising jurisdiction over it.

[¶13]   We have little trouble in finding 
that EM purposefully availed itself of the privilege of acting in Wyoming. 
First, EM voluntarily purchased an interest in land in this state. EM also 
accepted the benefits of that ownership in the form of the royalty payments. The 
fact that the payments were not made in Wyoming but instead were paid by Amoco's 
Tulsa, Oklahoma office to EM's Denver office, is irrelevant. The payments were 
earned in Wyoming and were based on oil and gas production which occurred 
here.

[¶14]   EM relies on our decision in 
Anderson v. Perry, 667 P.2d 1155 (Wyo. 1983) in arguing that passive 
ownership is not sufficient to justify jurisdiction, rather the owner must 
somehow actively manage the property. We think EM's reliance is misplaced. While 
the finding of jurisdiction in that case was based, at least in part, on the 
defendant's hiring of an agent in Wyoming to manage the property, that was not 
the determinative factor. Anderson, 667 P.2d  at 1158. Jurisdiction in 
Anderson was primarily based upon the existence of a contract to purchase 
real property in Wyoming. Several cases were cited by this court in 
Anderson which support the assertion of jurisdiction over a foreign 
defendant based on a contract and the associated consequences of that contract 
in the forum state. Proctor & Schwartz, Inc. v. Cleveland Lumber Co., 
228 Pa. Super. 12, 323 A.2d 11 (1974) (jurisdiction asserted because contract 
had consequences in the forum state which defendant should have foreseen despite 
the fact defendant had no offices, property, agents, representatives or 
employees in the forum state); see also Cook Associates, Inc. v. Colonial 
Broach & Machine Co., 14 Ill. App.3d 965, 304 N.E.2d 27 (1973). EM 
voluntarily undertook actions which clearly establish that it purposefully 
availed itself of the privilege of acting in Wyoming. 

Did the 
cause of action arise from the consequences of EM's activities in 
Wyoming?

[¶15]   This question is easily answered 
yes. As we have already pointed out, this case involves "specific" personal 
jurisdiction; Amoco's cause of action "arises out of" the unit agreement to 
which EM was a party and is "related to" EM's ownership of the royalty interest. 
Anderson, 667 P.2d  at 1158, compare Markby, 647 P.2d  at 1074 
(cause of action did not arise out defendant's activities in Wyoming where suit 
was based on "general" personal jurisdiction). The cause of action asserted in 
this case has everything to do with EM's local activities.

Did the 
activities of EM have a substantial enough connection with Wyoming to make the 
exercise of jurisdiction reasonable?

[¶16]   Here our decision is guided by what 
we said in Anderson:

The third factor which 
must be considered is whether the activities or consequences had a substantial 
connection with the forum state. In Dwyer v. District Court, Sixth Judicial 
District, 188 Colo. 41, 532 P.2d 725 (1975), which concerned a contract 
involving real property, the court stated that of utmost importance was the fact 
that "the subject matter of the contract, the real estate, was located in 
Colorado thereby making Colorado the state with the greatest interest in the 
transaction." Id. [532 P.2d] at 727. In the present situation the 
contract concerns real property located in Wyoming and the covenants are 
recorded in Wyoming. We hold that this satisfies the "substantial connection" 
requirement of the test.

667 P.2d  at 
1158. Similarly, here the contract concerns a royalty interest located in 
Wyoming which earned EM substantial amounts of money on oil and gas produced in 
this state. The "substantial connection" requirement is satisfied in this case 
as well.

[¶17]            
Furthermore, the exercise of jurisdiction by Wyoming is reasonable in 
light of the foregoing discussion for two reasons. First, this state has an 
interest in both the enforcement of valid contracts performed in this state and 
in effectuating the parties' intent in regard to those contracts. Eddy, 
784 P.2d  at 613-14. Wyoming has also expressed a strong interest in its natural 
resources and their production. See W.S. 30-1-101 et seq. (laws regulating mines 
and minerals in Wyoming). The owners of royalties have even been provided with 
special protection. See W.S. 30-5-301 to -303. Second, EM voluntarily bought 
property and entered into a contract which was performed in this state and 
benefitted substantially from that relationship. It cannot now complain, when 
that very relationship is the subject of a suit in this state, that the exercise 
of jurisdiction by Wyoming is unreasonable. EM's contacts with Wyoming are not 
"attenuated" but are substantial; therefore, the exercise of personal 
jurisdiction by this state is reasonable.

III. 
CONCLUSION

[¶18]   EM purposefully availed itself of 
the privilege of acting in Wyoming, its activities in this state are related to 
the suit, and its contacts with Wyoming are substantial, making the exercise of 
jurisdiction over it by the State of Wyoming reasonable.

[¶19]            
Reversed.