Case Title: Blackmore v. Davis Oil Co.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1983-11-04T00:00:00Z

Document:
Blackmore v. Davis Oil Co.1983 WY 115671 P.2d 334Case Number: 83-27Case Number: 83-27Decided: 11/04/1983Supreme Court of Wyoming
FRANCES B. BLACKMORE, WIDOW OF R.B. BLACKMORE, AND MILLARD 
HUEY, APPELLANTS (PLAINTIFFS),

v.

DAVIS OIL COMPANY, A 
COLORADO PARTNERSHIP, AND MARVIN DAVIS, INDIVIDUALLY AND AS GENERAL PARTNER, 
APPELLEES (DEFENDANTS).

Appeal from the 
District Court, Campbell County, Paul T. Liamos, Jr., J.

Lubnau & 
Drew, Gillette, Robert C. Hawley of Dechert, Price & Rhoads, Denver, Colo., 
Kirk B. Holleyman, Aspen, Colo., for 
appellants.

Morris R. 
Massey of Brown, Drew, Apostolos, Massey & Sullivan, Casper, and Erik 
Carlson, of Davis Oil Company, Denver, Colo., for appellees.

Before ROONEY, C.J., and RAPER,* 
THOMAS, ROSE and BROWN, JJ.

* Retired June 13, 
1983, but continued to participate in the decision of the court in this case 
pursuant to order of the court entered June 13, 1983.

ROSE, 
Justice.

[¶1.]      This appeal 
concerns the propriety of a summary judgment granted defendants-appellees in a 
suit for specific performance, accounting and damages arising out of a letter 
agreement concerning a geologist's prospect.

[¶2.]      We will 
affirm.

INTRODUCTION

[¶3.]      A prospect is a 
promoter's assessment of a drilling or mining site which is based on information 
obtained from observations, tests and other sources. The merit of the prospect 
depends upon the promoter's skill and the viability of the data he gathers, and 
it is common practice for a promoter to exchange his work-up for a retained 
interest in the venture.

FACTS

[¶4.]      In 1963, Marvin 
Davis, a partner in Davis Oil Company of Denver, Colorado, and R.B. Blackmore, a 
promoter from Casper, Wyoming, signed a letter agreement which Blackmore 
required before submitting his oil prospect in the Powder River Basin in 
Campbell County, Wyoming. Davis then referred Blackmore's work-up to Donald 
Mettler, the geologist for Davis Oil Company, who, having studied the 
prospectus, concluded that it was without merit. Mettler told Blackmore that 
Davis Oil Company was not interested and, save for a later attempt by Blackmore 
to rekindle interest in the prospect, there was no further communication between 
them. Mettler left Davis Oil in 1968.

[¶5.]      Ten years later, 
Davis Oil began to acquire leases in the Powder River Basin, all of which were 
supported by the reports and recommendations of Gordon Heele, then geologist for 
Davis. Heele's recommendations and reports to Davis were not presented until 
other extensive development and drilling activity in the Powder River Basin had 
been accomplished and the data therefrom made available to Heele. The record in 
this case reveals that Heele did not rely on Blackmore's prospectus in making 
his geological recommendations to Davis Oil. The leases acquired by Davis Oil 
Company after 1973 covered a large area which included a small portion of the 
two townships mentioned in Blackmore's 1963 prospect. Davis drilled and 
successfully completed several wells within this area.

[¶6.]      Blackmore 
remained active in his business until his death in 1976, but did not claim to 
have any rights under the 1963 agreement after Davis Oil began to acquire the 
leases in 1973. Drilling in the precise area mentioned in the letter agreement 
began in 1977. In March of 1981, Millard Huey, who introduced Blackmore to Davis 
and to whom Blackmore assigned 25% of his interest in the letter agreement, 
learned of Davis Oil's productive wells and, in September of that year, asserted 
an interest in the wells. Davis Oil refused to recognize any obligation to Huey 
or the Blackmore estate. In July of 1982, Huey and Frances Blackmore (successor 
to the remaining 75% interest in the letter agreement) brought suit against 
Davis Oil seeking specific performance of the 1963 agreement, an accounting of 
the proceeds from the well, and damages. The district court granted defendant's 
motion for summary judgment.

THE 
LAW

[¶7.]      The duty of this 
court on review of summary judgment has often been stated as 
follows:

"* * * When a motion 
for summary judgment is before the supreme court, we have exactly the same duty 
as the district judge; and, if there is a complete record before us, we have 
exactly the same material as did he. We must follow the same standards. The 
propriety of granting a motion for summary judgment depends upon the correctness 
of a court's dual findings that there is no genuine issue as to any material 
fact and that the prevailing party is entitled to judgment as a matter of law. 
This court looks at the record from the viewpoint most favorable to the party 
opposing the motion, giving to him all favorable inferences to be drawn from the 
facts contained in affidavits, depositions and other proper material appearing 
in the record." Reno Livestock Corporation v. Sun Oil Company (Delaware), Wyo., 
638 P.2d 147, 150 (1981).

[¶8.]      The moving party 
is entitled to summary judgment when there is no genuine issue of material fact 
and the movant is entitled to judgment as a matter of law. Rule 56(c), W.R.C.P.; 
Lafferty v. Nickel, Wyo., 663 P.2d 168 (1983). Furthermore, the party moving for 
summary judgment has the burden of showing that there is no genuine issue of 
material fact. Timmons v. Reed, Wyo., 569 P.2d 112, 121 (1977). A material fact 
is one with legal significance which would affect the outcome of litigation. 
Thus,

 
 
"* * * a 
determination, as to whether or not a fact is material, depends greatly upon the 
principle of law to be applied." Timmons 
v. Reed, supra, 569 P.2d  at 117.

In this 
contract action, appellees demonstrated to the trial judge that they did not 
drill on the basis of information provided by Blackmore in 1963 and thereby made 
a prima facie showing that there was no genuine issue of material 
fact.

[¶9.]      Once the moving 
party has made a prima facie showing that there is no genuine issue of material 
fact, the burden shifts to the party opposing the motion to show that a genuine 
issue of material fact exists which justifies taking the case to trial. Gennings v. First National Bank at 
Thermopolis, Wyo., 654 P.2d 154, 156 (1982). Appellants attempted to 
discharge this burden by producing the affidavit of a consulting petroleum 
engineer who merely expressed his opinion to the effect that Davis Oil had 
undertaken a drilling program utilizing the Blackmore 1963 prospect. However, 
this conclusory affidavit is inadequate to raise an issue of material fact. This 
court has often said that under Rule 56(e), W.R.C.P., affidavits on a motion for 
summary judgment must set forth specific facts indicating the presence or 
absence of a genuine issue of material fact.

"It is incumbent upon 
the appellant to come forward with not only competent evidence but also specific 
facts in opposition to those set forth by appellee, as the movant for summary 
judgment, if there is to remain a genuine issue of fact for trial." Gennings v. First National Bank at 
Thermopolis, supra, 654 P.2d  at 155.

See also, Kimbley v. City of Green River, Wyo., 
663 P.2d 871 (1983); Hunter v. Farmers 
Insurance Group, Wyo., 554 P.2d 1239, 1242 (1976); Maxted v. Pacific Car & Foundry Company, 
Wyo., 527 P.2d 832, 834 (1974); McClure 
v. Watson, Wyo., 490 P.2d 1059, 1062 (1971); In re Estate of Wilson, Wyo., 399 P.2d 1008, 1009 (1965).

[¶10.]    Our holding in Lieuallen v. Northern Utilities Company, 
Wyo., 368 P.2d 949, 952 (1962), is applicable to the situation which confronts 
this court in the case at bar. There we said:

"We cannot say that 
this response met the requirements of Rule 56(e) above noted. It does not set 
forth specific facts which challenge in any way the truth of defendant's 
affidavits * * *. Plaintiff's affidavit also fails to develop any specific facts 
* * *. Thus not even an implication remained * * *."

[¶11.]    We recognize that it is our 
appellate duty to consider the record in the light most favorable to the party 
opposing the motion, Timmons v. Reed, 
supra, 569 P.2d  at 116; Reno Livestock 
Corporation v. Sun Oil Company (Delaware), supra, 638 P.2d  at 150, and to 
give him all favorable inferences.

"* * * [W]e look at 
the record from the viewpoint most favorable to the party opposing the motion, 
giving to him all favorable inferences to be drawn from facts contained in 
affidavits, exhibits, and depositions. Bluejacket v. Carney, Wyo., 550 P.2d 494 
(1976); Timmons v. Reed, supra." Miller v. Reiman-Wuerth Company, Wyo., 
598 P.2d 20, 24 (1979).

[¶12.]    In this case the most that 
can be said for appellants' position is that, even if the 1963 agreement was 
binding at the outset, and even if 14 years is a reasonable time for an oil and 
gas lease agreement to remain operative and viable under an open-ended contract, 
and even if Blackmore did not waive any interest he may have had by his failure 
to assert it between 1973 and 1976, then there remains only a possible 
inference, unsupported by fact, to the effect that Davis' decision to drill was 
influenced by Blackmore's prospect. Appellants would have us hold that, even 
though they presented no specific facts constituting an issue, the bare 
inferences in and of themselves - when pitted against the hard testimony of 
nonreliance which was introduced by Davis - raise a genuine issue of material 
fact. Specifically, appellants rely upon inferences which say that the letter 
agreement was a continuing contract, that Davis waited until after Blackmore 
died to drill the wells in question so as to avoid the agreement, and that Davis 
in fact used the information obtained from Blackmore in 1963 to support the 
contention that Davis Oil is liable to them. While the appellants are entitled 
to all favorable inferences which may be drawn from the material facts, in this 
appeal they have presented no specific facts upon which such inferences could 
rest.

[¶13.]    We said in Forbes Co. v. MacNeel, Wyo., 382 P.2d 56, 57 (1963), that an inference which is contrary to direct testimony is 
insufficient to support a finding that a genuine issue of material fact 
exists:

"* * * Plaintiff 
presented no affidavit which on its face showed defendant to have been negligent 
but now argues that an inference of negligence was inherent in the diagram 
attached to the patrolman's affidavit. Nothing therein contained was 
contradictory of the defendant's answer to interrogatories * * 
*.

"Inferences contrary 
to direct testimony are not ordinarily sufficient to support a finding." Forbes 
Co. v. MacNeel, supra, 382 P.2d  at 57.

[¶14.]    Even if we were to assume 
that inferences in the appellants' favor might be drawn from the facts presented 
(an assumption we make only for the sake of discussion), the inferences cannot 
stand against uncontroverted testimony to the contrary. The Davis witnesses have 
testified unequivocally that they did not rely upon Blackmore's prospectus in 
order to make their drilling decisions in the Powder River Basin and there is no 
testimony in this record which contradicts this evidence. This direct testimony 
nullifies any asserted inference which the appellants seek to establish for the 
purpose of structuring an issue of fact.

[¶15.]    Appellants in this case have 
failed to show that there exists a genuine issue of material fact which should 
have been submitted to the trier of facts. Without a fact question upon the 
issue of whether Davis utilized the Blackmore information, the appellees are 
entitled to judgment as a matter of law. Therefore, summary judgment was the 
correct disposition of the case by the trial court. In fact, as we said in Reno Livestock Corporation v. Sun Oil 
Company (Delaware), supra, 638 P.2d at 151:

"The various aspects 
of the case before us make it an excellent candidate for summary judgment. The 
district judge aptly recognized it as such."

[¶16.]    
Affirmed.

ROONEY, Chief Justice, 
dissenting.

[¶17.]    I disagree with that said in 
the majority opinion in only two respects:

I

[¶18.]    I question the 
characterization of the affidavit of a consulting petroleum engineer as "merely" 
expressing his opinion on the question of whether or not the drilling was on the 
"prospect" of Blackmore. Even if performance by appellees under the contract 
necessitated the use of Blackmore's geology - an element that is certainly not 
in the contract as drawn by appellees - expert testimony in the form of an 
opinion is the only available evidence to counter a bald assertion that the 
geology was not used. The affidavit set forth the identity of the material upon 
which the opinion was based and the geology resulting therefrom. The affidavit 
of Gordon Heele reflects that he conceived the "project" as a stratigraphic one 
and that Blackmore's geology was a structural one. A "prospect" may be 
discovered either way. Blackmore's earlier conclusion was verified by Heele, 
whether or not the same method was used. A summary judgment is not appropriate 
where expert testimony is required in order to make a finding of fact. Mealey v. City of Laramie, Wyo., 472 P.2d 787 (1970), on remand 485 P.2d 1019 (1971), appeal dismissed 404 U.S. 931, 
92 S. Ct. 282, 30 L. Ed. 2d 245 (1971). Accordingly, a material factual issue is 
present if the contract is interpreted to require the use of Blackmore's geology 
as a condition upon which he was to be paid. If it is not so interpreted, the 
only defense is one of laches - to be discussed infra.

[¶19.]    As reflected in the quotation 
in the majority opinion from Miller v. 
Reiman-Wuerth Company, Wyo., 598 P.2d 20, 24 (1979), appellant is entitled 
to all favorable inferences to be drawn from the facts. We prefer cases to be 
determined upon their merits. This one should be.

II

[¶20.]    This is a contract action. 
The requested relief arises from an alleged failure of performance by appellants 
under the contract. The contract was drafted by appellants and is to be 
considered most strongly against them. McGinnis v. General Petroleum 
Corporation, Wyo., 385 P.2d 198 (1963). In the absence of overreaching, the 
court should not aid those who have made an unwise bargain in the formation of a 
contract. Matter of Estate of 
Frederick, Wyo., 599 P.2d 550 (1979). The contract, dated February 5, 1963, 
provides:

"Mr. R.B. Blackmore 

P.O. Box 1588 

Casper, 
Wyoming

"AREA OF INTEREST: 
Twp. 42 North, 

Ranges 75 & 76 
West[,] CAMPBELL 

COUNTY, 
WYOMING

"Mr. R.B. 
Blackmore:

"This letter will 
constitute the written confirmation of our verbal agreement concerning the above 
captioned Area of Interest.

"If Davis Oil Company 
elects to drill the prospect within the above described and outlined Area of 
Interest, then Davis Oil Company agrees to purchase a minimum of 50,000 acres 
within the outline of the above described Area of Interest, which acreage shall 
be burdened with a maximum of Five Percent (5%) overriding royalty interest. 
Where such acreage within the outline of the above Area of Interest bears less 
than Five Percent (5%) overriding royalty interest, then and in that event, 
Davis Oil Company agrees to convey unto R.B. Blackmore, the difference between 
the existing override and the above stated maximum override of Five Percent 
(5%).

"If this constitutes 
your understanding of our agreement, please so indicate in the space provided 
below and return one copy to us for our files.

"Yours very truly, 

DAVIS OIL 
COMPANY

/s/ Marvin 
Davis

 Marvin Davis 

General 
Partner

"AGREED AND ACCEPTED 
this February 5th, 1963.

"by /s/ R.B. 
Blackmore 

R.B. 
Blackmore"

[¶21.]    The literal meaning of the 
contract results in a promise by appellees to purchase 50,000 acres in Township 
42 North, Ranges 75 and 76 West, Campbell County, Wyoming, and to pay an 
overriding royalty interest to Blackmore if appellees "elect to drill the 
prospect" in such area. Appellees contend for a different meaning inasmuch as 
the use of the word "prospect" creates an ambiguity in the contract with the 
resulting problem in this case. Does it recognize the then acceptance of geology 
so that any drilling thereafter in the area of interest meets the requirement 
for payment, i.e. the literal meaning, or does it anticipate further examination 
of the geology from which an election will be made whether or not to drill in 
the area of interest with payment contingent upon the election being in favor of 
drilling, i.e. changing the literal meaning? Which was the intent of the 
parties? Appellants could have used language to clarify the intent. They could 
have provided that the condition for payment was drilling based solely on Blackmore's geology, or based 
on partial use of such geology. A time limit for drilling could have been 
established. It should be remembered that appellees were scriveners of this 
contract and that it should be considered most strongly against 
them.

[¶22.]    The definition of a 
"prospect" in the majority opinion is not incorrect. The terms "prospector" (one 
searching for a suitable place to mine) and "prospect" (superficial indication 
of a mineral deposit) are well known terms in development of hard minerals. The 
term "grubstake" (furnishing supplies in return for share of discovered 
minerals) is likewise a well understood term.

[¶23.]    "Prospect" is a term 
frequently used in various types of oil and gas agreements and which may be 
defined very broadly or narrowly according to its 
context.1

"`* * * The term is 
of course a term of art, and its meaning must be determined from the context in 
which it is used. Philologically, it is formed from two Latin words "pro", 
meaning forward or ahead and "spicere" meaning to see or look. There are, of 
course, many shades of meaning attributed to the term, depending on the frame of 
reference in which it is applied; but from all of the evidence bearing on its 
meaning in the oil and gas industry, the literal translation of forward looking 
or looking to the future seems a quite proper basis on which to build a more 
technical and more accurate definition.

* * * * * 
*

"`* * * [I]n the oil 
and gas industry, a prospect commences with the determination of the existence 
of a certain geological structure, conducive to the production of oil and gas 
underlying a certain area of land. The actual existence of such minerals must 
then be determined and confirmed by actual drilling and production of said 
minerals. The continued exploration and drilling of additional wells then 
determine the extent of the area underlain by the geological structure which 
originally formed the basis for the drilling of the first well or wells. When by 
drilling it is ascertained that the limits of the producing geological structure 
have been reached, then the whole area underlain by that structure becomes a 
"field". From that, we conclude that a "prospect" contemplates, in its optimum 
aspect, the creation of a "field".'" Wurzlow v. Placid Oil Company, La. App., 
279 So. 2d 749, 754 (1973).

The meaning 
to be given to the term in this contract is a forward looking one, the scope of 
which depends upon the intent of the parties. The primary function of the court 
in interpreting a contract is to give effect to the intention of the parties. Busch Development, Inc. v. City of 
Cheyenne, Wyo., 645 P.2d 65 (1982); Amoco Production Company v. Stauffer 
Chemical Company of Wyoming, Wyo., 612 P.2d 463 (1980). When doubt arises 
from the contract itself as to what the parties meant, there exists a question 
of intent which the trier of fact must resolve. Goodwin v. Upper Crust of Wyoming, Inc., 
Wyo., 624 P.2d 1192 (1981); Goodman v. 
Kelly, Wyo., 390 P.2d 244 (1964); Worland School District v. Bowman, Wyo., 
445 P.2d 364 (1968).

[¶24.]    In this case, extrinsic facts 
considered by the trier of fact may well reflect that the intended use of the 
word "prospect" precludes recovery by appellants, but a motion for summary 
judgment is not the vehicle in which a conflict in material facts is properly 
decided or by which intent is to be determined from reference to conflicting 
extrinsic matters.

[¶25.]    The majority opinion notes 
the time lapse between the agreement, the drilling, and the claim for royalty 
payment, and it refers to 14 years as a time which may have been "reasonable" 
and which may have remained "operative and viable under an open-ended contract" 
and in which Blackmore may have waived "any interest he may have had." If a 
contract does not specify the time for performance, a reasonable time is 
implied, Zitterkopf v. Roussalis, 
Wyo., 546 P.2d 436 (1976); that which is a reasonable time depends upon the 
circumstances of each case, Black & 
Yates v. Negros-Philippine Lumber Co., 32 Wyo. 248, 231 P. 398 (1924); and 
the issue is generally one of fact. Gill 
v. Hale & Kilburn Co., 257 F. 906 (6th Cir. 1919); Shy v. Industrial Salvage Material Co., 
264 Wis. 118, 58 N.W.2d 452 (1953). After considering the customs and usages in 
the oil and gas industry, the time span for developing the area, the interim 
activity before and after drilling, etc., the fact finder may conclude that a 
reasonable time for performance had expired in this case. But the issue should 
not be decided on a motion for summary judgment.

[¶26.]    I would reverse and 
remand.

1 In his deposition, 
Paul Messinger, one of appellees' geologists, testified:

"Q. [By Mr. Massey] * 
* * Does the term `prospect,' as such, have any particular meaning in the 
industry?

"A. Well, the way it 
was meant here, it would be a circle drawn and an area outlined, and say in this 
area buy leases for the prospect."