Case Title: WOODS PETROLEUM CORPORATION v. PETER HUMMEL AND FRANK G. WELLS

Citation: 

Docket Number: 89-38

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-12-22T00:00:00Z

Document:
WOODS PETROLEUM CORPORATION v. PETER HUMMEL AND FRANK G. WELLS1989 WY 229784 P.2d 242Case Number: 89-38Decided: 12/22/1989Supreme Court of Wyoming
WOODS 
PETROLEUM CORPORATION, APPELLANT (PLAINTIFF),

v.

PETER HUMMEL AND FRANK G. 
WELLS, APPELLEES (DEFENDANTS).

Appeal 
from the District Court,CampbellCounty, Timothy J. Judson, 
J.

Neil J. Short, 
Casper, for appellant.

Russell K. Bean, 
a Member of the Wyoming State Bar, and Lee F. Sachnoff of Baker & Hostetler, 
Denver, Colo., for appellees.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY and 
GOLDEN, JJ.

MACY, 
Justice.

[¶1.]     This is an appeal from 
a summary judgment in favor of Appellees Peter Hummel and Frank G. Wells, 
denying the claim of Appellant Woods Petroleum Corporation for underbilled 
expenses of drilling, completing, and operating an oil 
well.

[¶2.]     We 
affirm.

[¶3.]     The issues, as framed 
by Woods Petroleum Corporation and adopted by Hummel and Wells, are as 
follows:

1. Whether the District 
Court erred in issuing Summary Judgment by interpreting the COPAS Accounting 
Procedure without relying on industry usage and practice and specific accounting 
interpretation.

2. Whether the District 
Court erred in issuing Summary Judgment where expert testimony is necessary to 
interpret specific contractual provisions.

3. Whether the District 
Court erred in issuing Summary Judgment where the clear language of the 
contractual provisions provided that Defendants/Appellees must pay their 
proportionate share of the costs attributable to the subject 
well.

[¶4.]     In 1977, Woods 
Petroleum Corporation and Hummel entered into an agreement for the development 
of an oil well in CampbellCounty, in which Hummel received a 
one-third nonoperating working interest. The agreement was subject to a model 
form operating agreement executed by Woods Petroleum Corporation, as operator, 
and Davis Oil Company and W.A. Moncrief, as nonoperators.1 The model form operating agreement 
incorporated a Council of Petroleum Accountants Societies of North America 
(COPAS) Accounting Procedure as Exhibit "C". Hummel later sold part of his 
interest to Wells. Paragraph 4 of the COPAS Accounting Procedure states in 
part:

Payment of any such bills 
shall not prejudice the right of any Non-Operator to protest or question the 
correctness thereof; provided however, all bills and statements rendered to 
Non-Operators by Operator during any calendar year shall conclusively be 
presumed to be true and correct after twenty-four (24) months following the end 
of any such calendar year, unless within the said twenty-four (24) month period 
a Non-Operator takes written exception thereto and makes claim on Operator for 
adjustment. No adjustment favorable to Operator shall be made unless it is made 
within the same prescribed period.

[¶5.]     From January 1978 
through November 1984, Woods Petroleum Corporation's invoices for Hummel's 
expenses totaled $275,501.03. In December 1987, Woods Petroleum Corporation 
claimed it had billed Hummel for one-fourth instead of one-third of the expenses 
and sent an additional invoice to Hummel for $91,833.33.

[¶6.]     Woods Petroleum 
Corporation brought suit in January 1988 to recover the amount of the 
underbilling. Hummel and Wells moved for summary judgment on the ground that 
Woods Petroleum Corporation was contractually barred from bringing the suit by 
Paragraph 4 of the COPAS Accounting Procedure. For purposes of their motion, 
they accepted as true the contention that Woods Petroleum Corporation had 
underbilled them for expenses.

[¶7.]     The trial court found 
the COPAS Accounting Procedure required that the claim be brought within 
twenty-four months from the end of the calendar year during which Woods 
Petroleum Corporation originally sent the bill. Since Woods Petroleum 
Corporation attempted to collect the underbilled amount more than twenty-four 
months later, the court held that Woods Petroleum Corporation was contractually 
barred from bringing the suit and entered judgment in favor of Hummel and 
Wells.

[¶8.]     A proper grant of 
summary judgment requires the dual findings that there are no genuine issues of 
material fact and that the prevailing party is entitled to judgment as a matter 
of law. St. Paul Fire and Marine Insurance Co. v. Albany County School District No. 1, 763 P.2d 1255 
(Wyo. 1988). 
The parties do not dispute the facts that Woods Petroleum Corporation 
underbilled Hummel and Wells by $91,833.33 and that, thirty-six months following 
the end of the calendar year when the last billing was made, Woods Petroleum 
Corporation attempted to collect that amount. Thus, the only issue remaining is 
the interpretation of the limitation language contained in Paragraph 4 of the 
COPAS Accounting Procedure.

[¶9.]     Our rules of contract 
construction are well established:

The determination of the 
parties' intent is our prime focus in construing or interpreting a contract. "If 
an agreement is in writing and the language is clear and unambiguous, the 
intention is to be secured from the words of the agreement." When the language 
is clear and unambiguous, the writing as a whole should be considered, taking 
into account relationships between various parts. Contract construction and 
interpretation are done by the court as a matter of law.

True Oil Company 
v. Sinclair Oil Corporation, 771 P.2d 781, 790 (Wyo. 1989) (citations omitted) (quoting Nelson v. Nelson, 
740 P.2d 939, 940 (Wyo. 1987)).

[¶10.]  Woods Petroleum Corporation contends that 
Paragraph 4 of the COPAS Accounting Procedure was ambiguous in its use of the 
word "adjustment." The COPAS Accounting Procedure contained definitions for a 
number of terms, but "adjustment" was not among those terms defined. The plain 
meaning of this term is: "[A] settlement of a claim or debt in a case in which 
the amount involved is uncertain or in which full payment is not made." 
Webster's Third New International Dictionary 27 (1961). If the parties intended 
for this term to have some other meaning, the contract should have defined it. 
SeeState Farm Fire and Casualty Company v. Paulson, 756 P.2d 764 (Wyo. 
1988). Paragraph 4 was clear and unambiguous. Its purpose was to 
provide

the Non-operator with a 
method to pay his bills timely, without a detailed analysis of their accuracy, 
and yet preserve his rights to collect any over-payment. It also implies a 
Statute of Limitations in providing that two years after the end of a calendar 
year, the transactions of that year shall be final with a conclusive presumption 
that the bills and statements were true and correct. After this period, Operator 
may make no adjustment favorable to him, and Non-operator can make no claim on 
Operator unless there has been a written exception and claim for adjustment 
during the period.

Dutton, 
Accounting Procedures: Contracts or Controversies?, 19 Rocky Mtn. Min.L.Inst. 
117, 123 (1974).

[¶11.]  Consideration of the entire writing does 
not affect our interpretation. Paragraph 8 of the Operating Agreement, titled 
"Costs and Expenses," stated in pertinent part:

Except as herein 
otherwise specifically provided, Operator shall promptly pay and discharge all 
costs and expenses incurred in the development and operation of the Unit Area 
pursuant to this agreement and shall charge each of the parties hereto with 
their respective proportionate shares upon the cost and expense basis provided 
in the Accounting Procedure attached hereto and marked Exhibit "C". If any 
provision of Exhibit "C" should be inconsistent with any provision contained in 
the body of this agreement, the provisions in the body of this agreement shall 
prevail.

Woods Petroleum 
Corporation failed in its brief to point out anything in the Operating Agreement 
which was inconsistent or which should have prevailed over Paragraph 4. 
Likewise, our examination of the entire writing reveals nothing which would 
cause us to reach any other conclusion than that Woods Petroleum Corporation is 
barred from attempting to collect the amount which it underbilled Hummel and 
Wells.

[¶12.]  Finally, Woods Petroleum Corporation 
contends that this case was inappropriate for a summary judgment motion because 
each side had an expert witness available to give his opinion as to the meaning 
of the agreement. The meaning of the contract is clear, and the court was 
correct in interpreting that meaning as a matter of law without resorting to 
opinion evidence or any other extrinsic evidence. See Cliff & Co., Ltd. v. 
Anderson, 777 P.2d 595 (Wyo. 1989); and Farrell v. Hursh Agency, Inc., 713 P.2d 1174 (Wyo. 
1986).

[¶13.]  Paragraph 4 of the COPAS Accounting 
Procedure allowed a specified time period in which Woods Petroleum Corporation 
could correct any billing errors. Woods Petroleum Corporation's failure to act 
within that time period precludes it from attempting to correct those errors 
now. The trial court correctly awarded summary judgment in favor of Hummel and 
Wells.

[¶14.]  Affirmed.

FOOTNOTES

1 The model form operating 
agreement was an American Association of Petroleum Landmen Form 610, titled 
"Model Form Operating Agreement - 1956."