IN THE SUPREME COURT, STATE OF WYOMING

2022 WY 72

APRIL TERM, A.D. 2022

June 16, 2022

SKYCO RESOURCES, LLP, a Texas 

limited liability partnership,

Appellant

(Plaintiff),

v.

FAMILY TREE CORPORATION, a 

Wyoming corporation and JD4, LLC, a 

Delaware limited liability company,

Appellees

(Defendants).

S-21-0161

Appeal from the District Court of Laramie County

The Honorable Thomas T.C. Campbell, Judge

Representing Appellant:

Brandon L. Jensen, Budd-Falen Law Offices, LLC, Cheyenne, Wyoming.

Argument by Mr. Jensen.

Representing Appellees:

Lucas Buckley and Sean Larson, Hathaway & Kunz LLP, Cheyenne, Wyoming. 

Argument by Mr. Larson.

Before FOX, C.J., and DAVIS*, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

GRAY, J., delivers the opinion of the Court; FOX, C.J., files a concurring in part and 

dissenting in part opinion, in which BOOMGAARDEN, J., joins.

*Justice Davis retired from judicial office effective January 16, 2022, and, pursuant to Article 5, § 5 of the 

Wyoming Constitution and Wyo. Stat. Ann. § 5-1-106(f) (LexisNexis 2021), he was reassigned to act on 

this matter January 18, 2022.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. 

Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, 

Wyoming 82002, of any typographical or other formal errors so that correction may be made before 

final publication in the permanent volume.
1

GRAY, Justice.

[¶1] Skyco Resources, LLP, entered into an agreement with Family Tree Corporation 

and JD4, LLC, (collectively Family Tree) for the purchase of mineral interests owned by 

Family Tree. Before closing, Skyco notified Family Tree that it was terminating the 

agreement based on title encumbrances and demanded a return of its earnest money.

Family Tree refused because Skyco failed to comply with the agreement’s termination 

provision. Skyco sued Family Tree for return of the earnest money, asserting claims of 

breach of contract, breach of the covenant of good faith and fair dealing, conversion, and 

fraud/intentional misrepresentation. The district court granted summary judgment to 

Family Tree. We affirm in part and reverse in part.

ISSUES

[¶2] The dispositive issues are:

1. Whether the district court properly granted Family Tree 

summary judgment on Skyco’s breach of contract and 

conversion claims.

2. Whether the district court properly granted Family Tree 

summary judgment on Skyco’s claim for breach of the 

covenant of good faith and fair dealing.

3. Whether the economic loss rule barred Skyco’s 

fraud/intentional misrepresentation claim.

FACTS

[¶3] In 2019, Family Tree enlisted a broker, Rob Arrowood, to assist in finding a buyer 

for mineral interests it held in Laramie County, Wyoming. On October 16, 2019, Mr. 

Arrowood provided information concerning those interests to Skyco’s vice president, R. 

Brian Coker. Skyco wanted to purchase Family Tree’s mineral interests and develop the

minerals. The parties negotiated a purchase and sale agreement (PSA). Prior to its signing 

of the PSA, Mr. Arrowood assured Skyco that Family Tree “held permits to drill for all of 

the acreage to be included in the leasehold interest that was the subject of the transaction.” 

Family Tree provided Skyco a spreadsheet which indicated less than 10% of the mineral 

interests being purchased were subject to a drilling permit issued to third parties. 

Thereafter, representatives of Family Tree signed the PSA on December 19, 2019, and 

Skyco representatives signed on December 20. 

[¶4] Pursuant to the PSA, Family Tree agreed to sell and Skyco agreed to purchase 

13,056.68 leasehold acres for $13,709,514. The PSA provided that time was of the essence 
2

in the agreement’s performance, and it required that closing be held on or before forty-five 

days from the PSA’s full execution, which was February 3, 2020. It also required that 

Skyco remit earnest money as follows:

(III) Earnest Money: Within ten (10) days from the 

execution of this agreement Buyer agrees to pay Seller earnest 

money in the amount of two percent (2%) of Total Purchase 

Price or $274,190.28 as a deposit which is non-refundable in 

the event the Buyer does not complete the transaction, unless 

terminated pursuant to Section (I)(b)(iii) herein. Upon Closing 

said earnest money shall be applied to the total purchase price.

[¶5] Pursuant to the PSA, Skyco could terminate the purchase based on title concerns:

(I) Title:

(a) Title Examination. Upon execution of this 

Agreement, Buyer may, at Buyer’s option and expense, 

undertake to obtain an examination of title to the 

Mineral Interest.

(b) Objections to Title. In the event Buyer 

determines title to the Leasehold is subject to any 

encumbrance, defect or issue which renders title to the 

Leasehold unacceptable to Buyer in its sole discretion, 

then Buyer shall promptly advise Seller of such 

encumbrance, defect or issue and request that Seller 

remove or correct the same. Buyer shall have final 

approval of all legal, geological, environmental and 

regulatory issues affecting the property, which 

approval shall not be unreasonably withheld. In the 

event Seller fails to remove or correct such issue, defect 

or encumbrance within thirty (30) days after notice 

thereof, Buyer shall have the right and option to:

(i) Grant a reasonable additional time for 

Seller to remove or correct such issue, defect or 

encumbrance;

(ii) Waive in writing such issue, 

encumbrance or defect or any portion thereof; or,
3

(iii) Refuse to accept title to such portions of 

the Leasehold as are affected by such 

encumbrance, defect, or issue. In the event title 

to more than 50% is refused by Buyer as 

provided herein, Buyer or Seller shall have the 

right to cancel this Agreement in its entirety.

(Emphasis added.) 

[¶6] On January 15, 2020, Skyco remitted $300,000 to Family Tree as earnest money.1

On January 22, Mr. Coker informed J. Christopher Dykes, a vice president of Family Tree, 

that Skyco needed an extension of the closing date to secure financing for the purchase. 

On January 23, Mr. Dykes emailed Mr. Coker and Blake Bergstrom, also of Skyco, that an 

extension of the closing date would require “additional non-refundable earnest money.” 

During its examination of the title to the mineral interests, Skyco had discovered that 67% 

of the 13,056.18 net mineral acres being purchased were permitted with companies or 

individuals other than Family Tree. Skyco could at most develop 33% of the property. On 

January 23, the same day that Mr. Dykes sent his email, Mr. Bergstrom emailed the 

following message to Mr. Dykes:

While discussing the substance of your and Brian’s call, 

it drew my attention to a schedule of permits we had produced 

by staff reflecting material impediments to the value of the 

leasehold. Due to the complications associated with Wyoming 

APDs [application for permit to drill] and the lack of any legal 

test of the proposed/accepted changes associated with 

overturning existing APDs, it is not reasonably possible to 

determine DSUs [drilling spacing unit] for the subject acreage. 

This serious impediment renders the acreage defective for all 

material purposes under Section I b iii of the PSA between the 

Parties . . . .

Skyco rescinds and revokes the PSA and requests return 

of the earnest money deposit, which exceeded the amount 

called for in the agreement and totaled $300,000.00. We 

appreciate the opportunity to have worked with you in an effort 

to purchase this acreage.

1 Skyco did not timely pay the earnest money, but the parties executed an addendum to the PSA, which 

stated that Skyco’s “delayed refundable earnest money deposit has not seriously impaired or impacted the 

terms to that Agreement and does not constitute a breach of contract.” 
4

[¶7] On January 24, 2020, Mr. Bergstrom sent a second email message to Mr. Dykes, 

which read:

I also wanted to apologize it took so long for us to 

review this. There was the holidays and we actually didn’t 

even notice the contract was changed by y’all . . . so we thought 

we had a lot more time. Please confirm this email was received 

and wire monies as soon as possible. Thank you.

[¶8] On January 28, Mr. Coker followed up with another email message to Mr. Dykes. 

This one read:

Did you receive Blake’s email from last week? I wanted 

to make sure that you all got “both” emails, the initial email 

that requests return of the earnest money as well as the more 

conciliatory email that apologizes for being a bit hot-headed. 

Without holding any permits in the name of [Family Tree] or a 

subsidiary of the same, taken as a whole: the absence of 

permits, the uncertainty surrounding what will happen with the 

Anadarko acreage and how that will impact the leasehold, 

together with the geological uncertainty surrounding the 

eastern acreage, I agree with Blake’s email below. Please call 

if you would like to discuss.

No one from Family Tree, including Mr. Dykes, responded to the email correspondence 

from Mr. Bergstrom or Mr. Coker. 

[¶9] On February 3, 2020, Mr. Coker emailed a letter to Mr. Dykes, which informed 

Family Tree, that because over 50% of the mineral leasehold was unacceptably 

encumbered, “I write to give notice of Skyco’s termination of the PSA pursuant to Section 

(I)(b)(iii) of the PSA and demand refund of $274,190.28, plus any overpayment, in earnest 

money as specified pursuant to Section III of the PSA.” Family Tree again did not respond 

to Skyco’s demand, and on March 16, 2020, counsel for Skyco sent a demand letter to 

Family Tree’s counsel. 

[¶10] On April 14, 2020, Skyco filed a complaint against Family Tree asserting several 

claims, including claims for breach of contract, breach of the implied covenant of good 

faith and fair dealing, conversion, and fraud/intentional misrepresentation. Following 

discovery, the parties filed cross-motions for summary judgment. Both parties asserted 

there were no genuine issues of material fact, and each claimed it was entitled to judgment 
5

as a matter of law on Skyco’s claims.2 Family Tree argued that because Skyco did not 

provide the required thirty-day notice and opportunity for Family Tree to cure any alleged 

concern with its title, it was not obligated to refund the earnest money. Skyco argued that 

it did not have to follow the PSA’s notice and cure termination provision because the 

defects it identified were incurable. It further argued that if its failure to provide the thirtyday notice was a breach, it was not material because Family Tree remained in possession 

of the property and the earnest money. 

[¶11] Skyco prepared an authenticated spreadsheet showing that the mineral acres in 

question were subject to no fewer than eighty-six drilling permits held by approximately 

eight separate companies. Mr. Coker by affidavit attested:

Acquisition of the drilling permits for the minerals

rights is a critical necessity for exploration and development of 

minerals in Wyoming. Wyoming is a “first to file state,” which 

means that the [first] developer to apply and receive a drilling 

permit over authorized spaces in a drilling spacing unit 

becomes the “operator.” The operator owns the exclusive right 

to conduct (or not conduct) oil and gas drilling within a spacing 

unit. A permit to drill lasts two years and can be renewed. 

Mineral rights and leasehold owners within [a] drilling spacing 

unit are at the mercy of the operator. Stated another way, 

without a drilling permit, mineral rights and leasehold owners 

in Wyoming have no right or opportunity to explore for or 

develop the mineral resource. Owning the drilling permit is 

critical to produce oil and gas in Wyoming.

[¶12] The district court found there were no disputed issues of material fact and granted 

Family Tree summary judgment on all Skyco’s claims. With respect to Skyco’s breach of 

contract claim, the court found that Skyco breached the PSA when it terminated the 

agreement without providing the required thirty-day notice and opportunity to cure. It 

further found that the breach was material, reasoning that “[r]egardless of who is in control 

of the earnest money or the property, the Court cannot see Skyco’s action as anything but 

a material breach of the PSA, as Skyco’s actions denote its intent to immediately stop 

performance on its part.” The court also rejected Skyco’s argument that the defects could 

not have been cured and found even if the defects were incurable, this circumstance would 

not excuse the failure to provide notice and the opportunity to cure. Ultimately, it ruled:

2 We are able to glean the parties’ summary judgment positions only from the district court’s order on 

summary judgment. Although the materials supporting their motions were designated as part of the record 

on appeal, neither party designated its motion nor supporting memoranda as part of the record. 
6

Neither party nor the Court can find anything 

ambiguous about the PSA. It is clear from the contract that the 

intent of the parties was to draft the PSA in such a way that 

both parties would be protected from contests over the title of 

the property. Skyco had the right to raise concerns regarding 

specific issues and Family Tree had a thirty (30) day period in 

which [to] quell any of Skyco’s concerns. Skyco clearly 

asserted its desire to rescind the contract and demanded its 

earnest money back. Given the terms of the contract, Family 

Tree was justified in its belief that Skyco had breached the 

PSA, thus withholding the earnest money and disengaging 

from any contractual obligation was within Family Tree’s 

rights. As there is no dispute as to Skyco’s actions, there is no 

dispute of material fact. Family Tree’s Motion for Summary 

Judgment as it pertains to Skyco’s claim of breach of contract 

must be granted.

[¶13] The district court concluded that Skyco’s claim for conversion depended on its 

breach of contract claim and therefore granted Family Tree summary judgment on that 

claim. As to Skyco’s claim for breach of the covenant of good faith and fair dealing, the 

court found that Family Tree acted as it was entitled to under the PSA and was therefore 

entitled to summary judgment on that claim as well. The court also ruled that Skyco’s 

fraud/intentional misrepresentation claim failed because it was barred by the economic loss 

rule. 

STANDARD OF REVIEW

[¶14] “We review a district court’s ruling on summary judgment de novo and may affirm 

on any legal ground appearing in the record.” Miller by & through Travis v. Sweetwater 

Cnty. Sch. Dist. #1, 2021 WY 134, ¶ 13, 500 P.3d 242, 246 (Wyo. 2021) (quoting James 

v. James, 2021 WY 96, ¶ 23, 493 P.3d 1258, 1264 (Wyo. 2021)).

We . . . afford no deference to the district court’s ruling. 

Thornock v. PacifiCorp, 2016 WY 93, ¶ 10, 379 P.3d 175, 179 

(Wyo. 2016). This Court reviews the same materials and uses 

the same legal standard as the district court. Id. The record is 

assessed from the vantage point most favorable to the party 

opposing the motion . . . , and we give a party opposing 

summary judgment the benefit of all favorable inferences that 

may fairly be drawn from the record. Id. A material fact is one 

that would have the effect of establishing or refuting an 

essential element of the cause of action or defense asserted by 

the parties. Id.
7

Miller, ¶ 13, 500 P.3d at 246 (quoting James, ¶ 23, 493 P.3d at 1265).

[¶15] Concerning the parties’ burdens on summary judgment, we have said:

The party moving for summary judgment bears the 

burden of establishing a prima facie case and showing there is 

no genuine dispute as to any material fact and the movant is 

entitled to judgment as a matter of law. Once that burden is 

met, the opposing party is obligated to respond with materials 

beyond the pleadings to show a genuine issue of material fact. 

When the moving party does not have the ultimate burden of 

persuasion, it establishes a prima facie case for summary 

judgment by showing a lack of evidence on an essential 

element of the opposing party’s claim. 

Miller, ¶ 14, 500 P.3d at 246 (citations and quotation marks omitted).

[¶16] Both Skyco and Family Tree asserted there were no disputed issues of material fact, 

and each claimed it was entitled to summary judgment on all claims. In the case of such 

cross-motions, we have emphasized the importance of considering each motion 

independently.

[E]ach party, as a movant for summary judgment, bears the 

burden of establishing that no genuine dispute of material fact 

exists and that the movant is entitled to a judgment as a matter 

of law. The fact that one party fails to satisfy that burden on 

his own Rule 56 motion does not automatically indicate that 

the opposing party has satisfied its burden and should be 

granted summary judgment on the other motion. The court 

must rule on each party’s motion on an individual and separate 

basis, determining, for each side, whether a judgment may be 

entered in accordance with the Rule 56 standard. Both motions 

must be denied if the court finds that there is a genuine dispute 

of material fact. But if there is no genuine dispute and one or 

the other party is entitled to prevail as a matter of law, the court 

will render judgment.

White v. Wheeler, 2017 WY 146, ¶ 39, 406 P.3d 1241, 1251 n.5 (Wyo. 2017) (quoting 10A 

Charles A. Wright et al., Federal Practice and Procedure § 2720 (4th ed. 2016)).
8

DISCUSSION

I. Despite an express notice and cure provision, a futility defense to repudiation of 

the contract may apply to Skyco’s breach of the PSA and, if it does, entitle it to

the return of its earnest money.

[¶17] The PSA provided that the earnest money paid by Skyco was “non-refundable in 

the event [Skyco] does not complete the transaction, unless terminated pursuant to Section 

(I)(b)(iii) herein.” Section (I)(b)(iii) required Skyco to give Family Tree thirty days’ notice 

of any title issue, defect, or encumbrance and allowed it to cancel the agreement if Family

Tree failed to remove or correct the issue, defect, or encumbrance. It gave Skyco broad 

discretion to determine what was an “encumbrance, defect or issue” and gave it “final 

approval” of “issues affecting the property . . . .” It is undisputed Skyco did not give Family 

Tree the thirty-day notice required by the PSA.

3

[¶18] Skyco makes alternative arguments to support its claim for return of the earnest 

money: (1) the notice and cure provision was not applicable given its broad discretion to 

reject title; (2) it did not breach or repudiate the PSA; and (3) any breach was excused 

under the futility doctrine. 

Applicability of the Notice and Cure Provision

[¶19] Skyco argues that because Section (I)(b)(iii) of the PSA states that (1) Skyco, as the 

buyer, can determine whether any “issue” “renders title to the Leasehold unacceptable to 

Buyer in its sole discretion,” and (2) “Buyer shall have final approval of all . . . regulatory 

issues affecting the property,” it could simply declare title unacceptable and terminate the 

contract without giving Family Tree notice and an opportunity to cure. It also claims that 

because it had such broad discretion, any breach by its failure to comply with the notice 

and cure provisions was immaterial. We reject this interpretation of the PSA because it 

would essentially nullify the requirement of notice and an opportunity to cure provision

found in Section (I)(b)(iii) of the PSA. See Pope v. Rosenberg, 2015 WY 142, ¶ 24, 361 

P.3d 824, 831 (Wyo. 2015) (“We do not construe contracts in a fashion that renders any

provision of them meaningless.” (citing Shaffer v. WINhealth Partners, 2011 WY 131, 

¶ 17, 261 P.3d 708, 713 (Wyo. 2011))). Although under the PSA Skyco had broad 

discretion to identify “issues” and make a final determination about the acceptability of 

title, the same provision required Skyco to notify Family Tree of such issues and give it an 

opportunity to cure. Skyco’s ultimate discretion did not render the notice and opportunity 

to cure requirement a nullity, nor did it make any breach immaterial. 

3 When considering cross-motions for summary judgment, we review each movant’s evidence separately. 

It is clear, however, that Skyco did not give Family Tree the notice required by the PSA, and Skyco does 

not contend otherwise. 
9

Breach or Repudiation by Skyco

[¶20] Next, Skyco claims its notices to Family Tree cancelling the contract did not 

actually breach or repudiate the contract, but only “put the Defendants on notice that the 

Plaintiff intended to cancel the contract if the Defendants were unable to remove or correct 

any of the issues regarding title.” We define a repudiation as follows: 

A repudiation is a manifestation by one party to the other that 

the first cannot or will not perform at least some of its 

obligations under the contract. For a repudiation to have legal 

effect, the threatened breach must be serious. According to the 

Restatement Second, it must be serious enough that the injured 

party could treat it as total if it occurred. A repudiation may be 

by words or other conduct.

Usually[,] a repudiation consists of a statement that the 

repudiating party cannot or will not perform. The statement 

must be sufficiently positive to be reasonably understood as 

meaning that the breach will actually occur. A party’s 

expressions of doubt as to its willingness or ability to perform

do not constitute a repudiation.

Roussalis v. Wyoming Med. Ctr., Inc., 4 P.3d 209, 254 (Wyo. 2000) (quoting II E. Allan 

Farnsworth, Farnsworth on Contracts § 8.20, at 470 (1990)).

[¶21] Skyco sent an email to Family Tree on January 23, 2020, stating “Skyco rescinds 

and revokes the PSA and requests return of the earnest money deposit[.]” On February 3, 

2020, one of Skyco’s principals again confirmed its repudiation of the PSA: “I write to 

give notice of Skyco’s termination of the PSA pursuant to Section (I)(b)(iii) of the PSA 

and demand refund [of the earnest money].” Skyco did not express any doubt as to its 

willingness or ability to perform, but unequivocally announced it would not complete the 

purchase. Skyco repudiated the contract. 

The Futility Doctrine

[¶22] Finally, Skyco asserts its breach of the PSA in the form of an anticipatory 

repudiation is “excused” because it would have been impossible for Family Tree to correct 

the permitting problems by the time of closing. As a corollary to this argument, Skyco 

claims Family Tree had the burden of showing it could have corrected the title problems 

and fully performed its duties under the PSA, and it failed to do so. Skyco’s argument 

relies squarely on the “futility” doctrine. 
10

[¶23] The doctrine of futility is widely accepted as recognized in reputable secondary 

authorities:

It is essential that the promisor’s [Skyco’s] conduct in 

repudiating the contract be the cause of the promisee’s [Family 

Tree’s] failure to perform a condition precedent. Thus, the rule 

excusing the nonoccurrence of conditions precedent when 

there has been a repudiation of the contract by the party whose 

performance is conditional does not apply when the promisee 

could not or would not have performed the condition in any 

event, that is, whether or not the promisor repudiated the 

contract. . . . In such a case, both parties are discharged from 

their duty to perform the contract.

13 Samuel Williston, Treatise on the Law of Contracts § 39:41, at 753–55 (Richard A. 

Lord ed., 4th ed. 2013) (emphasis added) (footnotes omitted) (Causation; the nonrepudiating party’s own inability or unwillingness to perform) (and cases cited therein). 

[¶24] The Restatement (Second) of Contracts § 254 (1981) (Effect of Subsequent Events 

on Duty to Pay Damages) states this principle:

(1) A party’s duty to pay damages for total breach by 

repudiation is discharged if it appears after the breach that 

there would have been a total failure by the injured party 

to perform his return promise.

(2) A party’s duty to pay damages for total breach by 

repudiation is discharged if it appears after the breach that 

the duty that he repudiated would have been discharged by 

impracticability or frustration before any breach by nonperformance.

Comment:

a. Non-performance by injured party after repudiation. If 

the parties are to exchange performances under an exchange of 

promises, each party’s duties to render performance are 

generally regarded as conditional on the other party’s 

performance, or at least on his readiness to perform (§§ 237, 

238, 251, 253). This principle applies even though one party 

is already in breach by repudiation. His duty to pay damages 

is discharged if it subsequently appears that there would have 
11

been a total failure of performance by the injured party. A 

failure is total in this context if it would have been sufficient to 

have discharged any remaining duties of the party in breach to 

render his performance. See § 242. The result follows even if 

it appears that the failure would have been justified and not a 

breach. Cf. § 244.

Restatement (Second) of Contracts § 254 & cmt. a (Am. Law Inst. 1981) (and cases cited 

therein).

[¶25] 17A Am. Jur. 2d Contracts § 705 states:

Although the plaintiff need not continue to perform 

after the other party has anticipatorily repudiated a contract, it 

does not relieve that party of the need to show an ability to 

perform as a prerequisite to obtaining a remedy. The plaintiff 

must still demonstrate, to recover damages, that he or she had 

the willingness and ability to perform before the repudiation 

and would have performed if the defendant had not repudiated.

Under the Restatement the obligation to pay damages 

for a total breach by repudiation is discharged if it appears after 

the breach that there would have been a total failure by the 

injured party to perform the return promise or the duty that was 

repudiated would have been discharged by impracticability or 

frustration before any actual breach. This language does not 

distinguish between damages sought by the injured party and 

damages already obtained from the repudiating party which the 

injured party seeks to retain. 

17A Am. Jur. 2d Contracts § 705, at 683–84 (2016) (footnotes omitted).

[¶26] “The futility doctrine flows out of the principle that ‘the law does not require the 

performance of vain or useless things.’” All. Metals, Inc., of Atlanta v. Hinely Indus., Inc., 

222 F.3d 895, 905–06 (11th Cir. 2000) (quoting Fishel v. Yorktowne Mut. Ins. Co., 385 

A.2d 562, 565 (Pa. Super. Ct. 1978) (citing Forester v. Teutonia Fire Ins. Co., 60 Pa. Super. 

151, 156 (1915))); see also Wolff & Munier, Inc. v. Whiting-Turner Contracting Co., 946 

F.2d 1003, 1009 (2d Cir. 1991) (noting that a party to a contract may be excused from 

complying with a notice requirement if notice would be a “useless gesture”). “A party is 

not required to perform a futile or vain act.” Love v. Beck Energy Corp., No. 14 NO 415, 

2015 WL 1453338, ¶¶ 52–54 (Ohio Ct. App. March 31, 2015). 
12

[¶27] The Eighth Circuit recognized the general rule that a party, such as Family Tree, 

who has made an assertion of anticipatory breach and immediate damages is not required 

to make an offer to perform or to show his ability to do so, but the court then noted this 

rule will apply only when the ultimate “failure to perform conditions [is] induced by the 

repudiation. . . . [Otherwise], the promisor [Skyco] is entitled to show in defense that the 

contract is one which the promisee [Family Tree] never could have performed.” Quivirian 

Dev. Co. v. Poteet, 268 F.2d 433, 439–40 (8th Cir. 1959). “[I]f the condition could not or 

would not have been performed had there been no repudiation of the promise, the promisor 

is not precluded from asserting the requirement of the condition.” Quivirian, 268 F.2d at 

440 (citation omitted); see also Stanwood v. Welch, 922 F. Supp. 635, 642 (D.D.C. 1995)

(“A party claiming anticipatory repudiation must show that but for the repudiation, he 

would have been ready, willing, and able to perform his obligations under the contract.”); 

SRGC, LLC v. Billy Casper Golf, LLC, No. 5:17-CV-546-OC-30PRL, 2019 WL 13143971, 

at *6–7 (M.D. Fla. Jan. 28, 2019) (“Owner argues there is material factual dispute because 

Florida law also recognizes the application of the futility doctrine to contracts and does not 

require an opportunity to cure when doing so would be impossible. The Court agrees.” 

(citing Leghorn v. Wieland, 289 So. 2d 745, 748 (Fla. Dist. Ct. App. 1974) (explaining that 

if a default is irreparable and incurable, then giving notice is useless); 7-Eleven, Inc. v. 

Kapoor Bros. Inc., 977 F. Supp. 2d 1211, 1222 (M.D. Fla. 2013) (holding, “[t]he Court 

agrees that giving a contracting party an opportunity to cure that which cannot be cured 

would be a useless exercise,” and concluding immediate termination of a contract was 

proper despite failing to abide by notice and cure provisions))).

[¶28] Courts have adopted various approaches to the doctrine of futility.4

 Cases in which 

the futility doctrine is argued as a basis to excuse a breach of a notice-and-cure provision 

are fact sensitive, and often turn on resolving disputed issues of fact. Many courts examine 

whether the party claiming entitlement to notice is in a position to deliver performance on 

the contract which would achieve its purpose. If the entitled party cannot perform (cure), 

the repudiating party can successfully raise a defense of futility. For example, Missouri 

law recognizes the rule as follows:

The law does not require written notice to be given when doing 

so would be a vain and useless act. See, e.g., Home Trust Co. 

v. Josephson, 339 Mo. 170, 95 S.W.2d 1148, 1152 (1936); 

Darr v. Structural Systems, Inc., 747 S.W.2d 690, 694 (Mo.

App. 1988). The application of this general principle of 

Missouri law is in accord with appellate decisions from other 

jurisdictions more specifically holding that the failure to give 

4 For example, New York allows application of the doctrine only under limited circumstances, where the 

other party has already repudiated or totally abandoned the contract. See Point Prods. A.G. v. Sony Music 

Ent., Inc., No. 93 CIV. 4001 NRB, 2000 WL 1006236, at *3–4 (S.D.N.Y. July 20, 2000); see also E. Empire 

Constr. Inc. v. Borough Constr. Grp. LLC, 156 N.Y.S.3d 148, 152 (App. Div. 2021). 
13

written notice, pursuant to a notice-and-cure provision in a 

contract, does not prevent immediate termination of the 

agreement if the breach is incurable. 

Stacey v. Redford, 226 S.W.3d 913, 918–19 (Mo. Ct. App. 2007) (citations to other 

jurisdictions omitted); see also DC Farms, LLC v. Conagra Foods Lamb Weston, Inc., 317 

P.3d 543, 553 (Wash. Ct. App. 2014) (requiring strict compliance with notice-and-cure 

provision but holding that breaching party may still defend on basis that product 

contamination that caused it to refuse further performance could not be cured); Mint Solar, 

LLC v. Sam’s W., Inc., No. 5:19-CV-05167, 2021 WL 1723095, at *11 (W.D. Ark. Apr. 

30, 2021) (“The Court disagrees with Mint’s characterization that courts only apply the 

futility defense when the party who would cure has repudiated or abandoned the 

contract.”); L.K. Comstock & Co. v. United Eng’rs & Constructors Inc., 880 F.2d 219, 232 

(9th Cir. 1989) (“[S]ince [subcontractor] was so far behind schedule, and since it could not 

have cured its breaches within 48 hours, for [general contractor] to give a 48-hour notice 

would have been a useless gesture in terms of any benefits to [subcontractor].”); Young 

Travelers Day Camps, Inc. v. Felsen, 118 N.J. Super. 304, 315, 287 A.2d 231, 237 (Dist.

Ct. 1972) (camp director unable to remedy breach for failing to secure campers could not 

rely on notice/cure clause in contract); LJL Transp., Inc. v. Pilot Air Freight Corp., 962 

A.2d 639, 651 (Pa. 2009) (allowing cancellation of franchise agreement without notice and 

chance to cure when franchisee was shipping on the side to avoid paying percentages to 

franchisor; breach went to the heart of trust and loyalty issues); Duncan v. Woodlawn Mfg., 

Ltd., 479 S.W.3d 886, 899 (Tex. App. 2015) (employee claiming a right to written notice 

before termination had violated at least two of the incorporated handbook rules, which by 

their terms permitted immediate termination based on the circumstances). Leghorn, 289 

So. 2d at 748 (employee charged with misappropriating corporate funds for his own use 

could not rely on notice and cure provision given impossibility of curing disloyalty and 

dishonesty claims).

[¶29] Similar to these cases, we have recognized futility as a defense to repudiation of a 

contract. Black & Yates v. Negros-Philippine Lumber Co., 32 Wyo. 248, 231 P. 398 

(1924).

5 In Black, the Court quoted with approval Geipel v. Smith, 26 L. T. (N. S.) 361 

(1872):

5 In Anderson v. Cliff Gold Mining Co., 47 Wyo. 349, 38 P.2d 334, 335–39 (1934), a dispute arose over a 

mining lease contract that required the lessee mine a certain tract of land and pay the lessor a percentage of 

the value of the ore and costs for the use of its equipment. The lessee found no useable ore and discontinued 

mining. The lessor claimed there was ore that could be mined. After finding that there was no evidence 

“ore could have been mined so as to produce a profit, a result both parties obviously contemplated by their 

contract.” Id. at 337. The Court, quoting Willis’ Thornton on Oil and Gas, § 243 with approval, under the 

theories of impracticability or impossibility, stated:

Except for the supposition of the presence of [ore] and its 
14

In Geipel v. Smith, supra, quoted in Andrew Miller & Co. v. 

Taylor & Co., 1 K. B. (1916) 402, 413, where it was contended 

that defendant abandoned performance too soon by sailing 

away, it was said:

If the defendants chose to run the risk, and in the event 

turn out right, they are in the same position as if they 

had waited a reasonable time and had then sailed away.

So in the case at bar, the defendant should not be placed in a 

worse position because it did not wait until the expiration of a 

reasonable time . . . .

Black, 231 P. at 405.

[¶30] On summary judgment, Skyco bore the burden of introducing evidence that giving 

notice and an opportunity to cure the alleged encumbrances on the title would have been 

useless. All. Metals, 222 F.3d at 905–06; O’Hara Grp. Denver, Ltd. v. Marcor Hous. Sys.,

Inc., 595 P.2d 679, 684–85 (Colo. 1979) (“The failure of O’Hara Denver to appear at 

closing or to make objections to the state of Marcor’s title until Marcor attempted to collect 

liquidated damages places the burden on O’Hara Denver to show that the defects could not 

have been cured by Marcor within a reasonable time.”). Summary judgment is appropriate 

only if a party, in this case Skyco, fails to present evidence of futility. Ezer v. Texas Tower 

Ltd., No. CIV.A. H-13-1805, 2014 WL 3669222, at *8–9 (S.D. Tex. July 22, 2014) 

(“Because Plaintiffs have produced no evidence that they provided notice, nor any evidence 

that providing notice would have been futile, Texas Tower is entitled to summary 

judgment[.]”). The district court stated that there were no facts supporting the conclusion 

that the defects in title could not have been cured. We disagree. Skyco was entitled to all 

favorable inferences that could be drawn from the evidence in the record at the summary 

judgment stage of the proceedings. Skyco presented evidence that—drilling permits are 

valid for two years and may be renewed at the discretion of the permit holder; 67% of the 

minerals were permitted with companies or individuals other than Family Tree, and there 

continuation throughout the period of the lease, there would have been no 

contract. Continuation and profitable production were contemplated. It 

was demonstrated that at the time of abandonment and refusal to pay the 

annual royalty there was no [ore] there. The drilling of the wells would 

have been futile. It is not denied that the drilling would have effectually 

erased the obligation. Obviously if that had been done, since the gas was 

not there, the lessor could have collected nothing under the contract and 

the contract would have ended even though it is silent in that respect.

Anderson at 338.
15

were no fewer than eighty-six drilling permits held by approximately eight separate 

companies.

[¶31] Skyco produced sufficient evidence to establish an issue of fact whether compliance 

with the notice and cure provision would have been futile. It is appropriate that a jury 

decide whether Skyco’s reasons for repudiation were based on legitimate concerns under 

the contract and whether it was impossible for Family Tree to cure the defects. See MeuseRhine-Ijssel Cattle Breeders of Canada Ltd. v. Y-Tex Corp., 590 P.2d 1306, 1311–12 (Wyo. 

1979) (“Not only is there a question of fact presented, but the issue of impossibility of 

performance is a question normally most suitable for determination by the trier of fact.”).

Skyco met its burden establishing issues of material fact as to whether Family Tree was 

able to perform its obligations under the terms of the contract.

Earnest Money

[¶32] If Skyco prevails on its futility defense, forfeiture of the earnest money would 

unfairly penalize Skyco. Skyco argues that, if its breach was excused, Family Tree did not 

suffer any actual damage which would entitle it to retain the earnest money. The function 

of earnest money in a contract was explained in Everett Assocs. v. Garner:

Depending on the language used in the contract and the 

intent of the parties, the existence of an earnest money

provision in a real estate contract can have one of three effects 

in the case of a breach by the buyer. First, the money could be 

considered as partial payment of any actual damages which can 

be proven as the result of the breach; second, the money could 

be applied as part payment of the purchase price in the 

enforcement of the contract in a suit for specific performance; 

and thirdly, the money could be liquidated damages for breach 

of the contract by the buyer.

Everett Assocs. v. Garner, 291 S.E.2d 120, 122 (Ga. Ct. App. 1982). Where, as in this 

case, parties seek neither actual damages nor specific performance, they are justified in 

retaining earnest money only if it constitutes liquidated damages:

A contractual provision requiring payment of a 

stipulated sum by one of the parties upon termination or 

cancellation of the contract will be treated as an enforceable

liquidated damages provision rather than an unenforceable 

penalty only if all three of the following factors are present: 

First, the injury caused by the breach must be difficult or 

impossible of accurate estimation; second, the parties must 

intend to provide for damages rather than a penalty; and third, 
16

the stipulated sum must be a reasonable pre-estimate of the 

probable loss resulting from such a breach.

Broad. Corp. of Georgia v. Subscription Television of Greater Atlanta, 338 S.E.2d 775, 

776–77 (Ga. Ct. App. 1985) (citing Thorne v. Lee Timber Prods., Inc., 279 S.E.2d 521, 522

(Ga. Ct. App. 1981)).

[¶33] We addressed earnest money as liquidated damages in Walker v. Graham:

Generally speaking, it may be said that when the damages 

arising from the breach of the contract which the obligation is

given to secure are uncertain in their nature and not readily 

susceptible of proof by the ordinary rules of evidence, and are 

not so disproportionate to the probable damages suffered as to 

appear unconscionable, and it is reasonably clear from the 

whole agreement that it is the intention of the parties to provide 

for liquidated damages and not a penalty, such a stipulation 

will be held to be one for liquidated damages.

Walker v. Graham, 706 P.2d 278, 281 (Wyo. 1985) (emphasis added) (citations omitted).

[¶34] The elements of a breach of contract claim are “a lawfully enforceable contract, an 

unjustified failure to timely perform all or any part of what is promised . . . , and entitlement 

of [the] injured party to damages.” Halling v. Yovanovich, 2017 WY 28, ¶ 13, 391 P.3d 

611, 616–17 (Wyo. 2017) (quoting Schlinger v. McGhee, 2012 WY 7, ¶ 12, 268 P.3d 264, 

268 (Wyo. 2012), as amended on reh’g (Feb. 7, 2012)). “It goes without saying that to 

warrant a recovery of liquidated damages, there must have been a breach of the underlying 

contract by the defendant.” 24 Samuel Williston, Treatise on the Law of Contracts § 65:33, 

at 358–59 (Richard A. Lord ed., 4th ed. 2018).

Anticipatory breach, by itself, does not entitle the injured party 

to damages. To recover damages, in addition to proving 

repudiation, the nonbreaching party need only show that it 

would have been ready and willing to have performed the 

contract, if the repudiation had not occurred. Thus, a party’s 

duty to pay damages for total breach by repudiation is 

discharged if it appears after the breach that there would have 

been a total failure by the injured party to perform its return 

promise.

23 Williston, § 63:44, at 656–57; see also Restatement (Second) of Contracts § 254.
17

[¶35] Here, if Skyco establishes that its compliance with the notice and cure provision is 

excused, there are no damages, and “both parties are discharged from their duty to perform 

the contract.” 13 Williston, § 39:41, at 755 (and cases cited therein). On the other hand, 

if a jury finds that Skyco has not established futility, Skyco’s breach was not excused, and 

Family Tree may be entitled to the earnest money if the earnest money qualifies as 

liquidated damages and not a penalty.

[¶36] Because Skyco has raised a material question of fact as to whether it was entitled to 

a return of its earnest money, its conversion claim likewise remains at issue. See Lieberman 

v. Mossbrook, 2009 WY 65, ¶ 21, 208 P.3d 1296, 1304 (Wyo. 2009) (“Conversion occurs 

when a person treats another’s property as his own, denying the true owner the benefits 

and rights of ownership.” (quoting Cross v. Berg Lumber Co., 7 P.3d 922, 929 (Wyo. 

2000))). We turn then to Skyco’s claim for breach of the covenant of good faith and fair 

dealing. 

II. Skyco offered no evidence that Family Tree breached the covenant of good faith 

and fair dealing.

[¶37] Wyoming has adopted the Restatement (Second) of Contracts § 205, which provides 

that “[e]very contract imposes upon each party a duty of good faith and fair dealing in its 

performance and its enforcement.” Bear Peak Res., LLC v. Peak Powder River Res., LLC, 

2017 WY 124, ¶ 68, 403 P.3d 1033, 1053 (Wyo. 2017) (quoting Scherer Constr., LLC v. 

Hedquist Constr., Inc., 2001 WY 23, ¶¶ 17–18, 18 P.3d 645, 652–53 (Wyo. 2001)).

The implied covenant of good faith and fair dealing requires 

that neither party commit an act that would injure the rights of 

the other party to receive the benefit of their agreement. 

Compliance with the obligation to perform a contract in good 

faith requires that a party’s actions be consistent with the 

agreed common purpose and justified expectations of the other 

party. A breach of the covenant of good faith and fair dealing 

occurs when a party interferes or fails to cooperate in the other 

party’s performance. The purpose, intentions, and 

expectations of the parties should be determined by 

considering the contract language and the course of dealings 

between and conduct of the parties. The covenant of good faith 

and fair dealing may not, however, be construed to establish 

new, independent rights or duties not agreed upon by the 

parties. In other words, the concept of good faith and fair 

dealing is not a limitless one. The implied obligation must 

arise from the language used or it must be indispensable to 

effectuate the intention of the parties. In the absence of 

evidence of self-dealing or breach of community standards of 
18

decency, fairness or reasonableness, the exercise of contractual

rights alone will not be considered a breach of the covenant.

Id. ¶ 68, 403 P.3d at 1053–54 (quoting Scherer, ¶ 19, 18 P.3d at 653–54).

[¶38] Skyco claims on appeal that Family Tree breached the covenant of good faith and 

fair dealing when it retained Skyco’s earnest money without attempting to cure the title 

defects Skyco had identified, or otherwise responding to its notices. It does not contend 

that it should have been granted summary judgment on its claim, but instead argues that 

the district court erred in granting Family Tree summary judgment on the claim. 

[¶39] Skyco claims two errors in the district court’s ruling. First, it contends the court 

erred in ruling that a breach of the covenant depended on finding a breach of contract. 

While we agree a breach of the implied covenant of good faith and fair dealing does not 

depend on a breach of contract, we disagree that was the basis of the district court’s ruling.

We have said:

The implied covenant of good faith and fair dealing is a claim 

separate and distinct from a breach of contract claim, and the 

two claims are not mutually dependent. Cathcart v. State Farm 

Mut. Auto. Ins. Co., 2005 WY 154, ¶ 25, 123 P.3d 579, 589 

(Wyo. 2005). Thus, a party may breach the implied covenant 

of good faith and fair dealing even if it did not breach the 

express terms of the contract. City of Gillette v. Hladky Const., 

Inc., 2008 WY 134, ¶ 41, 196 P.3d 184, 199 (Wyo. 2008).

Bear Peak, ¶ 68, 403 P.3d at 1054.

[¶40] The district court ruled:

Family Tree has not breached the terms of the PSA. 

Skyco plainly stated its intention to rescind the contract 

between the parties. Skyco did not, as noted above, have the 

right to do so without complying with the contracts [sic] cure 

provision. It was clearly, a declaration that Skyco no longer 

intended to perform. Family Tree at the time [was] not 

obligated to do anything further. Family Tree’s Motion for 

Summary Judgment as it pertains to Skyco’s claim of breach of 

implied covenant of good faith and fair dealing must be 

granted.

[¶41] We do not read the district court’s ruling as rejecting Skyco’s claim on the basis that 

Family Tree did not breach the PSA. We instead read it to say that Family Tree did what 
19

it was permitted to do under the PSA, and for that reason, it did not violate the covenant of 

good faith and fair dealing. Our law supports that conclusion. See Bear Peak, ¶ 69, 403 

P.3d at 1054 (“Under Wyoming law, a claim for breach of the implied covenant of good 

faith and fair dealing cannot exist where a party is simply exercising those right[s] that they 

are contractually entitled to exercise.” (quoting Harper v. Fid. & Guar. Life Ins. Co., 2010 

WY 89, ¶ 34, 234 P.3d 1211, 1221 (Wyo. 2010))); see also Scherer, ¶ 19, 18 P.3d at 654 

n.2 (“A motion for summary judgment may be granted if, under the facts in the record, the 

party’s actions alleged as the basis for the breach of the implied covenant were in 

conformity with the clear language of the contract.”). There is, however, a limitation on 

this rule, and that limitation leads us to Skyco’s next argument. 

[¶42] We have held that while a party’s exercise of its contractual rights may not serve as 

a basis for breach of the covenant, a party nonetheless may not exercise its contractual 

rights in a manner that amounts to self-dealing or a violation of community standards of 

decency, fairness, or reasonableness. Jontra Holdings Pty Ltd v. Gas Sensing Tech. Corp., 

2021 WY 17, ¶ 87, 479 P.3d 1222, 1246 (Wyo. 2021). Skyco contends that questions of 

fact existed concerning whether Family Tree’s failure to return the earnest money violated 

community standards of decency, fairness, or reasonableness, and those disputed facts 

precluded summary judgment. In support, it cites to evidence that between January 23 and 

February 3, 2020, it sent four email messages to Family Tree informing it of Skyco’s title 

concerns, cancelling the agreement, and demanding a return of its earnest money, along 

with evidence that Family Tree did not respond to its messages or return the money. We 

disagree that this evidence was sufficient to create a genuine issue of material fact. 

[¶43] Skyco did not give Family Tree thirty days’ notice of its title concerns, and its 

termination notice therefore did not comply with the PSA. Family Tree’s lack of a response 

to Skyco’s improper notices of termination thus did not interfere with Skyco’s justified 

expectations under the contract or otherwise violate community standards of decency, 

fairness, or reasonableness, and Skyco offers no reasoning or authority to support its 

assertion. Because Skyco terminated the agreement without providing the requisite thirtyday notice, and Skyco bears the burden of proving that giving notice and an opportunity to 

cure the alleged encumbrances on the title would have been useless, Family Tree was

entitled to consider the contract terminated and the question of its right to retain the earnest 

money remains at issue. There is no mention of futility in the contract itself. It is a defense 

claimed by Skyco for failure to provide the required contractual notice. “The covenant of

good faith and fair dealing may not . . . be construed to establish new, independent rights 

or duties not agreed upon by the parties.” Scherer, ¶ 19, 18 P.3d at 653. Family Tree did 

not violate its duty of good faith and fair dealing by failing to acquiesce to Skyco’s extracontractual defense.

[¶44] Skyco would bear the burden of persuasion on its claim for breach of the covenant 

of good faith and fair dealing if this case went to trial. Universal Drilling Co. v. R & R Rig 

Serv., LLC, 2012 WY 31, ¶ 40, 271 P.3d 987, 999 (Wyo. 2012) (“[T]o establish breach of 
20

the implied covenant of good faith and fair dealing, the injured party must demonstrate the 

other party acted in ‘bad faith’ by violating community standards of decency, fairness or 

reasonableness[.]” (citing Restatement (Second) of Contracts § 205 cmt. a & d)); Michael 

H. Graham, Winning Evidence Arguments § 301:2 (Dec. 2021 update) (“Plaintiff, the party 

seeking change, bears the risk of failing to prove the elements of its claim.”). This means 

that if Family Tree made a showing there was no evidence to support the claim, it was 

entitled to summary judgment unless Skyco came forward with evidence to create a 

disputed issue of material fact. See Miller, ¶ 14, 500 P.3d at 246 (“When the moving party 

does not have the ultimate burden of persuasion, it establishes a prima facie case for 

summary judgment by showing a lack of evidence on an essential element of the opposing 

party’s claim.” (citations omitted)). The only such evidence Skyco has offered is Family 

Tree’s failure to respond to Skyco’s untimely notice of title defects and notices of 

termination. For the reasons discussed, that evidence was not sufficient to create a genuine 

issue of material fact, and Family Tree was therefore entitled to summary judgment on 

Skyco’s claim for breach of the covenant of good faith and fair dealing.

III. The district court correctly ruled that the economic loss rule barred Skyco’s claim 

for fraud/intentional misrepresentation.

[¶45] The district court ruled that the economic loss rule barred Skyco’s fraud/intentional

misrepresentation claim and that Family Tree was thus entitled to judgment as a matter of 

law.6 Whether the economic loss rule precludes a claim is a question of law we review de 

novo. In re Est. of Gattis, 2013 COA 145, ¶ 10, 318 P.3d 549, 552.

[¶46] “The ‘economic loss rule’ bars recovery in tort when a plaintiff claims purely 

economic damages unaccompanied by physical injury to persons or property.” Rogers v. 

Wright, 2016 WY 10, ¶ 30, 366 P.3d 1264, 1275 (Wyo. 2016) (quoting Rissler & McMurry 

Co. v. Sheridan Area Water Supply Joint Powers Bd., 929 P.2d 1228, 1234–35 (Wyo. 

1996)). Its purpose “is to maintain the distinction between those claims properly brought 

under contract theory and those which fall within tort principles.” Id. (quoting Rissler, 929 

P.2d at 1234–35). It is “founded on the theory that parties to a contract may allocate their 

risks by agreement and do not need the special protections of tort law to recover for 

damages caused by a breach of the contract.” Id. (quoting Rissler, 929 P.2d at 1235). 

6 Skyco’s claim was essentially a claim for fraud in the inducement, the elements of which are: “1) the 

defendant made a false representation intending to induce action by the plaintiff; 2) the plaintiff reasonably 

believed the representation to be true; and 3) the plaintiff suffered damages in relying on the false 

representation.” Elworthy v. First Tennessee Bank, 2017 WY 33, ¶ 41, 391 P.3d 1113, 1124 (Wyo. 2017) 

(quoting Claman v. Popp, 2012 WY 92, ¶ 43, 279 P.3d 1003, 1016 (Wyo. 2012)). As the basis for its claim, 

Skyco asserted that in three telephone conversations prior to signing the PSA, Mr. Arrowood represented 

to Mr. Coker that Family Tree held permits to drill for all the leasehold acreage included in the PSA, and 

there were no issues with the permits, the legal description, or the lands involved. It further asserted that 

Mr. Arrowood either knew that the representations were false or was at least aware that he did not have a 

basis for making the statement. Finally, it claimed that had it known that Family Tree held none of the 

drilling permits, it would not have entered into the PSA or paid the earnest money. 
21

[¶47] We have recognized, however, that the economic loss rule does not apply to all tort 

claims alleging only economic damages; “tort liability may still be premised on a duty 

independent of contractual duties.” Rogers, ¶ 30, 366 P.3d at 1275 (quoting Excel Constr.,

Inc. v. HKM Eng’g, Inc., 2010 WY 34, ¶ 19, 228 P.3d 40, 46 (Wyo. 2010)); see also Rissler, 

929 P.2d at 1235 (noting there may be cases where the rule would not bar a claim for 

negligent misrepresentation but not where plaintiff contracted to protect against that harm). 

In particular, in Excel, we held the rule does not necessarily bar a claim for intentional

misrepresentation, subject to the caveat that the liability must be premised on a duty 

independent of contractual duties.

A party may not sidestep contractual limitations by simply 

pleading an intentional tort. Recovery on a tort theory requires 

a showing that a duty independent of contract was violated.

Determining whether a particular intentional tort claim is 

simply a repackaged contract claim requires consideration of 

the conduct alleged, its relationship to the contractual duties of

the parties, the source of the tort duty alleged to have been 

breached, and the nature of the damages claimed.

Excel, ¶ 31, 228 P.3d at 48 (citations omitted); see also JBC of Wyoming Corp. v. City of 

Cheyenne, 843 P.2d 1190, 1197 (Wyo. 1992) (“[T]ort recovery based on the contractual 

relationship should only be allowed where the breach constitutes an independent injury 

over and above disappointment of the plaintiff’s expectation interest.”).

[¶48] Skyco contends its claim is based on a duty outside the contract because it is based 

on Family Tree’s duty to speak truthfully during negotiations, which necessarily occur 

prior to execution of the contract. We disagree that the timing of the alleged 

misrepresentations alone should control. As one court observed:

If . . . all claims for fraud in the inducement are extraneous or 

independent of the contract because they occur prior to the 

formation of the contract itself . . . , every breach of warranty 

claim could be turned into a tort by a simple affidavit stating,

in effect, that the warranty was spoken before it was written. 

Worse, written disclaimers of warranties could be voided after 

the fact by the same affidavit, again so long as the oral 

representations preceded the contract. . . . [A]llowing one party 

to plead a tort claim based on oral representations by another 

concerning the performance of obligations which are also 

contained in a written contract would swallow the economic 

loss doctrine.
22

Rich Prods. Corp. v. Kemutec, Inc., 66 F. Supp. 2d 937, 979–80 (E.D. Wis. 1999) (citations 

and quotation marks omitted), aff’d, 241 F.3d 915 (7th Cir. 2001).

[¶49] The interpretation Skyco would have this Court adopt ignores the basis for the 

economic loss rule and undercuts its objectives. The rule recognizes sophisticated parties 

are able “to provide contractual remedies in their business dealings.” Rissler, 929 P.2d at 

1235 (citation omitted). Moreover, its aim is to encourage parties to do just that, “to 

negotiate toward the risk distribution that is desired or customary.” Id. (citation omitted).

Thus, rather than adopting a bright line rule that statements made in negotiations are 

necessarily separate from the parties’ contractual duties, we will determine whether 

Skyco’s tort claim is simply a “repackaged contract claim” based on the considerations we 

outlined in Excel: “the conduct alleged, its relationship to the contractual duties of the 

parties, the source of the tort duty alleged to have been breached, and the nature of the 

damages claimed.” Excel, ¶ 31, 228 P.3d at 48.

[¶50] The record shows as follows concerning the Excel factors:

• The conduct alleged and its relationship to the contractual duties of the parties: The 

alleged misrepresentations concerned the nature of the leasehold acres that were the 

subject of the contract. The PSA placed the burden on Skyco to obtain a title 

examination, but it also gave Skyco sole discretion to declare the title unacceptable 

based on any encumbrance, defect, or issue. The PSA then shifted the responsibility 

back to Family Tree to cure the defect to Skyco’s satisfaction. If that did not happen, 

and more than fifty percent of the property was affected, the PSA allowed Skyco to

cancel the agreement and have its earnest money refunded.

• The source of the duty alleged to have been breached: As discussed, the source of the 

duty that Skyco claims was breached is the duty to speak truthfully during negotiations. 

See Rogers, ¶ 13, 366 P.3d at 1271 (“[E]ven if someone is not under a duty to speak, 

if he does speak, he is under a duty to speak truthfully and to make a full and fair 

disclosure.” (quoting Claman v. Popp, 2012 WY 92, ¶ 43, 279 P.3d 1003, 1016 (Wyo. 

2012))).

• The nature of the damages claimed: As to the damages claimed, Skyco claims on appeal 

that it “suffered damages independent of its claim for breach of contract, including lost 

business opportunities and worsening of their financial position.” Its complaint, 

however, claimed only the following damages:

Based on the assurances from Mr. Arrowood . . . , the 

Plaintiff delivered the earnest money deposit in accordance 

with the addendum. Upon discovery by the Plaintiff that the 

Defendants did not own the [sic] all of the necessary drilling 

permits, the Defendants have refused to refund the Plaintiff’s 
23

earnest money deposit. Consequently, the Plaintiff has 

suffered damages relying on Mr. Arrowood’s false 

representation.

[¶51] Skyco’s fraud/intentional misrepresentation claim is exactly what application the 

economic loss rule is intended to address. The PSA was an agreement negotiated between 

sophisticated parties who plainly recognized the risk that the mineral interests in play might 

not meet Skyco’s expectations upon close examination. The parties allocated that risk by 

negotiating a forgiving rescission provision. Skyco demanded the return of the earnest 

money—the very damages it seeks in its tort claim. See Rissler, 929 P.2d at 1235 (“[W]e 

will not allow [a tort claim] to be used as a method to sidestep contractual duties or to 

provide a scapegoat for self-inflicted damages.”). As this Court observed in JBC:

This is not to say that JBC has no independent cause of 

action based in tort, only that such an action cannot be based 

upon the fact that the City and Board failed to make timely 

payment. Our holding on this point seems almost self-evident. 

Failure to pay sums due under a contract or under arbitration 

provided for by contract is clearly ex contractu rather than ex 

delicto.

JBC, 843 P.2d at 1197.

[¶52] For these reasons, we agree with the district court that the economic loss rule barred 

Skyco’s claim for fraud/intentional misrepresentation.

CONCLUSION

[¶53] Skyco’s evidence established a material issue of fact as to whether Family Tree was 

able to perform its end of the bargain. We reverse summary judgment in favor of Family 

Tree on Skyco’s claim for return of its earnest money. We affirm the district court’s grant 

of summary judgment in favor of Family Tree on the remainder of Skyco’s claims.

[¶54] We reverse in part, affirm in part, and remand for proceedings consistent with this 

opinion.
24

FOX, Chief Justice, concurring in part and dissenting in part, in which 

BOOMGAARDEN, Justice, joins.

[¶55] I concur in the majority opinion to the extent it affirms the district court ruling. I 

dissent in part because I do not believe that futility is a defense available to Skyco under 

the circumstances of this case, and I would therefore affirm the district court’s grant of 

summary judgment to Family Tree in its entirety. 

[¶56] Although, as the majority states, we recognize futility as a defense to repudiation of 

a contract, see Black & Yates v. Negros-Philippine Lumber Co, 32 Wyo. 248, 231 P. 398 

(1924), we have not considered the extent to which the futility doctrine relieves a 

repudiating party when the parties have expressly contracted for a mechanism to address 

futility. I fully appreciate there will be cases in which the futility doctrine should apply to 

a party’s failure to comply with a contract’s bargained for notice-and-cure provision. This 

is not such a case. 

[¶57] The principle of freedom to contract permits contracting parties to agree to any 

terms they wish, so long as those terms do not violate public policy. Nuhome Invs., LLC v. 

Weller, 2003 WY 171, ¶ 9, 81 P.3d 940, 945 (Wyo. 2003) (“This court has often showed 

its commitment to uphold the right of competent parties to freely contract for various 

provisions.”). These parties agreed Skyco would pay earnest money, and they negotiated 

the amount. They further agreed the earnest money would be non-refundable if Skyco did 

not complete the transaction, unless Skyco terminated the agreement in compliance with 

its notice-and-cure provision.7

[¶58] The notice-and-cure provision the parties negotiated benefitted both parties. It 

allowed Skyco broad discretion to declare what constituted a title “issue,” but protected 

Family Tree by requiring Skyco to provide it a thirty-day period in which to cure any such 

alleged defect. The provision thus addressed the risk that title issues may be discovered too 

late to address them before the closing date and allowed Family Tree to retain the earnest 

money if Skyco failed in its obligation to give Family Tree the required thirty days’ notice 

of any defect or issue. Skyco has not asserted the earnest money or notice provisions 

operated as a penalty or otherwise violated public policy, and I therefore see no basis on 

which this Court may refuse enforcement of the parties’ agreement. See McMurry Oil Co. 

v. Deucalion Rsch., Inc., 842 P.2d 584, 589 (Wyo. 1992) (“It would indeed take an unusual 

factual situation for this court to invade the agreement of this Buyer and these Sellers to 

redraft what they defined as the understood result for damages if Buyer became unable or 

refused to perform.”); see also Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon & 

7 Earnest money forfeitures are generally enforced unless the amount is so unreasonable as to operate as a 

penalty. 24 Williston on Contracts § 65:24 (4th ed. May 2022 update). Skyco has not asserted that the 

earnest money amount in this case was unreasonable, operated as a penalty, or was otherwise overreaching 

or unconscionable.
25

Co., 660 N.E.2d 415, 421 (N.Y. 1995) (“Freedom of contract prevails in an arm’s length 

transaction between sophisticated parties such as these, and in the absence of 

countervailing public policy concerns there is no reason to relieve them of the 

consequences of their bargain.”).

[¶59] This Court’s decision in McMurry illustrates its commitment to these principles. 

There, the parties entered into an agreement for the sale of oil and gas properties for 

$950,000 and agreed to a closing date of January 12, 1990. McMurry, 842 P.2d at 585, 587. 

Their agreement provided as follows concerning the buyer’s right to terminate:

Buyer shall be entitled to perform, or cause to be performed, at 

Buyer’s sole expense, any such title examination as Buyer 

deems necessary or appropriate. In the event Buyer determines 

that any title defects exist, Buyer shall notify Seller, in writing, 

on or before closing of Buyer’s title objections; provided, 

however, Buyer shall notify Seller promptly of any title defects 

discovered by Buyer. As used in this paragraph, the term “title 

defect”, shall include the failure of any working interest. Seller 

shall furnish to Buyer on or before closing such curative data 

as may be necessary to satisfy Buyer that such defects have 

been resolved. If Seller is unable to provide Buyer such 

curative data prior to closing, and Buyer is unwilling to waive 

any such defects, Buyer may so notify Seller and terminate this 

agreement.

Id. at 586.

[¶60] The buyer in McMurry obtained a title opinion on December 15, 1989, which 

informed it that another party had a claim to certain unit revenues on a portion of the 

property. McMurry, 842 P.2d at 586-87. In a communication dated January 17, 1990, and 

received by the sellers on January 26, 1990, the buyer notified the sellers of its title rejection 

and termination of the agreement. Id. at 587. The parties thereafter filed cross-suits over 

who was entitled to the buyer’s $50,000 earnest money deposit. Id. at 585. The district 

court found no breach by the seller, but it concluded that retention of the earnest money 

was an unjustified penalty and ordered it returned to the buyer. Id. This Court reversed. Id. 

at 589. 

[¶61] The Court held “the defendants bargained for and obtained a limited right to cancel 

which they failed to exercise within the time agreed upon. The cancellation was, therefore, 

ineffective and the defendants’ refusal to perform constituted a breach. . . .” McMurry, 842 

P.2d at 587 (quoting Maxton Builders, Inc. v. Lo Galbo, 502 N.E.2d 184, 186 (N.Y. 1986)). 

It concluded, “The general principle to be applied is that, in the absence of overreaching or 
26

unconscionability, the parties should be left within the framework of the terms of the 

agreement that they negotiate.” McMurry, 842 P.2d at 587. 

[¶62] I see no reason the McMurry holding should not apply equally to this case. The PSA 

provided Skyco a limited right to cancel, conditioned on the requirement that it provide 

Family Tree thirty days’ notice of any concerns with title. Skyco did not provide the 

required notice, and thus, like the buyer in McMurry, it forfeited its right to return of the 

earnest money.

[¶63] The notice and cure provision in the PSA prescribed the method by which Skyco 

was permitted to establish futility, and Skyco chose not to avail itself of that method. The 

terms of this contract did not require Family Tree to prove an ability to complete the 

contract in the event of Skyco’s repudiation. Rather, the terms required Skyco to give 

notice and an opportunity to cure which would definitively answer the question of futility. 

Skyco chose not to do so.8

 

[¶64] Because Skyco was not entitled to a return of its earnest money, its conversion claim 

should likewise fail. See Lieberman v. Mossbrook, 2009 WY 65, ¶ 21, 208 P.3d 1296, 1304 

(Wyo. 2009) (“Conversion occurs when a person treats another’s property as his own, 

denying the true owner the benefits and rights of ownership.”) (quoting Cross v. Berg 

Lumber Co., 7 P.3d 922, 929 (Wyo. 2000)). 

8 The cases cited by Skyco do not change this result. See Wolken v. Wade, 406 N.W.2d 720 (S.D. 1987); 

O’Hara Grp. Denver, Ltd. v. Marcor Hous. Sys., Inc., 595 P.2d 679 (Colo. 1979); Cohen v. Kranz, 189 

N.E.2d 473 (N.Y. 1963). None of these cases addressed a buyer’s attempt to cancel a purchase agreement 

pursuant to its cancellation or termination provision. They instead stand for the common law rule that “if 

the defects in the vendor’s title are incurable, a breach by the vendee is excused because the vendor could 

not have performed and could not have put himself in a position to perform.” Wolken, 406 N.W.2d at 724 

(quoting O’Hara and Cohen). Notably, these cases concern title defects as that term is generally understood, 

rather than title defects as defined by the parties’ agreement. See Wolken, 406 N.W.2d at 722 (third party 

had superior ownership interest in mineral claim buyers were purchasing); O’Hara, 595 P.2d at 684 

(undisputed that title was encumbered by reservation of mineral rights in third person rendering seller’s 

title unmarketable); Cohen, 189 N.E.2d at 474-75 (concerns with legality of structure on premises). In this 

case, Skyco declared a title defect pursuant to a provision of the PSA that gave it “sole discretion” to identify 

any unacceptable “issue” with the property’s title. Skyco never asserted that Family Tree did not own the 

mineral interests it was selling, or that they were otherwise unmarketable. Instead, Skyco asserted a title 

defect based on issues with the interests that made them less valuable to it. Under the PSA, that was its 

right, but it had to assert that right in compliance with the PSA’s terms. It should not be permitted to seek 

the shelter of a common law rule which operates outside the terms to which it agreed.