UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

___________________________________ 

HEAVY PETROLEUM PARTNERS, 

LLC; CHEROKEE WELLS, LLC, 

Plaintiffs-Counter-DefendantsAppellees, No. 11-3017 

(D.C. No. 6:09-CV-01077-EFM) 

(D. Kan.) 

v. 

PAUL ATKINS; J.J.R. OF KANSAS 

LIMITED, 

Defendants-Counter-ClaimantsAppellants. 

___________________________________ 

ORDER AND JUDGMENT*

____________________________________ 

Before BRISCOE, Chief Judge, BALDOCK and LUCERO, Circuit Judges. 

____________________________________ 

 Plaintiff Heavy Petroleum Partners (HPP) and Defendant J.J.R. of Kansas Limited 

(J.J.R.) entered into a contract whereby HPP would develop and use steam injection to 

increase production on an oil lease owned by J.J.R. Under the terms of the contract, 

J.J.R. would assign HPP a 75% working interest in the lease if HPP were able to produce 

oil on the lease in commercial quantities. Before HPP reached a point of commercial 

production, however, J.J.R. executed an unconditional assignment of the 75% interest to 

HPP. Thereafter, Defendant Paul Atkins, who is the owner of Defendant J.J.R., took 

 * This order and judgment is not binding precedent except under the doctrines 

of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its 

persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

FILED 

United States Court of Appeals 

Tenth Circuit 

January 17, 2012

Elisabeth A. Shumaker 

Clerk of Court
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actions inconsistent with HPP’s 75% ownership interest, including “shutting in” the oil 

wells on the lease. Plaintiff Cherokee Wells is the current operator of the lease. 

Plaintiffs filed suit against Atkins and J.J.R., and Defendants counterclaimed. The 

district court granted Plaintiffs’ motion for partial summary judgment and denied 

Defendants’ motion for leave to file an amended counterclaim. The court then submitted 

the remaining issues to a jury, which found Defendants had breached the contract and 

awarded damages. Defendants appealed. We have jurisdiction under 28 U.S.C. § 1291. 

We affirm in part, vacate in part, and remand. 

I. 

 Defendant J.J.R. acquired an oil and gas lease on property located in Jefferson 

County, Kansas. On May 19, 2006, J.J.R. and HPP entered into a farmout agreement 

under which HPP would form a test pod and “commence actual operations for the drilling 

of new wells and the reworking of existing wells . . . to inject steam into the McClouth 

Sandstone for the purpose of producing oil in commercial quantities.”1

 If HPP failed to 

commence operations on the lease, the farmout would terminate without penalty. But if 

HPP “timely and properly” completed the test pod, developed “a facility capable of 

producing oil in commercial quantities,” and complied with the farmout’s other terms, 

then J.J.R. would “assign to [HPP], subject to the reservations and conditions contained 

herein, a 75% Working Interest” in the oil lease. The farmout gave Plaintiffs the right to 

 1

 “Farmout Agreements are common agreements in the oil and gas business by 

which the owner of a lease agrees to assign an interest in the lease to another if it drills a 

well on the lease.” Shell Rocky Mountain Prod., LLC v. Ultra Res., Inc., 415 F.3d 1158, 

1160 n.1 (10th Cir. 2005). 
- 3 - 

develop additional 2.5-acre pods if it did not allow more than 180 days to elapse between 

“the completion of one Pod and the commencement of operations on the next Pod.” 

Under paragraph 9 of the farmout, if Plaintiffs ceased to drill and develop additional 

pods, the lease on all undeveloped pods “shall be reassigned” to Defendant J.J.R. 

The farmout provided that if HPP “violate[d] or fail[ed] to comply with any of the 

terms and provisions of this agreement,” J.J.R. would give HPP written notice of the 

violation by certified mail. HPP would then have thirty days in which to correct the 

violation. “Failure of [HPP] to come into compliance with said agreement will result in 

the termination of said agreement in its entirety with all rights and interest in the Contract 

Area reverting to [J.J.R.].” (Appellants’ App. at 63.) In the event of an uncured breach, 

HPP would then reassign its interest in the lease to J.J.R. within 30 days of the farmout’s 

termination. 

Plaintiffs allege the farmout agreement “included an A.A.P.L. Form 610-1989 

Model Form Operating Agreement, often referred to as a joint operating agreement 

(JOA).” (Am. Compl. at ¶ 15.) Both “Heavy Petroleum Partners, LLC” and “JJR of 

Kansas” were typed into the attestation page of the JOA, but the parties’ representatives 

did not actually sign the attestation page. (Appellants’ App. at 87.) The JOA designated 

Blue Jay Operating, LLC, as the operator of the lease, but Blue Jay Operating later 

assigned its interest as operator to Plaintiff Cherokee Wells. The JOA provided that 

J.J.R. would pay a share of the costs and expenses of developing further oil production on 

the lease, as well as a portion of the overhead once additional wells began operation. (Id. 

at 89, 93.) The JOA contained a provision granting attorney’s fees and costs to the 
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prevailing party in any suit to enforce a party’s financial obligations under the JOA. The 

parties orally agreed that Defendant Atkins would oversee some operations on the lease. 

 HPP proceeded to develop a test pod capable of “producing in paying quantities” 

by August 2006, but steam injection did not commence until October 2006, when the 

Kansas Corporation Commission approved a steam injection permit. Nevertheless, on 

August 23, 2006, J.J.R. executed an assignment to HPP of 75% of the working interest in 

the lease. The assignment had an effective date of May 19, 2006, the same day the 

farmout was executed. J.J.R. made this assignment even though HPP had not yet fully 

complied with the farmout by commencing steam operation.2

 The assignment made no 

reference to the farmout or the conditions therein. 

 In early January 2009, Plaintiffs noticed diminished oil sales from the lease from 

the prior month and directed Defendant Atkins to increase production. Atkins appeared 

to correct the deficiency, and sold 300 barrels of oil from the lease in January 2009. On 

January 26, 2009, however, Atkins filed an affidavit of non-production in the county 

records in which he stated “there is at present no production of oil or gas in commercial 

quantities at this time and secondary recovery attempts have failed. Assignment and 

farmout agreement authorizing said assignment has expired by its own terms.” A few 

days later, Atkins filed a “Request of Change of Operator” with the Kansas Corporation 

Commission designating J.J.R. as the operator of the lease. He did so despite the JOA’s 

 2

 In the district court, Defendants explained this surprising move as resulting from 

“pressure” from Plaintiffs, who needed an assignment in order to receive payment for the 

oil they sold. (Appellants’ App. at 146.) Defendants did not support this assertion by 

reference to any evidence, however. 
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provision that the operator “may be removed only for good cause by the affirmative vote 

of Non-Operators owning a majority interest” in the lease. The Commission approved 

the change of operator request. Atkins then informed the crude oil buyer that J.J.R. was 

now the operator, and the buyer changed its records to reflect this information. 

 In March 2009, HPP noticed the lack of oil sales from the lease in the prior month. 

HPP personnel subsequently discovered the wells on the lease had been shut in and steam 

injection had stopped. HPP personnel spoke with Atkins, who admitted he had shut in 

the wells and turned off the steam.3

 He said he could not afford his share of the operating 

costs because Plaintiffs were running up costs to put him out of business. 

II. 

 Plaintiffs then filed this diversity action under 28 U.S.C. § 1332 against 

Defendants, asserting various state law tort and contract claims. They also sought a 

temporary restraining order (TRO) and preliminary injunction prohibiting Defendants 

from interfering with operations on the lease. In order to avoid the expense of a hearing 

on the TRO and preliminary injunction, the parties entered into a “standstill agreement” 

in which Defendants agreed not to interfere with the operations of the lease pending 

 3

 Defendants’ disputed this fact in their answer to the First Amended Complaint. 

In their answer to the original Complaint, however, they said “defendant Atkins admits 

that he spoke to HPP personnel and admitted that he had shut the wells since there was no 

one to operate the Lease. Further, it is admitted the steam generators had been turned off, 

but that was at the direction of plaintiffs.” A statement in a legal pleading is an 

admission binding on a party. Rooms v. S.E.C., 444 F.3d 1208, 1213 (10th Cir. 2006). 

 
- 6 - 

resolution of the litigation.4

 Defendants counterclaimed against Plaintiffs for conversion 

and quiet title, alleging Plaintiffs breached the farmout agreement by ceasing to drill and 

develop further pods. Plaintiffs subsequently filed an amended complaint asserting 

causes of action for (I) breach of contract, (II) quiet title, (III) “breach of contract—

unpaid joint interest billing,” (IV) “breach of contract—unpaid overhead,” (V) “breach of 

contract—failure to offer other leases/acreage,” (VI) “breach of contract—standstill 

agreement,” and (VII) declaratory judgment. Plaintiffs moved for partial summary 

judgment, seeking summary judgment as to counts I, II, III, IV, and parts of count VII, as 

well as to all of Defendants’s counterclaim.5

 Defendants filed a response and at the same 

time sought leave to file an amended counterclaim. The district court denied Defendants’ 

motion for leave to file an amended counterclaim, concluding the amendment would be 

futile because the claims would be subject to dismissal. 

Thereafter, the district court granted Plaintiffs’ motion for partial summary 

judgment, and held the following: (1) Plaintiff HPP was the owner of an unconditional 

75% interest in the lease (2) Plaintiff Cherokee Wells had the exclusive right to operate 

the lease, and Defendants had no right to “operate, manipulate, or otherwise control 

equipment” on the lease, (3) Defendants had no right to interfere with Cherokee Wells’ 

operation of the lease, (4) Cherokee Wells had the right to collect from Defendant J.J.R. 

the share of overhead attributable to J.J.R.’s working interest in the lease, and (5) 

 4

 Defendants allegedly violated this agreement, and the district court later entered 

a preliminary injunction prohibiting Defendants from interfering with the lease. 

5

 Plaintiffs later abandoned counts V and VII, and stipulated to this effect in the 

pretrial order. 
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Defendants were permanently enjoined from operating or manipulating any machinery 

located on the lease property and from taking any action to interfere with Plaintiffs’ 

production on the lease property. The district court then submitted the remaining narrow 

questions to the jury: whether Defendants breached their duty to pay amounts owed under 

the JOA, and if so, what damages were appropriate. The district court also submitted the 

amount of “litigation expenses,” including attorney’s fees, to the jury. The jury found 

Defendants failed to pay their share of oil production expenses under the JOA and 

awarded Plaintiffs $52,012.03 for “Unpaid Joint Interest Billing,” $35,375 for “Unpaid 

Overhead,” and $155,239.36 for “Litigation Expenses.” Pursuant to the jury verdict, the 

court entered judgment against Defendants for $242,626.39 in damages. 

III. 

Defendants attempt to raise five issues on appeal, although they have waived a 

number of them. First, they argue Defendant Atkins is not personally liable on the 

farmout agreement or the JOA because he was not a party to those agreements. Second, 

Defendants argue the JOA was not a valid contract because it was not attached to the 

farmout or signed in compliance with the statute of frauds. Third, Defendants contend 

the district court abused its discretion in denying leave to file an amended counterclaim. 

Fourth, they argue the district court erred in quieting title to the lease in Plaintiffs. Fifth, 

Defendants argue the district court erred in awarding Plaintiffs attorney’s fees and costs. 

A. 

 Defendants first argue Defendant Atkins is not personally liable on the farmout 

agreement or JOA. In Count I of the First Amended Complaint, Plaintiffs asserted, 
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“Defendants’ actions in shutting in the wells, attempting to change the operatorship with 

the [Kansas Corporation Commission], and attempting to change the operatorship and/or 

the division of interest recognized by the crude oil purchaser breached the Farmout and 

the JOA . . . .” Count II merely sought to quiet title, not to impose liability on 

Defendants. Counts III and IV did not allege action by “defendants,” but only by J.J.R. 

Plaintiffs abandoned Counts V and VI, and Count VII requested a declaratory judgment 

of Plaintiffs’ rights vis-à-vis J.J.R. without mentioning Defendant Atkins. Thus, only 

Count I alleged Atkins’ individual liability on the contract. Plaintiffs did not make clear 

whether they were seeking money damages on Count I or simply injunctive relief. Under 

Count I, the First Amended Complaint said, “[Plaintiffs] have suffered, and will continue 

to suffer, damages from this breach in the form of lost production and additional 

operating expenses . . . . Damages from this breach are difficult to determine, and 

[Plaintiffs] have no adequate remedy at law.” In their prayer for relief, Plaintiffs 

requested “actual damages,” without specifying on which counts. 

Although Plaintiffs argued in their brief that Atkins was personally liable on the 

contract, they reversed course at oral argument and conceded Atkins was not personally 

liable for damages. At our request, Plaintiffs clarified their position in a letter submitted 

after oral argument. Plaintiffs now concede, 

[T]he trial court’s amended judgment was in error to the extent, and only to 

the extent, that it awarded money damages against defendant/appellant Paul 

Atkins individually. The trial court’s judgment was correct, and should be 

affirmed, in all other respects, including . . . the declaratory and injunctive 

relief provided against Paul Atkins . . . . 

(Letter of John W. Broomes to the Clerk of Court, Nov. 28, 2011.) Because Plaintiffs 
- 9 - 

concede the point, we need not consider whether the district court actually erred.6

 On 

remand, the district court should vacate the damages award against Defendant Atkins. 

See U.S. ex rel. Moody v. Am. Ins. Co., 835 F.2d 745, 749 (10th Cir. 1987). 

B. 

 Defendants next argue the JOA is not a valid and binding contract. “We review a 

district court’s grant of summary judgment de novo, applying the same standard as the 

district court.” Helm v. Kansas, 656 F.3d 1277, 1284 (10th Cir. 2011). Summary 

judgment is appropriate “if the pleadings, the discovery and disclosure materials on file, 

and any affidavits show that there is no genuine issue as to any material fact and that the 

movant is entitled to judgment as a matter of law.” Bowling v. Rector, 584 F.3d 956, 

963–64 (10th Cir. 2009) (internal quotations omitted). Defendants argue the JOA is not 

binding because it was neither signed nor attached to the farmout agreement. Defendants 

have waived any challenge to the JOA’s validity a number of times. First, Defendants 

admitted in their answer the truth of Plaintiffs’ allegation that the JOA was included with 

the farmout agreement. (Answer to Am. Compl. at ¶ 3.) “A pleading prepared by an 

attorney is an admission . . . because the attorney presumably speaks for the litigant.” 

Rooms v. S.E.C., 444 F.3d 1208, 1213 (10th Cir. 2006). Second, the parties stipulated in 

the pretrial order that “[t]he Farmout included A.A.P.L. Form 610-1989 Model Form 

 6

 The only potential “error” by the district court we can discern is the court’s 

assumption that Plaintiffs’ Complaint sought money damages against Defendant Atkins. 

But this would have been at least a plausible assumption based on the Complaint’s 

ambiguity and the fact that neither party challenged this reading of the Complaint. Thus, 

the district court’s judgment may not have been “in error.” Plaintiff’s concession of 

error, however, is sufficient to relieve Atkins of personal liability. 
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Operating Agreement, often referred to as a joint operating agreement (JOA).” (Pretrial 

Order at 3.) Moreover, the pretrial order reflects that Defendants requested “Attorney 

fees and litigation costs expressly recoverable pursuant to JOA.” (Appellees’ 

Supplemental App. at 159.) Our law is clear that “claims, issues, defenses, or theories of 

damages not included in the pretrial order are waived . . . .” Wilson v. Muckala, 303 F.3d 

1207, 1215 (10th Cir. 2002). Finally, Defendants failed to raise any objection to the JOA 

in the district court. “Absent extraordinary circumstances, we will not consider 

arguments raised for the first time on appeal.” Turner v. Pub. Serv. Co. of Colo., 563 

F.3d 1136, 1143 (10th Cir. 2009). 

 Defendants also argue “there was an insufficient finding of evidence of a joint 

venture to support the validity of the unsigned JOA . . . .” Defendants further contend 

they “would be privileged under Kansas statute to remove themselves and cease to 

participate in the joint venture that would have existed if the plaintiff’s [sic] joint 

operating agreement was executed by either.” This argument is misdirected; joint 

venture principles are simply inapplicable. The district court found Defendants liable 

based on contractual liability, not based on a finding of a joint venture or partnership. 

 Defendants also challenge the JOA based on its failure to comply with the statute 

of frauds. Defendants have waived this objection as well because they failed to raise it 

prior to this appeal. “Failure to plead an affirmative defense results in a waiver of that 

defense.” Bentley v. Cleveland Cnty. Bd of Cnty. Comm’rs, 41 F.3d 600, 604 (10th Cir. 

1994). Federal Rule of Civil Procedure 8(c) specifically lists the statute of frauds as a 

waivable defense, and thus Defendants cannot raise the statute of frauds at this late 
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juncture. The district court correctly determined the JOA to be a binding contract. 

C. 

 Defendants next argue the district court erred in denying them leave to file an 

amended counterclaim. We generally review the district court’s denial of leave to amend 

a counterclaim for abuse of discretion. Manning v. United States, 146 F.3d 808, 812 

(10th Cir. 1998). Leave to amend should be freely given “when justice so requires,” Fed. 

R. Civ. P. 15(a)(2), but a district court may deny leave to amend if the amendment would 

be futile. U.S. ex. rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161, 1166 (10th Cir. 

2009) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). “[W]hen denial is based on a 

determination that amendment would be futile, our review for abuse of discretion 

includes de novo review of the legal basis for the finding of futility.” Miller ex. rel. S.M. 

v. Bd. of Educ. of Albuquerque Pub. Schs., 565 F.3d 1232, 1249 (10th Cir. 2009). 

Defendants sought to add counterclaims for (1) negligence, (2) fraud, (3) “intentionally 

fraudulent actions” giving rise to punitive damages, and (4) intentional infliction of 

emotional distress. The district court held that all four claims would be futile. The 

negligence claim would fail because it was barred by the JOA and because the contract 

specifically required the allegedly negligent actions. The court said the second and third 

claims were “conclusory” and not pleaded with the particularity required by Fed. R. Civ. 

P. 9(b). Finally, the fourth claim failed the pleading requirements set forth in Ashcroft v. 

Iqbal, 129 S. Ct. 1937 (2009). 

 The district court properly denied leave to amend. Defendants’ first counterclaim 

asserted that “plaintiffs have negligently damaged production capabilities of the oil 
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bearing formation on the lease by injecting water and steam into the formation without 

conducting reasonable and proper research and investigation into the effects of the water 

and steam on the . . . oil bearing formation.” The farmout agreement specifically 

required Plaintiffs to conduct steam injection in the test pod and, if it were successful, in 

additional pods. Thus, Plaintiffs had a contractual duty to conduct steam injection in the 

test pod, and the contract required no further “research and investigation.” As the district 

court said, “defendants may not circumvent the terms of the contract by resorting to 

negligence allegations.”7

 Under Kansas law, “[i]t is elemental that negligence does not 

operate in a vacuum. In order for negligence to be actionable, there must exist a duty 

owed to the plaintiff.” Schmeck v. City of Shawnee, 651 P.2d 585, 605 (Kan. 1982). In 

this case, such a duty must arise apart from the contract. See Moore v. Muntzel, 642 P.2d 

957, 960 (Kan. 1982) (“[T]he issue of negligence of defendant must involve violation of 

some duty arising independently of the contract.”); Pancake House, Inc. v. Redmond ex 

rel. Redmond, 716 P.2d 575, 578 (Kan. 1986) (“A tort . . . is a violation of a duty 

imposed by law, a wrong independent of contract.”). Defendants have not alleged that 

Plaintiffs had any statutory or common law duty to conduct steam injection in a way that 

did not damage the oil-bearing formation. And if Plaintiffs violated their contractual

duties, Defendants must sue in contract, rather than in tort. Thus, Defendants’ first 

counterclaim would have been futile. 

 7

 Additionally, the JOA provided that the “operator” would have no liability 

except for injuries resulting from “gross negligence or willful misconduct.” This 

protection would extend to the Cherokee Wells, who is designated as the operator under 

the JOA. The protection would not, as the district court suggests, apply to Plaintiff HPP, 

because HPP is not the operator of the lease. 
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 Defendants’ second and third counterclaims fare no better. Rule 9(b) requires 

parties asserting fraud to “state with particularity the circumstances constituting fraud or 

mistake.” Fed. R. Civ. P. 9(b). The complaint must “set forth the time, place and 

contents of the false representation, the identity of the party making the false statements 

and the consequences thereof.” Schwartz v. Celestial Seasonings, Inc., 124 F.3d 1246, 

1252 (10th Cir. 1997) (quoting Lawrence Nat’l Bank v. Edmonds, 924 F.2d 176, 180 

(10th Cir. 1991). Here, the entirety of Defendants’ second counterclaim reads: 

Defendants have been damaged by their reliance upon the false, fraudulent, 

intentionally misleading statements and representations of partners, 

employees and agents of plaintiffs when defendants detrimentally relied on 

the statements that plaintiff Heavy Petroleum Partners, L.L.C. was skilled, 

experienced and qualified to conduct heavy petroleum extraction on 

defendants’ lease with the use of secondary recovery steam injection 

technology. This fraud resulted in damages to defendants due to their 

detrimental reliance. 

(Def.’s First Amended Counterclaim ¶ 8.) These allegations list the basic elements of 

fraud and allege some facts, but they do not indicate the time or place of the alleged 

misstatements. Such conclusory allegations do not meet the heightened pleading 

standard of “particularity.” Fed. R. Civ. P. 9(b). Defendants’ third proposed claim, for 

“intentionally fraudulent actions,” is probably not even a separate counterclaim. It reads, 

“Defendants request punitive damages based on the intentionally fraudulent actions of 

plaintiff.” (Id. ¶ 9.) This is most likely simply a prayer for punitive damages, but if it 

were construed as a separate fraud claim, it too would fail for lack of particularity. 

Therefore, Defendants’ second and third proposed counterclaims would have been 

subject to dismissal under Fed. R. Civ. P. 12(b)(6). 
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 Defendants’ fourth counterclaim for intentional infliction of emotional distress 

was also futile. In order to survive a motion to dismiss, a pleading under Rule 8(a) “must 

contain sufficient factual matter, accepted as true, to state a claim to relief that is 

plausible on its face.” Iqbal, 129 S. Ct. at 1949 (quotations omitted). “Threadbare 

recitals of the elements of a cause of action, supported by mere conclusory statements, do 

not suffice.” Id. Defendants’ counterclaim states: 

Paul Atkins requests that he be awarded monetary compensation for 

damages suffered due to the intentional infliction of emotional distress by 

plaintiffs in their intentionally abusive treatment and cruel and unwarranted 

financial dealings with Paul Atkins, resulting in his inability to enjoy his 

family, home, and life. 

(Def.’s First Amended Counterclaim ¶ 10.) This claim is devoid of any specific facts that 

would support a plausible claim for relief. Iqbal, 129 S. Ct. at 1949. It merely alleges 

“intentionally abusive treatment” and “cruel and unwarranted financial dealings,” but 

does not support these allegations with any concrete facts. Because the proposed 

amended counterclaim would have been futile, the district court did not abuse its 

discretion in denying Defendants leave to file the counterclaim. 

D. 

 Next, Defendants argue the district court erred in quieting title in Plaintiffs 

because, according to Defendants, title to the lease reverted back to J.J.R. when Plaintiffs 

breached the farmout agreement.8

 We review the district court’s grant of summary 

 8

 Defendants do not enlighten us on how Plaintiffs breached the farmout 

agreement. Defendants assigned a 75% interest in the lease to Plaintiffs before Plaintiffs 

had fulfilled all the conditions in the farmout. But Plaintiff HPP’s mere acceptance of an 

early and unearned assignment cannot constitute a breach of the farmout. Defendants 
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judgment on the quiet title issue de novo. Helm, 656 F.3d at 1284. In a diversity action, 

we apply the substantive law of the forum state, which here is Kansas. Cohen-Esrey Real 

Estate Servs., Inc. v. Twin City Fire Ins. Co., 636 F.3d 1300, 1302 (10th Cir. 2011). 

Under Kansas law, “[t]he primary rule for interpreting written contracts is to ascertain the 

parties’ intent. If the terms of the contract are clear, the intent of the parties is to be 

determined from the contract language without applying rules of construction.” 

Carrothers Constr. Co. v. City of S. Hutchinson, 207 P.3d 231, 239 (Kan. 2009). Absent 

any ambiguity, Kansas courts “must give effect to the intent of the parties as expressed 

within the four corners of the instrument.” Blair Constr., Inc. v. McBeth, 44 P.3d 1244, 

1252–53 (Kan. 2002). Here, the district court interpreted the August 2006 assignment as 

unambiguous, because it did not refer to the farmout agreement or JOA. The district 

court therefore concluded the assignment was not conditioned on the farmout or JOA, 

and quieted title to a 75% working interest in the lease to Plaintiffs. 

 The district court, however, failed to consider an important rule of Kansas contract 

interpretation which neither party has raised. Under Kansas law, “[d]ocuments which are 

executed at different times, but in the course of the same transaction concerning the same 

subject matter, will be construed together to determine the intent of the parties to the 

 

also argued that we should abstain from this case under Burford v. Sun Oil Co., 319 U.S. 

315, 327 (1943), because Plaintiffs allegedly conducted steam injection without a proper 

state permit. This argument is utterly frivolous. Burford “is concerned with protecting 

complex state administrative processes from undue federal interference.” New Orleans 

Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 362 (1989). To resolve this 

case, neither we nor the district court need to interfere with state administrative 

processes, complex or otherwise. At most, we need to determine whether the allegedly 

unauthorized steam injection constituted a breach of the farmout agreement. 
- 16 - 

contract.” Hollenbeck v. Household Bank, 829 P.2d 903, 906 (Kan. 1992). This rule 

applies to contracts executed in the course of the same transaction even if “they do not in 

terms refer to each other.” West v. Prairie State Bank, 436 P.2d 402, 405 (Kan. 1968). 

Additionally, this rule applies even if the contract being interpreted is unambiguous. See 

Schnug v. Schnug, 454 P.2d 474, 477–78 (Kan. 1969) (construing two documents 

together even after finding them both unambiguous); Harder v. Wagler, 838 P.2d 366, 

408 (Kan. Ct. App. 1992) (applying the rule despite a party’s contention that two 

documents were unambiguous if interpreted separately). 

1. 

The August 2006 assignment clearly “concerns the same subject matter” as the 

farmout agreement and JOA, because it concerns the same lease. The more difficult 

question is whether it was executed “in the course of the same transaction.” The Kansas 

courts have not discussed this element in much depth, but their decisions provide some 

insight. The earliest Kansas case to articulate this rule was Jordon v. Clark, 121 P. 345 

(Kan. 1912). There, a married couple executed a separation agreement in which each 

released the other from “all claims . . . now or hereafter” on a quarter section of land they 

jointly owned. Id. at 345. On the same day, the couple conveyed to each other by 

warranty deed separate halves of the jointly owned property. Id. These deeds contained 

clauses barring the grantor and his or her heirs and assigns from any claim or inheritance 

to the land. Id. The Kansas Supreme Court was faced with the question of whether the 

separation agreement renounced the wife’s right to inherit her husband’s half of the 

property. The court determined the warranty deeds should be construed along with the 
- 17 - 

separation agreement, and all three “should be regarded as a single contract.” Id. at 346. 

The court said, 

The presumption is that different writings made by the same parties, on the 

same day, relating to the same subject-matter, and in the course of the same 

transaction, should be read together and construed as a single contract. 

Especially should they be regarded as parts of one transaction, where, as 

here, they refer to each other. 

Id. (emphasis added). The court concluded, based on the language in the warranty deeds, 

that the wife had disclaimed her inheritance rights in her husband’s portion of the 

property. 

 The Kansas courts later abandoned Jordon’s requirement that the documents be 

executed “on the same day,” and substituted the words “at or near the same time.” 

Dearborn Motors Credit Corp. v. Neel, 337 P.2d 992, 1001 (Kan. 1959). From there, the 

rule evolved into its modern iteration—documents will be construed together if executed 

by the same parties “contemporaneously or even at different times in the course of the 

same transaction” as long as they “concern the same subject matter.” In re Cooper’s 

Estate, 403 P.2d 984, 988 (Kan. 1965). Unlike this case, however, most Kansas cases 

have involved documents that were executed within hours or days of each other, making 

the “same transaction” element more easily satisfied. 

At least one Kansas case, however, has construed together documents that were 

executed years apart. In Parsons v. Biscayne Valley Investors Ltd., 935 P.2d 218, 220 

(Kan. Ct. App. 1997), the Kansas Court of Appeals considered a case in which plaintiffs 

loaned money to an apartment complex developer in exchange for two promissory notes 

secured by two mortgages. A bank held a second mortgage on each apartment complex. 
- 18 - 

Id. Ten years after executing the mortgages, the parties modified the two mortgages with 

the bank’s consent. Id. The plaintiffs argued the modification gave their mortgages 

priority over the bank’s mortgages. The Kansas Court of Appeals determined the 

plaintiffs’ mortgages, the bank’s mortgage, and the modification agreement should “be 

construed together.” Id. at 222. The court quoted Hollenbeck’s rule that documents 

“executed at different times, but in the course of the same transaction concerning the 

same subject matter” were construed together. Id. (citing Hollenbeck, 829 P.2d at 906). 

The court noted the modification agreement referred to all three mortgages and “the 

documents concern the same subject matter.” Id. “Therefore, it is appropriate to 

construe all of the instruments together.” Id. Parsons is significant because the 

documents which were construed together were executed ten years apart. Yet the court 

still determined, at least impliedly, that they related to the same transaction.9

 9

 The Kansas Supreme Court appeared to reach the same result in Federal Land 

Bank of Wichita v. Krug, 856 P.2d 111, 113 (Kan. 1993), but its opinion is not entirely 

clear. In Krug, the original borrowers purchased land with a loan secured by a mortgage 

in favor of the Federal Land Bank. Three years later, the borrowers sold the land to 

S & S Ranch, which signed a separate agreement assuming the mortgage. S & S later 

stopped making payments on the mortgage because it never received a deed. The Kansas 

district court rescinded the land sale contract between the borrowers and S & S, but held 

both the borrowers and S & S were liable to the Bank. The Kansas Court of Appeals 

reversed, holding that the mortgage assumption agreement was also rescinded because it 

was unsupported by consideration. The Kansas Supreme Court reversed again, saying 

the question on appeal was whether rescinding the land sale contract also rescinded the 

assumption agreement. The court said, 

An assumption agreement is an act of assuming or taking an obligation on 

one’s self and can include the undertaking or adoption of a debt or 

obligation resting upon another. When one contracts to assume a mortgage 

even though the documents are executed at different times, but in the course 

of the same transaction concerning the same subject matter, they will be 
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In Giefer v. Swenton, 928 P.2d 906, 911 (Kan. Ct. App. 1996), by contrast, the 

Kansas Court of Appeals did not construe two documents together where they were 

intended to take effect at different times. In Giefer, “the trial court attempted to construe 

a deed, which was intended to take effect immediately, along with two unprobated wills 

executed by decedent.” Id. The court of appeals “consider[ed] this to be mixing apples 

with oranges” because a will does not take effect until the testator dies and the will is 

admitted to probate. Id. The court said, “These documents are so divergent that we 

believe they should not be construed together.” Id. 

2. 

Based on the foregoing authority, we conclude the documents in this case are part 

of the “same transaction.” Black’s Law Dictionary defines “transaction” as “[t]he act or 

an instance of conducting business or other dealings” and “[s]omething performed or 

carried out; a business agreement or exchange.” Black’s Law Dictionary 1635 (9th ed. 

2009). Even though the assignment was executed three months after the farmout, it 

related to the same “business agreement or exchange” as the farmout—Plaintiff’s right to 

a 75% interest in the lease in exchange for developing steam injection. The assignment 

 

construed together to determine the intent of the parties to the contract. 

Id. at 115 (citing Hollenbeck, 829 P.2d at 903). A cursory reading suggests the court was 

construing the mortgage assumption agreement together with the original mortgage. 

Yet the court actually was construing the mortgage with the land sale contract. The 

court went on to say the land sale contract was conditioned on “the approval of the Bank 

and the buyer’s assumption of the note and mortgage. Under these circumstances, the 

Bank’s approval was sufficient consideration for the assumption agreement.” Id. Thus, 

despite wording suggesting otherwise, the Kansas Supreme Court has not construed 

documents executed three years apart as being “in the course of the same transaction.” 
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would have made no sense if it were not part of the exchange set forth in the farmout 

agreement. Furthermore, the court in Jordon said documents are particularly likely to be 

part of the “same transaction” if they refer to each other. Jordon, 121 P. at 346. Here, the 

farmout referred to the assignment, or at least contemplated it. Specifically, the farmout 

said that if HPP developed a successful test pod and “complied with all of the terms and 

conditions contained herein,” then J.J.R. would “assign to [HPP], subject to the 

reservations and conditions contained herein, a 75% Working Interest” in the lease. 

Finally, the assignment was dated to take effect the same day as the farmout, May 19, 

2006, even though it was executed three months later. This date indicates the parties’ 

intent to treat the assignment as part of the May 19, 2006, transaction. 

Accordingly, we vacate the district court’s judgment quieting title in Plaintiffs and 

remand for the district court to consider whether, reading the assignment and the farmout 

agreement together, Plaintiffs are entitled to a 75% working interest in the lease. We 

leave that determination to the district court because it presents a multitude of questions 

that are neither adequately briefed nor addressed by the record on appeal. Under 

paragraph 15 of the farmout, Defendants were not entitled to reassignment of a 75% 

working interest in the lease unless (1) Plaintiffs breached the farmout, (2) Defendants 

gave Plaintiffs notice of the breach by certified mail, and (3) Plaintiffs failed to cure the 

breach within thirty days. Defendants have failed to assert any breaches of the farmout in 

their briefs before this court, even though such a breach is essential to their argument. 

They did perfunctorily reference seven alleged breaches in the district court in response 

to the motion for partial summary judgment. But these “breaches” are so tied up in the 
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facts of this case that we are loathe to address them as a matter of law. Defendants have 

also made many inconsistent and confusing assertions and denials in the course of this 

litigation, making it difficult to determine what assertions we should credit or reject. 

Because the district court is better equipped to determine whether fact issues 

remain, we leave it to the district court to decide whether summary judgment is 

appropriate when the assignment is read in conjunction with the farmout. In determining 

whether Plaintiffs are entitled to an interest in the lease, the district court may need to 

consider such questions as (1) whether assignment of the lease was conditioned on the 

test pod producing commercial quantities using steam injection, or simply conventional 

methods, (2) whether Defendants waived any conditions in the farmout agreement, (3) 

whether Plaintiffs failed to “commence operations,” and, if so, whether the lease 

terminated automatically, (4) whether Defendants provided Plaintiffs proper notice 

regarding any actual breaches, (5) whether any fact issues remain, and (6) whether, in 

light of paragraph 9 of the farmout, Plaintiffs are entitled to any interest in the lease 

beyond the first two pods. We express no view on how these questions are to be resolved 

and whether the quiet title remedy is appropriate. We leave that determination to the 

district court. 

E. 

 Defendants’ final contention is that the district court “abused its discretion by 

granting arrearages, fees and costs to be paid to Plaintiff[s] without documentation and a 

stated contractual right in the executed agreement.” We first address Defendants’ 

contention that the attorney’s fees were not authorized by contract. Under Kansas law, a 
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prevailing party may recover attorney’s fees if such fees are “specifically authorized by 

statute or agreement.” T.S.I. Holdings, Inc. v. Jenkins, 924 P.2d 1239, 1254 (Kan. 1996). 

Here, the JOA contained the following provision: 

Costs and Attorney’s Fees: In the event any party is required to bring legal 

proceedings to enforce any financial obligation of a party hereunder, the 

prevailing party in such action shall be entitled to recover all court costs, 

costs of collection, and reasonable attorney’s fees which the lien provided 

for herein shall also secure. 

 (Appellants’ App. at 82.) Defendants’ only response to this provision is to argue the 

JOA is not a binding contract, an argument the district court properly rejected.10 The 

provision unambiguously authorized attorney’s fees to the prevailing in suits arising out 

of financial obligations imposed by the JOA. Because we vacate the district court’s 

decision on the quiet title issue, however, we must also vacate the award of attorney’s 

fees. Until the district court resolves the quiet title question, Plaintiffs cannot be a 

“prevailing party” entitled to attorney’s fees. 

We next address the manner in which fees were awarded. Ordinarily, we review a 

district court’s decision whether to award attorney’s fees for abuse of discretion and its 

application of the legal principles underlying that decision de novo. Pound v. Airosol 

Co., 498 F.3d 1089, 1100 (10th Cir. 2007). This is not an ordinary case, however, 

because the district court did not award attorney’s fees, but rather submitted the issue and 

the amount of attorney’s fees to the jury. Thus, Defendants’ argument is misdirected; the 

 10 Defendants’ challenge to both the JOA and the recovery of attorney’s fees at 

this stage is disingenuous given that Defendants themselves sought to recover “Attorney 

fees and litigation costs expressly recoverable pursuant to JOA.” (Appellees’ 

Supplemental App. at 159.) 
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district court did not “grant” attorney’s fees. Defendants have not challenged the jury’s 

damages award that included $155,239.36 in “litigation expenses.” Nor have Defendants 

argued that the district court erred in submitting attorney’s fees to the jury. 

Nevertheless, the procedure by which the district court awarded attorney’s fees 

was improper. Federal Rule of Civil Procedure 54(d)(2)(A) instructs, “A claim for 

attorney’s fees . . . must be made by motion unless the substantive law requires those fees 

to be proved at trial as an element of damages.” We apply the substantive law of Kansas, 

Cohen-Esrey, 636 F.3d at 1302, and Kansas law does not require attorney’s fees to be 

proved as an element of damages. In fact, under Kanas law, “ordinarily . . . the court, 

sitting without a jury, makes an allowance of attorney’s fees.” Thomas v. Kansas City S. 

Ry. Co., 421 P.2d 51, 57 (Kan. 1966). This is because “a claim for attorney’s fees is not 

part of the merits of the action to which the fees pertain.” Snodgrass v. State Farm Mut. 

Auto. Ins. Co., 789 P.2d 211, 214 (Kan. 1990) (quoting Budinich v. Becton Dickinson & 

Co., 486 U.S. 196, 200 (1988)). Although we have recognized a right to a jury for a 

claim “for attorneys’ fees already incurred in a separate, underlying action against a third 

party,” J.R. Simplot v. Chevron Pipeline Co., 563 F.3d 1102, 1117 (10th Cir. 2009), we 

have never held that Rule 54(d)(2)(A)’s exception applies to contracts such as the JOA in 

this case, which authorize attorney’s fees for the prevailing party in the same lawsuit. 

The Seventh Circuit has concluded that the exception is inapplicable to such cases. 

Rissman v. Rissman, 229 F.3d 586, 588 (7th Cir. 2000). In Rissman, the Seventh Circuit 

said, 

What Rule 54(d)(2)(A) requires is that a party seeking legal fees among the 
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items of damages—for example, fees that were incurred by the plaintiff 

before the litigation begins, as often happens in insurance, defamation, and 

malicious prosecution cases—must raise its claim in time for submission to 

the trier of fact, which means before the trial rather than after. Fees for 

work done during the case should be sought after decision, when the 

prevailing party has been identified and it is possible to quantify the award. 

Id. at 588 (emphasis added). Because the fee agreement in this case did not fit Rule 

54(d)(2)(A)’s exception, the fees should have been requested pursuant to Rule 54(d) 

rather than submitted to a jury. On remand, the prevailing party may seek an award of 

costs and attorney’s fees pursuant to Rule 54(d). 

We AFFIRM the district court’s denial of leave for Defendants to file an amended 

counterclaim and its ruling that the JOA is a valid and binding contract; we VACATE the 

grant of quiet title, the grant of summary judgment, the jury verdict, and the award of 

attorney’s fees; and REMAND for further proceedings. 

 Entered for the Court, 

Bobby R. Baldock 

United States Circuit Judge