Opinion ID: 2508252
Heading Depth: 1
Heading Rank: 6

Heading: The Applicable Standard For Measuring the Duty Owed by Mr. Flocchini

Text: [¶18] The royalty owners contend the district court applied the wrong standard for measuring the duty owed to them by Mr. Flocchini as a successor to the executive right under the original agreement between Mr. Wright and Ms. Spielman. They claim the court erred in relying on True Oil Co. v. Sinclair Oil Corporation, 771 P.2d 781, 793 (Wyo. 1989) to conclude that the fiduciary duty was defined by the 1982 agreement and was limited to acting in good faith and as a prudent mineral operator. They argue the district court's reliance on True Oil was misplaced because in that case True's relationship with Sinclair as agent and trustee arose from the contract itself, warranting the conclusion that the contract alone defined the obligations between the parties. In contrast, the royalty owners argue, the relationship between themselves and Mr. Flocchini arose not from the 1982 settlement agreement, but from Mr. Flocchini's position as executor of the royalty owners' interest. Thus, the royalty owners assert, the district court erred in concluding that the 1982 settlement agreement defined the relationship between the parties. The mineral owners respond that the parties' agreement controls the relationship and, therefore, Mr. Flocchini's duty as holder of the executive rights was to act in good faith and as an ordinary prudent mineral owner. [¶19] In its summary judgment decision letter, the district court stated: The 1982 Agreement and Assignment expressly provided for and defined the duty of the Defendant as to executory authority and good faith. When parties express a standard of care, the existence and extent of their duties is controlled by that contractual expression. See, True Oil Co. v. Sinclair Oil Corp., 771 P.2d 781 (Wyo. 1989). In this case [royalty owners] have attempted to separate good faith and fair dealing out of an argued fiduciary duty. As these are intertwined, and because of questions of fact relating to the question of good faith and fair dealing, Counts 2 [breach of covenant of good faith and fair dealing] and 3 [breach of fiduciary duty] present issues proper for hearing. The existence of duty is a question of law for the court to decide and, finding that a duty is present, Counts 2 and 3 should proceed. We hold that the district court correctly concluded the 1982 settlement agreement defined the standard of care Mr. Flocchini owed to the royalty owners. [¶20] We have recognized in a number of cases that contracting parties may incorporate express terms varying the standards that would otherwise govern their relationship. Kemper Architects, P.C. v. McFall, Konkel & Kimball Consulting Engineers, Inc., 843 P.2d 1178, 1185 (Wyo. 1992). Where express terms are contractually agreed upon, they control the relationship of the parties. Id. Consistent with this general principle, we concluded in True Oil Co., 771 P.2d at 793, that the rights and duties of the parties were controlled by their agreement. We cited Tenneco Oil Co. v. Bogert, 630 F.Supp. 961, 967 (W.D. Okla. 1986) for the principle, applicable in joint ventures to develop oil and gas properties, that the existence and extent of fiduciary duties is controlled by the terms of the agreement between the parties. True Oil Co., 771 P.2d at 793. Although Tenneco Oil Co. involved a joint operating agreement, the principle we cited from the case is equally applicable to the agreement at issue here in which the parties expressly agreed that mineral owners would negotiate all future oil and gas leases and other mineral leases in good faith and as ordinary prudent mineral owners. That was the standard the parties agreed to and that was the standard that governed Mr. Flocchini's conduct. [5] Consistent with our longstanding principles of contract interpretation, we will not rewrite the parties' express and unambiguous agreement.