Opinion ID: 6215668
Heading Depth: 3
Heading Rank: 1

Heading: The Farmout Agreement

Text: Peter D. argues that Wold breached the Farmout Agreement by not assigning the additional 25% interest to Black Diamond. According to Peter D., Black Diamond 10 Appellate Case: 20-8050 Document: 010110641796 Date Filed: 02/07/2022 Page: 11 substantially performed its obligations under the Farmout Agreement because it had drilled the Initial and Additional Wells and spent the balance of the Program Deposit as required. And Peter D. insists that any qualms Wold has with Black Diamond’s performance concerns technical or minor breaches at best. Thus, this claim turns on what counts as substantial performance given the terms of the agreement and whether Black Diamond, in fact, substantially performed. Whether a party substantially performed under a contract is a question of fact. Ferguson v. Reed, 822 P.2d 1287, 1290 (Wyo. 1991). We may reverse the district court’s conclusion that Black Diamond did not substantially perform under the Farmout Agreement only if its ruling is clearly erroneous—without support in the record. See Mathis, 787 F.3d at 1305. Here, Peter D. fails to reference this stringent standard of review, much less overcome it. The doctrine of substantial performance “allows a party that has substantially complied with a contract to recover for its performance despite the fact that it has breached the contract by failing to comply fully with its terms.” Larson, 421 P.3d at 546–47 (citation omitted). “The doctrine is rooted in fairness and is intended to protect a party’s right to be compensated when it has performed in all material and substantive respects and to avoid the possibility of a forfeiture due to technical, minor, inadvertent, or unimportant deficiencies.” Id. at 547 (citation and quotations omitted). Wold argues that Black Diamond breached the Farmout Agreement by, among other reasons, failing to begin dewatering operations on any of the wells it spudded 11 Appellate Case: 20-8050 Document: 010110641796 Date Filed: 02/07/2022 Page: 12 and failing to hook up the spudded wells. Because these contractual obligations weren’t fulfilled, Wold argues that Black Diamond’s performance was not substantial and that Wold wasn’t required to convey any more of its interest in the Contract Area to Black Diamond. Upon review of the record and Farmout Agreement, we agree. Black Diamond’s breaches aren’t technical, minor, inadvertent, or unimportant deficiencies in its performance. Peter D. concedes that Black Diamond never began dewatering operations and neglects to explain why this failure was insubstantial. After reading Peter D.’s briefs, we are left to guess how much labor dewatering would require, how long the process would take, or how much it would have cost Black Diamond (or a third party) to dewater the wells. We must accept the district court’s factual findings unless Peter D. convinces us that they’re clearly erroneous. Mathis, 787 F.3d at 1305. The district court concluded that “[d]ewatering the wells— a prerequisite to producing gas—went to the very essence of the contract.” So it rejected the argument that Black Diamond’s failure to dewater the wells was technical or minor. Put simply, Peter D. needed to persuade us that dewatering was a minor consideration. And because we lack a basis to question the district court’s finding, we affirm on this point.