Opinion ID: 2586675
Heading Depth: 1
Heading Rank: 15

Heading: Did the district court err by holding all defendants jointly and severally liable for the entire judgment?

Text: [¶ 138] The district court ruled that the promise to pay the NPI was a joint and several obligation of all of the defendants, as successors to First Parties. It ruled, therefore, that each defendant is liable for the full amount of the damages resulting from [the] breach. The non-operating defendants argue that the district court erred by making them jointly and severally liable for the entire judgment. [¶ 139] As we stated above, each defendant, as a successor to First Parties, had a duty to pay the plaintiffs' net profit interest. That ruling does not, however, determine whether each defendant should be held jointly and severally liable for the full judgment amount. The district court cited to Gilstrap v. June Eisele Warren Trust, 2005 WY 21, 106 P.3d 858, 865 (Wyo.2005) and Restatement (Second) Contracts, § 289(2) (1981) in support of its decision that all defendants were jointly and severally liable for the entire judgment. In Gilstrap, ¶ 21, 106 P.3d at 865, we considered a warranty in a deed and recognized the general principle: With regard to the scope of the warranty in the context of multiple grantors, the general assumption is that the warranty obligation is joint, not several, unless specific language is included in the deed indicating that each grantor is warranting only his or her individual interest. (Citation omitted). Section 289(2) of the Restatement (Second) of Contracts also states the general rule: Where two or more parties to a contract promise the same performance to the same promisee, they incur only a joint duty unless an intention is manifested to create several duties or joint and several duties. [¶ 140] Although Gilstrap and § 289(2) stated a presumption of joint obligation, those authorities also recognize that the intention of the parties to the contract controls. The importance of the parties' intent is emphasized in Restatement (Second) Contracts § 288: (1) Where two or more parties to a contract make a promise or promises to the same promisee, the manifested intention of the parties determines whether they promise that the same performance or separate performances shall be given. (2) Unless a contrary intention is manifested, a promise by two or more promisors is a promise that the same performance shall be given. [¶ 141] We turn, then, to the contract language to determine whether the defendants were jointly and severally obligated to pay the entire NPI proceeds to the plaintiffs. Section 1 imposes upon all of the defendants, as successors to First Parties, the responsibility of paying the net profits interest. However, subsequent provisions, including Section 3 (Payment) and Section 5 (Transfer), make it clear that the operator is responsible for accounting and actually remitting payments to the plaintiffs. Because the non-operators have neither the responsibility nor the authority to gather the net profit payments from each defendant and remit to the plaintiffs, the contract indicates that the non-operating defendants are only responsible for their proportionate shares of the net profits. [¶ 142] We considered a similar situation in Moncrief, 816 P.2d at 107-08. As we explained above, Texaco was lessee and working interest owner on a lease burdened by Harvey's overriding royalty interest; Moncrief was the operator on the lease. Harvey brought suit against Texaco and Moncrief. The district court ruled that each defendant was responsible for its proportionate share of the unpaid royalties, but Harvey argued on appeal that Texaco should have been jointly and severally liable for the entire amount of unpaid royalties. We concluded that, because each defendant owned a proportionate share of the leasehold estate, the principle of proportionate responsibility is most equitable. Id. at 108. Considering the language of the Unit NPI Contract and that each defendant only owns a proportionate share of the working interest(s) in the NPI leases, we conclude that the district court erred by making the non-operators jointly and severally liable for the entire NPI payment due. We reverse the district court's ruling in that regard.