Court Opinion

ID: 9532905
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:26:05.623376+00
Date Added: 2024-06-11T13:28:52.023148
License: Public Domain

THOMAS, Justice,
dissenting.
Aztec Gas & Oil Corporation (Aztec) and Roemer Oil Company (Roemer) agreed to settle their differences over amounts owed by Aztec to Roemer under an oil and gas operating agreement. See Roemer Oil Co. v. Aztec Gas & Oil Corp., 886 P.2d 259 (Wyo.1994). Aztec was to pay Roemer $15,261.48 in six payments. The settlement agreement encompassed a right on the part of Roemer to file a Confession of Judgment against Aztec for “$26,000.00 together with reasonable costs (but not attorneys’ fees) for filing and collecting the judgment, prejudgment interest at the rate of 8% compounded annually from the date of [the] Settlement Agreement, and post judgment interest,” minus amounts paid pursuant to the agreement, in the event of a breach of the Settlement Agreement by Aztec. When Roemer claimed a breach for failure to make the December payment, it requested entry of judgment for $14,900.60, representing the difference between the claimed amount and the amounts admittedly paid.
In the Final Judgment entered upon a Motion for Entry of Judgment, filed by Roemer, and a Motion for Dismissal with Prejudice, filed by Aztec, the district court found that Aztec had failed to make a payment as required by the Settlement Agreement, and it had not cured the default. The court specifically found “that Aztec comes before the court with unclean hands for failure to make any of the payments, except the first $3,000.00 payment, in a timely manner on the dates contained in the Settlement Agreement.” In fact, the Settlement Agreement specifically anticipated late payments and provided:
3. Default. The parties agree that, if Aztec fails to make any payment required under paragraph 1 of this Settlement Agreement, then Roemer upon (1) written notice to Aztec, and (2) Aztec’s failure to cure its default within ten days of Roemer’s written notice, may, in the alternative to otherwise enforcing this Settlement Agreement, file, enforce and collect the Confession of Judgment, a copy of which is attached hereto as Exhibit “B”. Aztec shall execute the Confession of Judgment contemporaneously with the execution of this Settlement Agreement. With the Confession of Judgment, Roemer shall file and serve upon Aztec a duly executed affidavit as proof of Aztec’s default. * * * Roemer also agrees that it will not file or seek to enforce the Confession of Judgment except upon Aztec’s failure to make any payment and failure to cure as provided in this paragraph.
After the first cheek, the other payments by Aztec to Roemer were late, but the cheeks uniformly were written and furnished to Roemer within the ten day period provided in the parties’ Settlement Agreement. It is *906fair to say that Roemer treated each check, save one, as payment for purposes of the default provision of the agreement. In accordance with the established practice, a check was furnished to Roemer for the payment it claims as the default. After Aztec made the December payment, it requested Roemer to promptly negotiate the check because Aztec intended to close the cheeking account on which the check was written. Aztec twice requested that the check be forwarded for collection so that it would clear the account before it was closed. The parties stipulated to the truth of averments in the affidavit of Charles Blackard, the controller for Aztec Gas and Oil Corporation, that stated among other things:
5. By mid-January 1996 I noticed that Roemer had not cashed these checks. During the week of January 15, 1996 I called Roemer representative Steve Swanson and advised him to cash the checks promptly, since Aztec was going to close the account upon which they were drawn. Approximately one week later I called Mr. Swanson again, and again advised him to promptly cash the checks. Aztec even offered to replace the cheeks with cashiers checks, if Mr. Swanson would return the two checks. Mr. Swanson indicated that he did not have the checks and that they had been sent off for processing.
Another paragraph of the Settlement Agreement provides:
7. Further Assurances. From time to time after the execution of this Settlement Agreement, the parties shall, without charge, perform such other acts, and shall execute and deliver and shall furnish such other instruments, documents, materials and information, as may be reasonably necessary to effectuate the acts provided for in this Settlement Agreement.
This contractual language surely is sufficiently broad to cover the simple act of negotiating a check within thirty days, upon the specific request of the other party. The Restatement (Second) of CONTRACTS § 205 (1979) states, “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” We have relied upon this provision, citing it with approval, and have said:
The implied covenant of good faith and fair dealing is present in every contract: § 205 Duty of Good Faith and Fair Dealing
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.
Restatement (Second) of Contracts § 205 (1981).
State Farm, Mut. Auto. Ins. Co. v. Shrader, 882 P.2d 813, 825 (Wyo.1994). We acknowledged this provision in Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 220 (Wyo.1994), and Husman, Inc. v. Triton Coal Co., 809 P.2d 796, 801 (Wyo.1991). I would adopt this rule for Wyoming and apply it in this case.
My rhetorical question is where do we find good faith and fair dealing on the part of Roemer with respect to this check. Roemer, obviously whiffing the scent of blood, did not negotiate the check until some thirty days after it was sent by Aztec, at which time the account had been closed, and the check was returned. Aztec provided a replacement cheek (another stipulated fact), but Roemer refused to accept that check, even though it had accepted and received payment of the sixth check (another stipulated fact). Roemer took the position that the settlement agreement had been breached and proceeded to file the Confession of Judgment. When Aztec sought relief from the district court, the district judge entered Final Judgment in favor of Roemer for $14,912.00.
The result in this case is that Aztec has paid $12,225.03 on the settlement agreement; has endeavored to pay the balance; and now has a judgment against it for an additional $14,912.00, for a total recovery by Roemer of $27,137.03, almost double the amount agreed upon in the Settlement Agreement. The district court refused relief to Aztec, holding that it came seeking equity without clean hands because of the continual history of late payments. No stain apparently attached to Roemer with respect to holding a check it had been requested to cash and then claim*907ing that Aztec had breached the contract when the cheek failed to clear the account,
I am satisfied that this is an instance in which the law has perpetrated an injustice on Aztec. Consequently, I would reverse the decision of the trial court, holding that there had been performance under the terms of the contract by Aztec, and Roemer is the party in default because it did not manifest good faith and fair dealing consistent with paragraph seven of the Settlement Agreement when it did not honor the request for prompt presentment of the cheek. I would reverse, holding that Roemer is not entitled to the Final Judgment resulting from its filing of the Confession of Judgment.