443 P.3d 838
Wyo.2019Background
- Finley Resources (TX) and EP Energy (TX) executed a 2007 Purchase and Sale Agreement transferring oil-and-gas lease interests in Converse and Niobrara Counties, WY; Finley alleges EP failed to assign certain deep rights.
- Finley sued in Wyoming district court asserting quiet title, declaratory judgment, breach of contract, breach of implied covenant of good faith and fair dealing, and adverse possession.
- The Agreement contains a Texas choice-of-law provision and a forum-selection clause requiring suits "based on any matter arising out of or in connection with" the Agreement to be brought in Texas federal or state courts (if they have subject-matter jurisdiction).
- EP Energy moved to dismiss under the forum-selection clause; the Wyoming district court dismissed. Finley appealed, arguing the equitable claims (quiet title, declaratory judgment, adverse possession) are independent of the Agreement and therefore outside the clause, and that Texas courts lack subject-matter jurisdiction over out-of-state title claims.
- The Wyoming Supreme Court applied Texas law and examined whether the equitable claims were independent of the contract or "but-for" the Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the forum-selection clause requires Finley to litigate in Texas | Equitable claims (quiet title, declaratory judgment, adverse possession) arise independently from Finley’s possession and thus fall outside the clause | All claims "arise out of or in connection with" the Agreement; equitable claims implicate and depend on contract rights | Held: Clause applies; all claims fall within its scope |
| Whether adverse possession claim is independent of the Agreement | Adverse possession is based on Finley’s open, notorious, exclusive, continuous possession since assignments and therefore independent | Adverse possession claim rests on color of title/claim of right derived from the Agreement | Held: Adverse possession depends on the Agreement and is within clause |
| Whether the forum clause is unenforceable because Texas lacks jurisdiction over out-of-state title claims | Texas courts’ inability to adjudicate title to out-of-state realty defeats enforcement | The clause requires Texas courts to have subject-matter jurisdiction over the suit generally, not jurisdiction over every specific claim; inability to hear a particular cause of action does not defeat clause enforcement | Held: Lack of Texas jurisdiction over certain title claims does not invalidate the clause; clause remains enforceable |
| Whether Wyoming public policy against outsourcing local title disputes defeats enforcement | Finley: strong public policy favors local determination of title to Wyoming real property | EP Energy: freedom of contract and forum-selection precedent favor enforcement; Finley failed to demonstrate a clear public-policy bar | Held: No public-policy exception; enforcement affirmed |
Key Cases Cited
- Pinto Tech. Ventures, L.P. v. Sheldon, 526 S.W.3d 428 (Tex. 2017) (but-for test and scope of forum-selection clauses)
- In re Int'l Profit Assocs., Inc., 274 S.W.3d 672 (Tex. 2009) (forum clause scope and relatedness analysis)
- In re Lisa Laser USA, Inc., 310 S.W.3d 880 (Tex. 2010) (claims that would not exist but for the agreement fall within clause)
- Durdahl v. Nat'l Safety Ass'n, Inc., 988 P.2d 525 (Wyo. 1999) (equitable claims implicating contract are subject to forum clause)
- Roush v. Roush, 589 P.2d 841 (Wyo. 1979) (adverse possession requires mining/operations to establish elements)