371 P.3d 120
Wyo.2016Background
- Sorenson (surface owner) and Pennaco (mineral lessee) executed a surface damage and use agreement granting Pennaco access for coalbed methane operations in exchange for annual payments and reclamation obligations.
- Pennaco developed wells, roads, pipelines and water disposal pits, made payments through 2010, then sold/assigned its lease and surface-agreement interests to CEP-M, which assigned to High Plains Gas; neither assignees nor Pennaco thereafter paid or reclaimed the land.
- Sorenson sued Pennaco and the assignees for unpaid annual payments, reclamation costs, and water-well damages; CEP-M and High Plains defaulted; jury awarded Sorenson $1,055,982.62; district court added costs and attorney fees.
- Pennaco moved for summary judgment arguing assignment released it from post-assignment obligations (via exculpatory language in the lease or because obligations run with the land); district court denied, treating Pennaco as remaining liable as a matter of law and submitting damages to the jury.
- District court awarded attorney fees using the lodestar as a base ($124,591.25) and enhanced it by a 2.5 multiplier (to $311,478.13), citing Wyoming statute factors and contingent-fee considerations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pennaco remains liable under the surface damage and use agreement after assignment | Sorenson: basic contract rules bind the assignor absent an express exculpatory clause or novation; Pennaco remains liable | Pennaco: assignment (and lease exculpatory clause) or covenants running with the land mean post-assignment obligations belong to assignee, not Pennaco | Court: Pennaco remains liable; surface agreement is a contract (like lease derivatives); absent exculpatory clause or novation, delegating duties does not relieve delegant |
| Whether the district court properly treated the summary-judgment denial as a legal determination preserving the liability issue for appeal | Sorenson: denial of summary judgment is typically not reviewable, but the order effectively decided liability and thus is preserved as law of the case | Pennaco: contended issue was not preserved because it didn’t renew a Rule 50(a) motion on liability at trial | Held: The denial operated as a legal ruling fixing liability for trial (issues limited to damages), so the question was preserved for appeal |
| Whether the surface agreement incorporated the lease’s exculpatory clause | Sorenson: the surface agreement did not incorporate the lease; it contains its own terms and binds "operators, agents, employees and assigns" but has no exculpatory release | Pennaco: lease contains exculpatory language that should apply to obligations | Held: No incorporation — the surface agreement lacked clear incorporation language, so lease exculpatory clause does not free Pennaco under the surface agreement |
| Whether the district court abused discretion by enhancing lodestar fees by a 2.5 multiplier to account for contingent-fee risk | Sorenson: multiplier appropriate because counsel took case on contingency, client could not afford hourly rates, and multiplier is authorized by Wyo. Stat. §1-14-126 factors | Pennaco: contingent-fee multipliers are impermissible (relying on Dague) and risk of double-counting makes multipliers improper | Held: Enhancement permissible and not an abuse of discretion here — Wyoming statute directs consideration of contingency; court reasonably applied factors and precedent permitting rare multipliers |
Key Cases Cited
- Pennaco Energy, Inc. v. KD Co. LLC, 363 P.3d 18 (Wyo. 2015) (held surface agreements are contractual in nature and delegating duties does not relieve original obligor absent an exculpatory clause or novation)
- Cargill, Inc. v. Mountain Cement Co., 891 P.2d 57 (Wyo. 1995) (motion for judgment as a matter of law is the proper vehicle to challenge an adverse trial ruling)
- Big-D Signature Corp. v. Sterrett Properties, LLC, 288 P.3d 72 (Wyo. 2012) (law-of-the-case and preservation principles for pretrial rulings subsumed into final judgment)
- Perdue v. Kenny A., 559 U.S. 542 (U.S. 2010) (lodestar may be adjusted in rare circumstances; contingency multipliers not categorically prohibited)
- City of Burlington v. Dague, 505 U.S. 557 (U.S. 1992) (criticized enhancement of fees for contingency risk under certain fee-shifting statutes)
- Thorkildsen v. Belden, 269 P.3d 421 (Wyo. 2012) (lodestar approach and appellate standard for reviewing attorney-fee awards)