[00:00:00] Speaker 02:
Final case this morning will be Teardrop Cattle Company versus Devon Energy Production, number 24-8001.

[00:00:11] Speaker 02:
Counsel, you may proceed.

[00:00:19] Speaker 03:
Thank you, Your Honor, and may it please the Court?

[00:00:22] Speaker 03:
Let me be the first to wish you a good afternoon.

[00:00:25] Speaker 03:
My name is Clay Gregerson and along with Jeff Oven at Council Table, we represent Devon Energy Production Company.

[00:00:32] Speaker 03:
It's my intent to reserve about three minutes for the panel today.

[00:00:38] Speaker 03:
This case pertains to various agreements regarding the use of lands owned by Teardrop Cattle Company and the use related to oil and gas operations and that require payment for that use.

[00:00:50] Speaker 03:
Devon assigned those agreements in 2016 to two related entities, Mariah Powder River and Carbon Creek Energy.

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For years after that assignment, Mariah and Carbon Creek worked with Teardrop exclusively and without Devon.

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They reclaimed, they made payments, they followed the agreements.

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But in 2019, those payments stopped.

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And it was only after Mariah filed for bankruptcy that Teardrop demanded that Devon remit payment and this litigation followed.

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We're here today asking the court to reverse the district court's orders first, granting Devin's motion to dismiss on mootness, or alternatively, the district court's summary judgment orders finding Devin remained liable under those agreements after its assignment.

[00:01:33] Speaker 03:
The first issue the court needs to address is jurisdictional and whether this case should be here in the first place.

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In the fall of 2022.

[00:01:40] Speaker 02:
Well, let me ask you on that question.

[00:01:43] Speaker 02:
This goes to whether

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the counterclaim should be moot.

[00:01:49] Speaker 02:
Yes, you're correct.

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And Devin moved to dismiss, well, to dismiss his moot, but moved to dismiss the counterclaim as moot.

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So if this is a close issue, not saying it is or isn't, but let's assume it is, does that mean that Devin has the burden to show mootness because it was the moving party on the issue?

[00:02:13] Speaker 03:
I believe as the moving party, yes, it would be Devon's burden to show mootness.

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And I believe that Devon did.

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In this case, years into the litigation, and in the fall of 2022, Moriah paid Teardrop everything.

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They didn't just pay Teardrop the amounts Teardrop was claiming in this litigation.

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They didn't just pay Teardrop the amounts that it accrued since this litigation started up to that point.

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They also paid Teardrop all of its claims for interest on those payments.

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They paid Teardrop all of its claims, potential claims, for penalties based on those payments being late.

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And it paid all of Teardrop's attorney's fees incurred in this litigation.

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At that point in time, there was nothing under the agreements that was in dispute.

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Teardrop couldn't bring a claim under these agreements because there was nothing to bring a claim on.

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Teardrop couldn't make a demand based on these agreements because there was nothing to demand.

[00:03:03] Speaker 02:
So how did that line up with the fact that didn't Teardrop sue Devin again

[00:03:10] Speaker 02:
in 2022 for delinquent payments?

[00:03:13] Speaker 03:
It did, and that case was dismissed because of the payment that carbon created.

[00:03:16] Speaker 02:
All right, but it happened again.

[00:03:17] Speaker 03:
It did.

[00:03:18] Speaker 02:
Okay.

[00:03:19] Speaker 02:
And isn't it at least reasonably likely that the assignees might fail to make their payments again given that they're still in bankruptcy?

[00:03:30] Speaker 03:
It may be, but that's not the relevant inquiry.

[00:03:33] Speaker 03:
The relevant inquiry isn't about whether it might happen in the future.

[00:03:36] Speaker 02:
Well, why isn't it the relevant inquiry?

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If it's likely or reasonably likely to happen, why would it be moot?

[00:03:44] Speaker 03:
Because the standard is whether or not under mootness there are direct real world impacts and the change in the party's behavior that will result from a decision from the court.

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At that point in time and upon curing all defaults and making good on all obligations under the agreements, there was nothing that a decision from the court would have

[00:04:03] Speaker 03:
required to happen would have changed in the party's behavior.

[00:04:05] Speaker 04:
Counsel, can I ask you though, you invited this inquiry by filing a counterclaim for declaratory judgment, which is necessarily asking the court to determine your rights so that the parties would then know how to proceed in the future.

[00:04:17] Speaker 04:
And so one concern I have is I was reviewing the record, it seems as if Devin has argued about the declaratory judgment statute in Wyoming before the Wyoming Supreme Court, but also within this case.

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and saying that it should be construed very broadly.

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And in fact, at one point before the district court here, I believe in an opposition to summary judgment, essentially making an argument that differs maybe even 180 degrees from the one you're making now and saying it's moot.

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So my concern is about judicial estoppel.

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And why shouldn't we attribute Devin's prior arguments about how to construe this statute in this case and in other cases, which seems to me to be opposite of what you're arguing today?

[00:04:59] Speaker 03:
I don't believe it's inconsistent, Your Honor.

[00:05:01] Speaker 03:
When we made those arguments, and frankly, I do, the Wyoming Declaratory Judgment Act is a very broad act, but it still requires a live case and controversy.

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It still requires some change in behavior from a decision from the court.

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Now, when we made the argument about this case being broader, that was after summary judgment, the first summary judgment order had been issued in Teardrop's favor as to just Teardrop's claims.

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when the district court after that order basically said the case is done.

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And we said, hey, hold on a second, the case isn't done.

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There's other claims between us and third parties and there's also our declaratory judgment action.

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The important distinction at that point in time was that there were payments outside of what Teardrop was claiming in this case that had become due.

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And the payments that Teardrop was claiming hadn't been paid.

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So there was still that outstanding obligation under these agreements that hadn't been fulfilled.

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That's what gave it the live case and controversy.

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That's what gave it a decision from this court's impact.

[00:05:56] Speaker 01:
Well, you didn't specify that, though, in this pleading opposing summary judgment.

[00:06:00] Speaker 01:
You just simply argued that Teardrop's claims didn't address the broader question in the counterclaim involving successive and future payments.

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whether Devon could be held liable for those obligations and amounts or Devon's ability to terminate or stop access under the agreement.

[00:06:17] Speaker 01:
You yourself characterized this as a very, very broad counterclaim.

[00:06:22] Speaker 03:
We did, Your Honor, and because it worked.

[00:06:23] Speaker 03:
Very broad.

[00:06:24] Speaker 01:
And you asked for this.

[00:06:25] Speaker 03:
We asked for

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because there was issues, because there was hundreds of thousands of dollars at issue, and we suspected just as tear duct tape.

[00:06:32] Speaker 01:
And future potential obligation, right?

[00:06:33] Speaker 03:
Exactly.

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And we wanted a decision on that because... And there still is, if you don't get a decision on that.

[00:06:40] Speaker 03:
Not currently, there's not.

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There's no obligations that are outstanding right now.

[00:06:45] Speaker 01:
But you didn't talk about right now, you talked about potentially future obligations.

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If you did not get a decision,

[00:06:52] Speaker 01:
on that issue.

[00:06:53] Speaker 03:
We talked about successive payments, which at that time, there were successive payments.

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By the time Teardrop even filed its lawsuit, there were successive payments.

[00:07:01] Speaker 01:
Successive and future payments.

[00:07:03] Speaker 03:
Yes, Your Honor.

[00:07:04] Speaker 01:
Yeah.

[00:07:10] Speaker 02:
So one technical procedural point I just want to make sure I'm clear about, because you're here arguing that the counterclaims should go away.

[00:07:21] Speaker 02:
I assume that

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You couldn't, Devin couldn't simply dismiss the counterclaim under Rule 41A.

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That's why it's still there.

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Is that right?

[00:07:32] Speaker 03:
Yeah, too much time had passed and we weren't gonna get consent from Teardrop to do so.

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And we have authority that says that you're stuck with, unless it's moved.

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Right.

[00:07:41] Speaker 03:
Okay.

[00:07:44] Speaker 03:
The next issue before the court today is the interpretation of the agreements and whether the Penteco cases, two Wyoming Supreme Court cases,

[00:07:52] Speaker 03:
would hold that Devon remained liable after it assigned those to Carbon Creek and Moriah.

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And I want to emphasize this, we're not asking this court to overturn Pinnacle.

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We don't think Pinnacle was wrongly decided.

[00:08:03] Speaker 02:
I'm sorry to interrupt, but it's just a threshold leading into your argument.

[00:08:09] Speaker 02:
Why should we review summary judgment on the summary judgment order on teardrops claims when the parties in the district court have all said the claims are removed?

[00:08:20] Speaker 03:
Because it's that decision, if you read the decision on our counterclaims.

[00:08:23] Speaker 03:
I have.

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It's that first decision that was the entire basis of that second decision.

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And so it's the same rationale from the first decision.

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And so whether you're reviewing the second or the first, it's the same question, threshold question.

[00:08:36] Speaker 03:
Same question, but are we reviewing that order?

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I don't necessarily think the court has to review that order.

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I think the court could simply review the second question.

[00:08:44] Speaker 03:
That's my question.

[00:08:45] Speaker 02:
All right.

[00:08:45] Speaker 03:
Yeah, because it's the same Penteco analysis that goes into it.

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All right.

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To my point, we're not asking for Pinnacle to be overruled or changed.

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We're simply asking for it to be applied as it was written.

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And that's under Wyoming's well-established rules for contract interpretation, which seek to both ascertain and imply the intent of the parties, based primarily on the contract language.

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And the issue is whether or not in these agreements, the parties intended to create obligations that are connected to Devin and would stay with Devin after assignment, or obligations connected to the use of the land,

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and would therefore pass with the assignment.

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This is necessarily a case by case and agreement by agreement determination and we're asking the court to apply it that way.

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The problem in this case can be seen how Teardrop characterizes the Penteco decisions.

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They characterize them as policy decisions.

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Where the Wyoming Supreme Court was faced with a situation where landowners like Teardrop had defunct or bankrupt operators

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and were thus stuck with oil and gas facilities all over their land that they were promised would be cleaned up.

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And so the Wyoming Supreme Court said, we are gonna make a new categorical rule where we interpret these kinds of oil and gas agreements differently than any other agreement and assigning operators automatically remain liable.

[00:10:04] Speaker 03:
That's not what the court said in Pinnacle.

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What the court did in Pinnacle was apply the same rules it applies in any contract interpretation to determine the intent of the parties.

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And frankly,

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I don't think it would be appropriate for the Wyoming Supreme Court to come up with such a policy decision, because that would be the purview of the legislature.

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And if the Supreme Court in Wyoming was going to do that in the Pinnacle cases, they certainly would have said so, and they didn't.

[00:10:29] Speaker 04:
Councilor, can you help me understand this though, because teardrop wasn't a party to this assignment.

[00:10:34] Speaker 04:
And so, as I recall, the district court found that the agreement was not ambiguous as to liability after assignment.

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And then, as I also understand it, there was no written novation afterwards.

[00:10:48] Speaker 04:
So is your argument just that by teardrop going directly to the assignees for payment and dealing with them, essentially acknowledging that your client was cut out, that that's enough then to transfer not just Devin's rights under the contract, but their obligations as well?

[00:11:07] Speaker 04:
There's a lot to unpack in that question.

[00:11:09] Speaker 03:
There is, I agree.

[00:11:10] Speaker 03:
So there's two separate issues here, and they have two separate timelines that you have to keep in mind.

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PENACO is about the intent in the agreements and whether or not surely the assignment would discharge Devin from its obligations.

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That's based on interpreting the contracts, and that's based on the moment they were assigned.

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The second question is novation.

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Novation is based upon after that, and it presumes that Devin was not released at the moment of assignment based on the intent of the parties.

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That question is then based on everything that happened in the years after that.

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And yes, we do not have an express written novation in this case, but the law is clear that novation, like other agreements, can be implied and based upon the conduct of the parties.

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And so what we're arguing, particularly at this stage, is that summary judgment was inappropriate on novation because those years of conduct and working with, with Teardrop, working with Moriah and Carbon Creek, created a question of fact as to whether or not there was the intent

[00:12:03] Speaker 03:
to discharge debon through the substitution and replacement with carbon carbon monoxide.

[00:12:08] Speaker 01:
What was the evidence that showed a clear manifestation of assent?

[00:12:12] Speaker 01:
Clear manifestation of assent.

[00:12:15] Speaker 01:
Right.

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To release the client.

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So I think an important distinction to make is our burden at trial is to show a clear intent to do that.

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Our burden at summary judgment is to provide sufficient evidence that a jury could find that at trial based on weighing the evidence.

[00:12:30] Speaker 01:
You gotta have something.

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And our evidence in this case is the years of working with Mariah, with the complete absence of debt.

[00:12:37] Speaker 01:
What case law did you have to show that from an innovation standpoint, just ascending to their payment somehow releases the actual contracting party from their obligations?

[00:12:52] Speaker 03:
Well, we aren't making the argument that simply accepting payment is not enough.

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And I would agree with you.

[00:12:57] Speaker 01:
What else do you have?

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What we have is the fact that it's not just accepting performance, it's that when performance was deficient, Teardrop looked to Carbon Creek and Moriah to fix it.

[00:13:08] Speaker 03:
And it wasn't just that they looked for them to fix it, it's not an issue of, hey, you were supposed to reclaim this well, you didn't do a good job, come back out, and then they do it.

[00:13:15] Speaker 01:
Well, of course they would look to them first.

[00:13:16] Speaker 01:
I mean, why wouldn't they do that?

[00:13:18] Speaker 01:
Until they couldn't pay or they couldn't fix it and then they look to the obligor.

[00:13:23] Speaker 03:
Well it's certainly evidence that could be interpreted in a light most favorable to Devin that they believe that that's because that obligation was Carbon Creek MRIs and only theirs.

[00:13:33] Speaker 01:
Any case law to support that?

[00:13:34] Speaker 03:
Yeah, I believe the Gulf Coast, Gulf oil case that we cited, it talks about this is very analogous.

[00:13:40] Speaker 03:
The case of Lewis in Wyoming talks about novation, talks about implied novation of looking at the conduct of the parties.

[00:13:47] Speaker 04:
But don't we only analyze that type of evidence if we don't find the answer by first looking within the four corners of the document itself?

[00:13:55] Speaker 03:
No, but again, that's the separate question between whether or not the contract itself would discharge Devin after an assignment and whether or not novation.

[00:14:02] Speaker 03:
So if we conclude that the contract itself does not discharge Devin and the rest of this is irrelevant?

[00:14:07] Speaker 03:
No, it would be the opposite.

[00:14:08] Speaker 03:
If the contract concludes that the assignment would discharge Devin, then novation becomes irrelevant because we wouldn't need a novation.

[00:14:14] Speaker 03:
If the contract assumes that we, and has the intent that Devin would not be discharged, then novation comes in to see whether or not Devin was discharged regardless of what the intent of the contract was.

[00:14:25] Speaker 03:
And I see him running out of time.

[00:14:27] Speaker 01:
There is... On the Pinnacle decision, which you started to talk about, you seem to be suggesting that the district court didn't really consider it as a factual issue.

[00:14:39] Speaker 01:
And I think there's some reason to believe that Pinnacle II made it black letter law.

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and that this just simply doesn't pass muster, but district court did an alternative approach.

[00:14:52] Speaker 01:
It said, all right, if it's black letter, here's my answer, and my answer's the same if you look at the various factors that were set out in Pinnacle 1 and discussed again in slightly different form in Pinnacle 2.

[00:15:03] Speaker 01:
It looked at it both ways.

[00:15:05] Speaker 03:
It did, but I don't believe it applied it correctly.

[00:15:08] Speaker 03:
In contract interpretation, you're supposed to apply the language to arrive at the intent.

[00:15:12] Speaker 03:
And I agree that PENACO 2 was a shorter analysis, but that makes sense because PENACO 1 was a question of first interpretation.

[00:15:18] Speaker 03:
I see I'm out of time, if you wouldn't mind.

[00:15:21] Speaker 03:
PENACO 1 was the first time that the court had to address this question.

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And so what it did was it went through a detailed analysis.

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It said, these are the kind of obligations that stay with the assigning party.

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These are the kind of obligations that don't.

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It said, this is how we're going to figure it out.

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We're going to compare different obligations from different other contracts.

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Then it had to say, okay, so this is what we think's important.

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It went and applied that to several different agreements with multiple parties.

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And then it recapped and said, here are all the factors that we're looking at.

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And then it also had interveners and amicus briefs that it had to address their arguments of.

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That's a lot of analysis.

[00:15:54] Speaker 03:
PENACO 2 didn't hardly have any of that.

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And PENACO 2 already had PENACO 1 saying, this is the important factors, this is what we're gonna look at.

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And it did, and Pinnacle 2 reiterated that we're doing this on a case by case, contract by contract interpretation.

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And it primarily relied on the connection between reclamation and annual payments.

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And again, we've highlighted this extensively in our brief here, it's about use.

[00:16:17] Speaker 03:
And I do, and I apologize for going over, but I do like to make one point on the point of use, is the court in Pinnacle talked about the connection between annual payments and reclamation to support that obligation.

[00:16:29] Speaker 03:
It's specifically said that connecting the obligation to use would show the servitude.

[00:16:34] Speaker 03:
That's exactly what the surface use agreement does here.

[00:16:36] Speaker 03:
And it's important to note that the surface use agreement has two different payment provisions for the construction of well sites and using this land.

[00:16:43] Speaker 03:
The first is initial payment, $1,900 if you want to build a well site.

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The second is an annual payment for the continued use.

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And unlike in Pinnacle where that annual payment was specifically for damages, the surface use agreement in this case specifies expressly in section four that it's that initial payment that is paying for the right for that building to be there, for those facilities to be there.

[00:17:04] Speaker 03:
That's the damages payment, that's the one time payment.

[00:17:06] Speaker 03:
The annual payment in section five is expressly about use.

[00:17:10] Speaker 03:
That connects to the operator that's currently working on it.

[00:17:16] Speaker 03:
Thank you.

[00:17:33] Speaker 00:
My name is Tom Toner.

[00:17:36] Speaker 00:
I represent Teardrop Cattle Company.

[00:17:41] Speaker 00:
My law firm represented both of the ranchers in the Pinnacle cases.

[00:17:47] Speaker 00:
Our ranchers in the Powder River Basin were faced with the plague of these major oil companies abandoning the wells to these startup companies that were financially irresponsible and then leaving

[00:18:01] Speaker 00:
leaving the country with all these wells and not paying for them.

[00:18:05] Speaker 00:
So we brought a number of lawsuits beginning in 2011 against these major oil companies.

[00:18:11] Speaker 00:
And we thought we'd finally got it resolved in the Pinnacle cases, which were decided in December of 2015 and March of 2016 when the Wyoming Supreme Court said if you have a surface damage agreement relating to the production of oil and gas on Wyoming land,

[00:18:27] Speaker 00:
You do not escape liability on that contract by assigning it to somebody else.

[00:18:33] Speaker 00:
You have to either have an exculpatory clause that says upon assignment you're released or the landowner has to release you.

[00:18:41] Speaker 00:
We thought that sort of resolved it.

[00:18:43] Speaker 04:
Am I right that your argument is there is no exculpatory clause here and the contract's not ambiguous to that point?

[00:18:49] Speaker 00:
That's exactly right.

[00:18:51] Speaker 00:
There's no exculpatory clause.

[00:18:53] Speaker 00:
These contracts are not ambiguous.

[00:18:55] Speaker 00:
They're either a contract or they're a subvertude.

[00:18:57] Speaker 00:
They're one or the other.

[00:18:58] Speaker 00:
And you look just at the paper.

[00:19:00] Speaker 00:
There is no argument about what Devin intended or didn't intend.

[00:19:04] Speaker 00:
As the court said in Pinnacle, we don't know what secret intentions Devin had.

[00:19:09] Speaker 00:
We look at the four corners of the document.

[00:19:12] Speaker 04:
And there's certainly nothing in the record to indicate that Teardrop released Devin.

[00:19:16] Speaker 00:
No.

[00:19:17] Speaker 00:
No, the testimony is absolutely to the contrary.

[00:19:21] Speaker 00:
prime man on this, Brian Carlson, testified they never negotiated with Teardrop for a release.

[00:19:29] Speaker 00:
They never told Teardrop that they were no longer obligated after they assigned it.

[00:19:34] Speaker 00:
They never repudiated the contract.

[00:19:36] Speaker 00:
Teardrop never signed a contract with Carbon Creek or Moriah.

[00:19:41] Speaker 00:
And when they asked us to amend the agreements to cut them some slack while they were making some payments,

[00:19:48] Speaker 00:
Teardrop refused to do it because we knew what would happen if we ever changed the contracts in the least bit, we'd be faced with an innovation argument.

[00:19:58] Speaker 00:
And so that's what happened.

[00:20:00] Speaker 00:
So what happened here is the reason those dates of the decisions of Pinnacle are so important is because Devin, when they entered into the contract with Mariah, they testified they knew about both of the Pinnacle cases.

[00:20:15] Speaker 00:
They knew they were there.

[00:20:17] Speaker 00:
And so here they were, they were losing $6 million a year.

[00:20:21] Speaker 00:
They had to unload this money-losing asset.

[00:20:24] Speaker 00:
They knew about the Penteco cases.

[00:20:27] Speaker 00:
They knew that there weren't exculpatory clauses in any of their provisions, in any of the contracts.

[00:20:32] Speaker 00:
None of them had that.

[00:20:34] Speaker 00:
So they decided they were going to give, what they did, they gave the assets away, hundreds of wells, all this equipment for $0, plus they agreed to pay them $7 million to take these wells and plumb them.

[00:20:47] Speaker 00:
So that's the factual situation we're dealing with here.

[00:20:52] Speaker 00:
Now, in our brief in the Pinnacle cases, we referred to some authority that certainly says the, or announces the principle more clearly than I ever could.

[00:21:04] Speaker 00:
It came from a professor, Charles Knapp, at the New York University.

[00:21:08] Speaker 00:
He wrote a book called Problems in Contract Law in 1976.

[00:21:15] Speaker 00:
And he talked about assigning rights and delegating duties.

[00:21:18] Speaker 00:
And I would never have thought of this, but here's what he said.

[00:21:21] Speaker 00:
He said, if assigning a right is like passing a football, then delegating a duty resembles more the dissemination of a catchy tune or a communicable disease.

[00:21:35] Speaker 00:
Passing it along is not the same as getting rid of it.

[00:21:39] Speaker 00:
And Devin knew that when they entered into the contract with Mariah.

[00:21:45] Speaker 00:
They knew they couldn't pass it along.

[00:21:48] Speaker 00:
So knowing that they didn't have an exculpatory clause in their contracts, they were making a big bet.

[00:21:57] Speaker 00:
They were betting that this company that was just formed couldn't provide any financial statements or financial assurances, was going to be able to make the payments to Teardrop and they wouldn't have to worry about it.

[00:22:09] Speaker 00:
Well, they lost that bet, but now they're calling on Teardrop to pay their losses.

[00:22:14] Speaker 00:
But of course, Devin, I get these companies mixed up sometimes, Devin is a shrewd company.

[00:22:23] Speaker 00:
They're a major oil company.

[00:22:24] Speaker 00:
So they hedged their bets.

[00:22:27] Speaker 00:
And in their contract that they signed with Moriah, they didn't give all the rights that they had under the Teardrop agreements away.

[00:22:36] Speaker 00:
They kept some.

[00:22:38] Speaker 00:
They reserved the right.

[00:22:42] Speaker 00:
drops payment, they reserve the right to come in and make the payment.

[00:22:48] Speaker 00:
If Mariah didn't reclaim teardrops property, Devin reserved the right in their contract to come on to the teardrop ranch and do the reclamation.

[00:23:03] Speaker 00:
And just like in the Pinnacle cases, exactly the same, they reserved the so-called deep rights.

[00:23:10] Speaker 00:
in the teardrop lands and in the leases, and they reserve the right to come on, just like in Pinnacle, the teardrop lands to produce their deep rights.

[00:23:23] Speaker 00:
And not only that, that contract says if the coal bed methane wells that they had passed on to Moriah Carbon Creek were producing and holding the deep rights,

[00:23:39] Speaker 00:
under the terms of the oil and gas lease.

[00:23:43] Speaker 00:
And if Moriah Carbon Creek wanted to plug that well, they reserved the right to take it back in order to protect their deep rights.

[00:23:52] Speaker 00:
So they didn't even give away all of their rights under this contract.

[00:23:57] Speaker 00:
They actually kept rights to use the teardrop land, just like in Pinnacle.

[00:24:03] Speaker 00:
Now you might wonder why I'm here since we got paid.

[00:24:07] Speaker 00:
It's a pretty obvious question.

[00:24:09] Speaker 00:
It's because of that extremely broad counterclaim that they asserted against us.

[00:24:15] Speaker 00:
They wanted a declaration that their contracts were cancelled and terminated, that they were not responsible for any future liabilities or breaches, and they were precluded from ever suing them again for anything.

[00:24:31] Speaker 00:
Non-payment, reclamation, nothing.

[00:24:34] Speaker 00:
We were out.

[00:24:35] Speaker 00:
Now, once we won the summary judgment,

[00:24:38] Speaker 00:
on the complaint, where they were defending, saying, oh, well, these are still servitudes, they're not contracts, or there isn't some kind of novation, they still had this position.

[00:24:53] Speaker 00:
You know, their position was stated very clearly.

[00:24:56] Speaker 00:
Their head man, again, he said, I asked him this question on his deposition, he said, this is found in the

[00:25:07] Speaker 00:
Volume 2, page 241.

[00:25:10] Speaker 00:
Now, you've mentioned making a full and complete assignment several times.

[00:25:15] Speaker 00:
Is it your understanding that Devon was automatically released from its obligations to Teardrop when it made the assignment to Mariah or Carmen Creek?

[00:25:24] Speaker 00:
Yes.

[00:25:26] Speaker 00:
Yes.

[00:25:26] Speaker 00:
The stroke of the pen, they're gone.

[00:25:29] Speaker 00:
That was their position.

[00:25:30] Speaker 00:
They were claiming these were server tickets.

[00:25:32] Speaker 02:
Well, counsel, could we get

[00:25:35] Speaker 02:
focused in a little bit more on this mootness.

[00:25:38] Speaker 00:
Mootness?

[00:25:39] Speaker 02:
Yeah.

[00:25:40] Speaker 00:
Yes.

[00:25:40] Speaker 00:
Oh, sure.

[00:25:41] Speaker 02:
Right.

[00:25:41] Speaker 02:
So we have the counterclaim and you would prefer it not to be moot and they would prefer it to be moot.

[00:25:53] Speaker 02:
So why isn't it moot?

[00:25:57] Speaker 02:
It's not moot.

[00:25:57] Speaker 02:
I mean, you've been paid.

[00:26:01] Speaker 02:
What's there to be decided at this point that will have real-world impact and why haven't they shown that this has moved?

[00:26:12] Speaker 00:
Well, let me start with one of the questions you were asking and you were just told that, well, they've been paid since.

[00:26:21] Speaker 00:
You know who's paying us?

[00:26:23] Speaker 00:
Devin.

[00:26:25] Speaker 00:
You don't think this is going to have real-world consequence, that counterclaim?

[00:26:28] Speaker 00:
If that counterclaim had been granted, do you think we'd have paid a dime after that?

[00:26:33] Speaker 00:
They would have gone back to Oklahoma.

[00:26:35] Speaker 00:
Because I might say, well, this company that's still in bankruptcy after five years, maybe they'll pay you in the future.

[00:26:47] Speaker 00:
If you look at the appendix volume five at page 68 through 73,

[00:26:54] Speaker 00:
Let me tell you what they wrote about this company that might pay us in the future.

[00:27:00] Speaker 00:
It says, throughout the course of this bankruptcy, the debtor has taken actions to the detriment of creditors in the estate, including transferring significant amounts of money on a monthly basis to the debtor's affiliates, PM and CR.

[00:27:15] Speaker 00:
That's Potter River Midstream and Carbon Creek.

[00:27:20] Speaker 00:
With no supervision over how those funds were spent,

[00:27:23] Speaker 00:
The transactions coupled with the enormous amount of unpaid post-petition obligations of the debtor raise serious questions concerning the debtor's management of its resources and the property of the bankruptcy estate.

[00:27:37] Speaker 00:
Now, that's a pretty real-world consequence.

[00:27:41] Speaker 00:
This bankruptcy entity is a walking dead entity.

[00:27:47] Speaker 00:
It really is.

[00:27:48] Speaker 00:
And there's no way we're going to... Okay, let me back up.

[00:27:52] Speaker 02:
I really want to get to the standard for mootness.

[00:27:56] Speaker 02:
And the question is, at least at this point, is there anything, is there any outstanding payment to your client at this point?

[00:28:08] Speaker 00:
Not today, because Devin just paid us this month, right before this argument.

[00:28:13] Speaker 02:
Okay, and to the extent that the Sinis, Moriah, for example, that they didn't pay, it's Devon who's been paying for them, is that what you're telling us?

[00:28:25] Speaker 00:
No, Devon's been paying for Devon.

[00:28:27] Speaker 00:
It's their obligation.

[00:28:30] Speaker 02:
Well, I understand that.

[00:28:33] Speaker 02:
I understand that, but if this were to repeat, if history repeats itself,

[00:28:39] Speaker 02:
How does it play out?

[00:28:41] Speaker 02:
Do the assignees not pay, and then you ask to be paid, and then maybe Devin pays, and how likely is that to happen?

[00:28:49] Speaker 02:
Because if it's likely, that's a better argument that it's not moot, but if all we're talking is speculation, then maybe not.

[00:28:57] Speaker 02:
So why is this still a live issue?

[00:29:02] Speaker 00:
It's still a live issue because if you

[00:29:05] Speaker 00:
If there is a decision that these are servitudes, which they've asked you to decide in this case, they've argued that they're servitudes, they're going to get back to Oklahoma and they're never going to pay us again.

[00:29:19] Speaker 00:
You know, what's going on right now is the payment comes due.

[00:29:24] Speaker 00:
We send them a notice of default.

[00:29:28] Speaker 00:
Moriah Carbon Creek does not pay and eventually Devon pays.

[00:29:35] Speaker 00:
Now, that may or may not continue.

[00:29:39] Speaker 00:
It's highly unlikely that it will continue if their arguments in this case succeed, is that it's a servitude or it's an ovation.

[00:29:49] Speaker 00:
And that's what their position is.

[00:29:52] Speaker 00:
So it can't be moved.

[00:29:54] Speaker 00:
This case has to be decided because if it isn't, they're not going to pay anymore.

[00:30:00] Speaker 00:
Why would they?

[00:30:01] Speaker 04:
Well, but then you can sue them.

[00:30:03] Speaker 04:
But then you can sue them and then you resurrect that dispute.

[00:30:07] Speaker 00:
Then we start over.

[00:30:07] Speaker 00:
I mean, ranchers don't have unlimited access to attorney fees.

[00:30:15] Speaker 00:
Some of these contracts don't have attorney fee provisions.

[00:30:19] Speaker 00:
And if Devin just says, well, sue us, what's the worst that can happen?

[00:30:23] Speaker 00:
We'll have to pay you what we owe you, or maybe not, or maybe because of our economic power, you'll give up.

[00:30:29] Speaker 00:
And that happens.

[00:30:31] Speaker 00:
Because sometimes the ranchers just can't afford to do it.

[00:30:34] Speaker 04:
Council, can I ask you about the one issue that was raised that we haven't discussed today, and that's the Wyoming Split State Act.

[00:30:41] Speaker 04:
And as I understand Devin's argument, they're saying, well, we're not actually an oil and gas producer anymore because we're just not in that business.

[00:30:50] Speaker 04:
So therefore, we're not liable under this act.

[00:30:53] Speaker 04:
I think I know your answer to this, but I'd like to invite you to tell me why they're wrong.

[00:30:57] Speaker 00:
Well,

[00:31:00] Speaker 00:
because their argument makes no sense.

[00:31:04] Speaker 00:
If you're contractually obligated to make the payment and the Wyoming legislature passed a law specifically to be sure that the landowner gets paid and the oil companies don't get to keep somebody else's money as a remedial statute, they're saying, yes, we're liable for the payment,

[00:31:24] Speaker 00:
But if we decide not to pay you, we can defeat this purpose of the legislature and claim that we're not currently operating.

[00:31:33] Speaker 00:
And the question is, were they engaged?

[00:31:36] Speaker 00:
Now, Judge, if you want to look at the district court decisions, and I understand you guys give it due regard, since it hasn't been decided by the Wyoming Supreme Court, what have our district courts held every time

[00:31:50] Speaker 00:
And the same law firm that represents Devin here has lost this argument at least four times against our firm.

[00:31:57] Speaker 00:
In other cases, when they were representing a company called Adedarco, the courts have said, if you're contractually liable for it and you've got the contractual liability, that is necessarily linked to the statutory liability.

[00:32:11] Speaker 00:
Otherwise, it makes no sense.

[00:32:14] Speaker 00:
And the other point I would make on that is, remember, they reserved the deep rights.

[00:32:20] Speaker 00:
they still have the operating rights under teardrop land and they have the right to take over a co-benefiting well on teardrop land right now today if they thought they had to do it in order to protect their deep rights.

[00:32:37] Speaker 02:
I have a slightly different but related question on the Split Estate Act double damages.

[00:32:47] Speaker 02:
If the parties have agreed that Teardrop's claims in this case are moot, why isn't that issue moot?

[00:32:59] Speaker 00:
Well, I guess the whole case would be moot then.

[00:33:01] Speaker 00:
They're complaining about the... Well, no.

[00:33:04] Speaker 02:
We're talking about if there's going to be any split or double damage payment, it would be on your claims.

[00:33:11] Speaker 02:
Yes.

[00:33:12] Speaker 02:
And they've been paid.

[00:33:15] Speaker 02:
and both sides say they're gone, that those claims are gone, they're moot.

[00:33:20] Speaker 02:
Why should this split state act even apply at this point?

[00:33:28] Speaker 02:
We don't have anything to apply it to.

[00:33:31] Speaker 00:
Well, no, but they've asked for a ruling from this court.

[00:33:38] Speaker 00:
that says they are not responsible because they're not a current operator.

[00:33:43] Speaker 02:
They're asking for it.

[00:33:44] Speaker 02:
And I understand that that was the colloquy leading up to my question, but my question is whether this gets off the ground at all because your claims are moot.

[00:33:54] Speaker 00:
Well, of course, I don't think the claims are moot.

[00:33:57] Speaker 02:
No, you agreed that those claims were moot.

[00:34:00] Speaker 02:
You don't agree that the counterclaims moot, but Teardrop's initial claims have been mooted.

[00:34:06] Speaker 02:
They've been paid.

[00:34:07] Speaker 02:
Both sides agreed they're moot.

[00:34:09] Speaker 02:
So how do we even reach the double damages issue?

[00:34:13] Speaker 00:
It's fine with me if you don't want to reach that issue.

[00:34:16] Speaker 00:
I mean, they raised it as an issue in the case.

[00:34:19] Speaker 00:
I had to respond to it.

[00:34:20] Speaker 00:
I agree with you.

[00:34:22] Speaker 02:
Well, okay.

[00:34:25] Speaker 02:
I mean, I absolutely agree.

[00:34:29] Speaker 02:
Weren't you seeking the double damages?

[00:34:31] Speaker 00:
Yes.

[00:34:31] Speaker 02:
Okay, are you conceding that issue today because it's moot?

[00:34:35] Speaker 00:
I'm not conceding the issue.

[00:34:37] Speaker 00:
I'm saying they're still liable.

[00:34:38] Speaker 00:
If this issue ever comes up again.

[00:34:40] Speaker 02:
If it comes up again, I'm just talking about the part of the case that isn't part of the case anymore.

[00:34:48] Speaker 00:
That's right.

[00:34:49] Speaker 00:
It would not be part of the case, but for the fact they've listed it as an issue on appeal.

[00:34:54] Speaker 00:
And I had to respond to it.

[00:34:55] Speaker 00:
I'm comfortable that we go back into Wyoming court.

[00:34:59] Speaker 02:
Okay.

[00:34:59] Speaker 02:
Let me just back up and put it this way.

[00:35:03] Speaker 02:
Does Devin owe you any payments at this point on the Wyoming Split Estate Act?

[00:35:12] Speaker 00:
No.

[00:35:13] Speaker 02:
All right.

[00:35:14] Speaker 02:
I do not.

[00:35:15] Speaker 02:
That's helpful.

[00:35:16] Speaker 02:
Thank you.

[00:35:17] Speaker 01:
And they didn't ask for this particular ruling in terms of any future obligations.

[00:35:22] Speaker 01:
They were relating it to your claim in this particular action.

[00:35:25] Speaker 00:
Yes.

[00:35:25] Speaker 00:
That's right.

[00:35:25] Speaker 01:
So that makes this claim moot, essentially.

[00:35:29] Speaker 00:
Yes, it would.

[00:35:30] Speaker 00:
But it's nonetheless here.

[00:35:33] Speaker 02:
I see your point.

[00:35:33] Speaker 02:
You respond.

[00:35:33] Speaker 02:
No, I understand.

[00:35:34] Speaker 02:
You were responding to a brief.

[00:35:36] Speaker 02:
Right.

[00:35:36] Speaker 02:
Okay.

[00:35:37] Speaker 02:
Thank you.

[00:35:39] Speaker 00:
I think I'm way over.

[00:35:40] Speaker 00:
I'm sorry.

[00:35:41] Speaker 02:
Thank you.

[00:35:42] Speaker 02:
Thanks to both of you.

[00:35:44] Speaker 02:
I appreciate the arguments this afternoon.

[00:35:48] Speaker 02:
And the case is submitted and counsel are excused.