Basic Energy Servs., L.P. v. Petroleum Res. Mgmt., Corp.

343 P.3d 783

2015 WY 22

BASIC ENERGY SERVICES, L.P., Appellant (Plaintiff)

v.PETROLEUM RESOURCE MANAGEMENT, CORP., and PRM Partners I, LLC, Appellees (Defendants).

No. S–14–0088.

Supreme Court of Wyoming.

Feb. 19, 2015.

Representing Appellant: Gregory C. Dyekman and Justin N. Hesser of Dray, Dyekman, Reed & Healey, P.C., Cheyenne, Wyoming. Argument by Mr. Dyekman.

Representing Appellees: Scott P. Klosterman of Williams, Porter, Day & Neville, P.C., Casper, Wyoming.

Before BURKE, C.J., and HILL, KITE, DAVIS, and FOX, JJ.

Opinion

FOX, Justice.

[¶ 1] In this dispute over equipment damaged in an oil well fire, the district court granted summary judgment to the owner and operator of the well and against the equipment owner, Basic Energy Services, L.P. (Basic Energy). The district court found that neither the owner nor the operator of the well could be held liable for the actions of the independent contractor hired to perform the day-to-day operations of the well. The district court also found that, though there was a valid contract between the operator Petroleum Resource Management, Corp. (PRM) and Basic Energy, PRM did not breach the terms of that contract. We affirm in part and reverse in part, and remand for further proceedings consistent with this opinion.

ISSUES

[¶ 2] The parties raise four issues on appeal, which we restate as follows:

1. The district court determined that the Daily Work Ticket created a valid and enforceable contract between PRM and Basic Energy. Is there a question of material fact concerning whether PRM breached the terms of that contract?

2. Did PRM have a duty to use reasonable care in hiring Hot Oil Services, Inc. (Hot Oil) as its independent contractor?

3. Did Basic Energy raise the issue of apparent agency in the district court?

4. Should the well owner, PRM Partners I, LLC (PRM Partners), be dismissed from the appeal?

FACTS

[¶ 3] PRM Partners is a leaseholder of lands which cover an oil well identified as Fuller Federal No. 5–18 (No. 5–18) near Shoshoni, Wyoming. PRM Partners designated PRM¹ as operator of No. 5–18 on January 1, 2000. PRM later contracted with Hot Oil to “furnish all necessary labor and equipment to perform in a good and workmanlike manner the pumping services ... on [No. 5–18.]”² The Well Pumping Contract between PRM and Hot Oil declared:

In the performance of the services hereunder, Contractor shall act as, and conclusively be for all purposes, an independent contractor free and clear of any dominion or control by PRM of the manner in which such services are to be performed, it being understood that PRM is interested only in the final results obtained.

The district court held that Hot Oil was an independent contractor, and this finding was not appealed.

[¶ 4] Hot Oil managed the day-to-day operations of the well at the “field level” on behalf of PRM, which included:

[M]aximizing production ..., switching tanks, treating oil and gas as necessary to place it in merchantable condition; preparing daily gauge and production reports and delivering same to PRM; making pipeline deliveries; operating, lubricating and maintaining mechanical equipment supporting the operation of the [well]; policing and upkeeping the leases on which the [well is] located and making such adjustments, repairs and performing such services as are customarily made or performed by a lease pumper, as well as such particular lease operating, maintenance or operational services as may be periodically requested by PRM.

In addition, Hot Oil often engaged other independent contractors to perform services on various wells covered by the contract, including No. 5–18. In such situations, Hot Oil would contact an independent contractor to provide services, approve of the work performed by a signature on the invoice, and the invoice would be forwarded to PRM, which would then make payment directly to the independent contractor. Basic Energy was one such independent contractor, which provided services and received payment in the manner described.³

[¶ 5] In the fall of 2009, Hot Oil requested that Basic Energy perform workover operations⁴ on No. 5–18. In preparation, Basic Energy moved its workover rig, Taylor Rig No. 1658, onto No. 5–18. The following Monday, a crew from Basic Energy arrived at No. 5–18 to assist⁵ in performing the workover operations. While the evidence as to what occurred during the workover operations is conflicting, it is undisputed that oil began flowing out of the wellhead onto the surface, and within minutes, a fire erupted. The fire damaged various pieces of equipment, including Basic Energy's workover rig, which is at the heart of this dispute.

[¶ 6] Later, Basic Energy submitted a Daily Work Ticket to PRM for payment. The Daily Work Ticket, which incorporated a number of terms and conditions, invoiced PRM for seven-and-a-half hours of rig and crew labor and one hour of travel, for a total of $2,050.00. It did not, however, include a statement of the damages to Basic Energy's equipment. PRM ultimately paid the amount of the invoice to Basic Energy.

[¶ 7] Basic Energy filed suit against PRM Partners, PRM, and Hot Oil⁶ to recover the damage to its equipment. All defendants timely answered Basic Energy's complaint, and the parties engaged in discovery. PRM Partners and PRM filed a joint motion for summary judgment, and the district court found that there were no genuine issues of material fact, and that PRM Partners and PRM were entitled to judgment as a matter of law. The district court's decision was premised, in large part, on its finding that Hot Oil was an independent contractor and neither PRM nor PRM Partners could be held liable for the acts of an independent contractor. After the district court entered its summary judgment order, Basic Energy and Hot Oil stipulated to a dismissal of Basic Energy's claims against Hot Oil without prejudice. Basic Energy timely appealed.

STANDARD OF REVIEW

[¶ 8] “We evaluate the propriety of a summary judgment by employing the same standards and using the same materials as the district court. Thus, our review is plenary.” Hatton v. Energy Elec. Co., 2006 WY 151, ¶ 8, 148 P.3d 8, 12 (Wyo.2006) (internal citations omitted). Pursuant to W.R.C.P. 56(c), summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. A genuine issue of material fact exists when a disputed fact, if proven, “would establish or refute an essential element of a cause of action or a defense that the parties have asserted.” Christensen v. Carbon Cnty., 2004 WY 135, ¶ 8, 100 P.3d 411, 413 (Wyo.2004) (quoting Metz Beverage Co. v. Wyo. Beverages, Inc., 2002 WY 21, ¶ 9, 39 P.3d 1051, 1055 (Wyo.2002) ).

[¶ 9] Upon review, we consider the evidence in the light most favorable to the party opposing the summary judgment motion, and “give that party the benefit of all favorable inferences which may be fairly drawn from the record.” Hatton, 2006 WY 151, ¶ 8, 148 P.3d at 12 (quoting Cathcart v. State Farm Mut. Auto. Ins. Co., 2005 WY 154, ¶ 11, 123 P.3d 579, 586 (Wyo.2005) ). Questions of law, however, are reviewed de novo. Id.

[¶ 10] The initial burden of establishing a prima facie case for summary judgment lies with the moving party. Id. at ¶ 9, 148 P.3d at 12. Once that burden is met, the party opposing summary judgment must present “competent evidence admissible at trial showing there are genuine issues of material fact.” Id. (quoting Cook v. Shoshone First Bank, 2006 WY 13, ¶ 12, 126 P.3d 886, 890 (Wyo.2006) ). “The opposing party must affirmatively set forth material, specific facts in opposition to a motion for summary judgment, and cannot rely upon allegations and pleadings ..., and conclusory statements or mere opinions are insufficient to satisfy the opposing party's burden.” Id.

DISCUSSION

I. The district court determined that the Daily Work Ticket created a valid and enforceable contract between PRM and Basic Energy. Is there a question of material fact concerning whether PRM breached the terms of that contract?

[¶ 11] In its decision letter, the district court stated, “The Court finds and concludes that no genuine issues of material fact exist that the Daily Work Ticket, which includes the attached Terms and Conditions, is a valid and enforceable contract and PRM and Basic Energy are bound thereby.” The court went on to determine that “PRM has not breached any term or condition of the Daily Work Ticket” and granted summary judgment in favor of PRM. We affirm in part and reverse in part.

[¶ 12] Neither party appeals the district court's determination that the Daily Work Ticket created a valid and enforceable contract between PRM and Basic Energy. We therefore consider only whether there exists a genuine issue of material fact that PRM breached the terms of the Daily Work Ticket.

[¶ 13] Basic Energy cites two distinct provisions of the Daily Work Ticket which it claims PRM breached. The first states, “[PRM] shall provide or reimburse the cost of any safety/health equipment required for [PRM's] operations which exceed [Basic Energy's] routine safety practices for area.” Basic Energy argues that PRM breached the contract by failing to provide safety equipment, namely a blowout preventer (BOP), which would have prevented oil from leaking from the well, thus causing the fire. Basic Energy presented undisputed evidence that it was not within its routine safety practices to furnish BOPs when providing workover services on wells in the area, unless requested by the company for which the services were being provided. Neither Hot Oil nor PRM requested that Basic Energy come equipped with a BOP when providing workover services on No. 5–18 that day. Because the BOP was not within the routine safety equipment normally provided by Basic Energy in that area, under the contract terms, if a BOP was required for the workover services on No. 5–18, it was PRM's duty to provide it. It is uncontested that PRM did not provide a BOP.

[¶ 14]...