Thursday, March 01, 2012

Summary 2012 WY 31

Summary of Decision March 1, 2012

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Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name: Universal Drilling Company, LLC v. R & R Rig Services, LLC; R & R Rig Services, LLC v. Universal Drilling Company, LLC

Citation: 2012 WY 31

Docket Number: S-11-0079, S-11-0080


Appeal from the District Court of Washakie County, The Honorable Robert E. Skar, Judge

Representing Appellant Universal Drilling Company LLC (Defendant-Plaintiff): Raymond B. Hunkins and Amanda Hunkins Newton of Hunkins Newton Law Firm, Cheyenne, Wyoming. Argument by Mr. Hunkins.

Representing Appellee R & R Rig Services LLC (Plaintiff/Defendant):

Date of Decision: March 1, 2012

Facts: The rig service moved the drilling company’s drilling rig in May 2007 under a time and materials contract. The company refused to pay the rig service’s invoice, claiming that it should only have to pay the amount it paid to have the rig moved a few weeks later by a different company. The rig service brought suit for payment for the services it rendered, and the drilling company counterclaimed on the basis of fraud and breach of the implied covenant of good faith and fair dealing. The district court held a bench trial and generally ruled in favor of the rig company and against the drilling company, although it refused to grant the rig service’s request for pre-judgment interest. Both parties appealed.

Issues: In Case No. S-11-0079, the drilling company challenged the district court’s judgment in favor of the rig service on the following grounds: 1) Whether the trial court adopted an erroneous methodology for calculating the amount due for the rig move when it superimposed its determination of “reasonableness” rather than the appropriate methodology for calculating damages under a time and materials contract; 2) Whether the trial court made a clearly erroneous ultimate finding that fraud in the execution and fraud in the inducement had not been proven when its basic findings included findings constituting a concurrence of several indicia or “badges” of fraud; 3) Whether the trial court reached an incorrect conclusion that breach of the implied covenant of good faith and fair dealing was not proven where the trial court’s findings supporting that conclusion showed that the rig service systematically and pervasively overcharged the drilling company and then sought to enforce its invoice containing those overcharges for over two years without any attempt to reconcile its own records until this matter went to trial; Whether the trial court erroneously failed to consider the drilling company’s affirmative defense of estoppels; and 5) Whether the computational and arithmetical errors in the trial court’s findings related to the rig company’s daily work tickets rendered the trial court’s determination of the amount due for the rig move clearly erroneous.

In Case No. S-11-0080, the rig service articulated the following issue: 1) Whether it was error and abuse of discretion for the trial court judge to refuse to award prejudgment interest on any part of the amount the trial court found was due and owing to the rig service by the drilling company.

Holdings: The record supports the district court’s judgment of $188,301.50 in favor of the rig service, less minor computation errors. The Court affirmed its decision subject to those adjustments. The Court noted that the district court did a masterful job of sorting through the voluminous documents and arriving at a fair value for the time and materials provided by the rig service in moving the company’s rig. The Court found the district court properly ruled that the drilling company failed to prove the rig service committed fraud or breached the implied covenant of good faith and fair dealing, and the Court affirmed those rulings. In addition, the Court found the record did not support the drilling company’s estoppel defense. However, the Court concluded the rig service should be awarded prejudgment interest on the amount the drilling company conceded it owed—$97,500. The Court reversed the district court’s ruling on that issue and remanded for further proceedings consistent with the opinion.

C.J. Kite delivered the opinion for the court.

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