Zilkha Energy Company, Plaintiff-appellant, v. Arthur Leighton, Verna Leighton, George W. Leighton, Susankay Stansberry, Ann E. Thompson, and Michael Frankthompson, Defendants-appellees, 999 F.2d 548 (10th Cir. 1993)

Plaintiff-appellant Zilkha Energy Co. appeals from a judgment denying its claims for restitution and a judgment and award of damages in favor of Defendants-appellees Michael Thompson and Verna Leighton for unpaid road rentals. Our jurisdiction arises under 28 U.S.C. § 1291 and we affirm.

Zilkha, an oil and gas exploration company, leased properties from Defendants, on which it operated the Thompson No. 5-1 well. Zilkha brought suit to recover alleged overpayment of royalties. Defendants moved to dismiss, claiming that the applicable statute of limitations had expired. Zilkha responded that an equitable limitations period should have applied to its claims. Initially, the district court applied the statutory limitations period and dismissed Zilkha's claims. We remanded for a determination of whether an equitable limitations period was appropriate. Zilkha Energy Co. v. Leighton, 920 F.2d 1520 (10th Cir. 1990). On remand, the trial court found that the claim was barred by the doctrine of laches, but still addressed the merits of the claim. Defendants counterclaimed for unpaid road rentals and shut-in royalty payments on the properties. At trial, the district court rejected Zilkha's overpayment claim and Defendants' counterclaims for shut-in royalty payments, but entered judgment in favor of Defendants Michael Thompson and Verna Leighton on their counterclaim for unpaid road rentals.

We review the trial court's findings of fact under the clearly erroneous standard, but review de novo questions of law. Fed. R. Civ. P. 52(a); Eastman Kodak Co. v. Westway Motor Freight, Inc., 949 F.2d 317, 319 (10th Cir. 1991). The district court's conclusion that Plaintiff failed to demonstrate overpayments is not clearly erroneous. Direct, cross and recross examination of Plaintiff's primary witness on the issue raised substantial questions as to whether an overpayment actually occurred. See Aplt.App. at 510-39.

Nor did the district court abuse its discretion in determining that the claim should have been barred under the equitable doctrine of laches. The district court found that Plaintiff's delay in filing suit was inexcusable and that the delay prejudiced Defendants by causing them to overpay income taxes. Aplt.App. at 438-41. There was substantial evidence supporting the district court's finding that Defendants did not give Zilkha assurances that Defendants would correct the alleged overpayment, and that the delay in filing suit was therefore not excusable. There was also evidence before the district court that Plaintiff refrained from filing suit for an entirely different and unrelated business reason. In appealing the district court's conclusions and in support of its claim that its delay was excusable, Plaintiff cites only its affidavits in opposition to summary judgment. Aplt.Brief at 15-19. However, a court must determine factual issues such as the excusability of a delay in filing suit based on testimony and evidence actually introduced at trial, not on hearsay affidavits previously submitted on a summary judgment motion. Sufficient evidence supports the district court's finding that no assurances of payment were made, and therefore Plaintiff's delay was inexcusable. Aplt.App. at 42-43, 103-04.

Finally, we affirm the trial court's decision awarding Defendants Michael Thompson and Verna Leighton a total of $28,419.40 in unpaid road rentals. The plain language of the leases required payment of road rentals during the lease term until the land so utilized was returned to its original condition. Although Plaintiff argued "common practice" did not require such payment, no evidence was produced to support that argument. We find no error in the trial court's decision.

AFFIRMED.