Case Title: Halliburton Co. v. Claypoole

Citation: 

Docket Number: 93-17

State: wyoming

Court: Wyoming Supreme Court

Date: 1994-02-03T00:00:00Z

Document:
Halliburton Co. v. Claypoole1994 WY 11868 P.2d 252Case Number: 93-17, 93-18Decided: 02/03/1994Supreme Court of Wyoming

HALLIBURTON COMPANY, Appellant (Plaintiff),

v.

Patti CLAYPOOLE, Appellee (Defendant). Patti 
CLAYPOOLE, Appellant (Defendant), v. HALLIBURTON COMPANY, Appellee 
(Plaintiff).

Appeal from the District Court, Converse County, 
William A. Taylor, J.

Thomas R. Smith, Murane 
& Bostwick, Casper, WY, for Halliburton Co.

Stephen R. Winship, Donald 
R. Winship & Associates, P.C., Casper, WY, for Patti 
Claypoole.

Before THOMAS, CARDINE, and GOLDEN, JJ., Brown, J. 
(Retired), and McEwan, D.J. (Retired). 

McEWAN, District Judge 
(Retired).

[¶1]      The Halliburton 
Company appeals from a judgment entered upon a jury's verdict. It contends the 
district court erred in denying its post-trial motions and that, in essence, the 
judgment is not supported by sufficient evidence, particularly with regard to 
the jury's finding that Halliburton defrauded Patti Claypoole. In her 
cross-appeal, Claypoole asserts the jury's verdict was sound in all respects and 
that the district court erred in reducing the jury's general damage award, as 
well as the punitive damage award.

[¶2]      We affirm in 
part, but reverse the district court insofar as it reduced the general and 
punitive damage awards.

[¶3]      As appellant in 
Case No. 93-17, Halliburton raises these issues:

1. Whether the court erred in denying Halliburton's 
motions for a directed verdict or subsequent motion for judgment notwithstanding 
the verdict?

2. Whether the trial court erred in denying 
Halliburton's motions for a new trial either because a) the verdict was contrary 
to law, b) the verdict was not sustained by sufficient evidence, or c) there was 
an error of law at trial?

3. Whether a new trial should be granted based upon 
prejudicial testimony of Claypoole's counsel during voir dire of the jury 
panel?

[¶4]      Claypoole 
provides this summary of the issues in response:

1. Was there an absence of evidence to support the 
verdict entered?

2. Whether the denial of a motion for a directed 
verdict is an appealable order.

3. Was it an abuse of discretion by the trial court 
in denying the motion for new trial?

4. Whether Appellant properly preserved its 
objections.

As appellant in Case No. 
93-18, Claypoole contends:

1. Whether, in view of W.S. § 38-1-101, the District 
Court should have directed a verdict for Appellant.

2. Whether the District Court should have instructed 
the jury concerning the duties of Appellee under W.S. § 
38-1-101.

3. Whether the District Court should have instructed 
the jury concerning the duty of Appellee to exercise good faith, ordinary care 
and diligence in obtaining and administering Appellant's 
guaranty.

4. Whether the District Court should have instructed 
the jury on the enforceability of a contract based on "moral 
consideration".

5. Whether the District Court erred in reducing the 
jury's verdict.

[¶5]      Halliburton 
summarizes its response to those arguments as follows:

1. Whether Wyoming Statute § 38-1-101 required 
Halliburton to proceed against Denton before filing suit against 
Claypoole?

2. Whether the District Court erred in not 
instructing the jury on defendant/counterclaimant's theory of 
negligence?

3. Whether the District Court was correct in not 
instructing on defendant/counterclaimant's theory of moral 
consideration?

4. Whether the District Court properly exercised 
discretion in reducing the jury's verdict?

5. Whether this court's standard of review, giving to 
the evidence of the successful party every favorable inference which may 
reasonably and fairly be drawn from it, gives allowance to unsubstantiated 
inferences?

[¶6]      The facts of this 
case are somewhat complicated. Patti Claypoole's father, Deto Lawson, invested 
in several oil wells with Rance Denton's father, usually as a working interest 
owner. Denton's father died in 1972, and, thereafter, Lawson continued to invest 
in wells with Denton. Eventually, Denton sold all of his interest in those 
developments to Lawson, although Denton continued to help with some of the work. 
Several years later, Denton formed his own oil companies. By agreement dated 
August 8, 1988, Lawson and Denton entered into an arrangement as co-venturers to 
develop an oil well in Adams County, Colorado. In early 1989, Lawson also put up 
collateral for several bonds on wells Denton intended to develop. Denton sought 
to have some work done for him by Halliburton on wells he was developing and, 
because of his poor credit rating, Halliburton insisted upon having a guarantor 
for payment of those services.

[¶7]      In their 
arrangements with Halliburton, Denton and Lawson dealt with Jerry Stroud who was 
Halliburton's credit manager. Stroud was aware that Denton had been in 
bankruptcy and that he owed the Internal Revenue Service a considerable amount 
of money. Moreover, Stroud never expected that Denton would make any payments, 
indeed, Denton owed Halliburton for services which had never been paid for, 
going back as far as 1982. Denton also asserted that Lawson understood that he 
would be paying for the services as the primary debtor, but that the guaranty 
arrangement would allow them six months of free credit. By "Letter of Guaranty" 
signed on January 13, 1989, Lawson agreed to pay to Halliburton the indebtedness 
of Idagas Oil Company (one of Denton's companies) up to a limit of $50,000.00 
for work done after January 10, 1989. In a letter dated January 10, 1989, and 
addressed to Stroud, Lawson stated:

Enclosed is a copy of my financial statement as of 
December 31, 1988. I have agreed to guarantee for Rance Denton and his company 
up to $50,000.00 on a note or whatever you and Rance have agreed on. My 
understanding this work will be done on his wells in Adams County, Colorado. 
Rance has assured me you would keep my financial statement confidential and only 
discuss it with him or I. I have an interest in Rance's project that he will be 
drilling and completing in Adams County, Colorado and think it will be a 
success. My only requirement would be if agreeable to you, Halliburton will give 
me sixty (60) days notice in the event Rance and his company should default on 
this agreement.

[¶8]      By a handwritten 
"deal" dated and signed on February 23, 1989, Lawson and Denton 
agreed:

This agreement made this 23rd day of February 1989 by 
and between Deto Lawson and Rance Denton. Deto Lawson has made an agreement with 
Halliburton Services of Denver in which Deto Lawson will pay for services 
provided by Halliburton in wells that Rance Denton and his company has put 
together to drill. Rance Denton agrees that all assignment will be made to Deto 
Lawson or Patti Claypoole for the working interest earn[ed] in each well if the 
wells are productive.

            
Rance Denton has several notes with Deto Lawson on interest of past and 
current wells. Deto Lawson agrees that all notes and mon[e]y had been paid in 
full by Rance Denton to Deto Lawson.

            
Rance Denton agrees that Deto Lawson will earn his pro rata share of all 
cost that Halliburton provide for Deto Lawson share of the AFE or actual costs 
on each well. This will also pertain to any equipment that Deto Lawson will 
furnish.

            
Deto Lawson has provided Rance Denton with Drilling Bonds for his wells 
in Colorado or wherever else Rance Denton needs for his companies. Rance Denton 
agrees to assign 1/2% carried working interest to Deto if any well is productive 
that Deto Lawson bond is on.

[¶9]      Deto Lawson died 
on April 5, 1989. Stroud took the view that Lawson's guaranty was no good after 
his death. When he became aware that Lawson had died, he insisted that Denton 
immediately supply another guarantor. Stroud also knew that if he wanted to 
enforce the guaranty against Lawson he would have had to file a claim against 
Lawson's estate, but he did not do so. Thus, even long after Lawson died, there 
were a number of outstanding charges not yet paid and no effort was made to 
collect those.

[¶10]   Denton brought Patti Claypoole to 
Stroud's office on July 18, 1989, and on that date she signed letters of 
guaranty essentially identical to that previously signed by her father. The 
guaranties were on behalf of Idagas and IDG Exploration, Inc., both companies 
principally owned and run by Denton. Stroud did not expect Idagas or IDG 
Exploration to pay the sums guaranteed by Patti Claypoole, just as he had not 
expected Denton to pay on her father's earlier guaranty. Claypoole sent Stroud a 
letter similar to the letter her father had sent indicating that her guaranty 
was for work in Adams County. Claypoole, however, did not indicate that she had 
any interest in Denton's developments. Stroud basically ignored the contents of 
that letter, including the portion indicating that Claypoole intended only to 
guarantee work done on wells in Adams County, Colorado, as he had also done with 
Lawson's earlier letter. In addition, Stroud did not inform Claypoole that he 
assigned the limitation in her letter no meaning. Stroud very reluctantly agreed 
that the guaranty used in this situation was unusual because there was no intent 
to seek payment from the primary debtor (Denton or his companies). Indeed, by 
letter and agreement, Claypoole undertook to guaranty payment for all services 
rendered under her father's guaranty, in part because she felt she was obligated 
to because she was the executrix of her father's estate. She also guaranteed 
work done between the time of her father's death and the date of her guaranty. 
By the time she signed her first guaranty it was over 50% exhausted by 
commitments made prior to her signing it. Claypoole eventually paid everything 
owed to Halliburton under her agreement and, in early January, asked to be 
released from her guaranty.

[¶11]   By letter agreement dated May 3, 
1990, Claypoole then entered into a second agreement to guarantee payments for 
Denton. Although this agreement was not in the same form as the earlier 
guaranties, it was treated by Halliburton on internal credit documents as a 
guaranty. As a part of this guaranty, Claypoole undertook to pay for services 
which had been performed for Denton without there being a guaranty in place. 
Moreover, the billings which Claypoole received from Stroud did not show well 
locations, though it was the usual practice of Halliburton to send guarantors 
invoices which showed well locations. In mid-April 1990, Claypoole received 
copies of the actual invoices which included well locations. After having had 
time to study those invoices, but not before she signed the second commitment to 
underwrite Denton, she realized that she had vastly overpaid for wells that were 
not located in Adams County. Claypoole then canceled her second guaranty on July 
24, 1990. Claypoole actually contended that she did not even remember that she 
had signed the second guaranty. The record also demonstrates that Stroud could 
remember very little about either of Claypoole's guaranties, even when presented 
with documentation that he himself had prepared. At this point, Claypoole 
offered to pay Halliburton for work done on a well in Adams County, after offset 
for sums she had paid which she contended she did not owe, and no more. 
Halliburton did not accept that settlement offer.

[¶12]   Instead, on January 30, 1993, 
Halliburton filed suit against Claypoole, premised upon breach of contract, 
seeking to recover the sum of $30,930.49, plus costs and attorney's fees. 
Claypoole answered and counterclaimed against Halliburton alleging that she had 
overpaid Halliburton, that Halliburton had defrauded her and breached the 
implied covenant of good faith and fair dealing. She also filed a third-party 
complaint against Denton1. The case was tried to a jury and 
the jury found that Claypoole owed Halliburton $1,792.52; that Halliburton owed 
Claypoole $36,975.74; that Denton owed Claypoole $56,688.00; that Halliburton 
committed fraud in its dealings with Claypoole and that Halliburton should pay 
Claypoole $76,000.00 as punitive damages.

[¶13]   Halliburton made a number of 
post-trial motions and they were denied, with this exception: The district court 
found that the jury had duplicated items in its award of damages and, therefore, 
the award of actual damages had to be reduced by the sum of $11,229.60 and the 
punitive damages had to be reduced by a parallel sum of $22,000.00. Judgment was 
entered accordingly and Halliburton appeals from that judgment as outlined 
above. Claypoole appeals that aspect of the judgment which found the jury 
duplicated items, thus reducing the total judgment by over 
$33,000.00.

[¶14]   Halliburton contends that the acts 
of Stroud were not fraudulent and that Halliburton should be allowed to collect 
the debts justly owed by Claypoole to Halliburton. As its first contention, 
Halliburton asserts the district court erred in not granting a directed verdict 
for Halliburton. Halliburton states that all charges sent to Claypoole were for 
services provided under her guaranties and that no misrepresentations were made 
to Claypoole by Halliburton or Stroud. Halliburton also contends that Claypoole 
could have amended her complaint to make her allegations of fraud more specific, 
but she did not do so. Thus, according to Halliburton she is stuck with the 
pleadings as they appear in the record and, based upon those pleadings, she 
failed to prove fraud as she alleged it.

[¶15]   In reviewing this contention of 
error, we accept the plaintiff's evidence as true and afford it every favorable 
inference which may reasonably and fairly be drawn from the evidence. Crown Cork 
& Seal Co. v. Admiral Beverage Corp., 638 P.2d 1272, 1274-75 (Wyo. 1982). Of 
course, no rule can be applied without a certain degree of prudence and, under 
the circumstances presented here, it is difficult to refrain from noting that 
Stroud's testimony lacked virtually all of the features customarily associated 
with verity. We seek to determine "whether the evidence is such that, without 
weighing the credibility of the witnesses or otherwise considering the weight of 
the evidence, there can be but one conclusion as to the verdict that reasonable 
men could have reached." Barnes v. Fernandez, 526 P.2d 983, 985 (Wyo. 1974); and 
see Kaiser v. Farnsworth Drilling Co., Inc., 851 P.2d 1292, 1295 (Wyo. 1993); 
and Cody v. Atkins, 658 P.2d 59 (Wyo. 1983). We must apply that standard of 
review in combination with our standard of review for assessing claims of 
fraud:

The elements of a claim for relief for fraud are a 
false representation made by the defendant which is relied upon by the plaintiff 
to his damage, the asserted false representation must be made to induce action, 
and the plaintiff must reasonably believe the representation to be true. A 
plaintiff who alleges fraud must do so clearly and distinctly, and fraud will 
not be imputed to any party when the facts and circumstances out of which it is 
alleged to arise are consistent with honesty and purity of intention. Fraud must 
be established by clear, unequivocal and convincing evidence, and will never be 
presumed.

Lavoie v. Safecare Health 
Service, Inc., 840 P.2d 239, 252 (Wyo. 1992) (quoting Duffy v. Brown, 708 P.2d 433, 437 (Wyo. 1985)).

[¶16]   We need not exhaustively enumerate 
the possibilities which a jury might have considered under these rather involved 
facts. We are satisfied that a fact finder could have inferred, from all the 
circumstances presented, that Halliburton represented to Claypoole that she was 
to serve as a guarantor for Denton only for the duration of her guaranties and 
only for wells in Adams County. The fact finder might also have readily inferred 
that those representations were false in that Halliburton never intended for 
Claypoole to be a guarantor and never really treated her as one. See generally, 
38 AM.JUR.2d Guaranty, §§ 1, 12-18 (1968). The jury apparently decided that what 
Claypoole signed were letters of guaranty, but that they were limited in 
duration and scope. One of Halliburton's principal claims is that the jury could 
not construe the guaranties except as set out in the "four corners" of the 
guaranty. Under the circumstances presented here, we can only determine that the 
jury properly viewed the entire course of dealings at issue and that the 
"contract" between Halliburton and Claypoole had to be viewed in the light of 
more than just the letters of guaranty. See Peters Grazing Ass'n v. Legerski, 
544 P.2d 449, 459 (Wyo. 1975); Town of Lovell v. Menhall, 386 P.2d 109, 112-16 
(Wyo. 1963); Laibly v. Halseth, 345 P.2d 796, 800 (Wyo. 1959). Halliburton 
contends that Claypoole's letter of August 10, 1989, was a unilateral 
modification of the guaranty which the specific terms of the guaranty 
prohibited. However, Stroud and Halliburton demonstrated through the course of 
dealings that the "contract"2 was freely modifiable when 
circumstances required. There is no question that Claypoole relied on 
Halliburton's representations, believed them to be true and was damaged as a 
result. In answer to Halliburton's assertion that Claypoole did not prove fraud 
exactly as she alleged it in her complaint, we note that when an issue not 
raised by the pleadings is tried by express or implicit consent of the parties, 
it will be treated in all respects as if it had been raised in the pleadings. 
WYO.R.CIV.P. 15(b); Title Guaranty Co. of Wyo. v. Midland Mortg. Co., 451 P.2d 798, 800 (Wyo. 1969); 6A WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND 
PROCEDURE: Civil 2d § 1493, p. 50 (1990). Under these circumstances, the 
district court properly denied Halliburton's motion for a directed verdict, as 
well as the motion for judgment notwithstanding the verdict. Potts v. Brown, 452 P.2d 975, 979 (Wyo. 1969).

[¶17]   Halliburton next contends that the 
district court erred in denying its motion for new trial. WYO.R.CIV.P. 59(a)(6) 
provides that a new trial may be granted on grounds: "That the verdict, report 
or decision is not sustained by sufficient evidence or is contrary to law." To 
this end, Halliburton postulates an "explanation" for how the jury improperly 
reached its verdict. To repeat it here would only add another level of confusion 
to this matter. We have already noted above that we are comfortable that there 
was sufficient evidence for the jury to deliberate Claypoole's allegation of 
fraud. We are unable to discern facts or circumstance which would lead us to 
conclude that the evidence was not sufficient to sustain the verdict or that the 
verdict is contrary to law. All relevant facts were presented to the jury, 
albeit it in a manner which almost defies precise description. The jury was 
instructed in a manner consistent with the parties' positions and, for the most 
part, without meaningful objection. See City of Cheyenne v. Simpson, 787 P.2d 580, 582 (Wyo. 1990); Gary v. Foster Lumber Co., Inc., 531 P.2d 497, 498 (Wyo. 
1975). We are unable to conclude that the district court abused its discretion 
in denying the motion for new trial. WYO.R.CIV.P. 59(a)(6); Carlson v. Carlson, 
836 P.2d 297, 304-05 (Wyo. 1992); Vivion v. Brittain, 510 P.2d 21, 25-26 (Wyo. 
1973).

[¶18]   Finally, Halliburton contends the 
motion for new trial should have been granted because counsel for Claypoole made 
improper comments to the jury during voir dire. Because voir dire was not 
reported, the record contains a settled statement of what occurred, in 
accordance with WYO. R.APP.P. 3.04. Claypoole's lawyer stated that Claypoole was 
an unsophisticated waitress who was dealing with skilled and sophisticated 
businessmen. Counsel for Halliburton objected and, at a side-bar discussion, out 
of hearing of the jury, the district court directed that no further comments be 
made in that regard and that the statement bordered on grounds for a mistrial. 
Halliburton did not seek grant of a mistrial, but now contends that it is 
grounds for a new trial. Halliburton fails to present either cogent argument or 
pertinent authority in this regard and we will not consider that issue further. 
WYO.R.APP.P. 7.01(f); Amrein v. Wyoming Livestock Bd., 851 P.2d 769, 772 (Wyo. 
1993). Nonetheless, we consider it instructive to admonish counsel that, while a 
wide latitude should be afforded counsel in examining jurors, that concept is 
not without limits. If a question of the nature as that at issue here may be 
relevant, the trial court should be informed before the question is asked to 
avoid the possibility of creating an unfair attitude toward any litigant and the 
prospect of a mistrial. Morrow v. Zigaitis, 608 S.W.2d 427 (Mo. App. 1980); 47 
AMJUR.2d Jury, § 427 (1969).

[¶19]   At oral argument, Claypoole 
conceded she did not really seek reversal of the judgment and a new trial, and 
that the issues raised in her cross-appeal were "defensive" vis-a-vis 
Halliburton's appeal. In view of our decision to reinstate the verdict, we need 
not address the issues she raised further. Halliburton contends the jury used 
duplicative figures in reaching its general verdict against Halliburton. 
Halliburton's argument has some level of believability, however, the record 
simply does not adequately bear out its contention. The record discloses that a 
pretrial was held in this case and, customarily, one of the functions of 
pretrial is to ascertain the exhibits which will be offered at trial. If this 
was in fact done, it was not included in the record. If it had been done, 
Halliburton could easily have determined that the exhibits to be offered by 
Claypoole were faulty for the reason that they were duplicative of some elements 
of damage. Closing arguments in the first phase of the trial were not reported 
and, thus, we are unaware of exactly what argument was associated with the 
disputed Exhibit XX which Halliburton claimed introduced the error to the jury. 
The so-called Exhibit XX was not really an exhibit, but a chart drawn by 
Claypoole's counsel in closing argument. Halliburton thought it was important to 
include it in the record and was able to do so by post trial motion. We agree 
that it was important, but for a reason different from that suggested by 
Halliburton. The chart was only a summary of information evidenced by the 
invoices which were exhibits and which were used by the jury during its 
deliberations. Exhibit XX was not taken into the jury room and, since there is 
no evidence the jury was permitted to take notes, we must assume they arrived at 
their damage award from the invoices which were in evidence. The duplication of 
invoices was readily apparent and could easily have been noted in the process of 
jury deliberation. At closing argument, Halliburton knew, or should have known, 
of the duplicate entries. At that juncture Halliburton could or should have 
taken steps to have the jury properly instructed on the duplications, but it 
took no such action. The record does include both the argument associated with 
the punitive damage phase of the trial, which was, of course, presented to the 
same jury immediately following the general liability/damage phase of this case. 
During those proceedings, and while the jury was still available to answer the 
very question which Halliburton contends this court should answer, Halliburton 
advanced its theory that the jury had duplicated some of the damages, but made 
no meaningful effort to reconsider its damage award. The inconsistent and 
muddled "numbers" presented to the jury afforded it some measure of territory 
from which it could model a verdict.

[¶20]   We have examined the "numbers" as 
conscientiously as is possible given the state of the record. Our undertaking 
here is to assess whether the district court abused its discretion in altering 
the verdict reached by the jury. At worst, we recognize that the jury did not 
select a "number" which pops out of the record easily recognized. On the other 
hand, the jury's final "number" is consistent with the overall evidence. Absent 
an objection raised in a manner timely enough so that the apparent inconsistency 
could be called to the attention of the jury, we are unable to conclude that the 
jury failed in its responsibility to faithfully calculate a damage award. We are 
most reluctant to disturb the verdict of a properly instructed jury. Here there 
were no meaningful objections to the instructions, and so we must assume the 
parties were satisfied with them. The proper time to challenge the verdict was 
when the jury was still able to explain that which Halliburton now considers to 
be an inconsistency. Caterpillar Tractor Co. v. Donahue, 674 P.2d 1276, 1284 
(Wyo. 1983). Failure to raise this matter before the jury was released, as 
provided for in WYO. STAT. § 1-11-213 (1988), results in waiver of the right to 
complain about inconsistencies or irregularities in the verdict. Moreover, 
because of the opportunity to correct the verdict offered by § 1-11-213, the 
complaining party will be held to have waived the error notwithstanding its 
degree of irregularity or impropriety. In the case at bar, no matter how obvious 
the irregularity, the right to complain of the verdict was waived. Goggins v. 
Harwood, 704 P.2d 1282, 1289-1292, 1296 (Wyo. 1985); DeWitty v. Decker, 383 P.2d 734, 738-740 (Wyo. 1963). Thus, we conclude that the district court abused its 
discretion in reducing the jury's award of general damages against Halliburton. 
See Big-O Tires, Inc. v. Santini, 838 P.2d 1169, 1175 (Wyo. 1992). Consistent 
with this holding, we need not further consider the jury's award of punitive 
damages.

[¶21]   Therefore, we hold that under the 
circumstances of this case, the jury's verdict, as rendered, must be reinstated. 
Accordingly, we remand to the district court with directions that judgment be 
entered consonant with the jury's verdict, i.e., the judgment against 
Halliburton, and in favor of Claypoole, should be: $36,975.74 in general damages 
plus $76,000.00 in punitive damages, less an offset in favor of Halliburton of 
$1,792.52; a net judgment for Claypoole of $111,183.22. As thus modified, the 
judgment of the district court is affirmed.

 

Footnotes
 

1 Claypoole also recovered a judgment 
against Denton, but Denton did not appeal.

2 Whether it was a guaranty, or some 
other sort of agreement is not especially important. Indeed, it might be 
impossible to definitively characterize it.