Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-08111/USCOURTS-ca10-90-08111-0/pdf.json

Parties Involved:
Carl D. Underwood Oil & Gas
Appellant
Pacific Enterprises Oil Company
Appellee

Document Text:

t IL.L:JlJ 

IR TIIB URITBD STATES COURT OF APPEALI' !'ll.ed SCata CGurtot ~": 

Tffldt Ormit 

FOR TBB TBR'l'II CIRCUIT 

CARL D. UNDERWOOD OIL & GAS, 

a Wyoming corporation, 

Plaintiff-Appellant, 

v. 

PACIFIC ENTERPRISES OIL COMPANY, 

a California corporation, 

Defendant-Appellee. 

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ORDER ARD JUDGHERT* 

SEP 8 1992 

ROBERT L. HOECKER 

Clerk . 

No. 90-8111 

(D.C. No. 89-1037-B) 

(D. Wyoming) 

Before BOLLONAY** and McWILLIAIIS, Senior Circuit Judges, and 

CAUTBROR,*** District Judge. 

This litigation arises from the sale in 1988 by a predecessor 

of Pacific Enterprises Oil Company (USA) of an interest in several 

oil and gas properties in Wyoming. The purchaser, Carl D. 

Underwood Oil & Gas, sued Pacific in the District of Wyoming 

alleging, inter alia, _misrepresentation and/or fraud and 

conversion as well as seeking a declaratory judgment that the 

conveyance document correctly described the properties that the 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppal. 10th Cir. R. 

36.3. 

** Subsequent to argument and submission, 

senior status effective May 31, 1992. 

*** 

Judge Holloway took 

The Honorable Robin J. Cauthron, United States District Judge 

for the Western District of Oklahoma, sitting by designation. 

Appellate Case: 90-8111 Document: 010110309469 Date Filed: 09/08/1992 Page: 1
parties intended to include in the sale agreement. Pacific 

counterclaimed, alleging that as a result of a mutual mistake the 

conveyance document erroneously included more properties than the 

parties intended to include in the transaction. Pacific prevailed 

by summary judgment on the reformation claim and at trial on the 

remaining claims and Underwood appealed. 

The issues presented on appeal include: (1) whether the 

district court properly granted summary judgment in favor of 

Pacific on the counterclaim, thereby reforming the conveyance 

document on the ground that it contained a scrivener's error; (2) 

whether Underwood Oil & Gas presented sufficient evidence of 

conversion to withstand a directed verdict; (3) whether the 

district court's instructions correctly stated Wyoming law of 

misrespresentation; and (4) whether pretrial or evidentiary 

rulings of the trial judge were error. We affirm in part, but 

reverse the entry of summary judgment in favor of Pacific on the 

reformation claim and remand for trial of that claim. 

I 

In late 1987, Terra Resources, Inc., predecessor of Pacific, 

began trying to sell its interest in several oil and gas 

properties in Weston County, Wyoming. An invitation to bid mailed 

to potential buyers in December 1987 offered for sale Terra 

Resources' interest in properties that included two oil and gas 

fields -- the East Fiddler Creek Unit and the West Fiddler Creek 

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Unit -- and three wells on an· adjacent property called the Egert 

Lease. 1 

In mid-February 1988, about two months after the bid package 

was distributed, the president of Terra Resources told Carl 

Underwood, the president and chief executive officer of Underwood 

Oil & Gas, that the Fiddler Creek units were on the market. 

Following the conversation, Underwood began negotiating with Terra 

Resources to buy the properties. In March 1988, the parties 

reached an agreement under which Terra Resources was to assign an 

interest in the properties to Underwood Oil & Gas in exchange for 

$80,000. This controversy arose in part because of a disagreement 

between the parties about what portion of the Terra Resources 

interest in the Egert Lease the parties intended to include in the 

transaction. 

The property history in the bid package explained that of the 

several wells within the Egert Lease, the Terra Resources interest 

in just three -- well Numbers 6, 7, and, 8 -- was included in the 

sale offering. 2 However, two documents generated during the 

1 

The bid solicitation package identified Terra Resources as 

the operator, as well as a working interest and revenue interest 

owner, of both units and the Egert Lease. 

2 

The relevant part of the description of the portion of the 

Egert Lease being offered for sale stated: 

The Egert Lease is located in Fiddler Creek Field, 

adjacent to but not within the East Fiddler Creek Unit. 

Production from the lease commenced in 1949. A total of 

10 wells have been drilled but due to inclusion of part 

of the lease into the Townsend Unit, only three remain 

on a lease basis and are included in this sale. These 

wells, the numbers 6,[]7, and 8 were all drilled in 1960 

(Footnote continued on next page) 

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negotiations between the parties did not limit the interest being 

sold to the three wells. One of the documents, a letter agreement 

prepared by the seller, stated that Underwood Oil & Gas had 

offered to purchase "all Terra's right, title and interest in and 

to the Egert Lease" and the two units. Appellee's Supplemental 

App. at 166 (emphasis added). The other document, the 

"Assignment, Bill of Sale and Conveyance," specifically conveyed 

to Underwood Oil & Gas not only Terra Resources' interest in well 

Numbers 6, 7, and 8, but also its interest in the remainder of the 

Egert Lease, including two other wells located within an adjacent 

field called the Townsend Newcastle Sand Unit. See Appellant's 

App. (Exhibits) Plaintiff's Ex. 3. 

Another aspect of this litigation involves Terra Resources' 

representations to Underwood Oil & Gas about the condition of the 

Fiddler Creek units. For a number of years, Terra _Resources used 

a waterflood method of recovering oil and gas in the East and West 

Fiddler Creek units. 

operation in 1986. 

Terra Resources stopped the waterflood 

At the time it offered the properties for 

sale, Terra Resources faced a November 1989 deadline imposed by 

the Wyoming Oil and Gas Conservation Commission for testing many 

(Footnote continued): 

and are located in the E/2, E/2 of Section 19, T46N, 

R64W. 

The Egert lease has not had a water injection 

program of its own but has benefitted from the East 

Fiddler Creek Unit waterflood. When this flood was shut 

down in 1986 due to declining oil prices, Egert Lease 

production fell rapidly .... One well on the lease 

currently produces while the remaining two are inactive. 

Appellee's Supplemental App. at 176 (emphasis added). 

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Appellate Case: 90-8111 Document: 010110309469 Date Filed: 09/08/1992 Page: 4
of the injection wells in the units. 

II 

In November 1989, Underwood Oil & Gas sued Pacific 

Enterprises Oil Co. (USA) in the District of Wyoming, in part 

seeking a declaratory judgment that the conveyance document 

correctly reflected the parties' agreement. Underwood Oil & Gas 

asserted other claims, including misrepresentation and/or fraud as 

well as conversion. As the basis of its fraud claim, Underwood 

Oil & Gas contended that prior to the sale Terra Resources made 

numerous misrepresentations to Carl Underwood about the 

properties, including false representations about the mechanical 

and physical condition of the injection wells in the units, about 

the potential liability for testing, plugging, and abandoning 

wells, and about the feasibility of restarting the idle waterflood 

recovery operation. Underlying the conversion claim was Underwood 

Oil & Gas' contention that prior to the sale Terra Resources 

removed large amounts of unit-owned property from the units. 

Pacific counterclaimed, seeking in part a declaratory judgment 

that the parties intended to include just well numbers 6, 7, and 8 

in the conveyance to Underwood. 

Ruling on cross-motions for summary judgment in June 1990, 

the district court resolved the issues involving the conveyance 

document by granting summary judgment in favor of Pacific. The 

district court held that the conveyance of the wells within the 

Townsend Unit had been a mutual mistake, and consequently reformed 

the conveyance document to reflect that Pacific had not conveyed 

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Appellate Case: 90-8111 Document: 010110309469 Date Filed: 09/08/1992 Page: 5
its interest in the Townsend Unit wells. 

(Pleadings) tabs 5, 6. 

Appellant's App. 

Underwood Oil & Gas' remaining 

misrepresentation/fraud were tried 

claims of conversion and 

to a jury in October 1990. 

During trial, the district court granted Pacific's motion for a 

directed verdict on the conversion claim. The jury returned a 

verdict in favor of Pacific on the plaintiff's misrepresentation 

claim. 

III 

We consider first whether, as a 

error, Pacific was entitled to summary 

document that conveyed its interests 

Underwood Oil & Gas. In reviewing a 

result of a scrivener's 

judgment 

in the 

reforming the 

Egert Lease to 

district court's order 

granting summary judgment we apply the same standard that the 

district court applied under Rule 56(c) of the Federal Rules of 

Civil Procedure. ~, Considine v. Board of County Comm'rs, 910 

F.2d 695, 699 & n.5 (10th Cir. 1990). We must affirm if the 

record, viewed in the light most favorable to Underwood Oil & Gas, 

shows that there are no genuine issues of material fact and that 

Pacific was entitled to reformation as a matter of law. 

Pacific contended that it was entitled to reformation to 

correct a scrivener's error in the conveyance that mistakenly 

conveyed to Underwood Oil & Gas its interest in the properties 

located within the Townsend Unit. Agreeing, the district court 

granted summary judgment in favor of Pacific and reformed the 

conveyance document so that Pacific retained ownership of its 

interest in the Townsend Unit properties. 

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The Wyoming courts will reform a writing that, because of a 

mutual mistake, does not reflect the actual agreement of the 

parties. ~, Rainbow Oil Co. v. Christmann, 656 P.2d 538, 544 

(Wyo. 1982); Pfister v. Brown, 498 P.2d 1243, 1244-45 (Wyo. 

1972). The party claiming the mistake bears the burden of 

establishing that "there was an agreement in which the parties had 

a meeting of the minds which was entered into prior to the written 

agreement, and that as a result of mutual mistake or fraud the 

written contract differs from the original agreement and omits 

certain agreed-to terms." Rainbow Oil Co., 656 P.2d at 544; see 

also, e.g., Pfister, 498 P.2d at 1245 (describing rules of mutual 

mistake); Stoll v. Nagle, 86 P. 26, 28 (Wyo. 1906) (same). 

A court may reform an instrument, then, because of a mistake 

only if the parties reached an agreement that is not reflected in 

the final writing. ~, Rainbow Oil Co., 656 P.2d at 544; 

Pfister, 498 P.2d at 1244-45 . It follows that the existence of a 

genuine issue of fact as to whether the parties reached an 

agreement that is not 

summary judgment improper. 

contained in a later writing would make 

In determining whether the parties 

reached an agreement not reflected in the conveyance document, the 

court was permitted to consider extrinsic evidence. See Stoll, 86 

P. at 28-29 (reviewing extrinsic evidence received to resolve 

reformation claim based upon 

Corbin, Corbin on Contracts 

mistake); see also 3 Arthur L. 

§ 540, at 89 (1960) (explaining in 

reformation of scrivener's error, parol evidence rule does not bar 

proof of mistakenly omitted terms by extrinsic evidence). 

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Based on review of the evidentiary materials, the district 

court upheld Pacific's contention that it did not intend to sell 

its interests in properties within the Townsend Unit. Appellant's 

App. (Pleadings) tab 5, at 15. Further, the trial judge held that 

Carl Underwood did not know what properties he was buying. Id. 

The court concluded that "if one party had no particular intent as 

to the terms of a contract, then the intent of the party that had 

an intent governs." Id. 3 From this factual p r emise, the district 

court determined that summary judgment for reformation should be 

granted. The court cited the Wyoming decisions in Pfister v. 

Brown, 498 P.2d 1243 (Wyo. 1972), and Stoll v. Nagle, 86 P. 26 

(Wyo. 1906), inter alia. 

We cannot agree that on this summary judgment record and the 

showing made by Pacific as the moving party, reformation by 

summary judgment was proper. The order pointed to lack of intent 

3 

The district judge's reasoning as to how the parties had an 

agreement on Pacific's terms follows: 

The Court finds that if Carl Underwood had formed 

any intent at all about the interest he was acquiring in 

the Egert Lease, it was that he would gain an interest 

in one or two wells. At best, Underwood lacked intent 

as to what interest in the Egert Lease he was acquiring; 

he simply intended to take the "sweetheart deal" offered 

to him by Pacific, no matter what it was. The Court 

holds that, if one party had no particular intent as to 

the terms of a contract, then the intent of the party 

that had an intent governs. Therefore, whether 

Underwood only intended to acquire one or two wells on 

the Egert Lease, or whether Underwood didn't really know 

what he was getting, there was a meeting of the minds 

which was not expressed by the instrument written, and 

the conveyance of the Townsend Unit wells was a mutual 

mistake. 

Appellant's App. (Pleadings) tab 5, at 15 (emphasis added). 

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Appellate Case: 90-8111 Document: 010110309469 Date Filed: 09/08/1992 Page: 8
by Underwood as to the properties he was buying. The Wyoming 

Court has made clear the requirements for such reformation relief 

being granted on the basis of mutual mistake. In Pfister, where 

the Court held that proof of mistake on the part of the scrivener 

was not sufficiently clear and conclusive to make a judgment 

mandatory in favor of the party seeking reformation, the court 

stated: 

This court, in the early case of Stoll v. Nagle, 15 

Wyo. 86, 86 P. 26, 28, delineated limitations which 

apply to the right of reformation on account of mistake. 

The following statement from that case is pertinent: 

'The mistake, however, must have been a mutual 

one. There must have been a meeting of minds 

and a contract actually entered into. but. by 

reason of the mistake, the instrument as 

written does not exoress what was really 

intended by the parties. Both the mistake and 

its mutuality must be established by evidence 

that is clear and satisfactory.' 

Also, in Grieve v. Grieve, 15 Wyo. 358, 89 P. 569, 

571, our court pointed out, when a mistake in a writing 

is claimed, the burden rests on the party claiming the 

mistake to establish by evidence that is clear, 

satisfactory and convincing that the contract as written 

does not contain the agreement entered into between the 

parties: that the mistake was mutual: and that it did 

not occur by or result from negligence of the party 

claiming it. 

498 P.2d at 1244-45 (emphasis added) (footnotes omitted). 

Here, it appears there was not a clear showing of mutual 

mistake coming within this doctrine for reformation relief. 

Instead the district judge found only that there was uncertainty 

or lack of intent on the part of Underwood. On the present 

summary judgment record we must hold that the summary judgment for 

reformation was not proper in light of the clear requirements of 

Wyoming law; thus Pacific has not demonstrated one critical part 

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of the required showing for · summary judgment that it was 

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c) 

(summary judgment to be rendered "if the pleadings, depositions 

... together with the affidavits . show that there was no 

genuine issue as to any material fact and that the moving party is 

entitled to a judgment as a matter of law"). 

We also feel that the additional requirement for summary 

judgment -- the absence of a genuine -issue as to any material fact 

was not satisfied here. We are persuaded that the letter 

agreement, the conveyance document, and the depositions here show 

a genuine factual dispute about the agreement of Terra Resources 

(the predecessor of Pacific) and Underwood Oil & Gas. Pacific did 

present substantial extrinsic evidence (the bid package an 

affidavit of a district operations manager) which indicated that 

Terra did not intend to sell its interest in the Townsend Unit 

properties. In addition, Pacific 

Underwood's conduct (Underwood's 

claiming an interest in the Egert 

presented evidence that Carl 

delay of nearly a year before 

Lease) was consistent with 

Pacific's mistake theory. Underwood, on the other hand, points to 

other evidence (the conveyance and the letter agreement) in 

support of his position on the transaction. See 3 Corbin§ 615, 

at 745-46 (explaining "document itself ..• has weight as 

evidence of mutual agreement"). A determination of the issue 

whether the conveyance as worded was a mistake will require 

weighing such conflicting evidence under the Wyoming standard 

which demands clear and convincing proof to establish the right to 

reformation for mutual mistake. See Crompton v. Bruce, 669 P.2d 

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Appellate Case: 90-8111 Document: 010110309469 Date Filed: 09/08/1992 Page: 10
930, 934 (Wyo. 1983). The reformation claim must therefore be 

remanded for trial. 4 

Finally, Underwood Oil & Gas urges us to direct a grant of 

summary judgment in its favor on the basis of the language of the 

conveyance. However, if there was a mistake in the terms of the 

conveyance, a summary judgment based on the instrument would be 

improper. As we have noted, the summary judgment record shows a 

genuine issue of material fact about the alleged mistake. Hence a 

summary judgment for Underwood based on the language of the 

conveyance would also be improper. 

IV 

Next we address whether the district court erred in granting 

a directed verdict for Pacific on the conversion count. A 

directed verdict is appropriate under Rule 50(a) of the Federal 

Rules of Civil Procedure "only if the evidence, viewed in the 

light most favorable to the nonmoving party, 'points but one way 

and is susceptible to no reasonable inferences supporting' the 

nonmoving party." Riggs v. Scrivner, Inc., 927 F.2d 1146, 1149 

(10th Cir. 1991) (quoting Zimmerman v. First Fed. Sav. & Loan 

Ass'n, 848 F.2d 1047, 1051 (10th Cir. 1988)), cert. denied, 112 

S. Ct. 196 (1991); see also, e.g., Martin v. Unit Rig & Equip. 

4 

We have noted that in granting summary judgment to Pacific on 

the mutual mistake claim, the district court also granted summary 

judgment in favor of Pacific on Underwood Oil & Gas' claims for 

slander of title and tortious interference with a contract. 

Appellants' App. (Pleadings) tab 5, at 15. Although these rulings 

were interrelated, Underwood Oil & Gas' appeal seeks relief solely 

from the court's ruling on the mutual mistake issue. Accordingly, 

we treat only the reformation issue which we remand. 

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Appellate Case: 90-8111 Document: 010110309469 Date Filed: 09/08/1992 Page: 11
Co., 715 F.2d 1434, 1438 (10th Cir. 1983) (same). 

At the close of Underwood Oil & Gas' evidence at trial, the 

district court granted a directed verdict in favor of Pacific on 

Underwood Oil & Gas' cause of action for conversion. The trial 

judge explained in general terms that he viewed the evidence of 

conversion insufficient because Underwood Oil & Gas had proved 

with specificity neither the items supposedly converted nor their 

value. 5 In a conversion action under Wyoming law a plaintiff is 

required to establish 

5 

that (1) he had legal title to the converted property; 

(2) he either had possession of the property or the 

right to possess it at the time of the conversion; (3) 

the defendant exercised dominion over the property in a 

manner which denied the plaintiff his rights to use and 

enjoy the property; (4) in those cases where the 

defendant lawfully, or at least without fault, obtained 

possession of the property, the plaintiff made some 

demand for the property's return which the defendant 

refused; and (5) the plaintiff has suffered damage by 

the loss of the property. 

In announcing his ruling directing a defendant's verdict on 

the conversion claim, the tr~al judge said: 

With regard to the conversion, I think that the 

plaintiff's evidence of conversion is sketchy at the 

best and nonexistent at the worst. I think it's all 

based on inference and deduction. You're taking two 

statements and one of [$)844,000 and then say -- another 

statement that there's [$)500,000 left and say, 

therefore, the [$)300,000 difference is missing. I 

think there is a little bit -- a little bit of evidence 

that shows that there were some truckloads of material 

hauled out. It didn't say what material, and the only 

evidence I know is that the man in charge of that 

operation said that they were instructed to haul Terra's 

property, not the unit property, out. So, therefore, I 

don't think that the conversion claim stands up and I'm 

going to grant a directed verdict as to that. 

Appellant's App. Sec. III, Vol. IX, at 187. 

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Appellate Case: 90-8111 Document: 010110309469 Date Filed: 09/08/1992 Page: 12
Frost v. Eggeman, 638 P.2d 141, · 144 (Wyo. 1981). 

We are satisfied that the directed verdict was not in error. 

The proof of Underwood was indeed "sketchy" and insufficient to 

support a judgment for conversion. 

V 

Underwood Oil & Gas argues that a new trial is warranted on 

its misrepresentation claim because the district court erred in 

refusing to give two proposed jury instructions. Both of the 

rejected instructions addressed the general rule that a party 

seeking to recover in tort for misrepresentation must show a 

justifiable reliance on the representation. See, e.g., Garner v. 

Hickman, 709 P.2d 407, 410 (Wyo. 1985). 6 

Addressing the reliance element of the alleged 

misrepresentation, the district court instructed the jurors as 

follows: 

6 

As the elements of a cause of action for fraud, the Wyoming 

courts require that a plaintiff establish that: (1) the defendant 

made a false representation which was "relied upon by the 

plaintiff to his damage"; (2) the asserted false representation 

was "made to induce action"; and (3) the plaintiff reasonably 

believed the representation to have been true. Duffy v. Brown, 

708 P.2d 433, 437 (Wyo. 1985); see also, e.g., Rocky Mountain 

Helicopters, Inc. v. Air Freight, Inc., 773 P.2d 911, 919 (Wyo. 

1989) (listing elements of fraud). 

Under the view that Wyoming follows, courts generally require 

evidence that a plaintiff investigated the representations "only 

where, under the circumstances, the facts should be apparent to 

one of his knowledge and intelligence from a cursory glance, or he 

has discovered something which should serve as a warning that he 

is being deceived." W. Page Keeton et al., Prosser and Keeton on 

the Law of Torts§ 108, at 752 (5th ed. 1984) (footnote omitted); 

see White v. Ogburn, 528 P.2d 1167, 1171 (Wyo. 1974) (denying 

recovery for alleged misrepresentations in advertising brochure 

about ranch because plaintiffs, including experienced rancher, 

observed problems but made no investigation). 

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A party claiming to have been defrauded by a false 

representation or concealment must not only have acted 

in reliance thereof, but must have been justified in 

such reliance, that is, the situation must have been 

such as to make it reasonable for him in the light of 

the circumstances and his intelligence, experience and 

knowledge, to accept the representations without making 

an independent inquiry or investigation. 

In the absence of information such as would cause a 

reasonable person to inquire further, the plaintiff 

would be entitled to rely upon the defendant's factual 

representations. 

You are further instructed that with respect to the 

element of reliance a plaintiff cannot align himself to 

observe the readily available facts and place reliance 

upon such false representations without making a 

diligent inquiry of these facts. 

Appellant's App. Sec. III, Vol. XII, at 106-07. 

Underwood Oil & Gas argues not that the instructions 

misstated Wyoming law, but rather that the statement of Wyoming 

law was incomplete in view of the trial evidence. Underwood says 

that the district court erred in refusing an instruction it 

proposed concerning a plaintiff's duty to investigate 

representations. The requested instruction, Number 10, read: 

You are instructed that where one party to a transaction 

induces the other party to enter into it by willful 

misrepresentation, he cannot escape liability for his 

fraud by showing that the other party could have 

investigated the representations made and would have 

found them to be untrue. 

Brief of Appellant at 33-34.7 Underwood Oil & Gas argues that the 

7 

The requested instruction generally follows the language of 

the Restatement (Second) of Torts§ 540. The section states: 

§ 540. Duty to Investigate 

The recipient of a fraudulent 

misrepresentation of fact is justified in 

relying upon its truth, although he might have 

ascertained the falsity of the representation 

had he made an investigation. 

(Footnote continued on next page) 

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requested instruction was necessary in view of Pacific's 

contention at trial, as summarized in the jury instructions, that 

"it was the responsibility of Underwood Oil & Gas to initiate and 

carry out its own investigation" of the property. Appellant's 

App. Sec. III, Vol. XII, at 95-96. 

Proposed instruction Number 10 was a correct statement of 

Wyoming law to the extent that a plaintiff is not, as a general 

rule, required to investigate representations in order to show 

justifiable reliance. The district court's instructions on the 

point stated the rule in terms of when a plaintiff has a duty to 

investigate. In short, the court's instructions informed the jury 

that Underwood Oil & Gas "was entitled to rely upon the 

defendant's factual representations" absent "information such as 

would cause a reasonable person to inquire further." Appellant's 

App. Sec. III, Vol. XII, at 106-07. We "will find reversible 

error in a trial court's jury instructions only if we have 

substantial doubt whether the instructions, taken together, 

properly guided the jury in its deliberations." Mitchell v. Mobil 

Oil Corp., 896 F.2d 463, 468 (10th Cir.), cert. denied, 111 S. Ct. 

252 (1990). We conclude that the court did not err in refusing to 

give proposed instruction Number 10 because the instructions as 

given adequately addressed Wyoming law concerning the 

circumstances under which investigation is necessary in order to 

make reliance justified. See White v. Ogburn, 528 P.2d 1167, 1171 

(Footnote continued): 

Restatement (Second) of Torts§ 540 (1977). 

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(Wyo. 1974) ("We do not say that plaintiffs could not rely upon 

representations made to them by the defendants, but they could not 

blind themselves to observe the readily available facts and place 

reliance upon such alleged misrepresentations without making a 

diligent inquiry of these facts"). 

Underwood Oil & Gas next contends that the district court 

erred in refusing to give its requested supplemental instruction 

Number 11, which stated: 

Except as stated in the following paragraph, one who 

makes a fraudulent misrepresentation or fraudulently 

conceals information is not liable to another whose 

decision to engage in the transaction is a result of an 

independent investigation rather than reliance upon the 

truth of the misrepresentation. 

The fact that the recipient of a fraudulent 

misrepresentation is relying upon his own investigation 

does not relieve the maker from liability if the maker, 

by false statements or otherwise, intentionally prevents 

the investigation from being effective. 

Brief of Appellant at 34. 

The second paragraph of proposed instruction Number 11 stated 

an exception to the requirement that a plaintiff show reliance 

upon the alleged misrepresentation. The second part of the 

requested instruction was virtually identical to the Restatement 

(Second) of Torts S 547(2), which generally provides that even if 

a plaintiff relied upon "his own investigation, the maker of the 

fraudulent misrepresentation may still be liable if he 

intentionally frustrates the investigation." Restatement (Second) 

of Torts S 547 cmt. b (1977). 8 Underwood Oil & Gas contends the 

8 

The relevant part of the section states: 

(Footnote continued on next page) 

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district court erred in refusing to give the instruction on the 

basis of its view that the evidence showed 

intentionally made the investigation ineffective. 

that Pacific 

Assuming that the requested instruction, supplemental 

instruction Number 11, correctly states Wyoming law, Underwood Oil 

& Gas has not demonstrated that the trial evidence required the 

added instruction. Underwood Oil & Gas has not pointed to trial 

evidence that Carl Underwood relied upon his own independent 

investigation, and that it was thwarted by acts of Terra which 

made it ineffective. See, e.g., H & W Enterprises, Inc. v. Ellis, 

467 So. 2d 790, 792 (Fla. Dist. Ct. App. 1985) (applying 

§ 547(2)). To the contrary, as we read the argument in its brief, 

Underwood Oil & Gas' theory at trial was that Carl Underwood 

relied directly on alleged misrepresentations of Terra. The 

general rule on liability for fraudulent representations was 

adequately covered by the charge. 9 Because we conclude that 

(Footnote continued): 

The fact that the recipient of a fraudulent 

misrepresentation is relying upon his own investigation 

does not relieve the maker from liability if he by false 

statements or otherwise intentionally prevents the 

investigation from being effective. 

Restatement (Second) of Torts S 547(2) (1977). 

9 

We note that the trial judge instructed in part: 

as 

of 

are 

the 

the 

When misrepresentations are made to the public 

to a public office or commission, for the purposes 

influencing action thereon, such misrepresentations 

fraudulent as to any individual acting upon 

misrepresentations and sustaining an injury thereby 

same as if the misrepresentations had been 

directly. 

made 

(Footnote continued on next page) 

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Underwood Oil & Gas has not met· its burden of showing that an 

additional special instruction on § 547(2) was required by the 

evidence at trial, we find no error in the district court's 

refusal to give it. 

VI 

Finally, we consider Underwood Oil & Gas' argument that the 

district court committed reversible error in evidentiary and 

discovery rulings. 

A 

Underwood Oil & Gas contends the district court erred in 

refusing to admit at trial two of its exhibits. The exhibits were 

letters exchanged between the State of Wyoming and Pacific on the 

issue of Pacific's continuing obligation to test, repair, or plug 

wells on the oil and gas properties that it sold to Underwood Oil 

& Gas. In one of the letters, Pacific proposed a compromise . In 

a pretrial ruling, the district court excluded the exhibits on the 

basis of Rule 408 of the Federal Rules of Evidence as evidence of 

compromise negotiations. Underwood Oil & Gas argues that the 

letters were admissible for the limited purpose of showing 

Pacific's intent to commit fraud. 

Underwood Oil & Gas asserts that Rule 408 did not necessarily 

preclude admission of the letters on the limited issue of 

Pacific's intent to commit fraud. See Wegerer v. First Commodity 

(Footnote continued): 

Appellant's App. Sec. III, Vol. XII, at 108. This instruction 

adequately covered the theory of Underwood Oil & Gas concerning 

misrepresentations to the commission and charged that any such 

misrepresentations should be treated as if made directly to 

Underwood. 

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Corp. of Boston, 744 F.2d 719, 724 (10th Cir. 1984); see also, 

~, Fed. R. Evid. 408 (excluding evidence of compromise 

negotiations only if offered to prove "liability for or invalidity 

of the claim or its amount"); Bradbury v. Phillips Petroleum Co., 

815 F.2d 1356, 1363 (10th Cir. 1987) (same). Underwood Oil & Gas 

has not, however, explained how the letters tended to show fraud. 

Accordingly, we affirm the ruling excluding the evidence. See id. 

B 

Underwood Oil & Gas next argues that the district court erred 

in denying its motion to reopen depositions. The plaintiff 

contends that it wanted to attempt (1) to develop evidence of 

other frauds by Pacific involving the dumping of hazardous wastes 

on land not the subject of this action, and (2) to determine 

whether Pacific had dumped hazardous wastes in the Fiddler Units. 

The magistrate denied the motion, and the district court affirmed. 

We note that a district court has wide discretion in its 

regulation of pretrial matters, including whether to reopen 

discovery. Sil-Flo, Inc. v. SFHC, Inc., 917 F.2d 1507, 1514 (10th 

Cir. 1990). In our view, there was "little likelihood" that the 

requested discovery would have lead to relevant discovery. Id. 

(quoting Smith v. United States, 834 F.2d 166, 169 (10th Cir. 

1987)). We are not convinced the court abused its discretion in 

denying the motion to reopen discovery. 

Accordingly, the judgment is AFFIRMED in all respects except 

as to the summary judgment denying reformation for alleged mutual 

mistake; as to that reformation claim, the summary judgment is 

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VACATED and the case is remanded for further proceedings in accord 

with this opinion. 

ENTERED FOR THE COURT 

William J. Holloway, Jr. 

United States Circuit Judge 

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