Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-02269/USCOURTS-ca10-90-02269-0/pdf.json

Parties Involved:
Union Texas Petroleum Corporation
Appellant
Charles Winters
Appellee
Sherry Winters
Appellee

Document Text:

FIL~D 

United States C-oort of .-\.pp-.:;lb T£nth Cir~ui: 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

AUG 171992 

ROBERT L. HOECKEE 

---------------------Clerk 

CHARLES WINTERS, Individually; SHERRY ) 

WINTERS, Individually; CHARLES WINTERS, ) 

and SHERRY WINTERS as natural parents ) 

and next friends of CHARLES BRUCE ) 

WINTERS, a minor; CHARLES WINTERS, and ) 

SHERRY WINTERS as natural parents and ) 

next friends of KELEIGH WINTERS, a minor) 

vs. 

Plaintiffs/Appellees/ 

Cross-Appellants, 

UNION TEXAS PETROLEUM CORPORATION, a 

Delaware corporation, 

Defendant/Appellant/ 

Cross-Appel lee. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

ORDER AND JUDGMENT* 

No. 90-2269 

No. 90-2285 

(D.c~ No. CIV-87-340-JB) 

(D. New Mexico) 

Before LOGAN, SETH, and SNEED,** Circuit Judges. 

SNEED, Circuit Judge. 

* . . . This order and Judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for the purposes of establishing the doctrines of law of the case, 

res judicata or collateral estoppel. 10th Cir. R. 36.3. 

** Honorable Joseph T. Sneed, Senior Circuit Judge of the United 

States Court of Appeals for the Ninth Circuit, sitting by 

designation. 

Appellate Case: 90-2269 Document: 010110276740 Date Filed: 08/17/1992 Page: 1
These appeals arise from a jury award of compensatory and 

punitive damages against Union Texas Petroleum Corporation in 

favor of the Winters family based on Union Texas' negligent 

drilling of a natural gas well. The drilling caused contamination 

of the Winters' water well, with consequent property damage to the 

Winters' homestead and personal injuries to the Winters. Union 

Texas appeals the jury verdict on a number of grounds and 

specifically appeals the award of punitive damages. The Winters 

appeal the sole issue whether the court erred in refusing to award 

prejudgment interest. We vacate that portion of the district 

court's order denying prejudgment interest, and remand for a 

determination of whether such interest is proper. We affirm the 

district court's decision in all other respects. 

I. 

FACTS AND PROCEEDINGS BELOW 

In 1979 Charles and Sherry Winters and their children moved 

into a house Charles and Sherry built on a five-acre spread in the 

Animas Valley of northwestern New Mexico. The two Winters 

children, Charles Bruce and Keleigh, grew up on the property. Mr. 

Winters ran horses on the land for his children, who participated 

in 4-H and rodeo. He also raised and trained racehorses there. 

A well, drilled in 1977, supplied the property with water. 

The well was deepened in 1982, and continued to produce good 

drinking water after being deepened. In April 1985, however, the 

water quality suffered a drastic change. For two weeks it ran 

hot, and then developed a foul odor and film. Tests confirmed 

that dangerous levels of methane, ethane, and propane gas were 

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Appellate Case: 90-2269 Document: 010110276740 Date Filed: 08/17/1992 Page: 2
present in the well water. Clothes turned gray in the wash, 

appliances were ruined, and the pipes began to corrode. The 

downstairs portion of the house was flooded when hot water pipes 

ruptured due to valve corrosion. The contaminated well water was 

unfit to drink, and the entire family suffered health and 

emotional problems as a result. Eventually the family moved out 

and their horses had to be sold. 

Because of the water problems, the Winters' property is 

essentially worthless and they cannot sell it. In late 1987, Mr. 

and Mrs. Winters were forced to move back into the house to enable 

them to send their children to school. They subsist by having 

their water trucked in at some expense. The foul odor has 

persisted, as have their health problems. 

On March 19, 1987, the Winters filed suit against Union 

Texas. Their complaint alleged that Union Texas negligently 

drilled a natural gas well, the Payne 8, which was located on a 

bluff overlooking the Winters' property, in such a manner as to 

cause their injuries and property damage. At a jury trial held in 

February 1990, the Winters introduced expert testimony and other 

evidence tending to prove that the Payne 8 was a "problem well," 

that the Payne 8 had been brought into production without due 

regard for the environment, and that leakage from the Payne 8 was 

the source of the Winters' water contamination. At the close of 

evidence, Union Texas moved for a directed verdict on the issue of 

punitive damages; the court denied the motion. The jury found 

Union Texas negligent, and awarded compensatory and punitive 

damages totalling $486,830. 

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Following the jury verdict, the Winters moved for an award of 

prejudgment interest, and Union Texas moved for remittitur or, 

alternatively, a new trial. The court denied both parties' 

motions. This appeal and cross-appeal followed. 

II. 

JURISDICTION AND STANDARDS OF REVIEW 

We have jurisdiction pursuant to 28 U.S.C. § 1291. The 

standards of review are numerous and vary with the issue involved. 

For example, abuse of discretion is the proper standard when the 

issues are the correctness of a trial court's decision to qualify 

an expert witness, Firestone Tire and Rubber Co. v. Pearson, 769 

F.2d 1471, 1482 (10th Cir. 1985), and its decision whether to 

grant prejudgment interest, see Strickland v. Roosevelt County 

Rural Elec. Coop., 99 N.M. 335, 657 P.2d 1184, 1193 (N.M. Ct. App. 

1982), cert. denied, 99 N.M. 358, 658 P.2d 433 (N.M.), and cert. 

denied, 463 U.S. 1209 (1983). Various adjectives modify this 

standard in other situations. It is "clear" abuse of discretion 

when a measuring a court's decision to admit relevant evidence, 

C.A. Assoc. v. Dow Chem. Co., 918 F.2d 1485, 1489 (10th Cir. 

1990); "manifest" when refusing to grant a motion for new trial 

based on insufficiency of the evidence, Royal College Shop, Inc. 

v. Northern Ins. Co. of N.Y., 895 F.2d 670 (10th Cir. 1990); and 

"gross" in granting or denying a remittitur, see Holmes v. Wack, 

464 F.2d 86, 89 (10th Cir. 1972). 

We review the jury instructions to determine whether "[t]he 

instructions as a whole ... convey a correct statement of the 

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applicable law." Wheeler v. John Deere Co., 862 F.2d 1404, 1411-

12 (10th Cir. 1988). Reversal is required only if an error in 

jury instructions "is determined to have been prejudicial, based 

on a review of the record ap a whole." Id. at 1411. Finally, we 

review the trial court's denial of a motion for directed verdict 

to determine whether the court's evaluation of the evidence was 

clearly erroneous. See Brown v. Reardon, 770 F.2d 896, 903 (10th 

Cir. 1985). 

A. 

III. 

DISCUSSION 

Scope of Union Texas' Appeal 

As a threshold matter, we must consider what issues Union 

Texas is entitled to have us review. Its first notice of appeal, 

on December 5, 1990, raised only the issue of punitive damages. 

On December 6, 1990, however, Union Texas amended its notice of 

appeal to cover alleged errors in the general verdict. The 

Winters insist that the December 6 filing was ineffective because 

Union Texas did not seek leave to amend from the district court. 

As a consequence, this court should hear Union Texas' appeal only 

as it relates to punitive damages, and we should not reach Union 

Texas' appeal of the general verdict. 

We reject the Winters' argument. December 6 was the last day 

on which an appeal would have been timely as a matter of right 

under Fed. R. App. P. 4(a) (1), 4(a) (4). Nothing in the Rules of 

Appellate Procedure precludes an amended notice of appeal from 

being accepted as of right so long as it meets the Rule 4(a) (1) 

and 4(a) (4) time guidelines. "Failure of an appellant to take any 

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step other than the timely filing of a notice of appeal does not 

affect the validity of the appeal, but is ground only for such 

action as the court of appeals deems appropriate .... " Fed. R. 

App. P. 3(a). The Winters' -reliance on Spound v. Mohasco Indus., 

Inc., 534 F.2d 404, 410-11 (1st Cir.), cert. denied, 429 U.S. 886 

(1976), is misplaced. That case deals with Rule 4(a) (5) relief 

from the Rule 4(a) (1) thirty-day time limit and has no application 

here. 

We now turn to the issues Union Texas fairly raises by this 

appeal. 

B. Certification of Winters' Expert Witness 

Union Texas contends that the district court improperly 

certified Norman Sachnik as an expert in petroleum engineering. 

It argues that the voir dire evidence failed to establish that 

Sachnik had the requisite skills for qualification under Fed. R. 

Evid. 702. We disagree. Sachnik had thirty-five years' 

experience as a consulting petroleum engineer, and his decisions 

as consultant routinely were acted upon by his clients. Moreover, 

he held eighteen patents on oilfield and oilwell equipment, with 

nine of those patents relating to oil and gas production. 

Although Sachnik admitted to being unfamiliar with certain 

measurement techniques pointed out by defendant's counsel, for 

example, gamma-ray and neutron logs, there was no suggestion that 

these techniques were at all germane to the formation of his 

expert opinions. our review of the record persuades us that the 

district court did not abuse its discretion in qualifying Sachnik 

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as an expert petroleum engineer. 

c. Admission of Evidence Regarding Union Texas' Net Worth 

Union Texas contests the district court's decision to admit 

into evidence an SEC form 10-Q for the purpose of assisting the 

jury in deciding the appropriate amount of punitive damages. 

Union Texas argues that evidence of net worth bears no reasonable 

relationship to actual damages and injury as required by New 

Mexico Uniform Jury Instruction SCRA 1986, 13-1827. This argument 

is meritless. New Mexico specifically allows net worth evidence 

as it relates to punitive damages. See Ruiz v. Southern Pac. 

Transp., 97 N.M. 194, 638 P.2d 406, 414 (N.M. Ct. App. 1981); 

Ramsey v. Culpepper, 738 F.2d 1092, 1099 {10th Cir. 1984). 

Union Texas' reliance on Pacific Mut. Life Ins. Co. v. 

Haslip. 111 s. Ct. 1032 (1991), is misplaced. In clarifying that 

to impose punitive damages, "[t]he fact finder must be guided by 

more than the defendant's net worth," id. at 1045, the Court did 

not hold that a defendant's financial status is inadmissible for 

purposes of determining punitive damages. On the contrary, 

financial condition evidence is relevant because punitive damages 

must be sufficient to alter conduct for the better. See id. at 

1044 (retribution and deterrence). That is the purpose of 

punitive damages; it is not to promote a single-shot 

redistribution of wealth. 

Union Texas further argues that it was prejudiced by the 

court's decision to allow the introduction of the Form 10-Q even 

though the Winters did not list the form in their pretrial 

representations and even though the introduction of the form 

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violated the district court's own pretrial time limits for 

noticing proposed evidence. We cannot say this was error. A 

trial court may modify a final pretrial order to prevent manifest 

injustice. Fed. R. Civ. P. 16(e) ·. The district court's decision 

to depart in this case from its own pretrial evidentiary rulings 

was not an abuse of discretion. 

D. Jury Instructions Regarding Duty of Care and Mitigation of 

Damages. 

Union Texas contests the district court's refusal to give two 

jury instructions requested by Union Texas. 

First, the court refused to instruct the jury that it must 

make a preliminary finding that Union Texas owed a duty of care to 

the Winters in order to find negligence. Such an instruction 

would have been improper. Duty of care is a question of law for 

the trial court, not for the jury. Shear v. Board of County 

Comrn'rs, 101 N.M. 671, 687 P.2d 728, 729 (N.M. 1984). The 

district court's negligence instructions followed the approved New 

Mexico model instructions. 

Second, the district court refused to give an instruction 

which, according to Union Texas, concerned the mitigation of 

damages. The court gave the following general instruction: "Every 

person has a duty to exercise ordinary care for the safety of the 

person and the property of others." Union Texas sought to have 

the court add: "Every person also had a duty to exercise ordinary 

care for his own safety and the safety of his property.'' However, 

this sentence addresses the affirmative defense of lack of care by 

the party seeking recovery, not mitigation of damages by the 

injured party. Mitigation of damages is a defense imposing on the 

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defendant the burden to show that the plaintiff reasonably could 

have limited his damages. See Hickey v. Griggs, 106 N.M. 27, 738 

P.2d 899, 902 (N.M. 1987). The district court correctly ruled 

that Union Texas' proposed instruction would have been 

inappropriate here. 

Moreover, even an instruction that properly concerned 

mitigation of damages would have been inappropriate. Although 

Union Texas contends on appeal that a major portion of its case 

dealt with the Winters' failure to mitigate property damage, the 

record belies this contention. Evidence was presented from which 

the jury properly could conclude that Union Texas' proposed means 

of mitigation, for example, venting water tanks or digging a new 

well, would have been ineffective, and that consequently, the 

Winters' property damage was unavoidable. In brief, Union Texas 

did not carry its burden of proof. 

E. Motion for Directed Verdict on Punitive Damages 

Union Texas challenges the district court's finding that 

there was sufficient evidence to warrant a jury instruction on 

punitive damages. From the bench, the court stated that the 

evidence, and in particular Sachnik's expert opinion and the data 

obtained from monitor wells drilled in the vicinity of the Payne 

8, showed that Union Texas "could have known that there was 

leakage from the well," and "that the conduct of the defendant was 

in careless disregard for the rights of the plaintiffs, which 

would warrant the issue of punitive damages under New Mexico law" 

(emphasis added). 

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Union Texas says this was error. It argues that "careless 

disregard" is simple negligence, and, in order to submit the 

punitive damages question, there must be at a minimum recklessness 

or gross negligence. Presumably Union Texas insists that only the 

words "reckless disregard" will serve the purpose. Our review is 

directed not at the court's particular wording in its oral ruling, 

but at the evidence adduced at trial. That evidence, viewed in 

the light most favorable to the Winters, supports a finding of 

recklessness or gross negligence on the part of Union Texas. 

Under New Mexico law, punitive damages properly may be assessed if 

the conduct in question is, inter alia, willful, wanton, reckless, 

or grossly negligent. Ruiz, 638 P.2d at 413; Dugan v. EMS 

Helicopters, Inc., 915 F.2d 1428, 1431 (10th Cir. 1990) ("willful, 

wanton, or grossly negligent"). It follows that the district 

court's view of the evidence was not clearly erroneous. 

Therefore, it did not err when it denied Union Texas' motion for 

directed verdict on the issue of punitive damages. 

F. Motion for New Trial or Remittitur 

Union Texas next contends that there was insufficient 

evidence for the jury to find proximate cause. The record does 

not support this contention. The jury properly could have found, 

based on the hydrological, geological, and other evidence 

presented, that the leakage of Payne 8 gave rise to the 

contamination of the Winters' well. Union Texas attempts to 

undermine the jury's conclusion through scattered citations to the 

record. We cannot reweigh the evidence. The verdict was 

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reasonable in light of the record as a whole, and the district 

court did not err in refusing to grant a new trial. 

The determination of the amount of damages is within the 

exclusive province of the jury. Sanchez v. Martinez, 99 N.M. 66, 

653 P.2d 897, 903 (N.M. ct. App. 1982). The jury's award of 

damages in this case is supported by law. In particular, under 

New Mexico law, there is no requirement that only an intentional 

injury will support a recovery of emotional distress damages. See 

Whalley v. Sakura, 804 F.2d 580, 587 (10th Cir. 1986). The damage 

award was not grossly excessive or beyond the bounds of any 

reasonable recovery. See Gutierrez v. ·Exxon Corp., 764 F.2d 399, 

402 (5th Cir. 1985). The trial court properly denied the motion 

for remittitur. 

G. Prejudgment Interest 

By statute, New Mexico leaves to the discretion of the trial 

court the question whether to award prejudgment interest from the 

date of service. The statute, which is set forth in the margin, 

lists two nonexclusive factors for the court to consider: whether 

the plaintiff created unreasonable delay, and whether the 

defendant timely made a settlement offer. N.M. stat. Ann. § 56-8-

4(B) (Michie 1978). 1 

1 In pertinent part, N.M. Stat. Ann. § 56-8-4 provides as 

follows: 

A. Interest shall be allowed on judgments and decrees 

for the payment of money from entry and shall be 

calculated at the rate of fifteen percent per year 

B. The court in its discretion may allow interest of 

up to ten percent from the date the complaint is 

served upon the defendant after considering among 

other things: 

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In its ruling declining to award prejudgment interest in the 

instant case, the district court expressed the view that an award 

of prejudgment interest is improper where the underlying damages 

award represents a recovery- for personal and emotional injuries. 

The New Mexico Court of Appeals has recently held to the contrary. 

In Southard v. Fox, No. 12,117, 1992 WL 108122 (N.M. Ct. App. Apr. 

21, 1992), the court construed the prejudgment interest statute in 

broad terms: "On its face, Section 56-8-4(B) applies to all 

actions and is not limited to certain or specific actions, such as 

those based on contract or in which damages are ascertainable 

before trial." Id. at *2. (emphasis in original). The court 

went on specifically to conclude "that Section 56-8-4(B) permits 

the award of prejudgment interest on all damages awarded in a 

personal injury action, including those for nonpecuniary losses." 

Id. at *4. 

The district court did not have the benefit of the 

interpretation of New Mexico law provided by Southard. 

Accordingly, we remand to afford the court an opportunity to 

determine whether, in light of Southard, an award of prejudgment 

interest is appropriate in this case. In making its 

(1) if the plaintiff was the cause of 

unreasonable delay in the adjudication of the 

plaintiff's claims; and, 

(2) if the defendant had previously made a 

reasonable and timely offer of settlement to the 

plaintiff. 

C. Nothing contained in this section shall affect the 

award of interest or the time from which interest 

is computed as otherwise permitted by statute or 

common law. 

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determination, the court shall give explicit consideration to the 

nonexclusive statutory factors set forth in N.M . Stat. Ann. § 56-

8-4(B), as well as such other factors as it may in its sound 

discretion deem proper. 

AFFIRMED IN PART, VACATED IN PART, and REMANDED. 

Entered for the Court 

Joseph T. Sneed 

Circuit Judge 

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