___________ No. 96-3004

____________ Arkwright Mutual Insurance * Company, a Massachusetts * corporation; Insurance Company * of North America, a * Pennsylvania corporation, * * Plaintiffs - Appellants, * * Appeal from the United States v. * District Court for the * District of North Dakota. Gwinner Oil, Inc., a North * Dakota corporation; Commonwealth * Petroleum Co., an Ohio * Corporation; Gwinner Propane * Inc., an Ohio corporation, * * Defendants - Appellees. *

___________ No. 96-3223

___________ Arkwright Mutual Insurance * Company, a Massachusetts * corporation; Insurance Company * of North America, a * Pennsylvania corporation, * * Plaintiffs - Appellees, * * v. * * Gwinner Oil, Inc., a North * Dakota corporation, * *

### -2- Defendant, * * Commonwealth Petroleum Co., an * Ohio corporation; Gwinner * Propane, Inc., an Ohio * corporation, * * Defendants - Appellants.*

___________ No. 96-3227

___________ Arkwright Mutual Insurance * Company, a Massachusetts * corporation; Insurance Company * of North America, a * Pennsylvania corporation, * * Plaintiffs - Appellees, * * v. * * Gwinner Oil, Inc., a North * Dakota corporation, * * Defendant - Appellant, * * Commonwealth Petroleum Co., an * Ohio corporation; Gwinner * Propane, Inc., an Ohio * Corporation, * * Defendants. *

___________ Submitted: June 9, 1997 Filed: September 19, 1997

___________

### *T he HONORABLE ANDREW W. BOGUE, United States Distric t

Judge for the District of South Dakota, sitting b y designation.
The Honorable Rodney S. Webb, Chief Judge, United State s 1 

### District Court for the District of North Dakota.
-3- Before MURPHY and HEANEY, Circuit Judges, and BOGUE, District Judge. *

___________ BOGUE, Senior District Judge.
This case arises out of an explosion and fire in Gwinner, Nort h Dakota at The Melroe Company’s manufacturing plant, on January 31, 1993. The plaintiffs, Arkwright Mutual Insurance Company and Insurance Company of North America were Melroe’s property insurers at the time of th e explosion. They brought this subrogation action in their own names agains t the de fendants, Gwinner Oil Company and Gwinner Propane, Inc., fo r neg ligence in delivering liquid propane to their insured, Melroe

. Defendant Commonwealt h Petroleum Company is the parent company of Gwinner Propane and was named as a defendant for its alleged negligent training an d supervis ion of Gwinner Propane’s employees. The district court entere d 1 judgment against the plaintiffs upon a jury verdict assessing more than 50 % of the fa ult for the loss to Melroe. The plaintiffs appeal from tha t verdict and judgment asserting several points of error. We affirm.

I.
Melroe is a large industrial company which manufactures “Bobcat ” skid steer load ers at its factory in Gwinner, North Dakota for shipment t o customers worldwide. Melroe uses large amounts of liquid propane to heat its manufacturing facility and power its

### -4-

fact ory utility vehicles. In fact, during the winter months, Melro e consumes approximately 30,000 gallons of propane per week. At the time of the accident, Melroe was storing nearly 100,000 gallons of propane in a storage and delivery system located on its property. This system consiste d of five large tanks--four with 30,000 gallon cap acities each, and one with a 15,000 gallon capac ity. These five containers were interconnected with a series of pipes cal led a “manifold” which enabled all of the containers to operate together as one storage system. Each tank had its own shut-off valve, however, so that any one tank could be shut off or isolated from th e rest of the system. With all of the valves open, a properly manifolde d systemmaintains a relatively equal level of propane in all of the tanks
as the propane is consumed. The liquid level in the tanks can vary widely , how ever, due to the peculiar properties of liquid propane. As th e temperature rises, liquid propane expands. A small increase in temperatur e
can cause a large volume expansion within the tanks. If a tank i s overfilled, and the p ropane then expands with an increase in temperature, hydrostatic pressure begins to build within the tank which, without some mechan ismfor releasing excess pressure, could become great enough t o rupture the tank. To prevent such an event, each of Melroe’s tanks were equipped with two pressure relief valves designe d to vent propane into the atmosphere if the pressure inside the tanks reac hed unusually high levels. By regula tion, all of the relief valves were required to be fitted wit h caps to prevent rain, snow, ice, etc. from blocking the vents and causing the valves to fail. Melroe contracted with Gwinner Propane to supply its great dema nd for propane. Because Gwinner Propane did not have a delivery truck larg e enough to transport the bulk propane required by Melroe, Gwinner Propane contracted with Gwinn er Oil whereby Gwinner Oil used its fuel transporter to make propane deliveries

### -5-

from Gwinner Propane’ s rail siding to Melroe’s plant. Melroe’s fuel was supp lied on an “as needed” basis. Gwinner Propane’s manager, Danie l Enders on, monitored Melroe’s fuel levels and decided when to delive r propane, and in what amounts. Marshall Johnson drove Gwinner Oil’s fuel transpor ter. Although he was an employee of Gwinner Oil, he too k instructions from Enderson relative to the Melroe deliveries. On Januar y 25, 1993, at Enderson’s direction, Marshall Johnson made anot her delivery of fuel to Melroe. Before pumping the nearly 9,00 0 gal lons of propane into the manifold, Johnson noticed the 15,000 gallo n tank was registering 97% full--a dangerously high level. Johnson called Enderson to report the overfull tank. Enderson instructed Johnson to clos e the shut-off valves to the 15,000 gallon tank, deliver the fuel to th e system a nd reopen the valves to the tank. Johnson followed thes e instructions and the delivery was made without i ncident. Upon learning of the overfull tank, En derson placed a telephone call to Melvin Adolfs, the maint enance foreman at Melroe, and informed him that the tank wa s registering 97% full. Adolfs in turn conveyed the information to Jerr y Johnson, Melroe’s maintenance coordinator, and t o Mark Hardebeck, Melroe’s maintenance worker incharge of the propane system. No one took measures to correct the problem. On January 27, Marshall Johnson returned to Melro e with another 9,000 gallons of propane. When he informed Enderson that the small tank was still 97% full, Enderson instructed him to follow the same delivery procedure as that of two days earlier. On January 29, Johnson wa s instructed to pump another 9,000 gallons of propane into the syste m following the same procedures, despite that the 15,000 gallon tank wa s stil l registering 97% full. After Enderson’s initial call to Melro e regarding the overfull tank, no more calls were made to inform them th e tank was still full. As of the January 29 delivery, no one had taken any measures to correct the problem.

### -6- By Janua ry 31, the outside temperatures had warmed from below zer o to above freezing Fahrenheit. At about 6 a.m. on the morning of January 31, the 15,000 gallon tank ruptured and began re leasing its contents. The ensuing explosion and fire caused nearly $2 million in damage to the Melro e plant and surrounding neighborhood. As Melroe’s insurers, the plaintiffs bore the bulk of this loss.
At trial, the plaintiffs theory was that Marshall Johnson overfilled the tank, closed its shut-off valves, and left them closed for a week , thereby isolating the tank from the rest of the system. Moreover, because the r ain caps were missing from the pressure relief vents, they becam e blocked with snow andice preventing them from releasing excess pressure. The overfilled isolated tank, they argued, combined with a dramatic rise in temperatures, created tremendous hydrostatic pressure inside the tank which ultimately caused the tank to fail at pressure levels much highe r than it was designed to withstand. The plaintiffs presented evidence to support their theory that the defendants knew the rain caps were missing, knew the tank was dangerously overfull, did nothing to alleviate th e problem, and in fact, added fuel to an extremely dangerous manifold system

. The plaintiffs mainta ined that the defendants’ fault far exceeded that of Melroe ’s because the defendants breached their duty to either inspec t Melroe’s storage system or shut off the supply o f propane once it obtained knowledge that the system was unsafe. The defen dants’ theory, on the other hand, was that the tank failed
as a re sult of a defective weld which, over time, weakened and burst a t pressures much lower than 250 psi--the pressure at which the relief valves
were c alibrated to activate. The defendants disputed the plaintiffs ’ theory that the shut-off valves were closed and that the vent pipes were blocked by snow and ice. They presented expert testimony to support their theory that the

### Gwinner Propane merged into Commonwealth Petroleum Compan y 2 

### prior to trial and the jury was instructed to consider th e negligence of both as if they were one entity.
-7- cracked w eld caused the tank to become overfull. The increase d temperature, they argued, created pressure levels which, although lowe r than 250 psi, were hi gher than normal. As the weakest point on the tank, the defective weld then failed under the pressur e, allowing the propane to escape and ignite. The defendants argued that M elroe’s fault exceed their
own because Melroe’s storage tank and maintenance procedures did not compl y with industry standards, thus allowing this accident to occur.
The jury was instructed to apportionfault among the various parties pursuant to North Dakota’s comparative fault laws. The jury returned a verdi ct assessing 54% fault to Melroe, 26% to Gwinner Propane an d Commonwealth Petroleum, and 20% to Gwinner Oil. 2

II.

The plai ntiffs first argue the district court erred in refusing t o
su bmit the plaintiffs’ proposed jury instruction regarding a propan e supplier’s duty of care when delivering propane into customers’ appliances that are k nown to be unsafe. Failure to instruct on this duty, the y maintain, erroneously allowed the defendant to characterize their duty as merely an allegation of negligence rather than a n affirmative duty imposed by law

. See , Monahan v. Flannery , 755 F.2d 678, 684 (8 Cir

. th 1985)(reversing a judgment based upon faulty instructions because it was “quite possible that the jury could have believed that the [legal duty ] was, in fact not a specific duty by law, but, instead, merely an

### -8-

alleg ation of negligence by plaintiffs”). The plaintiffs’ propose d instruction No. 21 provides: The law imposes an affirmative duty upon a supplier of liquid p ropane to investigate once it receives reasonable notice of the existenc e of danger . Whenever a distributor or supplier of liquid propane is in possession of facts that would suggest to a person of ordinar y care and prudence that a storage container or appliance of a cu stomer is uns afe, the company has the duty to investigate, as a person o f ordinary care and prudence similarly situated in handling a dan gerous substance would do, before it contin ued to furnish additional liquid propa ne. The duty to exercise reasonable diligence to inspect o r shut off the liquid propane supply is measured by the likelihood of the injury and only arises upon a re asonable notice of the existence of danger. The law does not measure the duty to exercise reasonable diligence by the customer’s sophistication. We review the district court’s instr uctions to the jury for an abuse of discretion. Hoselton v. Metz Baking Co. , 48 F.3d 1056 (8 Cir. 1995). th De novo review applies, however, to the issue of whether the district cour t correctly interpretedstate law. Kostelec v. State Farm and Cas. Co. , 64 F.3d 1220 (8 Cir. 1995). It is well established t hat a party is entitled th to have the jury instructed on its theories if the proposed instructions are correct statements of the law and supported by the evidence. Hoselton , 48 F. 3d at 1063. The district court, however, is not bound to give th e inst ruction requested by the litigants. Rather, the court has broa d discretion in choosing the form and the language of the instructions. Essc o Geometric v. Harvard Indus tries , 46 F.3d 718, 727 (8 Cir. 1995). There th is no reversible error if the instructions, take n as a whole and viewed in the light of the evidence and applicable law, fa irly and adequately submit the issues to the jury. Randle v. Parker , 48 F.3d 301 , 304 (8 Cir. 1995). th Initially, we must determine whether North Dakot a has expressly delineated the legal duties owed by propane gas suppliers. The district cour t concluded it has not.

### -9- A.

The plain tiffs argue that North Dakota law “imposes a duty upo n suppliers of propane to inspect and take affirma tive action in the face of propane -related danger.” They suggest that this duty arises from th e National Fire Protection Association (NFPA) safety standards adopted by th e North Dakota Fire Marshal pursuant to his authority under N.D.C.C. § 18-09

- 02 to make rules or regulations setting forth minimum general standards fo r the transport and utilization of liquified petro leum gases. NFPA standard 58, as adopted by the North Dakota Fire Marshal, provides in part tha t “[c]on tainers shall be filled only after determination that they compl y wi th the design, fabrication, inspection, marking and requalifcatio n provisions of this st andard.” NFPA 58 § 4-2.2.3. The plaintiffs cite no authority nor does th e Court’s research reveal any authority wherein this provision of the safety standards has been inter preted by the North Dakota courts as imposing anaffirmative duty upon a propane supplier to inspect its customers’ appliances and take affirmative actions when it knows a n appl iance is unsafe. Indeed, the applicability of NFPA 58 was hotl y contested at trial. The defendants called Mr. William Mahre to testif y relative to NFPA 58’s application. Mr. Mahre is a member of the National Propane Gas Associati on safety committee and is regularly involved in the interpretation and application of NFPA 58 for the propane industry an d propane users. Mr. Mahre testified that in his opinion, § 4-2.2.3 did not apply to the defendants. In the face of the uncertainty surrounding its interpretation and application, the district cou rt did not err in refusing to instruct on an affirmative duty arising out of NFPA 58.

### -10- B.

The pl aintiffs also refer us to Van Ornum v. Otter Tail Power Co. , 210 N.W.2d 188 (N.D. 1973) for the proposition that the North Dakot a Supreme Court has imposed a duty to take affirma tive action in the face of a propane-related danger when the party knows ab out the danger and has the author ityto reduce it. The plaintiffs, however, mischaracterize th e holding of Van Ornum . In Van Ornuma construction worker was suffocated when he entered a sump room filled with propane gas in the basement of the
new building his employer was constructing. One of the named defendants in the wr ongful death action brought by the decedent’s wife was th e architect who designed the new building. The plaintiff alleged that the architect knew of the unsafe condition of the sump room but did nothing to halt the construction or alter the design plans to correct the problem

. The plaintiff appealed the trial court’s refusal to instruct the jury that the architect, as a matter of law, had authority under its contract with the building owners, to halt construction or take whatever measures were necessary to correct the known danger in the sump room. The court rejecte d the plaintiff’s argument and merely held, inter alia , that the architect’s authority under the c ontract was a question of fact for the jury, and the jury was properly instructed that if the architect indeed had suc h authori tyyet failed to exercise it in the face of a known danger, suc h failure to act might constitute negligence. Id . at 200-01. The Van Ornum
case does not, as the plaintiffs argue, impose an affirmative duty upon th e def endants to inspect and take action in the face of a known propane

related danger.

### See , Gas Service Co. v. Helmers , 179 F.2d 101 (8 Cir. 1950); 3 th 

### Bellefuil v. Wilmar Gas Co. , 6 6 N.W.2d 779 (Minn. 1954); Ambriz v. Pertolane , 319 P.2d 1 (Cal. 1958); and Weber v. Interstate Ligh t and Power Co. , 68 N.W.2d 39 (Wis. 1955).
In Van D en Hul v. Baltic Farmers Elevator Co. , 716 F.2d 50 4 (8 Cir. 1983) this court indicated that South Dakota woul d t h 

### probably adopt the definition of a gas supplier’s duty set out in Simpson where a propane supplier was on notice that the grai n elevator’s gas line was defective. There is no indication , howeve r, that the elevator’s propane system and consumption wer e vastly different from that of a residential customer.
-11- C.
Alternatively, the plaintiffs would have us rule that North Dakot a would follow other jurisdictions which have addressed this issue and impos e
an aff irmative duty on the part of a propane supplier to inspect th e appliance or shut off the supply after obtaining notice that the storage applian ce is unsafe. The plaintiffs rely substantially on Simpson v

. Skelly Oil Company , 371 F. 2d 563 (8 Cir. 1967) for the language of their th proposed instruction number 21. In Simpson , a r esidential customer of the defe ndant oil company sued to recover damages from an explosion tha t occurred when the cus tomer attempted to re-light the pilot on his propane burning water heater. There was evidence that the propane supplie r inspected the water h eater but failed to detect a gas leak in the system. Because the Iowa courts had not defined the duty of a gas distributor in Iowa to inspect or remedy defects after notice of a leak in appliance s owned by its customers, the court relied in part on the cases o f surrounding states regarding the question of the duty of a gas supplier. The court he ld that when a gas supplier is on notice of the unsaf e condition of one of its residential customer’s appliances, it has a duty to either inspect the appliance before furnishing additional gas, or shut off the ga s supply entirely. Id . at 567-68. Importantly, however, i n Simpson an d the other cases relied upon by the plaintiffs, the court s imposed an affirmative duty to inspect or shut off the gas only in those situat ions where the defective appliance was owned by a residentia l customer of the supplier. In the case at bar, 3

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Melroe had a maintena nce crew of 20 workers, one of whom was specifically assigned to the propane storage system. Melroe was subject to a myriad of regulations relative to their tank farm and was responsible for training, maintenance, and the safe operation of their tanks. We cannot conclusivel y say that under these circumstances, the North Da kota court would impose an affirmative duty upon a gas supplier to inspect Melroe’s tank farm or take measures, other than those taken by the defendants here, to correct th e situation.

Because t he plaintiffs’ proposed instruction 21 does not accurately reflect the law of North Dakota, the district court did not err in refusin g to give that specific instruction to the jury. Our ruling does not mean,
as the pl aintiffs suggest, that a supplier is free to disregard an y dangerous situation a nd indiscriminately add propane to an unsafe system. It only means there is no specific duty imposed upon the defendants b y North Dak ota law. General negligence law, on the other hand, stil l applies. The suppliers in this situation are not relieved of their duty to act reasonably under the circumstances, nor of their liability for thei r failure to so act. We have reviewed the court’s instructions in this case and find that, as a whole, they fairly and adequately presented the issue s and the plaintiffs’ theory to the jury.

### -13- III.
The plaintiffs next argue the district court erroneously admitt ed the opinions of two of the defendants’ expert witnes ses, Thomas Crane and John Brynildson. We revie w the district court’s admission of expert testimony for an abuse of discretion. Ventura v. Titan Sports, Inc. , 65 F.3d 725 (8 th Cir. 1995).

A. Crane, a mechanical engineer, was called by the defendants to offer
an opinion as to how the 15,000 gallon tank became 97% full and remained
so throughout the week despite that the propane levels in the four other tanks were rising and falling uniformly. Crane’s opinion was in part base d upon a report by Philip Johnson prepared in conn ection with this accident. Joh nson was an expert and consultant in the gas industry and a forme r employee of Crane’s firm. Unfortunately, Mr. Johnson died before this cas e went to trial. The p laintiffs objected to any of Crane’s testimony based upon his reliance on Johnson’s report on grounds that it was not admissibl e und er Fed. R. Evid. 703. Pursuant to Rule 703, an expert may rely o n otherwise inadmissible hearsay evidence in forming his opinion if the fact s and data upon which he relies are of a type reasonably relied upon b y experts in his field. Fed. R. Evid. 703; South Central Petroleum, Inc. v. Long Brothers Oil Co. , 974 F.2d 1015, 1019 (8 Cir. 1992). Specifically, th the plaintiffs objected to Crane’s testimony on grounds that Crane never testified that Johnso n’s report was of the type reasonably relied upon by exp erts in his field. Our review of the record, however, reveals th e district court made i nquiry of Crane on this point and was satisfied that Johnson’s report was of the type reasonably relied upon by experts in the field and that it was reasonably relied upon by Crane in forming hi s opinion. Moreover, as required by Rule

### -14-

703, the district court expressly limited the admission to Crane’s opinion and did not admit the substance of Johnson’s report. South Central , 97 4 F.2d at 1019.

In any event, any error in the admission of testimony based upo n Joh nson’s report would be harmless. Although Crane relied on Johnson’ s report in forming his opinion, this reliance was not exclusive. Where an expert’s opinion is partly based on hearsay which does not meet the Rule 703 requirements, his opinion is nevertheless admissible if it is supporte d by the other independ ent bases upon which he relied to form that opinion. See , Simmons v. Chicago and Northwestern Transpo rtation Co. , 993 F.3d 1326 (8 C ir. 1993)(per curiam). Here the record shows that in addition t o th Johnson’s report, Cra ne relied upon his own thorough understanding of the manifold system, his extensive experience in the behavior of propane, and his extensive investigation of the physical evidence, including the storag e tanks, to arrive at h is conclusions. We find that the district court did not ab use its discretion, and properly admitted Mr. Crane’s exper t testimony.

B.

The plaintiffs argue further that the district court erroneousl y admitted the expert testimony of John Brynildson , a metallurgist called by the defen dants to testify regarding his opinion on the cause of th e explosion. The plaintiffs maintain that Brynildson should not have been allowed to testify because his opinion was “pure speculation and totally lacked fou ndation.” This argument goes to the weight rather than th e admissibility of the expert’s testimony. “[T]he factual basis of an exper t opinion goes to the credibility of the testimony, not the admissibility, and it is up to the opposing party to examine the factual basis for the

### -15-

opinion in cross-examination.” Hose v. Chicago Northwester n Transportation Co. , 70 F.3d 968, 974 (8 Cir. 1995)(citing Loudermill v. th Dow Chemical Co. , 863 F.2d 566, 570 (8 Cir. 1988)). Questions of a n th expert ’s credibility and the weight accorded to his testimony ar e ultimately for the trier of fact to determine. F ox v. Dannenberg , 906 F.2d 1253, 1 256 (8 Cir. 1990). “Only if an expert’s opinion is s o th fundamentally unsupported that it can offer no a ssistance to the jury must such testimony be excluded.” Hose , 70 F.3d at 974.

Here the district court made the threshold determination tha t Brynildson was competent to testify as an expert and that his testimon y would assist the jury in determining a fact in issue. See , Fed. R. Evid. 702. Brynildson testified that in his opinion, the tank failed as a resul t of a growing “crack” in a defective weld within the tank. He also offered testimo nyto refute the plaintiffs’ assertion that the tank failed a t pres sures greater than 250 psi. Brynildson based his opinion on hi s experi ence and knowledge as a metallurgist and on his extensiv e investigation and testing of the fractured tank. The plaintiffs greatly emphasize the fact th at Brynildson testified although one would expect to find “beach marks” evidencing the type of growing crack which he opined wa s present i n the 15,000 gallon tank, he found no such evidence during hi s examination of the tank. Thus, they argue, Bryn ildson’s opinion regarding the existence of the crack was based on speculat ion and mere possibilities and should have been excluded. Brynildson also testified, however, that given the low quality of this particular weld, a nd the obliteration of the evidenc e caused by the explosion, it would be extremely difficult fo r anyone to find the ch aracteristic beach marks. Moreover, beach marks (or the absence thereof) was not the only evidence u pon which Brynildson based his opinion. Our review of the record reveals

### I nsofar as it was brought only to preserve errors fo r 4 

### resolu tion in the event the Court ordered a new trial, we do no t reach the merits of the defendants’ cross-appeal.
-16- that Bryn ildson’s testimony was not without some basis in fact. He wa s subjected to extensive cross-examination regarding his opinion and the jur y
was properly allowed to assess his credibility and the weight of hi s testimony. The district court did not abuse its discretion in admitting Brynildson’s expert testimony.

IV.
Finally, the plaintiffs argue that the district court erred i n denying their motion for judgment as a matter of law, or alternatively, fo r
a new trial on grounds that the jury’s verdict was against the clear weigh t of the ev idence. We have thoroughly reviewed the record and find thes e asserted points of er ror are without merit. Accordingly, the judgment of the district court is affirmed. 4

A true copy

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.