UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

________________ _________________ ZENITH PETROLEUM CORPORATION, Plaintiff - Appellant,

v. DAVID R. STEERMAN, Executor for the Deceased Earlene H. Steerman, Defendant Third-Party Plaintiff - Appellee,

v. VERNON L. SMITH & ASSOCIATES, INC., Third-Pa rty Defendant - Appellee. No. 15-3242 (D.C. No. 6:13-CV-01175-JTM) (D. Kan.)

________________ _________________ ORDER AND JUDGMENT *

________________ _________________ Before TYMKOVICH , Chief Judge, BACHARACH and MORITZ , Circuit Judges.

________________ _________________ Zenith Petroleum Corporation appeals th e district court’s grant of summary judgment in favor of David Steerman a nd Vernon L. Smith & Associates on its

* After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not ma terially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. FILED United States Court of Appeals Tenth Circuit 

### July 11, 2016 Elisabeth A. Shumaker Clerk of Court2 complaint arising out of an oil-and-gas-le ase title dispute. Zenith contends the district court abused its discretion in ruling Zenith had not alleged a breach-ofcontract claim in the Pretri al Order. We exercise ju risdiction under 28 U.S.C. § 1291 and find no abuse of discretion. I. Earlene Steerman, a retired schoolteacher , entered into an oil-and-gas lease with Explore Energy Corporation, who reco rded the lease and later assigned it to Zenith. That lease agreement (the Ze nith Lease) included a warranty-of-title provision. Shortly before the Zenith Lease expired, Ms. Steerman and Zenith agreed to a two-year extension, but Zenith did not record the extension. A year and a half later, Ms. Steerman entered in to an oil-and-gas lease on the same tract of land to Smith. Zenith eventua lly learned of this second lease wh en trying to sell the Zenith Lease. Zenith filed a complaint against Ms. Steerman alle ging slander of title and breach of the Zenith Lease’s warranty-of-ti tle provision. It is undisputed that Zenith’s complaint did not allege any breach of the Zenith Lease as a whole, merely a breach of its warranty-of-title provision. Ms. Steerman passed away and her son and executor, David Steerman, was substitute d as the defendant. Steerman filed a third-party complaint agains t Smith alleging an agent of Smith made negligent misrepresentations that caus ed Ms. Steerman to mistaken ly grant a second lease to Smith.3 The parties prepared a Pretrial Order in accordance with Fed. R. Civ. P. 16(d) and D. Kan. R. 16.2, which set forth both parties’ factual cont entions, legal claims, and defenses. Zenith listed its legal claims as “Breach of Warranty/Contract” and “Slander of title/Cloud on title.” Aplt. App. at 134. Smith then moved for summary judgment against Steerman, ar guing it could not be liable to Steerman for negligent misrepresentation because Steerman was not liable to Zenith for breach of warranty or slander of title. Sm ith argued Steerman could onl y be liable under the warranty-of-title provision if its interest was superior to Zenith’s, which it was not. Zenith conceded Ms. Steerman had not breached the warranty-of-title provision. It argued, however, it still had an outstanding breach-of-contract claim separate from its breach-of-w arranty claim. Zenith clai med the Zenith Lease granted it an exclusive lease, which Ms. Steerman violated by enteri ng into the Smith lease. The district court ruled that Zenith had waived any general breach-of-contract claim by not asserting such claim in the Pretrial Order. It granted partial summary judgment against Zenith on the warranty- of-title claim, and granted Steerman’s motion for summary judgment. After Zenith dismissed its slander-o f-title claim, the district court entered final judgment, from wh ich Zenith appeals. II. Zenith argues the district court erred in refusing to consider a breach-of-contract claim. Th e district court, it argues, should not have sua sponte excluded that claim and failed to liberally construe the Pret rial Order. We review a district court’s decision to exclude issues and claim not as serted in the Pretrial Order4 for abuse of discretion. Rios v. Bigler , 67 F.3d 1543, 1549 (10t h Cir. 1995) (“The district court has discretion to exclude from trial issues and claims not set forth in the pretrial order.”) “The . . . pretrial order measures the dime nsions of the lawsuit, both in the trial court and on appeal.” Youren v. Tintic Sch. Dist ., 343 F.3d 1296, 1304 (10th Cir. 2003) (internal quotation marks omitted); see also Fed. R. Civ. P. 16(d) (stating the pretrial order “controls the course of th e action” unless modifi ed by the court). “Claims, issues, defenses, or theories of damages not included in the pretrial order are waived.” Cortez v. Wal-Mart Stores, Inc ., 460 F.3d 1268, 1276-77 (10th Cir. 2006) (internal quotation marks omitted). Zenith is correct that pretri al orders are to be “liber ally construed to cover any of the legal or factual theories that might be embraced by their language.” Trujillo v. Uniroyal Corp ., 608 F.2d 815, 818 (10th Cir. 1979) (internal quotations marks omitted). But the primary purpose of pretrial orders is to avoi d surprise by requiring parties to “fully and fairly di sclose their views as to what the real issues of the trial will be.” Cortez , 460 F.3d at 1276 (internal quotation marks omitted). Here, Zenith’s factual allegations in the Pretrial Order alleged only that Ms. Steerman violated the warranty-of-title provision, citing only Paragraph 5 of the Zenith Lease, the warranty-o f-title provision. Aplt. App. at 132. After Smith moved for summary judgment, Zenith argued for th e first time that Ms. Steerman also breached Paragraph 1 of the Zenith L ease, in which the lease was granted “exclusively” to the lessee. But that factual allegation and legal theory were never5 mentioned in the Pretrial Orde r; there is no mention of a c ontract theory based on this exclusivity language, nor did Zen ith cite to or mention the pr ovisions of Paragraph 1. Zenith strenuously argues that its sole us e of the word “contr act” in its listing of legal claims as “Breach of Warranty/Cont ract,” is sufficient to preserve its claim under a liberal construction. But as that heading is followed only by a discussion of the Paragraph 5 warranty provi sion, and makes no mention of either exclusivity or Paragraph 1, there is no reasonable construction of this “Breach of Warranty/Contract” heading that is so liberal as to include a claim for breach of the Paragraph 1 exclusivity provisi on. Zenith’s newly-assert ed claim based on Paragraph 1 is a wholly different theory of recovery based on a contract pr ovision that was not mentioned in the Pretrial Order. We c onclude the “Breach of Warranty/Contract” heading was wholly insufficient to alert Sm ith, Steerman or the district court that Zenith would be asserting any breach-of-cont ract claim other than a breach of the warranty-of-title provisi on in Paragraph 5. Zenith complains that the district court acted sua sponte in rejecting its breachof-contract claim. But a district court has authority to sua sponte confine the litigation to the claims and issues id entified in the pretrial order. See, e.g. , Hunt v. Cty. of Orange , 672 F.3d 606, 617 (9th Cir. 2012). Given that the Pretrial Order did not include a breach-of-contract claim, and that Zenith first ra ised its exclusivity theory in response to Smith ’s motion for summary judgmen t, the district court was well within its discretion to sua sponte reject the claim. Finally, Zenith argues it was not obligated under the rules of civil proce dure to allege a precise breach-of-contract6 claim in its complain t. The absence of the breach -of-contract claim was not, however, the basis of the district court’ s ruling, which was properly based on the absence of such a clai m in the Pretrial Orde r. It is the pretri al order, and not the complaint, that defines th e scope of litigation. See Tyler v. City of Manhattan , 118 F.3d 1400, 1403 (10th Cir. 1997). Accordingly, we find no abuse of di scretion in the district court’s determination that the Pretri al Order did not set forth a breach-of-contract claim. See Hullman v. Bd. of Tr s. of Pratt Cmty. Coll ., 950 F.2d 665, 667 (10th Cir. 1991) (“A plaintiff cannot escape the binding effect of the pretrial order by raising new issues in a response to the defendant's motion for summary judgment.”). Judgment Affirmed.

Entered for the Court
Timothy M. Tymkovich Chief Judge