* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### DEC 30 1998 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

NORTH FINN, a partnership,

Plaintiff-AppelleeCross-Appellant,

v. D.L. COOK, Defendant-AppellantCross-Appellee. Nos. 97-8112 & 97-8115 (D.C. No. 92-CV-165-B) (D. Wyo.)

ORDER AND JUDGMENT *

Before BALDOCK, EBEL, and MURPHY , Circuit Judges.

After examining the briefs and appellate record, th is panel has determined unanimously to grant the parties’ request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f) and 10th Cir. R. 34.1.9. Th e cases are therefore ordered submitted without oral argument.-2-

In this protracted oil and gas litigation, defendan t D. L. Cook appeals the district court’s order adopting an expert witness’ accounting which defines the amounts due between the parties. Plaintiff North F inn appeals from the accounting as well, but has represented that it wil l accept the accounting as final if this court decides to deny defendant’s appeal. Because any error in adopting the accounting without allowing Cook the opportunity to cross-examine the expert was harmless, we affirm the judgment. North Finn is the operator of the Carson Muddy SandUnit in Campbell County, Wyoming, an oil recovery unit that includes land leased by Cook from the federal government. Cook has working and royalty o wnership interests in the Unit. In 1989, Cook farmed out an adjacent federal leasehold to Kelly, who drilled two wells on the border of the Unit (refer red to as the Kelly No. 1-7 and Kelly No. 2-7 wells). Tests showed that the Kelly wells were draining from the same reservoir as that being pumped by the Unit. On October 31, 1991, North Finn, acting for the Uni t participants, purchased the Kelly wells in a Sheriff’s sale. Coo k thereafter claimed working ownership interests and overriding royalty interest s in the Kelly wells. When North Finn sought to join the wells into the Unit, Cook objected, and the issue was submitted to the Wyoming Oil and Gas Commission . The Commission upheld joinder of the wells as of September 1993, a nd the Wyoming Supreme-3-

Court affirmed. See Cook v. Wyoming Oil & Gas Conservation Comm’n , 880 P.2d 583 (Wyo. 1994). Throughout this interim peri od, North Finn operated the wells and recorded the expenses it incurred. In May 1992, North Finn brought a declaratory judgm ent action against Cook, seeking to define the parties’ rights and lia bilities regarding the Kelly wells. Cook filed several counterclaims. In May 1 994, trial was had before the court. During trial, North Finn presented testimony regarding the expenses of operating the Kelly wells. Thereafter, Cook soughtand received leave to amend its pleadings to include an additional counterclaim seeking an accounting of North Finn’s operation of the Unit. In November 1995, th e parties entered into a stipulation determining many of the disputed issues of fact and agreeing to entry of partial judgment. Pursuant to the stipulation, Cook was deemed to own (1) a 12.5 percent overriding royalty interest in the Kel ly wells, which was not subject to costs and charges other than taxes; and (2) a 30 per cent working interest in the Kelly No. 1-7 well and a 100 percent working intere st in the Kelly No. 2-7 well, which were subject to a proportionate share of oper ating expenses attributable to each well. The stipulation called for North Finn t o prepare an accounting regarding (1) its operation of the Kelly wells befo re they were joined into the Unit, and (2) its operation of the Unit from its date of inception, addressing the issues raised in Cook’s counterclaims.-4-

In December 1995, North Finn submitted its accounti ng, purporting to set out the revenues and expenses for each of the Kellywells and for its operation of the Unit from its inception. See Supp. App. at 196-204. Cook objected to North Finn’s submissions and filed a motion to strike the accounting and to require a more definite and certain accounting. In November 1996, the court held a hearing regarding the appointment of an outside expert witn ess to complete the accounting. In December 1996, North Finn submitted a supplementto its accounting, with invoice breakdowns for the two wells and copie s of invoices. This accounting concluded that Cook owed North Finn $30, 235.01, after taking account of Cook’s unit revenues, expenses, and overriding royalty interests, and his individual revenues, expenses and royalties for the Kelly wells. See Appellant’s App. at 74-86; Supp. App. at 223-51. T hereafter, accountant Michl McGee was appointed by the court to render an accou nting in the case. McGee submitted his accounting in August 1997. Although he accepted fully North Finn’s accounting of the revenues, expe nses, and royalties for Cook’s interests in the Unit before the Kelly wells were p urchased, he questioned many of the operating and legal expenses charged after t he wells were acquired but before they were joined into the Unit in September 1993. McGee concluded that if the disputed operating and legal expenses were d isallowed, Cook would owe-5-

North Finn $5,372.82. North Finn filed a motion fo r an order confirming the accounting, but requested the court to reinstate th e operating and legal expenses questioned by McGee. Cook filed objections to this motion, arguing that North Finn was not entitled to the deducted expenses, and noting the need for a hearing. On October 3, 1997, the district court entered an o rder confirming McGee’s report and adjudging North Finn entitled to $5,372. 82 from Cook. The court rejected both North Finn’s argument that it was ent itled to the disputed legal and operating expenses, and Cook’s arguments that the a ccounting was not sufficiently complete and that additional issues re mained for determination. Noting that McGee had, as an independent expert, ex amined the record and documentation thoroughly, the court found upon revi ewing the report that it was “an accurate determination of the rights and liabil ities of the parties to this action.” Appellant’s App. at 129. Cook moved forwithdrawal of the order on the grounds that he should have been permitted to c ross-examine McGee, and that McGee did not analyze North Finn’s accounting of it s operation of the Unit from its inception, including the issues raised in Cook’ s counterclaims, as was required by the stipulated judgment. The district court den ied the motion. On appeal, Cook argues that the district court erre d in adopting McGee’s findings without a plenary hearing, that such a pro cedure transformed McGee into the final decision maker, and that the district cou rt erred in failing to make-6-

separate findings of fact and law, as required by F ederal Rule of Civil Procedure 52(a). We review the district court’s legal ruling s de novo, but defer to its factual findings unless they are clearly erroneous. See Pierce v. Underwood , 487 U.S. 552, 558 (1988). The district court appointed McGee pursuant to Fede ral Rule of Evidence 706. That rule entitles the parties to cross-exami ne court-appointed experts. Therefore, we agree the district court erred in res tricting Cook’s right to crossexamine McGee before adopting the accounting. Give n the procedural posture of this case, however, we conclude that the error was harmless. Federal Rule of Civil Procedure 61 provides No error in . . . the exclusion of evidence and no error or defect in any ruling or order or in anything done or omitted by the court . . . is ground for . . . disturbing a judgment or order, un less refusal to take such action appears to the court inconsistent with substantial justice. The court at every stage of the proceeding must dis regard any error or defect in the proceeding which does not affect t he substantial rights of the parties. Here, the district court had before it many years o f evidence regarding North Finn’s operation of the Unit and the revenues and e xpenses relating to the Kelly wells. Much of the testimony in the May 1994 trial concerned these subjects. The stipulated judgment set out each of the parties ’ working interests in the wells and Cook’s overriding royalty interests. The recor d also included the Unit operating agreement, with provisions pertaining to the assessment of operating-7-

expenses, detailed invoices evidencing expenses inc urred in operating the Kelly wells between their purchase on October 31, 1991, and their inclusion in the Unit in September 1993, and North Finn’s revenue/expense reports. McGee’s accounting included a detailed explanation of his m ethodology, assumptions, and the evidence relied upon. Moreover, the district c ourt had before it Cook’s objections both to North Finn’s initial accounting and to McGee’s report. This backdrop provided the district court with more thanenough information to evaluate the accuracy of McGee’s conclusions. See, e.g. In re Spillane , 884 F.2d 642, 646-47 (1st Cir. 1989) (holding that denial of cross-examination, if error, was harmless, when court “had sufficient informatio n reasonably to conclude that all of the [disputed legal services] were compensab le”). More importantly, Cook has not demonstrated how cro ss-examining McGee would have changed the outcome of this case. He ha s not identified any substantive errors in the accounting, merely sugges ting that infirmities might be uncovered during a hearing. In the absence of such a showing, Cook has not demonstrated how the failure to allow cross-examination affected his substantial rights. See, e.g. , Texas-Capital Contractors, Inc. v. Abdnor , 933 F.2d 261, 270-71 (5th Cir. 1990) (noting significance of party’s fai lure to identify factual errors which would have been revealed by cross-examinationin holding denial of such cross-examination harmless); People of the State of Illinois v. Interstate-8-

Commerce Comm’n , 722 F.2d 1341, 1350 (7th Cir. 1983) (holding deni al of cross-examination harmless when party did not indic ate how acceptance of its evidentiary arguments might reasonably have been expected to have led to a different result). In addition, the district court did not abdicate it s decision-making role by adopting McGee’s accounting. McGee clearly indicat ed the bases upon which his report rested, and the legal issues yet to be decid ed by the court. The court decided these legal issues, concluding that the dis puted operating and legal expenses should not be set off against Cook’s reven ues from the Kelly wells. The court also conducted an independent review of McGee ’s conclusions, adopting them only after concluding they were an accurate de termination of the parties’ rights and liabilities. Further, the court’s adopt ion of the accountant’s factual conclusions and its determination of the identified legal issues are sufficient to permit “meaningful review,” and therefore satisfy t he requirements of Fed. R. Civ. P. 52(a). See Wolfe ex rel. Joseph A. v. New Mexico Dep’t of Hum an Servs. , 69 F.3d 1081, 1087 (10th Cir. 1995).-9-

The judgment of the United States District Court fo r the District of Wyoming is AFFIRMED.

Entered for the Court

Bobby R. Baldock Circuit Judge