Court Opinion

ID: 168966
Source: CourtListenerOpinion
Date Created: 2010-08-14 17:02:23+00
Date Added: 2024-06-11T09:12:58.740425
License: Public Domain

F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                       UNITED STATES CO URT O F APPEALS
                                                                     March 23, 2007
                            FO R TH E TENTH CIRCUIT                Elisabeth A. Shumaker
                                                                       Clerk of Court

    JERRY M C DO N A LD ; N IK K I
    M C DO NA LD ,

              Plaintiffs,
                                                        No. 06-7045
         v.                                      (D.C. No. CIV-05-065-SH)
                                                        (E.D. Okla.)
    NO RTH AM ERICA SPECIALTY
    IN SU RAN CE C OM PA N Y ;

              Defendant-Third-Party-
              Plaintiff-Appellee,

    v.

    FA RRELL C OO PER MIN IN G
    COM PA NY, a foreign corporation,

              Third-Party-
              Defendant-Appellant.

                             OR D ER AND JUDGM ENT *

Before H E N RY, B AL DOC K , and M U RPH Y, Circuit Judges.

*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 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 This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
      In this diversity subrogation action, Defendant Farrell Cooper M ining

Company appeals from a district court order that denied its post-trial motion for

judgment as a matter of law. W e have jurisdiction under 28 U.S.C. § 1291, and

we affirm.

                                  B ACKGROUND

      In 2005, Jerry and Nikki M cDonald sued their insurer, North American

Speciality Insurance Company, in federal court in Oklahoma for failing to pay

benefits after their two poultry houses were damaged. North American impleaded

Farrell Cooper, alleging that its mining activities had caused the damage. After

North American paid the policy limits to the M cDonalds and the M cDonalds

dismissed their claims, North American sought subrogation against Farrell

Cooper.

      In the pretrial order, the parties agreed on several issues, including whether

Farrell Cooper’s blasting had damaged the M cDonalds’ poultry houses. North

American attempted to identify as an issue whether “Farrell Cooper [is]

responsible on a theory of ultrahazardous activity.” Aplt. A pp., Vol. 1 at 80.

Farrell Cooper objected, however, stating that North American had pled only

negligence. Additionally, North American and Farrell Cooper stipulated that

North American’s payment of $205,000 “was reasonable for the damages

incurred” to the houses and for the M cDonalds’ lost income, and “that the costs to

re-build both poultry houses [exceeded] the sum of $275,000.00.” Id. at 79. The

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parties also noted that the fair market value of the poultry houses remained an

issue for trial. After empaneling a jury, the district court announced the parties’

monetary stipulation.

      During North American’s case-in-chief, M r. M cDonald testified that the

poultry houses were on his 120-acre farm, together with a residence, an old barn,

and two “out buildings.” Id., Vol. 2 at 278. One of the poultry houses was

insured for $90,000 and the other for $80,000, as recommended by insurance

agent Jerry Pitchford, who procured an insurance policy from North American

after inspecting the poultry houses.

      Before Farrell Cooper began blasting near the farm, it had W hite Industrial

Seismology, Inc. (W IS) inspect for any preexisting property damage. W IS

reported no significant damage to the poultry houses. Additionally, the

Britt/Paulk Insurance Agency inspected the poultry houses before Farrell

Cooper’s blasting and reported that the superstructures’ columns were plumb, had

good base contact, and were not buckling, corroded, or missing bolts. Both

M r. M cD onald and M r. Pitchford testified that prior to blasting, the poultry

houses’ walls and columns were not leaning.

      Farrell Cooper began blasting in June or July 2003, roughly two to three

hundred feet from the poultry houses. After it stopped blasting in October 2003,

M r. M cDonald noticed that the poultry houses were leaning and he became

concerned that they would collapse. He contacted M r. Pitchford, who observed

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that the houses were now leaning aw ay from the blast cite. In a “Property Loss

Notice,” M r. Pitchford w rote, “Blasting from a Local mine has caused the poultry

barns to basically fall in on themselves.” Aplee. Supp. App. at 12.

      Civil structural engineer John Lawrence testified as an expert for North

American. He opined that the damage to the poultry houses w as most likely

caused by Farrell Cooper’s blasting. Farrell Cooper’s mining superintendent

testified that the blasting was accomplished using a total of 1,300 tons of

amm onium nitrate, which was roughly 600 times more ammonium nitrate than

was used in the 1995 bombing attack on the Alfred P. M urrah Federal Building.

      After North A merican rested, Farrell Cooper moved for judgment as a

matter of law, arguing, among other things, that (1) there was no evidence of

negligence, causation, or the poultry houses’ fair market value; and (2) Lawrence

did not rule out possible alternative causes of the damage, such as wind. The

district court denied the motion.

      Farrell Cooper then offered the testimony of a certified blaster, who

indicated that there were “forty-five or more actual blasts,” generating “different

waves of vibration” instead of “one huge wave,” Aplt. App., Vol. 2 at 538, and

that an open pit on the farm reduced the amount of ground vibration, id. at 542.

Farrell Cooper also offered the testimony of a professional engineer, who

concluded that “vibration from the blasting had nothing at all to do with the

damage,” id. at 561, and that if “they are leaning to the south, they were built that

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way,” id. at 566. He conceded on cross-examination, however, that he did not see

any significant damage associated with wind, and that the blasting shook the

M cDonalds’ residence with such force that it knocked pictures off the w alls.

      At the close of the evidence, Farrell Cooper again requested judgm ent as a

matter of law. Additionally, North American sought “to proceed on the theory of

ultra hazardous activity” instead of negligence, and requested a corresponding

jury instruction. Id. at 591. The district court denied both motions, ruling that

North American had presented sufficient evidence to take the case to the jury, but

that the jury would be instructed only on negligence because North American had

failed to plead an ultrahazardous-activity theory.

      The jury returned a verdict in favor of North American for $170,000, which

was the amount North American had paid for the damage to the poultry houses.

Farrell Cooper then filed a renewed motion for judgment as a matter of law,

arguing that (1) there was no evidence of the poultry houses’ fair market value;

(2) there was no evidence of the standard of care for a blast-mining operation or

of any breach of that standard; and (3) there was insufficient evidence that

blasting had caused the damage. The district court denied the motion, and Farrell

Cooper appealed.

                                         -5-
                                    D ISCUSSION

                              I. Standards of Review

      “W e review the district court’s denial of judgment as a matter of law de

novo, using the same standard employed by the district court.” Crumpacker v.

Kansas, Dep’t of Hum an Res. 474 F.3d 747, 751 (10th Cir. 2007). “A party is

entitled to judgment as a matter of law only if the evidence points but one way

and is susceptible to no reasonable inferences which may support the opposing

party’s position.” EEOC v. Heartway Corp., 466 F.3d 1156, 1160 (10th Cir.

2006). In conducting our review, “we will not weigh evidence, judge w itness

credibility, or challenge the factual conclusions of the jury.” Id. at 1161.

      Because this is a diversity case, the substantive law of the forum state,

Oklahoma, governs. Clark v. State Farm M ut. Auto. Ins. Co., 433 F.3d 703, 709

(10th Cir. 2005).

                               II. Fair M arket Value

      In Oklahoma, “the measure of damages for the permanent injury to real

property is the difference between the fair market value of the real property

immediately prior to the injury, and the fair market value thereof immediately

after such injury.” Stekoll v. Prevett, 359 P.2d 579, 580-81 (O kla. 1961); see also

Schneberger v. Apache Corp., 890 P.2d 847, 849 (Okla. 1994). Farrell Cooper

contends that “[t]here w as no evidence of fair market value, and therefore, there

was no competent evidence on which to base any kind of damage award.” A plt.

                                         -6-
Br. at 15. But M r. M cDonald testified that the $80,000 and $90,000 “property

values” set by the insurance agent on the two poultry houses were “a fair deal,”

Aplt. App., Vol. 2 at 294, and that if he had thought the values were different, he

would have sought different insurance coverage, id. at 296. M r. M cDonald

further testified that those values applied up until Farrell Cooper’s blasting, id.,

and that afterward, the poultry houses were leaning so badly that they were not

safe to enter, id. at 363. There was also testimony by M r. M cDonald that he had

offered to sell the entire farm before blasting for $695,000, a figure suggested by

a real estate appraiser. Id. at 366. W e conclude that this evidence was sufficient

for the jury to infer that the poultry houses’ fair market value before blasting was

$170,000, and that afterw ard their value was zero. See H.D. Youngman

Contractor, Inc. v. Girdner, 262 P.2d 693, 696 (Okla. 1953) (“It is generally

recognized that the opinion testimony of the owner of property, because of his

relationship as owner, is competent and admissible on the question of the value of

such property, regardless of his knowledge of property values.”).

      That M r. M cDonald may have expressed uncertainty when cross-examined

in terms of “replacement cost” value and “fair market value,” Aplt. Br. at 9, 1 is

not enough for us to discard the jury’s verdict, as we do not weigh evidence when

reviewing a motion for judgment as a matter of law, Heartway Corp., 466 F.3d at

1
      Farrell Cooper’s appendix omits the transcript pages cited in support of its
uncertainty argument.

                                          -7-
1160. Indeed, this rule has particular relevance here, as we have no way of

resolving the conflict between Farrell Cooper’s cross-examination of

M r. M cDonald, which purportedly elicited $170,000 as the cost to “replace[ ]” the

poultry houses, and Farrell Cooper’s stipulation that the cost to “rebuild” the

poultry houses exceeded $275,000.

      In short, “[i]t was within the jury’s province to determine the value of the

[poultry houses].” Cleveland v. Dyn-A-M ite Pest Control, Inc., 57 P.3d 119, 130

(Okla. Civ. App. 2002).

                            III. Standard of Care/Breach

      Farrell Cooper next argues that there was no “evidence as to the standard of

care required for a blasting operation,” and therefore, the jury had no “basis upon

which to determine whether [Farrell Cooper] breached its standard of care to the

M cDonalds.” Aplt. Br. at 15. But standard of care and breach are elements of

negligence, see Johnson v. Hillcrest Health Ctr., Inc., 70 P.3d 811, 816, 817

(Okla. 2003), and are not required to prove strict liability for ultrahazardous

conduct, see Wetsel v. Ind. Sch. Dist. I-1, 670 P.2d 986, 990 (Okla. 1983). The

Oklahoma Supreme Court has unambiguously held since 1957 that a plaintiff need

not “allege and prove negligence on the part of defendant before plaintiff can

recover property damage caused by blasting.” Smith v. Yoho, 324 P.2d 531, 533

(Okla. 1958) (citing Seismograph Serv. Corp. v. Buchanan, 316 P.2d 185

(Okla. 1957)). “[T]he liability of a user of explosives is absolute and not

                                          -8-
predicated on the user’s negligence.” Id.; see also Superior Oil Co. v. King,

324 P.2d 847, 848 (O kla. 1958) (observing that “[s]ince . . . Seismograph Service

. . . it is immaterial whether there was negligence,” and approving a jury

instruction imposing liability “without regard to the degree of care employed in

discharging the blast”); Ward v. H. B. Zachry Const. Co., 570 F.2d 892, 895-96

(10th Cir. 1978) (collecting cases and observing that Oklahoma law on the use of

explosives “impos[es] liability without regard to negligence”). All that the

plaintiff need prove is that the property was damaged directly and proximately by

explosion. States Exploration Co. v. Reynolds, 344 P.2d 275, 278 (Okla. 1959).

      W hile North American seeks to uphold the judgment under negligence

principles, “[w]e may affirm on any ground adequately presented to the district

court.” Griffith v. Colo., Div. of Youth Servs., 17 F.3d 1323, 1328 (10th Cir.

1994) (citations omitted). Before trial, North American identified the “theory of

ultrahazardous activity” in the pretrial order as a triable issue, Aplt. A pp., Vol. 1

at 80, and during trial North American sought to proceed under that theory instead

of negligence and to have the jury so instructed, id., Vol. 2 at 591. Further,

contrary to the district court’s ruling, North American’s third-party complaint can

be read as asserting an ultrahazardous-activity theory, notwithstanding the

complaint’s one isolated reference to “negligence.” See 5 Charles A . W right &

Arthur R. M iller, Federal Practice and Procedure § 1216, at 227 (3d ed. 2004)

(stating that a pleading must contain allegations from which to infer that evidence

                                           -9-
exists on the “material point[s] necessary to sustain a recovery on any

recognizable legal theory, even though that theory may not be the one suggested

or intended by the pleader”). Because the theory of ultrahazardous activity was

presented to the district court— indeed, it was the only theory under Oklahoma

law that applied— we conclude that any failure by North American to proffer

evidence of the standard of care for blasting or of breach was irrelevant to the

judgment, and therefore harmless. See Fed. R. Civ. P. 61.

                                   IV. Causation

      Farrell Cooper claims that “M r. Lawrence offered no explanation for how

[its] blasting damaged the M cDonalds’ poultry houses.” Aplt. Br. at 25. But in

doing so, it ignores M r. Lawrence’s testimony that the cause was “blast induced

forces,” Aplt. App., Vol. 2 at 405, “air blast” from “heavy blasting going on

within a hundred and fifty feet, [or] two hundred [feet]” of the poultry houses, id.

at 409, or “blast induced vibrations in conjunction with the air blasts from the

explosions,” id. at 435.

      Farrell Cooper also argues that Law rence was not qualified to offer expert

testimony on whether blasting damaged the poultry houses. But instead of

discussing his qualifications or the lack thereof, see Fed. R. Evid. 702, and

whether his testimony had “‘a reliable basis in the knowledge and experience of

[the relevant] discipline,’” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149

(1999) (quoting Daubert v. M errell Dow Pharm., Inc., 509 U.S. 579, 592 (1993)),

                                         -10-
Farrell Cooper simply directs our attention to M r. Lawrence’s testimony on

cross-examination that (1) he could neither quantify the “air blast force” that

impacted the poultry houses nor state that the force exceeded “a twenty or thirty

mile an hour wind”; and (2) he could not rule out that a seventy-three mile an

hour w ind reported by the weather service had caused the poultry houses to lean.

Aplt. App., Vol. 2 at 422-23. M r. Lawrence’s admissions during

cross-examination only go to the weight of his opinion about the cause of

property damage, and have no bearing on the admissibility of his opinion. See

Goebel v. Denver and Rio Grande Western R.R. Co., 346 F.3d 987, 998-99

(10th Cir. 2003) (indicating that an expert’s failure to rule out all possible

alternative causal sources does not render the expert’s testimony inadmissible);

Compton v. Subaru of Am., Inc., 82 F.3d 1513, 1518 (10th Cir. 1996) (stating that

if there is a logical basis for an expert’s opinion, the weaknesses in the

underpinnings of the opinion go to the weight and not the admissibility of the

testimony), overruled on other grounds by Kumho Tire Co., 526 U.S. at 147, 149;

accord SR Int’l Bus. Ins. Co., Ltd. v. World Trade Ctr. Props., LLC, 467 F.3d

107, 134 (2d Cir. 2006) (stating that gaps or inconsistencies in an expert’s

testimony concern the weight of the evidence and not its admissibility); TFWS,

Inc. v. Schaefer, 325 F.3d 234, 240 (4th Cir. 2003) (classifying as a challenge to

weight, rather than admissibility, the argument that an expert’s calculations did

not support the expert’s conclusion); see also Daubert, 509 U.S. at 596

                                          -11-
(“Vigorous cross-examination, presentation of contrary evidence, and careful

instruction on the burden of proof are the traditional and appropriate means of

attacking shaky but admissible evidence.”).

       Even if we were to somehow conclude that the admission of

M r. Lawrence’s testimony was an abuse of the district court’s discretion, see

Champagne M etals v. Ken-M ac M etals, Inc., 458 F.3d 1073, 1079 (10th Cir.

2006), there was ample independent evidence of causation. For instance,

M r. M cDonald testified that he did not notice the poultry houses leaning until

after Farrell Cooper’s blasting. Similarly, insurance agent Pitchford testified that

after the blasting, the walls were leaning away from the blast cite. And both the

W IS report and the Britt/Paulk report indicate that there was no leaning before the

blasting. M oreover, Farrell Cooper’s own expert acknowledged that the blasting

shook the M cDonald residence, which was over twice the distance from the

blasting than the poultry houses, and that he did not see any significant damage to

the poultry houses that he would attribute to the wind. Finally, the evidence

showed that there were roughly forty-five actual blasts within two to three

hundred feet of the poultry houses, using a total of 1,300 tons of ammonium

nitrate.

       This evidence of causation is arguably more than the evidence found

sufficient by the Oklahoma Supreme Court in Superior Oil Co. There, the causal

link between the defendant’s use of explosives and the damage to the plaintiff’s

                                         -12-
well was shown by (1) the plaintiff’s testimony that the “shot fired” shook his

residence, rattling windows and dishes, and that the well was practically dry the

next morning; and (2) another witness’s testimony that when the shot was fired he

was five or six hundred yards away from the firing point, he heard the explosion,

saw dirt fly, and felt the shock or vibration, and that after the explosion he saw a

crack in the well. 324 P.2d at 848.

      W hile Farrell Cooper provided trial testimony that its blasting may not have

caused the damage to the poultry houses, it has not demonstrated on appeal that

the other causation evidence given to the jury “points [its] w ay and is susceptible

to no reasonable inferences which may support [North American].” Heartway

Corp., 466 F.3d at 1160.

      The judgment of the district court is AFFIRMED.

                                                     Entered for the Court

                                                     M ichael R. M urphy
                                                     Circuit Judge

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