Woods Petroleum Corp. v. Delhi Gas Pipeline Corp., 57398

• Decision Date: 19 April 1983
• Docket Number: No. 57398,No. 4,57398,4
• Citation: 700 P.2d 1023
• Parties: 1983 OK CIV APP 26 WOODS PETROLEUM CORPORATION, et al., Appellees, v. DELHI GAS PIPELINE CORPORATION, Appellant
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Page 1023

700 P.2d 1023

1983 OK CIV APP 26

WOODS PETROLEUM CORPORATION, et al., Appellees, v. DELHI GAS PIPELINE CORPORATION, Appellant.

No. 57398.

Court of Appeals of Oklahoma Division No. 4.

April 19, 1983.

Rehearing Denied May 12, 1983.

Certiorari Granted to Review Attorney

Fee Award Dec. 26, 1984.

Released for Publication by Order of the Court of Appeals June 3, 1985.

Robert H. Gilliland, Jr., and Kenneth L. Buettner McAfee & Taft, P.C., Oklahoma City, for appellees.

Thomas T. Rogers and John M. Kyser, Lynch, Chappell, Allday & Alsup, Austin, Tex., for appellant.

STUBBLEFIELD, Judge.

This is an appeal in an action brought by plaintiff, Woods Petroleum Corporation, seeking damages from Delhi Gas Pipeline Company for their alleged taking of plaintiffs' gas without compensation. Plaintiff brought suit under pure negligence, res ipsa loquitur, conversion and breach of contract theories. The jury returned a verdict finding defendant negligent and giving recovery for the amount of gas estimated taken but not paid for ($858,022.40). The trial court awarded prejudgment interest and attorney fees to plaintiffs.

I

Plaintiff Woods Petroleum Corporation, hereinafter referred to as Woods, completed the O.M. Taylor 26-2, hereinafter referred to as Taylor # 2, in Dewey County, Oklahoma, in July of 1976. The Taylor # 2 was drilled to a depth of 9,575 feet and pierced two lenticular aspects of the Morrow formation. Both zones of the Morrow were perforated and production established as a gas well with some condensate production. The top zone of production was from the 9,401 to 9,406 foot depth; the lower zone from 9,434 to 9,448. Bottom pressure of the well was established at 4,500 pounds.

Defendant Delhi Gas Pipeline Corporation, hereinafter referred to as Delhi, had a contractual agreement to purchase the gas produced from the Taylor # 2. By the terms of this agreement Delhi was to provide and operate the metering equipment which measured the volume of gas Delhi took from the Taylor # 2.

The metering device Delhi installed on the Taylor # 2 consisted of a differential pressure flow meter. Such a device works by placing a restriction of a certain known size, known as an orifice plate, in a line of a certain known size, known as the meter run, and measuring the difference in pressure on either side of the orifice plate. Due to the physical fact that for a certain volume of gas to move through such a restriction a certain percentage of the pressure of the gas is translated into velocity, it becomes possible to determine precisely the volume of gas moving through the meter by measuring this pressure drop across the orifice plate. The critical factors in determining the flow are the size of the opening in the orifice plate, the pressure on the system and the temperature of the gas. Delhi's meter on the Taylor # 2 recorded the differential pressure, the system pressure and the gas temperature on a seven day rotating paper chart.

Delhi began taking gas from the Taylor # 2 on October 26, 1976. A notation on the paper chart, accompanied by the initials of Delhi's meterman, on this day reflected that a .75 inch orifice plate had been removed and a 1.25 inch orifice plate installed in the meter run. The Taylor # 2 operated along lines expected for a Morrow formation well in the area. It was noted, however, that the well's production was only about one-half of what had originally been expected.

On May 17, 1978, Woods pumper for the Taylor # 2 checked the well before noon, noting the wellhead pressure, the operation of the condensate separator/heater, the choke opening on the well, the production of condensate and the readings on Delhi's chart. On this date the pumper recorded a differential pressure of 10. The next day when the pumper checked the well he found all conditions identical to those of the day before except for the differential pressure which had jumped from 10 to 44. A note had also been made on the chart that the orifice plate had been pulled and replaced with another 1.25 inch orifice plate. This note was accompanied by the initials of Delhi's meterman. This change in the differential pressure indicated the gas production from the Taylor # 2 had increased from approximately 880 Mcf to approximately 1,600 Mcf of gas per day.

Shortly after this occurrence Woods requested an inspection of Delhi's metering apparatus. At this inspection the apparatus tested out to be true and the orifice plate was pulled and measured to be 1.25 inches. Delhi's explanation to Woods for the sudden jump in production was that something must have happened in the well to cause an actual increase. Woods' theory was that a larger orifice than a 1.25 inch had been in the meter run and that Delhi's meterman had replaced it with the proper size orifice. Since Delhi had been figuring production using the flow factor for a 1.25 inch orifice, the larger orifice, with its attendant lower pressure drop, would have resulted in Woods being paid for much less gas than was actually being produced by the Taylor # 2. Woods reached the conclusion that a 1.75 inch orifice had actually been in the line prior to May 17, 1978, on the basis that a differential pressure of 10 multiplied by the coefficient for a 1.75 inch orifice equals a differential pressure of 44 multiplied by the true coefficient for a 1.25 inch orifice.

Delhi persisted in their denial that any size orifice other than a 1.25 inch had ever been in the meter run and continued to maintain that the cause of the production increase was actually in the well itself.

Woods subsequently brought suit on behalf of itself and all other parties holding interests in the Taylor # 2 in the District Court of Dewey County on December 19, 1979. Woods initially alleged causes of action in negligence and conversion, and also alleged facts to invoke the doctrine of res ipsa loquitur. Woods asked for damages of $858,022.40 for gas taken by Delhi but unpaid for, and for $1,000,000 in punitive damages. An amendment to Woods petition was later filed alleging a cause of action for breach of contract. Woods arrived at the figure for actual damages by multiplying the amount of money actually paid to Woods by Delhi by the ratio between the flow coefficient for a 1.75 inch orifice plate and a 1.25 inch orifice plate.

Trial was held before a jury starting on July 14, 1981. On July 17, 1981, the jury returned a verdict finding for plaintiffs on the negligence theory and awarding $858,022.40 in actual damages and no punitive damages. Judgment was entered pursuant to the jury's verdict.

Defendant on appeal argues on five grounds: (1) that the verdict is not supported by the evidence; (2) that the trial court erred in submitting alternative theories of recovery to the jury; (3) that it was error to submit the question of punitive damages to the jury; (4) that false testimony necessitated a new trial; and (5) that it was error to award plaintiffs attorney fees.

II

The first proposition of error presented by Delhi is that the jury's verdict was not supported by the evidence produced at trial and so should now be overturned. In the case of Walker v. St. Louis-San Francisco Railway Co., Okl., 646 P.2d 593 (1982), the court adhered to this rule:

" 'In a law action the verdict of the jury is conclusive as to all disputed facts and all conflicting statements, and where there is any competent evidence reasonably tending to support the verdict of the jury, this court will not disturb the verdict and judgment based thereon.' [emphasis supplied]"

In the present case Woods presented extensive evidence that the only factor that changed on the Taylor # 2 on May 17, 1978, was the increase in the differential pressure. Woods also presented extensive expert testimony that, if in fact this well had actually doubled in production, numerous other factors regarding the well would have changed correspondingly. From these facts the experts drew their opinions that the only possible conclusion which would explain all the existing data was that prior to May 17, 1978, a 1.75 inch orifice had been installed in Delhi's meter run and that on this date it had been replaced with a 1.25 inch orifice.

Under the evidence presented to them the jury found Delhi to have been negligent and found that this negligence damaged plaintiffs in the amount of $858,022.40. Actionable negligence consists of three elements: (1) the existence of a duty on the part of the defendant owing to the plaintiff; (2) a violation of that duty; and (3) injury proximately resulting from the violation of that duty. Sloan v. Owen, Okl., 579 P.2d 812 (1977). The evidence presented to the jury showed that Delhi had a duty to accurately measure the gas purchased by it from the Taylor # 2 under the terms of the gas purchase contract with plaintiffs. Sufficient evidence was also presented from which the jury could have concluded that, as a result of the use of an improper flow orifice, this duty had been breached. The evidence also showed damages to plaintiffs in the amount of $858,022.40 resulting from this breach of duty.

Delhi contends that the evidence offered by Woods is not competent to support the jury's verdict because it was not direct in nature and was based upon inference and speculation. Defendant overlooks the fact that reasonable inferences drawn from circumstantial evidence may have the same probative effect as would direct testimony. We conclude that there was considerable evidence supporting the verdict of the jury.

Woods presented extensive evidence of the physical performance of the Taylor # 2 consisting of regularly taken readings and Delhi's meter charts. This evidence showed that a change in flow from the Taylor # 2 occurred on May 17, 1978, without any concomitant changes in the other physical performance characteristics of the well. The expert witnesses testified that the only permissible inference to be made from this evidence was that the orifice...