Davis v. TXO Production Corp., 90-6019

Citation929 F.2d 1515
Decision Date11 April 1991
Docket NumberNo. 90-6019,90-6019
PartiesWilliam H. DAVIS, Plaintiff-Appellant, v. TXO PRODUCTION CORP., Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

H.B. Watson, Jr., Stephen R. Pitcock, and Sharon Taylor Thomas of Watson & McKenzie, Oklahoma City, Okl., for plaintiff-appellant.

Robert D. Nelon and Babette Patton of Andrews, Davis, Legg, Bixler, Milsten & Price, Oklahoma City, Okl., for defendant-appellee.

Before McKAY, SEYMOUR, and EBEL, Circuit Judges.

McKAY, Circuit Judge.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The case is therefore ordered submitted without oral argument.

Appellant William H. Davis appeals the Rule 12(b)(6) dismissal by the District Court for the Western District of Oklahoma of one count of his three-count amended complaint against appellee TXO Production Corporation. The district court concluded that appellant's allegation that appellee breached an implied covenant of good faith and fair dealing to appellant did not state a claim for which relief could be granted. See Fed.R.Civ.P. 12(b)(6).

I.

Before we address the merits of appellant's claim, we note that appellee challenges the right of appellant to appeal the district court's dismissal of this cause of action. In addition to the breach of an implied covenant of good faith claim at issue here, appellant's first amended complaint contained theories based upon tortious interference with a business relation and champerty and maintenance. The district court dismissed the breach of an implied covenant of good faith claim for failure to state a claim for which relief could be granted. It similarly dismissed appellant's tortious interference claim but denied the motion to dismiss on the count alleging maintenance. Appellant then sought and was granted leave to file a second amended complaint, which contained only counts alleging tortious interference and maintenance. Appellant did not adopt or incorporate any portion of his first amended complaint into his second amended complaint. Nor did he make reference to a claim based upon a breach of an implied covenant of good faith. Two weeks later, appellant moved to dismiss voluntarily his second amended complaint pursuant to Fed.R.Civ.P. 41(a)(2), which the district court granted.

Appellant now seeks to appeal the district court's dismissal of the breach of an implied covenant claim contained in his first amended complaint but not included in his second amended complaint. Because appellant's second amended complaint did not allege a breach of an implied covenant of good faith and fair dealing, appellee argues that appellant waived his right to raise this argument on appeal.

As appellee notes, "[i]t is well established that an amended complaint ordinarily supersedes the original and renders it of no legal effect." International Controls Corp. v. Vesco, 556 F.2d 665 (2d Cir.1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 758 (1978); see also Fed.R.Civ.P. 15(a); Washer v. Bullit County, 110 U.S. 558, 562, 4 S.Ct. 249, 250, 28 L.Ed. 249 (1884); Varnes v. Local 91, Glass Bottle Blowers Ass'n, 674 F.2d 1365, 1370 n. 6 (11th Cir.1982); Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 601 (5th Cir.1981); 3 J. Moore, Moore's Federal Practice p 15.08 (2d ed. 1990). Such a rule establishes to which complaint opposing parties should direct any subsequent motion. 6 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure p 1476, at 556-57 (2d ed. 1990).

We are presented here with a unique situation, however, because the cause of action not incorporated in the second amended complaint had already been subjected to a 12(b)(6) ruling. The opposing party could not therefore direct a further motion at that cause of action. Appellee nevertheless cites this court's decisions in Leggett v. Montgomery Ward & Co., 178 F.2d 436 (10th Cir.1949), and Aetna Life Ins. Co. v. Phillips, 69 F.2d 901 (10th Cir.1934), and argues that an amended complaint filed after the dismissal of the original complaint waives any error in the dismissal of the original. Because appellant did not replead the claim alleging a breach of a covenant of good faith and fair dealing, appellee contends, appellant waived any error in the district court's dismissal of that cause of action. As appellee notes, the court in Aetna appears to have addressed the very same issue when it stated: "Where a demurrer has been sustained to a party's pleading and he elects to plead over, he waives any error in the ruling on the demurrer." Id. at 903.

This court revisited the issue, however, in Blazer v. Black, 196 F.2d 139 (10th Cir.1952). There the court in dictum noted:

It has long been the rule of Federal practice ... that while the pleader who amends or pleads over, waives his objections to the ruling of the court on indefiniteness, incompleteness or insufficiency, or more technical defects in pleadings, he does not waive his exception to the ruling which strikes "a vital blow to a substantial part" of his cause of action.

Id. at 143-44.

Although the court's recitation in Blazer was only dictum, we believe it to be the better rule. Scholars have commented:

A rule that a party waives all objections to the court's dismissal if he elects to amend is too mechanical and seems to be a rigid application of the concept that a Rule 15(a) amendment completely replaces the pleading it amends. Without more, the action of the amending party should not result in completely denying the right to appeal the court's ruling.

6 C. Wright, A. Miller & M. Kane, Federal Practice & Procedure Sec. 1476 at 560-61 (2d ed. 1990) (footnotes omitted). They further concluded that the opinion in Blazer presents a reasonable standard to determine when a party should be allowed to assert the trial court's original alleged error on appeal.

Although we are aware that at least one circuit clings to the formalistic rule advanced by this circuit in Aetna and Leggett, see King v. Atiyeh, 814 F.2d 565, 567 (9th Cir.1987); London v. Coopers & Lybrand 44 F.2d 811, 814 (9th Cir.1981), 1 another has adhered to the rule set forth in Blazer. See Wilson v. First Houston Inv. Corp., 566 F.2d 1235, 1238 (5th Cir.1978), vacated on other grounds, 444 U.S. 959, 100 S.Ct. 442, 62 L.Ed.2d 371 (1979). We believe that a rule requiring plaintiffs who file amended complaints to replead claims previously dismissed on their merits in order to preserve those claims merely sets a trap for unsuspecting plaintiffs 2 with no concomitant benefit to the opposing party. So far as the decisions in Leggett and Aetna set forth a rule inconsistent with that stated here, they are overruled. 3

When addressing appellee's 12(b)(6) motion to dismiss appellant's first amended complaint, the district court reached the merits of appellant's claim alleging an implied covenant of good faith and fair dealing. The district court's dismissal of the claim made clear that any attempt by appellant to reallege that claim would be futile. Because we do not require a party to reallege a cause of action on which the district court has conclusively ruled, we conclude that appellant has not waived his claim of a breach of an implied covenant of good faith and fair dealing. Appellee's motion to dismiss for lack of jurisdiction is denied. We therefore reach the merits of this appeal. 4

II.

We review de novo a dismissal pursuant to Fed.R.Civ.P. 12(b)(6). We accept as true all well-pleaded factual allegations and make all reasonable inferences in favor of the plaintiff. Cruz v. Beto, 405 U.S. 319, 322, 92 S.Ct. 1079, 1081, 31 L.Ed.2d 263 (1972). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).

The dispute is based on actions by appellee concerning two joint operating agreements covering two oil and gas units. Appellant is the operator of both units and appellee is a non-operating interest owner. Appellant's complaint alleges that two officials of appellee met with Grant Feely, the lessor of appellee's lease interest in one of the two units, and made false and malicious statements concerning appellant's operation of both units. Similar statements were made concerning appellant's operation of a third unit. The ostensible purpose of this meeting was to convince Mr. Feely to withdraw his consent to a proposed unitization plan filed by appellant. According to the complaint, these statements led to two suits, one brought by Mr. Feely and another brought by the lessors of appellant's interest in the third unit, the Georges. Appellant alleges that appellee provided technical expertise and information to assist in both of the legal actions against him. 5 The statements also led to the withdrawal by Mr. Feely and the Georges of their consent to the proposed unitization plan.

Appellant brought this suit seeking, as special damages, the attorney fees he incurred in his defense of the two suits brought against him. In addition, he seeks punitive damages. Appellant argues that appellee's false allegations concerning his operation of the units and subsequent assistance to the plaintiffs in both actions constituted a breach of an implied covenant of good faith and fair dealing.

The district court analyzed appellant's...

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