Delta Drilling Co. v. Cruz, 13-85-228-CV

• Decision Date: 20 February 1986
• Docket Number: No. 13-85-228-CV,13-85-228-CV
• Citation: 707 S.W.2d 660
• Parties: DELTA DRILLING CO., et al., Appellants, v. Pedro CRUZ and Consuelo Cruz, Appellees.
• Court: Texas Court of Appeals

Page 660

707 S.W.2d 660

DELTA DRILLING CO., et al., Appellants, v. Pedro CRUZ and Consuelo Cruz, Appellees.

No. 13-85-228-CV.

Court of Appeals of Texas Corpus Christi.

Feb. 20, 1986.

Rehearing Denied March 20, 1986.

Russell Serafin, Mills, Shirley, McMicken & Eckel, Galveston, Olan Keeter, M. Colleen McHugh, Head & Kendrick, Corpus Christi, L. Keith Slade, Danny L. Van Winkle, Tracy K. Christopher, B. Lee Ware, Vinson & Elkins, Houston, for appellants.

Ernest H. Cannon, Houston, for appellees.

Before UTTER, SEERDEN and BENAVIDES, JJ.

OPINION

UTTER, Justice.

This is an appeal from a judgment in favor of appellees, Pedro and Consuelo Cruz, following a jury verdict. Pedro Cruz, an employee of Dowell Company, was seriously injured when an elevator in which he was riding fell from a drilling rig floor to the ground. The drilling rig and elevator were owned by Delta Drilling Company (Delta). The elevator was manufactured by C.C. Services. Moore McCormick Energy, Inc. was the owner-operator of the drilling site. McCormick settled with appellees during trial for $250,000.00; $225,000.00 to Pedro Cruz and $25,000.00 to Consuelo Cruz. Delta was the only defendant found liable by the jury. The jury found Delta negligent and grossly negligent and awarded $1,910,450.00 as actual damages; $60,000.00 to Consuelo Cruz for loss of consortium; $78,000.00 for Pedro Cruz's future medical expenses; and $6,000,000.00 in exemplary damages.

Delta, McCormick, and C.C. Services have brought this appeal alleging various points of error. Delta's points will be addressed first.

In its first point of error, Delta contends that the trial court erred because the court's charge did not correctly submit the question of gross negligence to the jury. The court's charge on gross negligence was as follows:

SPECIAL ISSUE NO. 17

Do you find from a preponderance of the evidence that the conduct of Delta Drilling Company was a heedless and reckless disregard of the rights of others affected by it?

"Heedless and reckless disregard" means more than momentary thoughtlessness inadvertence, or error of judgment. It means such an entire want of care as to indicate that the act or omission in question was the result of conscious indifference to the rights, welfare, or safety of the persons affected by it.

You are instructed that with regards to this issue you may consider only the acts or omissions, if any, that were authorized or ratified by a person acting in a managerial or supervisory capacity on behalf of Delta Drilling Company. [emphasis ours]

Delta contends that King v. McGuff, 149 Tex. 432, 234 S.W.2d 403 (1950), requires that the jury be questioned on the conduct of a specific employee or agent whose acts or omissions are contended to be grossly negligent. ¹

Delta further contends that Special Issue No. 17 allowed the jury to speculate as to the grossly negligent conduct of any employee of Delta, whether in a managerial or supervisory capacity or not. In support thereof, Delta cites this court's opinions in Western Construction Co. v. Valero Transmission Co., 655 S.W.2d 251 (Tex.App.--Corpus Christi 1983, no writ) and Delhi Pipeline Corp. v. Lewis, Inc., 408 S.W.2d 295 (Tex.Civ.App.--Corpus Christi 1966, no writ).

The cases cited above do not support Delta's position that specific vice-principals, i.e., persons acting in a managerial or supervisory capacity, must be identified in a special issue inquiring of gross negligence. In Delhi Pipeline Corp. v. Lewis, Inc., 408 S.W.2d at 301, this Court held that the following special issue and instruction was insufficient to support a jury finding that Delhi Corp. was grossly negligent.

SPECIAL ISSUE NO. 4

Do you find from a preponderance of the evidence that the Plaintiff Lewis, Inc., is entitled to exemplary damages against the Defendant Delhi Pipeline Corp.

* * *

* * *

You are instructed that before you can assess exemplary damages, you must believe and find from a preponderance of the evidence that Defendant Delhi Pipeline Corporation, acted willfully, maliciously and with utter disregard for the rights of the Plaintiff Lewis, Inc.

In this connection you are also instructed that punitive damages may be assessed as punishment for a wrongful act done, if the facts warrant the same. In awarding such damages, if any, you may consider the sense of wrong and insult to the Plaintiff Lewis, Inc., and the damage to his reputation, if any, as a result of the wrongful acts, if any of the Defendant Delhi Pipeline Corp. The amount to be fixed, if any, is in the sound discretion of the jury.

Id. at 301.

We held that since "Lewis did not request submission of issues concerning tortuous acts on the part of officers representing the corporation in its corporate capacity nor by lesser representatives of Delhi; nor as to whether the conduct of the latter had been authorized or ratified by the corporation," there was no jury finding establishing liability for exemplary damages.

In Western Construction Co. v. Valero Transmission Co., 655 S.W.2d 251, also decided by this Court, we were asked to determine whether or not a special issue submitted on negligence sufficiently comported with the requirements of King v. McGuff so as to support a finding of gross negligence and an award of exemplary damages. The special issue inquired whether "[o]n the occasion in question was Western Construction Company acting through its employees, negligent in striking and rupturing the pipeline after it had acquired notice, if any, of its presence?" Western Construction Co. v. Valero Transmission Co., 655 S.W.2d at 254. The conduct of two employees was in question. Glenn Hyden was a superintendent and was supervisor over the project involved. Pete Zamora was a mere employee, having neither managerial nor supervisory duties. In discussing this special issue, we wrote:

The infirmities which exist with Special Issue No. One are apparent. The issue inquires only whether appellant, acting through its employees was negligent. It fails to inquire [into] the negligence of the employees and then fails to specify whether or not the negligence found by the issue is attributable to Hyden, the undisputed manager. Perhaps negligence is attributed to both employees, Hyden and Pete Zamora.

Id.

We held that a special issue inquiring as to the negligence of two employees, one with managerial duties and the other without, could not support a judgment for exemplary damages against the corporation because such a judgment can only be based upon one of the grounds set forth in King v. McGuff.

In the present case, the trial court's instruction accompanying Special Issue No. 17 restricted the jury's consideration to "the acts or omissions, if any, that were authorized or ratified by a person acting in a managerial or supervisory capacity." This instruction substantially complies with the requirements for the imposition of exemplary damages based upon the gross negligence of a corporation as set forth in King v. McGuff. Delta's first point of error is overruled.

In points of error two and three, Delta contends that the evidence was factually and legally insufficient to support the jury's award of exemplary damages. In considering a "no evidence" or "insufficient evidence" point of error, we will follow the well established test set forth in Dyson v. Olin Corp., 692 S.W.2d 456 (Tex.1985); Glover v. Texas General Indemnity Co., 619 S.W.2d 400 (Tex.1981); Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); Allied Finance Co. v. Garza, 626 S.W.2d 120 (Tex.App.--Corpus Christi 1981, writ ref'd n.r.e.); CALVERT, No Evidence and Insufficient Evidence Points of Error, 38 Tex.L.Rev. 361 (1960).

Exemplary damages may be imposed upon a corporation for the acts of its agent if at the time of the wrongful act the agent was employed in a managerial capacity and was acting within the scope of his employment. Missouri Pacific Railroad Co. v. Dawson, 662 S.W.2d 740 (Tex.App.--Corpus Christi 1983, writ ref'd n.r.e.). Such an agent is "one who has the authority to employ, direct and discharge servants, engages in nondelegable or absolute duties; to whom the master has confided management of the whole or a department or a division of his business." Id. at 744. In order for the jury's award of exemplary damages to stand, we must determine whether or not the evidence of Delta's conduct demonstrates "that entire want of care which would raise the belief that the act or omission complained of was the result of a conscious indifference to the right or welfare of the person or persons to be affected by it." Williams v. Steves Industries, Inc., 699 S.W.2d 570 (Tex.1985); International Armament Corp. v. King, 674 S.W.2d 413, 416 (Tex.App.--Corpus Christi 1984), aff'd, 686 S.W.2d 595 (Tex.1985). In making this determination, the Supreme Court in Burk Royalty v. Walls, 616 S.W.2d 911, 922 (Tex.1981), stated:

the existence of gross negligence need not rest upon a single act or omission, but may result from a combination of negligent acts or omissions, and many circumstances and elements may be considered in determining whether an act constitutes gross negligence. A mental state may be inferred from actions. All actions or circumstances indicating a state of mind amounting to a conscious indifference must be examined in deciding if there is some evidence of gross negligence.

In Williams v. Steves Industries, Inc., 699 S.W.2d at 573, the Supreme Court wrote:

Thus, the test for gross negligence is both an objective and a subjective test. A plaintiff may prove a defendant's gross negligence by proving that the defendant had actual subjective knowledge that his conduct created an extreme degree of risk. In addition, a plaintiff may objectively prove a defendant's gross negligence by proving that under the surrounding circumstances a reasonable person would have realized that his conduct created an extreme degree of risk to the safety of others.

No exact line can be...