F.D.I.C. v. Everett A. Holseth & Co.

• Decision Date: 04 October 1994
• Docket Number: Nos. 93-6153,93-6215,s. 93-6153
• Citation: 36 F.3d 1004
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff-Counter-Defendant-Appellant, v. EVERETT A. HOLSETH & COMPANY, a Texas corporation, Defendant-Counter-Plaintiff-Appellee. Federal Deposit Insurance Corporation, in its corporate capacity, Plaintiff-Appellant, Richard A. CLINE, Intervenor, v. EVERETT A. HOLSETH & COMPANY, a Texas corporation, Defendant-Appellee, and John Does, I through LXX, Defendants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1004

36 F.3d 1004

FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate

capacity, Plaintiff-Counter-Defendant-Appellant, v. EVERETT A. HOLSETH & COMPANY, a Texas corporation,

Defendant-Counter-Plaintiff-Appellee.

Federal Deposit Insurance Corporation, in its corporate

capacity, Plaintiff-Appellant, Richard A. CLINE, Intervenor, v. EVERETT A. HOLSETH & COMPANY, a Texas corporation, Defendant-Appellee, and John Does, I through LXX, Defendants.

Nos. 93-6153, 93-6215.

United States Court of Appeals Tenth Circuit.

Oct. 4, 1994.

Lance Stockwell (Sheila M. Powers, also of Boesche, McDermott & Eskridge, Tulsa, OK, John L. Paulhamus, F.D.I.C., Dallas, TX, of counsel, Edward J. O'Meara, F.D.I.C., Washington, DC, with him on the briefs), for appellants.

Robert G. Green (Jon B. Wallis with him on the briefs), Tulsa, OK, for appellee.

Before SEYMOUR, Chief Judge, LOGAN and ANDERSON, Circuit Judges.

LOGAN, Circuit Judge.

The Federal Deposit Insurance Corporation (FDIC) appeals two separate judgments arising from its action for declaratory relief in a contract dispute with Everett A. Holseth & Company (Holseth).

In No. 93-6153, the FDIC asserts that (1) Holseth failed to present sufficient evidence of breach of contract; (2) Holseth failed to present sufficient evidence of damages; and (3) the district court erred in bifurcating certain issues and refusing to admit evidence concerning a settlement at the trial on Holseth's breach of contract claim. In No. 93-6215, the FDIC alleges that the district court erred (1) in concluding that the FDIC was not a real party in interest and that it could not stand in place of the other interest owners; and (2) in determining that the contract between the FDIC and Holseth obligated the other interest owners to pay Holseth a fifty percent contingency fee. Holseth seeks to dismiss No. 93-6215, asserting that both the district court and this court lack jurisdiction because the FDIC is not a real party in interest.

I

Although these cases involve complicated oil and gas pricing concepts and extensive trial testimony, we limit our discussion to the facts relevant to our review. In December 1988, the FDIC contracted with Holseth to audit and collect money due the FDIC under oil and gas audit adjustment rights. ¹ That contract provided that Holseth would evaluate, quantify and collect sums due the FDIC from others, in return for which Holseth would receive, after the first $25,000, fifty percent of all sums collected during the term of the agreement. The contract continued for a two-year term beginning December 29, 1988. It listed accounts for Holseth to collect; other accounts were added later by written amendment. The FDIC retained exclusive control over approval of settlements resulting from collection efforts. The contract was nonexclusive in that the FDIC could collect the same accounts during the contract term without sharing the proceeds with Holseth. The contract limited accounts within its coverage to those of $2,500,000 or less, or to claims which would each compensate Holseth no more than $250,000. Holseth's compensation for claims outside those limitations were to be negotiated separately.

Holseth audited and gathered information on the accounts, providing the FDIC with monthly updates on the estimated amounts of claims. Some claims were settled. Then in October 1990, two months before the contract was to expire, the FDIC wrote Holseth a letter stating that Holseth should cease negotiations on one particular contract and that the FDIC itself would negotiate "all future settlements." Appellant's App. 232. In December 1990, Holseth presented the FDIC with a list of claims for settlement, including its valuation of each claim. Apparently the FDIC has never settled most of these claims. The FDIC did not renew the contract with Holseth.

In 1991 the FDIC acknowledged that it owed Holseth approximately $295,000 for a settlement in the Swan account which Holseth had audited. The FDIC did not pay Holseth, however, because of disputes arising from other settlements. After negotiations failed, the FDIC brought this declaratory judgment action, asking the district court to resolve the disputes arising from the Holseth contract. Holseth counterclaimed for breach of the contract, for an accounting, for a declaration of Holseth's rights to the deposited funds, and, later, on the alternative theory of recovery on a quantum meruit basis.

The FDIC then filed an amended complaint asserting that Holseth had wrongfully paid itself over $450,000 of a so-called Anderson-Valero settlement which Holseth held in trust for distribution to the royalty owners. The FDIC asked for this amount to be withheld as a set-off against any money due Holseth from funds on deposit with the district court. The FDIC also asked the district court to set up a notification and claims procedure to determine the amounts due the royalty owners from the Anderson-Valero funds and for a declaration that the FDIC was not liable to the royalty owners for the settlement proceeds retained or entrusted to Holseth. The district court bifurcated the issues concerning the Anderson-Valero settlement from the breach of contract claim.

The Holseth breach of contract claim was tried to a jury, which awarded Holseth damages of $1,250,000. The district court denied post-trial motions and entered judgment for Holseth. Appeal No. 93-6153 concerns this judgment and the order bifurcating the Anderson-Valero settlement.

Later, the district court entered judgment on the Anderson-Valero issues. It concluded the FDIC was not a real party in interest. But it then declared that the Holseth contract covered all of the Anderson-Valero settlement funds and, therefore, Holseth was entitled to fifty percent of the entire fund. ² Appeal No. 93-6215 addresses those decisions.

II

No. 93-6153

A

The FDIC first asserts that the district court erred in submitting the breach of contract issue to the jury because Holseth failed to present sufficient evidence on which a jury could find a breach of contract. Holseth's claim was that the FDIC prevented Holseth from performing the contract, and breached its duty of good faith and fair dealing. See Jury Instructions 9, 10 (Holseth's Answer Brief 4-5). "[A] party to a contract may not prevent performance of a condition and then claim the benefit of such condition." Townsend v. Melody Home Mfg. Co., 541 P.2d 1370, 1374-75 (Okla.Ct.App.1975) (holding manufacturer of mobile homes could not deny dealer incentive bonus based on late payment when manufacturer was involved with finance company in delaying payment); see also Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir.1987) (party to contract may not deliberately prevent condition and then take advantage of failure of condition to avoid liability).

Holseth's evidence established that in October 1990, the FDIC informed Holseth it could no longer pursue the settlements but was only to provide accounting information for the FDIC to proceed to settlement. Holseth presented evidence that the FDIC did not cooperate in Holseth's attempts to conduct audits in September 1990; also that the FDIC took records belonging to Holseth and denied Holseth access to FDIC materials it needed to pursue the claims. Although the FDIC presented credible evidence to the contrary on each of these claims, it is the jury's province to resolve conflicts in the evidence. The evidence Holseth presented would support a jury finding that the FDIC breached the contract by preventing Holseth from performing and by acting in bad faith. See Townsend, 541 P.2d at 1374-75. The district court did not err in submitting the breach of contract issue to the jury.

B

The FDIC strenuously argues that the issue of damages should not have been submitted to the jury, and that the jury award was based on "gross speculation." FDIC Opening Brief at 20-21. It also argues that Holseth presented insufficient evidence of damages to sustain the jury verdict.

"When a jury verdict is challenged on appeal, our review is limited to determining whether the record--viewed in the light most favorable to the prevailing party--contains substantial evidence to support the jury's decision." Western Gas Processors, Ltd. v. Woods Petroleum Corp., 15 F.3d 981, 987 (10th Cir.1994) (quoting Comcoa, Inc. v. NEC Telephones, Inc., 931 F.2d 655, 661 (10th Cir.1991)).

Oklahoma law provides that the measure of damages in a breach of contract action is "the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom." Okla.Stat.Ann. tit. 23, Sec. 21 (West 1987). "Although the jury may not speculate about the fact of damages," Transpower Constructors v. Grand River Dam Auth., 905 F.2d 1413, 1416 (10th Cir.1990), "uncertainty about their exact amount will not preclude recovery." Id. (citations omitted). "Once a party has established the fact of damages, moreover, 'it is proper to let the jury determine what the loss is from the best evidence the nature of the case admits.' " Id. (quoting Southwest Ice & Dairy Prods. Co. v. Faulkenberry, 203 Okla. 279, 220 P.2d 257, 261 (1950)).

Our review of the record reveals sufficient evidence to support the jury award of $1.25 million. Holseth provided testimony and documentary evidence establishing that, under the contract, it could have realized compensation of several million dollars. Although the FDIC witnesses, especially their certified public accountant, attempted to discredit these numbers, it was within the province of the jury to determine the facts and weigh the evidence.

C

The FDIC's final argument on the contract issue is that the district court erred in bifurcating the trial so that the jury did not receive evidence concerning the Anderson-Valero settlement. District courts have "broad discretion in deciding whether to sever...