Kaufman v. CRA, Inc.

• Decision Date: 23 July 1965
• Docket Number: No. 14645-1.,14645-1.
• Citation: 243 F. Supp. 721
• Parties: E. H. KAUFMAN, Plaintiff, v. C.R.A., INC. (Formerly The Cooperative Refinery Association), Defendant.
• Court: U.S. District Court — Western District of Missouri

243 F. Supp. 721

E. H. KAUFMAN, Plaintiff, v. C.R.A., INC. (Formerly The Cooperative Refinery Association), Defendant.

No. 14645-1.

United States District Court W. D. Missouri, W. D.

July 23, 1965.

Buthod & Harrison, Evansville, Ind., Campbell & Clark, Kansas City, Mo., Wilson, Dyar, Houchen & McDonald, Decatur, Ill., for plaintiff.

Douglas Stripp, Robert B. Olsen, Kansas City, Mo., for defendant.

JOHN W. OLIVER, District Judge.

This case pends on defendant's motion for partial summary judgment directed to Count I of plaintiff's amended complaint.

As will later be made apparent in detail, the parties agreed, after one day of actual trial before the Court without a jury, to present the statute of limitations question raised by defendant's pending motion on what, in effect, is an agreed statement of facts. In order that the general factual background of the litigation and relevant dates be put in focus at the outset, we quote a portion of defendant's statement of those matters which plaintiff, in his brief, acknowledged to be substantially correct and accurate:

This action was originally filed to recover for the alleged fraud of defendant. Plaintiff alleged that defendant fraudulently over-stated certain oil reserves, thereby inducing him to invest in further oil leases. These leases were not productive and, as a consequence of the claimed fraud, plaintiff alleged substantial damages.

At the commencement of trial plaintiff changed his theory from fraud to negligent misrepresentation. After a partial trial, and at the suggestion of the Court, the case was stipulated into posture for a motion for partial summary judgment based upon the bar of the statute of limitations. * * * The issues in Count II of the amended complaint concerning a work-over on the Howland lease remain outside the scope of the motion.

Defendant assumes for purposes of this motion that plaintiff has stated and can prove a claim for negligent misrepresentation (Tr. 13, 17, 18). * * * The assumed facts are set out in the following paragraphs.

Plaintiff bought from defendant 50% of the working interest in the Byer lease on December 10, 1951. Defendant drilled the Byer lease and it was an oil producing lease. Plaintiff bought from defendant 50% of the working interest in the Howland lease on July 10, 1953, and it too proved to be a producing lease.

At various times between December, 1951 and October, 1954 plaintiff consulted with Owen W. Simonton, a petroleum engineer employed by defendant, concerning the development of the oil and gas properties which he and defendant jointly owned and developed. On various occasions during this period Simonton gave plaintiff his opinion on the amount of recoverable oil reserves underlying the Byer and Howland leases, the last such occasion being on June 17, 1955 (Tr. 23, 30). Simonton's reserve estimates proved to be substantially greater than the actual production attained on the Byer and Howland leases (Tr. 8). In reliance upon the Byer and Howland reserve estimates supplied by Simonton and upon Simonton's recommendation, plaintiff invested in six additional oil and gas ventures from July 10, 1952 to October 24, 1954, by purchasing fractional portions of the working interest in leases owned by defendant (amended complaint, paragraph 15). None of these leases were commercially productive.

Plaintiff's evidence would establish negligence on the part of Simonton in making the oil reserve estimates on the Byer and Howland leases.

Plaintiff made his last lease development payment to defendant on September 16, 1955 (Tr. 28). That is the date of the last damage suffered by plaintiff in regard to the cause of action alleged in Count I of the amended complaint and which is being tested by this motion (Tr. 11, 18).

It first came to plaintiff's attention in 1960 that Simonton's reserve estimates were very substantially overstated. In 1962 plaintiff concluded that the cause of the overstatement was Simonton's negligence (Tr. 23, 24). The original complaint was then filed October 17, 1963.

Plaintiff does not contend that the mere continuation of his relationship with defendant with regard to the Byer and Howland leases, subsequent to September 16, 1955, means that any portion of the cause of action accrued subsequent to September 16, 1955 (Tr. 14, 15). Nor is there any contention that plaintiff was fraudulently or negligently induced to invest in Byer and Howland (Tr. 15).

The theory of plaintiff's case is based on negligent misrepresentation, as stated in Section 552 of the Restatement of Torts (Tr. 22, 26).

* * * * * *

It is stipulated that plaintiff made his last lease development payment to defendant on September 16, 1955. He suffered no damage as a result of the alleged negligence of defendant after that date. The last allegedly negligent act occurred no later than June 17, 1955, the last time defendant supplied plaintiff with any reserve estimates. The complaint in this action was filed in October, 1963, more than eight years after the date of plaintiff's last damage or defendant's last allegedly negligent act.

The facts need not be stated in further detail because it has been agreed that none of the material facts are in dispute (Tr. 34). The transcript of the proceedings reflecting that the parties' factual agreements and stipulations of record is made a part of this memorandum by this reference.

Both parties are also agreed that the statute of limitations question presented by defendant's pending motion is controlled by Missouri law and that Section 516.120 RSMo 1959, V.A.M.S., is the applicable statute.

Plaintiff stated for the record that "the Court may accept September 15, 1955, this date was later changed to September 16, 1955 (Tr. 28), as the date of the last damage suffered by the plaintiff in regard to the cause of action that will be tested by the motion for summary judgment" (Tr. 11) and that plaintiff does not intend "to stretch the date of the sufferance of damage beyond the date of September 16, 1955" (Tr. 18). Plaintiff made clear that he does not contend either that "the mere continuation of a relationship in regard to both the Byer lease and the Howland lease, subsequent to the September 16 1955 date is designed to support any contention that any portion of the cause of action accrued subsequent to the September 16 1955 date" (Tr. 14-15) or that either of the two leases mentioned "was induced either by fraud or by negligence" (Tr. 15).

Plaintiff also concedes that the statute bars the Count I cause of action unless it can be said that the date the statute commenced to run is to be "measured from the date on which plaintiff first had the opportunity to learn of the existence of his claim" (plaintiff's suggestions, page 9). That date is to be distinguished from the date plaintiff sustained his last damage; a date which admittedly would bar plaintiff's claim.

The determination of the question posed turns on whether the Missouri courts would hold that a cause of action alleged under the theory of Section 552 of The Restatement of Torts¹ is within the compass of paragraph (4) of Section 516.120, which provides a five year limitation period for all actions "for any other injury to the person or rights of another, not arising on contract and not herein otherwise enumerated"; or whether such a cause of action is within the compass of paragraph (5) of Section 516.120, which contains the usual tolling provision for fraud actions and in which it is provided that in "an action for relief on the ground of fraud, the cause of action in such case to be deemed not to have accrued until the discovery by the aggrieved party, at any time within ten years, of the facts constituting the fraud".

Plaintiff's original complaint pleaded a typical action based on defendant's alleged fraud. Paragraph 3 of Count I, for example, alleged that defendant "made certain false and fraudulent representations"; that such were "known by the defendant to be false"; that they were "made with the intention of deceiving the plaintiff and inducing the plaintiff to act in reliance thereon to his detriment"; and that plaintiff, "believing said representations to be true," acted upon them to his detriment and damage.

But, as the record of the second day of trial shows, plaintiff acknowledged that he would not attempt to prove the allegations of fraud as contained in his original complaint.

The record made on that second day of trial reflects the following:

THE COURT: Let the record show that after the conclusion of proceedings in this case in open court yesterday that counsel conferred among themselves and later conferred with the Court in regard to the discussion of whether or not it was feasible to devise a procedure under which the question of Statute of Limitations could be put into posture for a motion for partial summary judgment that would enable the Court to make a definitive decision on all portions of the pending case, with the exception of the controversy that relates to the workover of one of the wells on the Howland lease, which the parties are in agreement is not within any Statute of Limitations.

The discussion last evening and the informal discussion before we went on the record this morning suggests that counsel for the plaintiff be given an opportunity to make a statement of what evidence plaintiff expects to offer in this case which the defendant may agree that, for purposes of a motion for partial summary judgment, and only for that purpose, the plaintiff would be able to offer such testimony.

The parties have also indicated that there is a likelihood that they will agree that all pleadings, interrogatories and their answers, requests for admissions, if any, that have been answered, and the depositions and exhibits to the depositions, and perhaps some additional exhibits that we may discuss later, would also be considered to be before the Court for purposes of ruling a motion for partial summary judgment t

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