Massey v. Gulf Oil Corp.
Decision Date | 17 February 1975 |
Docket Number | No. 72-3057,72-3057 |
Citation | 508 F.2d 92 |
Parties | A. L. MASSEY et al., Plaintiffs-Appellants, v. GULF OIL CORPORATION, Defendant-Appellee. |
Court | U.S. Court of Appeals — Fifth Circuit |
Michael R. Eubanks, Lumberton, Miss., William A. McKenzie, A. Joe Fish, G. Lee Hart, Dallas, Tex., for plaintiffs-appellants.
C. Denton Gibbes, Jr., Laurel, Miss., James A. Boone, Gulf Oil Corp., Jackson, Miss., William G. Duck, Gulf Oil Corp., New Orleans, La., for defendant-appellee.
Appeal from the United States District Court for the Southern District of Mississippi.
Before THORNBERRY, GODBOLD and CLARK, Circuit Judges.
This appeal follows a new trial granted by the District Judge. We review the correctness of the order granting that new trial and decide that it was not erroneous.
Plaintiffs own a 1/32 non-participating royalty interest in 122 acres of the Soso Oil Field in Mississippi. They and the other owners of royalty and operating interests in the Soso Field entered into a unitization agreement. This is an agreement under which royalty owners and operators of tracts in a field agree to combine or 'pool' the tracts for operational purposes into a single unit to be operated in an integrated manner. See 1A Summers, Oil and Gas, 104. The Soso Field had been in production several years before the unitization agreement was entered into. Contemporaneously all operating parties joined in an agreement designating Gulf as sole operator of the unit.
Plaintiffs sued Gulf for breach of the contractual obligations owed to them under the unitization agreement by Gulf as the designated operator. Stated briefly plaintiffs claimed that Gulf 'high graded' the unit by extracting only the oil most easily and least expensively available. The case was tried to a jury which found in answer to specific interrogatories that Gulf had failed in several different respects to carry out the obligations placed upon it by the unitization agreement. The jury returned a general verdict for the plaintiffs, assessing their damages at $265,876.
Gulf moved for judgment n.o.v. or for new trial. The trial judge denied the motion for judgment n.o.v. on the ground that there was 'substantial factual support from expert witnesses that (the) Unitization Agreement has been breached and violated by the defendant in several material respects.' He granted the motion for new trial and directed a new trial on all issues.
In the second trial the jury found for the defendant Gulf. On this appeal plaintiffs do not challenge any part of the second trial but only the propriety of the order granting that trial. Review of the order properly awaited the entry of a final judgment following the new trial. 6A Moore's Federal Practice P59.15(1), at 59-273ff; 11 Federal Practice and Procedure (Wright & Miller Ed.) 2818 at 115-116.
The District Judge set out in a written order his reasons for granting a new trial. Though stated in various ways, the heart of his order is that he considered that the evidence of plaintiffs' damages, as calculated by plaintiffs' expert witness and summarized in a single exhibit, lacked credibility. This conclusion was not directed at credibility in the sense of truth versus untruth but in the sense of the lack of accuracy of a complex mathematical computation; that is, the calculation of plaintiffs' damages, as made and summarized by plaintiffs' expert witness, was not supported by underlying evidence, with the result that the ultimate damage figure could not be accepted as accurate ('credible'). 1 An additional fact noted by the judge was that the damages figure assessed by the jury was precisely one-half of the expert's ultimate (and insufficiently accurate) figure, which figure reached by the jury was otherwise unrelated to the evidence.
In this circuit the ruling of a trial judge in either granting or denying a motion for a new trial is reviewable under an abuse of discretion standard. 2 United States for use of Weyerhaeuser Co. v. Bucon Construction Co., 430 F.2d 420 (CA5, 1970); Telfair v. Zim Israel Navigation Co., 428 F.2d 127 (CA5, 1970), cert. denied, 400 U.S. 1009, 91 S.Ct. 568, 27 L.Ed.2d 622 (1971); Willitt v. Purvis, 276 F.2d 129 (CA5, 1960); Marsh v. Illinois Central R. Co., 175 F.2d 498 (CA5, 1949). Although the trial judge's discretion is broad with respect to the granting of a new trial, the granting of a new trial constitutes reversible error under certain circumstances. See 6A Moore's Federal Practice P59.08(5), at 59-162-63.
Our review of an order granting a motion for new trial is somewhat broader than review of an order denying a motion for new trial. In Gorsalitz v. Olin Mathieson Chemical Corp., 429 F.2d 1033 (CA5, 1970), drawing at length from Taylor v. Washington Terminal Co., 133 U.S.App.D.C. 110, 409 F.2d 145 cert. denied, 396 U.S. 835, 90 S.Ct. 93, 24 L.Ed.2d 85 (1969), we pointed out that the operative factors underlying review of a ruling on a new trial motion are deference to the trial judge, who has had the opportunity to observe the witnesses and to consider the evidence in the context of a living trial rather than upon a cold record, deference to the jury's determination of weight of the evidence and quantum of damages, and the constitutional allocation to juries of questions of fact. We noted that where the judge denies the motion and leaves undisturbed the jury's determination, all factors press in the direction of leaving the trial judge's ruling undisturbed. But where the judge has granted a new trial, the factors oppose each other. Deference to the trial judge is subjected to opposing tensions of deference to the jury as the body to whom fact finding is constitutionally allocated and deference to the decision which the jury has reached pursuant to that authority. Furthermore, where a new trial is granted on the ground that the verdict is against the weight of the evidence, we exercise closer scrutiny than where the ground is that some undesirable or pernicious influence has intruded into the trial, because to an extent the judge has substituted his judgment of the facts and credibility of witnesses for that of the jury. Thereby we protect the litigants' right to jury trial. O'Neil v. W. R. Grace & Company, 410 F.2d 908 (CA5, 1969). 3
Thus we direct our close scrutiny to the predicate for the granting of a new trial, which in its ultimate thrust was the lack of accuracy of the expert's calculation as a basis upon which damages could be assessed. Plaintiffs' primary method for calculating damages was based upon data obtained from records which Gulf was required to and did maintain with respect to the unit. Under the unitization agreement it was necessary to establish a 'percentage of participation' ('POP') for each tract in the unit on the basis of which the production from the unit was allocated to the respective tracts. The amount allocated to a tract would be, of course, distributed among the several parties interested in the tract (both operating parties and royalty owners) on the basis of their respective interests. Thus the POP was the critical factor for determining the return which each royalty owner received from the interest which he had put into the operating unit by joining in the unitization agreement.
An initial POP was calculated for each tract in Zone A of the unit (strata down to 12,000 feet) as of the date of execution of the unitization agreement in 1956. The POP of each tract was the proportion that the 'evaluated acre feet' of sand under the tract bore to the aggregate 'evaluated acre feet' of sand under all tracts. The agreement specifically recognized that operations would provide additional information which might require altering the initial POP's and provided for subsequent revisions of POP's which should take into consideration data obtained from drilling wells and all other available information regarding the extent of the sands. Gulf was obligated to recalculate POP's at six months' intervals over a period of 30 months. The last such recalculation, which would fall in mid-1969, was to be the final recalculation and, with exceptions not here relevant, it would govern for Zone A for the remainder of the life of the unitization agreement.
The arrangements with respect to Zone B (strata below 12,000 feet) were substantially the same, except that the initial POP's were to be established if and when exploration in Zone B resulted in production of oil in commercial quantities. Periodic recalculations of POP's were required, with the final recalculation, falling in 1968, to govern thereafter for Zone B.
Plaintiffs introduced evidence of their damages calculated by an expert witness, ...
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