Unit Drilling Co. v. Enron Oil & Gas Co., s. 95-7039

• Decision Date: 04 March 1997
• Docket Number: Nos. 95-7039,95-7123 and 95-7125,s. 95-7039
• Citation: 108 F.3d 1186
• Parties: , 46 Fed. R. Evid. Serv. 764, 97 CJ C.A.R. 360 UNIT DRILLING COMPANY, Plaintiff-Appellant, v. ENRON OIL & GAS COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1186

108 F.3d 1186

37 Fed.R.Serv.3d 19, 46 Fed. R. Evid. Serv. 764,

97 CJ C.A.R. 360

UNIT DRILLING COMPANY, Plaintiff-Appellant, v. ENRON OIL & GAS COMPANY, Defendant-Appellee.

Nos. 95-7039, 95-7123 and 95-7125.

United States Court of Appeals Tenth Circuit.

March 4, 1997.

Frank D. Spiegelberg, (Clifford K. Cate, Jr., and Sheila M. Powers with him on the brief) of Boesche, McDermott & Eskridge, Tulsa, OK, for Plaintiff-Appellant.

Jon Epstein (Donna N. Blakley with him on the brief) of Hall, Estill, Hardwick Gable, Golden & Nelson, P.C., Oklahoma City, OK, for Defendant-Appellee.

Before SEYMOUR, Chief Judge, and PORFILIO and EBEL, Circuit Judges.

EBEL, Circuit Judge.

Plaintiff-Appellant Unit Drilling Company sued Enron Oil & Gas Company to recover the contract price of drilling work that it had performed. The case was tried to a jury which returned an ambiguous verdict. The district court refused to ask the jury to clarify the verdict as requested by Unit, and ruled that Unit would recover no damages. We hold that the district court abused its discretion in refusing to clarify the verdict. We therefore reverse and remand for a new trial.

FACTS

This breach of contract case arises out of a well-drilling contract between Unit Drilling Company (Unit), a drilling contractor, and Enron Oil & Gas Company (Enron), an oil and gas producer. While Unit was drilling the well for Enron, drill pipes separated twice. Enron incurred additional costs to have the pipes repaired and then refused to pay the final invoices submitted by Unit, claiming that it was damaged by the pipe separation in an amount greater than the amount due on the final invoices. Unit brought a diversity action pursuant to 28 U.S.C. § 1332 (1994) to recover $157,262.36, the amount of Enron's unpaid invoices. Enron claimed a set-off in the amount of $158,444.73.

The case was tried to a jury. At the close of the evidence, the jury was given four general verdict forms. The jurors were instructed that if they found that Enron had breached the contract, they were to indicate that on Form 1, and go on to consider Enron's claim for set-off. If they found that Enron did not breach the contract, they were to indicate that on Form 2, and not consider Enron's claim for set-off. If they found that Enron was entitled to a set-off, they were to indicate that on Form 3. If they found against Enron on its claim for a set-off, they were to use Form 4.

The jurors were also instructed that if they found that Enron breached the contract, they could measure Unit's damages in one of two ways. If they found that Unit fully performed the contract, they could award expectation damages of up to $157,262.36, the amount of the unpaid invoices. However, if they found that Unit only substantially performed the contract, they were to award the amount of the unpaid invoices, less the cost to Enron of correcting any defects that Unit caused. ¹

The jury returned a verdict for Unit on its breach of contract claim and awarded it $70,768.02 on Form 1. It awarded Enron a set-off of $86,494.30 on Form 3. ² The district court interpreted these verdicts to mean that Unit would recover no damages. To reach this conclusion, the court subtracted the amount of the set-off on Form 3 from the amount of damages on Form 1. Because the set-off was greater than the damages, the court awarded Unit no damages. ³ Unit objected to this interpretation of the verdicts, arguing that the jury itself had subtracted the amount of Enron's set-off, $86,494.30, from the amount of the unpaid invoices, $157,262.36, to arrive at an award of $70,768.02. ⁴ Unit asserted that the jury intended it to receive a judgment of $70,768.02 after the set-off.

Before the jury was discharged, Unit asked the trial judge to question the jury to clarify the damage awards, but the court refused. The court also refused to grant plaintiff's motion for judgment as a matter of law or its motion for a new trial.

On appeal, Unit claims the district court erred (1) in instructing the jury, (2) in refusing to question the jury to clarify the verdict, and (3) in interpreting the jury's damage awards. Unit also claims that the district court erred in excluding evidence of Enron's dealings with another contractor. Both Unit and Enron also raise issues relating to awards of attorney fees and costs.

A. Jury Instructions

Unit contends that the trial court erred in giving confusing jury instructions. However, Unit waived its right to claim error in the instructions by failing to object specifically at trial to the defect in the jury instructions of which it now complains. Under Fed.R.Civ.P. 51 "[n]o party may assign as error the giving or the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection." See also Neu v. Grant, 548 F.2d 281, 287 (10th Cir.1977) ("The need for specific objection applies to ... instructing the jury....").

During the trial, Unit raised two specific objections to the jury instructions. Neither objection related to the possibility that the jury would reduce Unit's award by the cost to Enron of fixing the pipes and separately award Enron the same damages on its claim for a set-off. Unit complained generally that the verdict forms were "extremely difficult to understand." However, when the trial judge asked Unit to suggest a way to make the forms more understandable, Unit did not provide one. The confusion encountered in the verdict forms could have been cured with an instruction telling the jury that if they reduced Unit's Form 1 award of damages by the amount it cost Enron to fix the pipes, they should not also award that amount to Enron as a set-off on Form 3. ⁵ However, Unit sought no such instruction.

Where the issue of jury instructions is not preserved for appeal, the court reviews the instructions for plain error. United States v. Zimmerman, 943 F.2d 1204, 1213 (10th Cir.1991). Plain error requires a finding that the instructions were "patently plainly erroneous and prejudicial." Moe v. Avions Marcel Dassault-Breguet Aviation, 727 F.2d 917, 924 (10th Cir.1984). The instructions given may have led the jury erroneously to award the plaintiff damages under a formula for substantial performance, thus reducing Unit's damages by the cost to Enron of fixing the pipes, and separately to award Enron the cost of the repairs as a set-off. Alternatively, the instructions may have confused the jury about how to fill out the verdict forms. On the whole, however, the instructions given were a correct statement of the law and the imperfections in them did not rise to the level of plain error.

B. Questioning of Jurors

Unit next claims that the trial court erred in refusing to ask the jury to clarify its damage awards when an ambiguity developed and Unit specifically requested clarification before the jury was discharged. We agree. In Resolution Trust Corp. v. Stone, 998 F.2d 1534 (10th Cir.1993), we approved the practice of asking the jury to clarify its meaning when the court is faced with an ambiguous verdict. As we explained,

permitting questioning of jurors ... promotes the value of judicial economy; otherwise, in the event of an ambiguity the court would be left with no other remedies than to order a new trial, even though a simple inquiry could clear up questions about how to read the damages verdict.

Id. at 1548. See also W.J. Dunn, Annotation, Verdict for Money Judgment Which Finds for Party for Ambiguous or No Amount, 49 A.L.R.2d 1328, § 10 (1956) (citing cases holding that it is proper to resubmit an ambiguous or incomplete verdict to a jury prior to jury discharge).

During the trial, Enron did not dispute that Unit performed the work reflected in the unpaid invoices. Thus, Unit argued that the jury itself had subtracted the set-off awarded to Enron, $86,494.30, from the balance on the unpaid invoices of $157,262.36 to reach its award to Unit of $70,768.02. Whether the jury intended Unit to receive a judgment of $70,768.02, or, as the trial court found, nothing, was at the very least ambiguous.

When a party objects to a trial court's interpretation of a verdict before the jury is discharged, as Unit did here, the district court should make a fair appraisal of the whole record to discern whether the verdict is, in fact, ambiguous. ⁶ In this case, potentially misleading jury instructions and forms ⁷ and the susceptibility of the verdict to an interpretation other than the one arrived at by the district court, given the facts of the case, point to an ambiguity in the verdict. Only by asking the jury to clarify its verdict could the court have determined the jury's "true decision." Resolution Trust, 998 F.2d at 1548. Parties who entrust the resolution of their disputes to the legal system are entitled to no less.

When a court is faced with an ambiguous general verdict, and a request for clarification is made before the jury is discharged, the court's options are to explain the ambiguity to the jury and send the jury back into deliberations with instructions to clarify the ambiguity or to order a new trial. See Resolution Trust, 998 F.2d at 1547 (questioning jury to clarify the verdict); see also Hartnett v. Brown & Bigelow, 394 F.2d 438, 441-443 & fn. 2 (10th Cir.1968) (ordering new trial where damage awards were ambiguous and incomplete). ⁸ Cf. Fed.R.Civ.P. 49(b) ("When the answers [to interrogatories accompanying a general verdict] are inconsistent with each other and one or more is likewise inconsistent with the general verdict, judgment shall not be entered, but the court shall return the jury for further consideration of its answers and verdict or shall order a new trial."). See also E.F. Hutton & Co. v. Arnebergh, 775 F.2d 1061, 1063 (9th Cir.1985) (analogizing ambiguous verdicts to inconsistent special verdicts). As we explained in Resolution Trust, clarifying the...