Valley View Angus Ranch, Inc. v. Duke Energy Field Services, LP

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
December 6, 2010
FOR THE TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court

VALLEY VIEW ANGUS RANCH,
INC.; OTIS CULPEPPER,

Plaintiffs-Appellees, No. 09-6185
(D.C. No. 5:04-CV-00191-D)
v. (W.D. Okla.)

DUKE ENERGY FIELD SERVICES,
LP,

Defendant-Appellant.

ORDER AND JUDGMENT *

Before HARTZ, Circuit Judge, PORFILIO and BRORBY, Senior Circuit
Judges.

In this diversity action, Valley View Angus Ranch, Inc. and its President,

Otis Culpepper (plaintiffs), sued Duke Energy Field Services, LP (now known as

DCP Midstream, LP), to recover damages for injury caused when Duke’s

oil-and-gas pipeline underlying Valley View’s property leaked condensate.

*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Plaintiffs’ amended complaint raised claims for private and public nuisance,

trespass, unjust enrichment, and punitive damages. After this court reversed and

remanded the district court’s grant of summary judgment in favor of Duke,

see Valley View Angus Ranch, Inc. v. Duke Energy Field Servs., Inc., 497 F.3d

1096 (10th Cir. 2007), Duke admitted liability for any harm to Valley View

directly caused by the pipeline leak. The district court entered partial summary

judgment in favor of Valley View on this issue and held a jury trial to determine

the nature and extent of the plaintiffs’ injuries and to assess what damages, if any,

each plaintiff should recover.

During the July 2008 trial, the jury heard testimony that Duke had spent

$222,124 on cleanup. The jury was also presented with evidence that it would

cost $756,592 to remove the remaining pollution from the Valley View property,

and plaintiffs’ real estate appraiser testified that the cleanup cost far exceeded the

market value of Valley View’s 470-acre ranch—which he estimated to be $1,000

per acre—before the leak.

The jury found Valley View entitled to $131,500 for injury to the property

and Mr. Culpepper entitled to $37,500 for his inconvenience, annoyance, and

discomfort. The district court entered judgment on the jury’s verdict; denied

Duke’s motion for judgment as a matter of law and alternative motion for

remittitur or a new trial; granted plaintiffs’ motion to amend judgment to award

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Mr. Culpepper prejudgment interest; and entered an amended judgment. Duke

filed a timely notice of appeal.

On appeal Duke contends that the district court (1) erroneously instructed

the jury on the measure of damages recoverable by Valley View; (2) improperly

admitted expert testimony and denied Duke’s posttrial motions; and

(3) incorrectly awarded prejudgment interest. Our jurisdiction arises under

28 U.S.C. § 1291. We affirm.

I. Background

Because the parties are familiar with the procedural history and trial

testimony in this case, we provide only an abbreviated summary. Mr. Culpepper

discovered Duke’s pipeline leak in October 2003. Duke hired an environmental

contractor to dig out polluted soil and perform other remediation. Plaintiffs filed

suit in February 2004. About two months later, Duke completed its excavation

and backfilled the excavation site with clean soil.

Throughout this litigation, plaintiffs have maintained that Duke “failed to

adequately clean up the leak,” J.A., Vol. 2 at 336. Duke, on the other hand, has

maintained that the plaintiffs have not “suffered either the type or extent of

damages which they seek,” id.

II. Measure of Damages

Neither party disputes on appeal the district court’s ruling that Valley

View’s claim was for temporary injury to its property. Nor does either party

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dispute that therefore the measure of damages in this case was the reasonable cost

of repairing and restoring the property to its original condition, but not to exceed

the decrease in the property’s fair market value caused by the injury. They also

agree that if the cost of repair and restoration exceeded that decrease in value, the

measure of damages amounted to that decrease. Where the parties differ in their

appellate briefs is on how much property should be considered in making the

decrease-in-value calculation. Duke asserts that the pipeline leak did not injure

more than two of Valley View’s 470 acres and that damages under Oklahoma law

should be limited to the diminution in value of only the injured portion of land.

Duke therefore challenges the following portion of jury Instruction Number 18:

“‘In determining the fair market value, you may consider the extent to which the

Valley View property, or some portion of it, was harmed.’” Aplt. Opening Br.

at 16 (quoting J.A., Vol. 2 at 592-93). Duke contends that the jury

“misconstrued” Instruction Number 18, asserting:

The only way the jury’s verdict [for Valley View] makes any sense is
if the jury read Instruction No. 18 to mean that they could consider
the fair market value of the entire 470-acre tract, even if only some
portion of it was harmed . . . . However, . . . this would be an
erroneous measure of damages.

Id.

Plaintiffs counter that the leak impacted more than two acres and that

Oklahoma law requires consideration of the diminution in value of Valley View’s

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entire 470-acre ranch. They assert that Instruction Number 18 gave proper

guidance to the jury concerning the measure of damages.

In a diversity case such as this, “the substance of a jury instruction is a

matter of state law, but the grant or denial of a tendered instruction is governed

by federal law.” Blanke v. Alexander, 152 F.3d 1224, 1232 (10th Cir. 1998).

Although we review the district court’s refusal to give a particular instruction for

an abuse of discretion, “[w]e review de novo whether, as a whole, the district

court’s jury instructions correctly stated the governing law and provided the jury

with an ample understanding of the issues and applicable standards.” Martinez v.

Caterpillar, Inc., 572 F.3d 1129, 1132 (10th Cir. 2009) (internal quotation marks

omitted). “We reverse only in those cases where we have a substantial doubt

whether the jury was fairly guided in its deliberations . . . .” Id. (brackets and

internal quotation marks omitted).

On appeal Duke principally relies on Houck v. Hold Oil Corp., 867 P.2d

451, 461 (Okla. 1993), which held that a plaintiff could recover damages for

temporary injury to one portion of its land and damages for permanent injury to

another portion, so long as there was no double recovery. Houck’s holding,

argues Duke, shows that the jury need not consider the entire property in

assessing damages for temporary injury. This argument, however, does not get

Duke very far. Duke appears to believe that the only portion of the property that

can be considered injured is that portion where the leak occurred—the two acres.

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But Houck tells us otherwise. It states: “[I]f the wrongful act somehow adversely

affected the entire parcel . . . , it is appropriate to compute the damages on the

basis of the diminution of the value of the total acreage and not just on the value

of the portion damaged.” Id. (emphasis added). Thus, if the value of portions of

the property other than the two acres was diminished by the leak, that loss must

be considered by the jury even if only the two acres were damaged. And because

the issue is the decrease in market value of the property, Duke could not be

prejudiced by the jury’s consideration of too much property. If, say, 450 of the

470 acres were not adversely affected by the leak—that is, the market value of the

450 acres was not decreased—then consideration of those 450 acres would not

have increased the amount of damages awarded.

Accordingly, we hold that the challenged language in Instruction Number

18 was correct. As the district court explained: “[T]he current instruction

recognizes that the extent of the harm caused by the leak may be considered in

determining fair market value but leaves to the jury, based on and in light of the

conflicting evidence, the determination of how that harm . . . impact[s] . . . the

value of the property.” J.A., Vol. 6 at 2057.

We now turn to Duke’s argument that the evidence, even assuming that

Instruction 18 is correct, could not support the verdict.

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 III. Sufficiency of the Evidence/Expert Testimony

Duke states its second issue on appeal as “The District Court improperly

denied [Duke’s] post-trial motions for judgment as a matter of law and for new

trial.” Aplt. Opening Br. at 18. Included within the discussion under this

heading, however, is a separate issue—the admissibility of testimony by

plaintiffs’ expert witness Jerry Black. We address that issue before turning to the

posttrial motions.

Duke contends that the district court should have excluded Black’s

testimony about his cleanup plan, which envisioned re-excavating soils

underlying the initial excavation area to a depth of 19 feet. 1 In evaluating the

admissibility of expert testimony under Federal Rule of Evidence 702, a district

court “must first determine whether an expert is qualified by knowledge, skill,

1
Duke also asserts in conclusory fashion that Black’s “estimated cost of
remediation lacked sufficient support to be submitted to the jury” because his
opinions about the efficacy of a remedial pumping treatment system were “not
reliable,” and that, to the extent the opinions of other experts “were based on
Black’s flawed cost estimate, . . . their testimony should also have been
excluded.” Aplt. Opening Br. at 23-24. We decline to review this issue on appeal
because Duke “has failed to provide arguments or authorities in support.”
Burlington N. & Santa Fe Ry. Co. v. Grant, 505 F.3d 1013, 1031 (10th Cir. 2007);
see also Bronson v. Swensen, 500 F.3d 1099, 1105 (10th Cir. 2007) (“[C]ursory
statements, without supporting analysis and case law, fail to constitute the kind of
briefing that is necessary to avoid application of the forfeiture doctrine.”).
Similarly, we need not address Duke’s perfunctory assertion that the district court
should have excluded “Black’s opinions regarding groundwater remediation”
because he had not calculated “the quantity of groundwater which could be
produced from the site.” Aplt. Opening Br. at 23.

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experience, training, or education to render an opinion. . . . [I]f the court

determines that a witness is qualified, it must then determine whether her

opinions are reliable.” Milne v. USA Cycling Inc., 575 F.3d 1120, 1133 (10th Cir.

2009) (brackets, citation, and internal quotation marks omitted); see also United

States v. Rodriguez-Felix, 450 F.3d 1117, 1122-23 (10th Cir. 2006) (discussing

district court’s gatekeeper role). Because Duke does not claim that “the district

court failed to employ the proper legal framework required by Daubert[ v.

Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)], we consider only

whether the district court abused its discretion in actually applying this

framework to the testimony at hand.” Rodriguez-Felix, 450 F.3d at 1125. “We

will not . . . disturb a district court’s ruling absent our conviction that it is

arbitrary, capricious, whimsical, manifestly unreasonable, or clearly erroneous.”

Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2004).

Before allowing Black’s testimony the district court held a pretrial Daubert

hearing and considered the parties’ various pleadings in opposition to and support

of the proposed testimony. Thereafter, the court issued an order acknowledging

Black’s education and nearly 30 years’ experience as an environmental consultant

and ruling that Black could testify regarding his cleanup plan. The court

acknowledged Duke’s assertion that the soil samples relied upon by Black “do not

cover a sufficient area to support his conclusion that contamination was

extensive.” J.A., Vol. 2 at 551. But it concluded that Duke had failed to “present

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a sufficient basis for rendering [the evidence] inadmissible as unreliable.” Id.

“Instead,” it said, “the deficiencies in his methodology should be the subject of

cross-examination, as they impact the weight of Black’s testimony.” Id. The

court also ruled that even though Black’s cleanup plan was a one-page document

with recommended remedial actions, the cost of each action, and a sum of the

costs, it held “that any deficiencies in the plan . . . d[id] not render it inadmissible

under Fed. R. Evid. 702”; rather, “such deficiencies go to the weight of the

evidence and should be the subject of cross-examination.” J.A., Vol. 2 at 547.

The district court’s ruling was not “arbitrary, capricious, whimsical,

manifestly unreasonable, or clearly erroneous.” Bitler, 400 F.3d at 1232. The

court heard extensive testimony about Black’s education and experience, and

about the methodologies he employed in this case. On review “we are concerned

with” whether the district court performed “its obligation under Rule 702 and

Daubert, not upon the exact conclusions reached to exclude or admit expert

testimony.” Id. In demonstrating that an expert’s testimony is reliable, a

“plaintiff need not prove that the expert is undisputably correct or that the

expert’s theory is generally accepted in the scientific community.” Id. at 1233

(internal quotation marks omitted). “Instead, [a] plaintiff must show that the

method employed by the expert in reaching the conclusion is scientifically sound

and that the opinion is based on facts which sufficiently satisfy Rule 702’s

reliability requirements.” Id. (internal quotation marks omitted). On the record

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before us, plaintiffs met their burden. See Daubert, 509 U.S. at 596 (“Vigorous

cross-examination, presentation of contrary evidence, and careful instruction on

the burden of proof are the traditional and appropriate means of attacking shaky

but admissible evidence.”). In particular, Duke has not shown why Black could

not properly testify that excavation to 19 feet was necessary given his testimony

that (1) the groundwater level was 19 feet, (2) there was evidence that the

condensate had seeped into the groundwater and traveled to neighboring areas,

and (3) condensate had seeped into Duke’s excavation from below. To be sure,

Duke had plausible grounds for challenging Black’s testimony, but the district

court did not abuse its discretion in leaving the matter to the jury.

The argument by Duke that matches its statement of the second issue on

appeal is that the district court improperly denied its motions for judgment as a

matter of law and for a new trial. These motions were based on Duke’s

contention “that there was no evidence in the record from which the jury could

find that the extent of the injury to the soil and groundwater directly caused by

the leak extended beyond the area of the leak site itself.” J.A., Vol. 2 at 385.

According to Duke, “[e]ven if Plaintiffs’ experts’ testimony was properly

admitted, [Duke] was and is entitled to judgment as a matter of law on the issue

of the extent of the injury to the property because the evidence was not

conflicting,” Aplt. Opening Br. at 24. Alternatively, Duke asks this court to

reverse and remand for a new trial.

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 We review de novo the district court’s denial of a Fed. R. Civ. P. 50(b)

motion for judgment as a matter of law (JMOL), “[d]rawing all reasonable

inferences in favor of the nonmoving party.” Wagner v. Live Nation Motor

Sports, Inc., 586 F.3d 1237, 1243-44 (10th Cir. 2009), cert. denied, 130 S. Ct.

2405 (2010). We will reverse the court’s refusal to grant JMOL only “if the

evidence points but one way and is susceptible to no reasonable inferences

supporting the party opposing the motion.” Id. at 1244 (internal quotation marks

omitted). We review for an abuse of discretion the district court’s denial of a

Rule 59 motion for a new trial. See M.D. Mark, Inc. v. Kerr-McGee Corp.,

565 F.3d 753, 762 (10th Cir. 2009). Where, as here, “a new trial motion asserts

that the jury verdict is not supported by the evidence, the verdict must stand

unless it is clearly, decidedly, or overwhelmingly against the weight of the

evidence.” Id. (internal quotation marks omitted). In diversity cases, federal law

governs whether JMOL or a new trial is appropriate, see Wagner, 586 F.3d

at 1244 (JMOL); Blanke, 152 F.3d at 1235-36 (new trial), but the substantive law

of the forum state governs analysis of the underlying claim, see Wagner, 586 F.3d

at 1244 (JMOL); Romero v. Int’l Harvester Co., 979 F.2d 1444, 1449 (10th Cir.

1992) (new trial).

Contrary to Duke’s position, the jury was presented with evidence from

which it could infer that the pipeline leak had affected the value of more than two

acres. Experts testified that polluted material still existed at the initial excavation

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site. Black testified that when polluted material is left in the ground, “[i]t

travels, . . . goes through various type[s] of medias, whether it be soil or water,”

J.A., Vol. 4 at 1177, and can persist for 30 years. He also testified that the

groundwater monitoring wells’ test results indicated that the groundwater was

polluted and was “expanding.” Id. at 1173. In particular, he noted groundwater

samples from a monitoring well not on Valley View’s property but across the

road, which showed that pollution had “migrated” and that the “service area of the

groundwater pollution ha[d] expanded,” which is what “you expect when you

don’t have the source removed and groundwater moves.” Id. at 1163. Another of

the plaintiffs’ experts, Dr. Robert Knox (a groundwater hydrologist), further

testified about the well off of Valley View’s property, stating that its test results

were “a very large concern,” because they indicate “the contamination has moved

off site” by flowing “with the groundwater.” Id. at 1329. He said that without a

proper cleanup the “problem gets worse” because groundwater is moving and

spreading out. Id.

The jury also heard testimony from plaintiff Culpepper that the leak had

affected the entire ranch’s value, reducing the value “by at least half,” id. at 1040,

by making it unattractive to prospective buyers. Plaintiffs’ real estate appraiser

concurred, stating that the property “would not be marketable.” Id. at 1265. On

cross-examination he said that even if the two-acre area were carved out, buyers

would not be interested in land near the polluted site, although he acknowledged

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that if a larger area around the two-acre site were carved out, the remaining

acreage could have a residual value of $210,000 (meaning that the decrease in

value was $260,000). There was evidence that Valley View had sold some

acreage near the leak site (but not on the 470-acre ranch) in 2008 for more than

$1,000 per acre; but the record does not indicate whether the buyers were

informed of the leak.

The jury observed the witnesses, heard the testimony, and reviewed the

parties’ exhibits. Its verdict of $131,500 implies both that it concluded that the

pipeline leak impacted more than two of Valley View’s 470 acres, and that it

rejected contentions that the 470 acres had become worthless or had lost half its

value. Having reviewed the record in light of the applicable deferential standards

of review, we cannot conclude that the evidence “points but one way,” Wagner,

586 F.3d at 1244 (JMOL) (internal quotation marks omitted), or that the verdict

“is clearly, decidedly, or overwhelmingly against the weight of the evidence,”

M.D. Mark, Inc., 565 F.3d at 762 (new trial) (internal quotation marks omitted).

IV. Award of Prejudgment Interest to Mr. Culpepper

The district court granted plaintiffs’ request that Mr. Culpepper be awarded

prejudgment interest under Okla. Stat. tit. 12, § 727. 2 Duke agrees that § 727

applies to this case but contends that Mr. Culpepper cannot be awarded any

2
Unless otherwise noted, all citations to Okla. Stat. tit. 12, §§ 727 and 727.1
are from the Oklahoma Statutes’ 2008 Supplement.

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interest because Oklahoma’s State Treasurer has never certified what the rate of

interest should be. To understand and evaluate Duke’s contention, we must

consider § 727, its successor statute, and what the State Treasurer did, and did

not, certify with respect to interest rates.

Section § 727 is “applicable to all actions . . . filed . . . on or after

January 1, 2000, but before January 1, 2005.” Id. § 727(K). It governs

prejudgment interest in this case because plaintiffs filed suit on

February 25, 2004. Section 727(I) states:

[P]ostjudgment interest and prejudgment interest . . . shall be
determined by using a rate equal to the average United States
Treasury Bill rate of the preceding calendar year as certified to the
Administrative Director of the Courts by the State Treasurer on the
first regular business day in January of each year, plus four
percentage points.

The certification required by the State Treasurer seems simple enough, but a

problem arose when the State Treasurer was given an additional certification duty

under a successor statute to § 727. In 2004 the state legislature enacted

Okla. Stat. tit. 12, § 727.1 (Supp. 2004). Section 727.1 did not repeal § 727 but it

set the rate for prejudgment interest for suits filed “on or after January 1, 2005.”

Okla. Stat. tit. 12, § 727.1(K). Under § 727.1, that rate is:

the prime rate, as listed in the first edition of the Wall Street Journal
published for each calendar year and as certified to the
Administrative Director of the Courts by the State Treasurer on the
first regular business day following publication in January of each
year, plus two percent (2%).

Id. § 727.1(I).

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 Unfortunately, the State Treasurer has not found it possible to perform two

certifications for the same year. There is a published interest rate for the year

2004, calculated under § 727(I). See 2004 Notice Re: Interest on Judgments,

available at http://www.oscn.net/applications/oscn/DeliverDocument.asp?Cite

ID=438218. But the published interest rates for the years 2005, 2006, 2007, and

2008, which are listed in the statutory note to § 727, see Okla. Stat. tit. 12, § 727

(“NOTICE RE: INTEREST ON JUDGMENTS . . . . Interest rates since the

inception of the law of November 1, 1986, are as follows:”) were apparently

calculated under § 727.1(I). The district court applied the published interest rates

contained in the statutory note to § 727, ruling that “a party otherwise entitled to

prejudgment interest should not be deprived of the same because of the absence of

the . . . certification of interest rates applicable to § 727.” J.A., Vol. 2 at 630.

“[A] federal court sitting in diversity applies state law, not federal law,

regarding the issue of prejudgment interest. Although an award of prejudgment

interest is generally reviewed for abuse of discretion, any statutory interpretation

or legal analysis underlying such an award is reviewed de novo.” AE, Inc. v.

Goodyear Tire & Rubber Co., 576 F.3d 1050, 1055 (10th Cir. 2009) (citation and

internal quotation marks omitted). Further, under Oklahoma law a court’s “goal

in construing statutes is to determine the Legislature’s intent.” Russell v. Chase

Inv. Servs. Corp., 212 P.3d 1178, 1185 (Okla. 2009); see also United States v.

DeGasso, 369 F.3d 1139, 1145 (10th Cir. 2004) (observing that if “the state

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supreme court has not interpreted a provision of the state’s statutory code, the

federal court must predict how the court would interpret the code in light of state

appellate court opinions, decisions from other jurisdictions, statutes, and

treatises” (brackets and internal quotation marks omitted)).

Guided by these standards, we affirm the district court’s award of

prejudgment interest. We cannot agree with Duke that the legislature intended

that a party otherwise entitled to prejudgment interest under § 727 should be

totally deprived of that interest because of a glitch in the procedure for computing

that interest. Would parties be deprived of prejudgment interest under § 727.1 if

the Wall Street Journal ceased publication? The more difficult question is what

interest rate to apply. But Duke has made no argument on that point, so we must

affirm the rate chosen by the district court.

V. Conclusion

For the foregoing reasons, we reject Duke’s appellate arguments and

AFFIRM the amended judgment of the district court.

Entered for the Court

Harris L Hartz
Circuit Judge

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