Husky Ventures, Inc. v. B55 Invs., Ltd.
911 F.3d 1000
10th Cir.2018Background
- Husky Ventures (operator) and B55 Investments entered Participation Agreements (2014) giving B55 minority interests in two oil-and-gas project AMIs; Husky responsible for lease acquisition and JIB (joint interest billing) invoices for future leases.
- Dispute arose when McArthur (B55 president) asserted an opt-in/lease-by-lease right, refused some JIB payments, demanded an inflated buyout, and threatened/encouraged third parties to assert liens and suits that jeopardized Husky’s operator status and project interests.
- Husky sued in Oklahoma court (removed to federal court) for breach of contract and tortious interference; B55 counterclaimed for breach, declaratory relief, and fraud.
- After a six-day jury trial, jury awarded Husky $4M compensatory (against B55 and McArthur) and $2M punitive (against McArthur); counterclaims were rejected. District court entered declaratory judgment interpreting the Participation Agreements and issued a permanent injunction barring B55/McArthur from contacting Husky’s business partners. Final judgment entered Jan. 17, 2017.
- B55/McArthur appealed and moved for a new trial under Rule 59(a); they also sought leave to amend counterclaims late in discovery. The district court denied the new-trial motion and denied leave to amend. On appeal the Tenth Circuit dismissed some issues for lack of jurisdiction, affirmed the injunction and declaratory judgment, and upheld denial of leave to amend.
Issues
| Issue | Plaintiff's Argument (Husky) | Defendant's Argument (B55/McArthur) | Held |
|---|---|---|---|
| Appellate jurisdiction over denial of Rule 59(a) new-trial motion | N/A (Husky defended jurisdictional rules) | No amended notice of appeal needed because issues on appeal were not unique to the Rule 59(a) order | Dismissed for lack of appellate jurisdiction; Appellate Rule 4(a)(4)(B)(ii) requires a notice/amendment to appeal denial of post-judgment motions |
| Permanent injunction (irreparable harm) | Injunction necessary because defendants will likely continue interference and future harm to Husky’s business cannot be quantified by money damages | Money damages (jury award) suffice; injunction unnecessary and speculative | Affirmed: district court did not abuse discretion — significant risk of future, incalculable harm to business justified injunction |
| Declaratory judgment — contract interpretation (Paragraphs 12 vs 18) | Contract interpretable to require JIB payments for AMI leases; Paragraph 18’s special procedures apply only to leases partly outside AMI | Paragraph 18 creates ambiguity allowing lease-by-lease opt-out; any ambiguity should be construed against drafter (Husky) | Affirmed: Court read provisions harmoniously under Oklahoma law; no unresolved ambiguity requiring contra-drafting rule |
| Denial of leave to amend counterclaims (timeliness/good cause) | B55 argued it discovered fraud evidence late via depositions and Husky impeded discovery; Rule 15 should be liberally applied | B55 failed to show diligence; deadlines passed and Rule 16(b)(4) good-cause not met | Affirmed: district court did not abuse discretion — B55 lacked diligence and failed to show good cause to amend after scheduling deadline |
Key Cases Cited
- Yost v. Stout, 607 F.3d 1239 (10th Cir. 2010) (timely notice of appeal is jurisdictional)
- Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988) (notice-of-appeal requirement principles)
- Sw. Stainless, LP v. Sappington, 582 F.3d 1176 (10th Cir. 2009) (money damages for past injury do not preclude injunction against likely future misconduct)
- Fish v. Kobach, 840 F.3d 710 (10th Cir. 2016) (definition of irreparable harm: harm not compensable by money damages)
- RoDa Drilling Co. v. Siegal, 552 F.3d 1203 (10th Cir. 2009) (irreparable harm standard for injunctions)
- Crowe & Dunlevy, P.C. v. Stidham, 640 F.3d 1140 (10th Cir. 2011) (significant risk of irreparable harm standard)
- Dominion Video Satellite, Inc. v. EchoStar Satellite Corp., 269 F.3d 1149 (10th Cir. 2001) (difficulty of ascertaining future damages supports irreparable-harm finding)
- Tri-State Generation & Transmission Ass’n v. Shoshone River Power, Inc., 805 F.2d 351 (10th Cir. 1986) (threat to business viability may constitute irreparable harm)
- Equifax Servs., Inc. v. Hitz, 905 F.2d 1355 (10th Cir. 1990) (money-damages adequacy turns on certainty of proving damages)
- Milk ‘N’ More, Inc. v. Beavert, 963 F.2d 1342 (10th Cir. 1992) (de novo review of contract interpretation)
- Gorsuch, Ltd., B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d 1230 (10th Cir. 2014) (post-scheduling-order amendments require Rule 16 good cause and Rule 15 compliance)
- SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507 (10th Cir. 1990) (scheduling orders should not be modified absent good cause)