HUSKY VENTURES, INC., Plaintiff Counterclaim Defendant - Appellee, v. B55 INVESTMENTS, LTD., Defendant Counterclaimant - Appellant, and CHRISTOPHER McARTHUR, an individual, Defendant - Appellant.
No. 17-6034
United States Court of Appeals, Tenth Circuit
December 18, 2018
PUBLISH. Elisabeth A. Shumaker, Clerk of Court.
Stephen E. Csajaghy (Marisa Hudson-Arney with him on the briefs), Condit Csajaghy LLC, Denver, Colorado, for Defendants-Appellants.
Shannon Wells Stevenson, Davis Graham & Stubbs LLP, Denver, Colorado, (Kyle W. Brenton and Daniel Rosales, Davis Graham & Stubbs LLP, Denver, Colorado, and Travis P. Brown, Brady L. Smith, John Paul Albert, Mahaffey & Gore, P.C., Oklahoma City, Oklahoma, with him on the briefs) for Plaintiff-Appellee.
HOLMES, Circuit Judge.
Husky Ventures, Inc. (“Husky“) sued B55 Investments Ltd. (“B55“) and its president, Christopher McArthur, for breach of contract and tortious interference under Oklahoma law. In response, B55 filed counterclaims against Husky.1 After a trial, a jury reached a verdict in Husky‘s favor, awarding $4 million in compensatory damages against
both B55 and Mr. McArthur and $2 million in punitive damages against just Mr. McArthur; the jury also rejected the counterclaims presented to it. In further proceedings, the district court entered a permanent injunction and a declaratory judgment in Husky‘s favor. After the court entered final judgment, B55 and Mr. McArthur filed a timely notice of appeal from that judgment. They also moved for a new trial under
On appeal, B55 and Mr. McArthur contend that the district court erred in denying their motion for a new trial and again move to certify a question of state law to the Oklahoma Supreme Court. In addition, they appeal the permanent injunction and declaratory judgment and argue that the district court erred in refusing to grant leave to amend the counterclaims.
We dismiss B55 and Mr. McArthur‘s claims relating to the motion for a new trial for lack of appellate jurisdiction and deny their motion to certify the state law question as moot. We affirm the district court‘s judgment on the remaining issues.
A
Husky is an Oklahoma oil and gas company. In the early 2000s, Charles Long, Husky‘s CEO, became interested in using horizontal drilling techniques to extract oil and gas from geologic formations previously thought to be depleted. In 2008, Husky had success drilling wells at an ostensibly depleted formation called the “Cimarron” prospect.2 Encouraged by this promising start, Husky created projects at other prospects, including “Chisholm Trail,” “Prairie Grove,” “Cherokee Ridge,” and “Viking.”
But Husky lacked capital to develop each of these projects independently, so it entered into аgreements to secure capital with other individuals and companies. Under these agreements, participating entities would contribute capital in exchange for a working interest in a particular project. Husky, for its part, was contractually designated as the projects’ “operator.” As the operator, Husky was responsible for making operational decisions regarding lease acquisitions and drilling services for each project. Such arrangements are common in mineral extractive industries. See Debra J. Villarreal & Lucas LaVoy, Participation Agreements, 31 E. MIN. L. FOUND. § 10.03 (2010) (“Frequently, companies desiring to pursue an opportunity with other companies do not want to incur liability for the others’ obligations. Industry participants, therefore, often prefer to enter into a contract to govern the joint exploration and development rather than form a joint venture.“); see also id. § 10.03[11] (“Participants typically name one of the participants . . . as the operator for the exploration area. The party named as operator is also often named as the party with primary responsibility for lease acquisition and making develoрment proposals.“).
In December 2013, Mr. Long and Mr. McArthur discussed a collaboration between
Signs of trouble quickly emerged. First, Mr. McArthur began making extracontractual requests that Husky declined to grant. For example, he asked Mr. Long both to make him Husky‘s CFO and to hire his son to lead Husky‘s drilling operations. Mr. McArthur also demanded a list of “the name[s], address[es], and phone number[s] of every participant [Husky] ha[d] in every well,” which Husky refused to disclose because the information was confidential. Id. at 3239-40.
And mere months after executing their 2014 Participation Agreements, B55 and Husky diverged over the meaning of the Agreements’ terms. Mr. McArthur claimed that Husky had to offer newly-developed leases to B55 on a lease-by-lease basis and that B55 had the right to opt in to participating in individual leases so offered. Holding this view, Mr. McArthur purported to reject certain leases that Husky had acquired. Husky disagreed with Mr. McArthur‘s reading of the Participation Agreements and warned B55 that failure to pay its share of the costs for newly-developed leases would forfeit B55‘s
Around this time, Mr. McArthur demanded that Husky buy out his interests in Prairie Grove and Viking for $25.6 million, more than five times B55‘s original investment just a few months earlier. Mr. McArthur informed Mr. Long that, if Mr. Long did not agree, Mr. McArthur would cause problems for Husky with service providers and other participants in its projects.
Mr. Long refused. True to his word, Mr. McArthur responded by causing problems for Husky. As a result of Mr. McArthur‘s efforts, several companies involved in Husky‘s projects took adverse legal actions against Husky. For example, Mr. McArthur contacted LaMunyon Drilling (“LaMunyon“), a Husky contractor that had drilled wells for Husky‘s Cimarron, Chisholm Trail, and Prairie Grove projects. At that time, Husky and LaMunyon were in tаlks to resolve a dispute over billing and the quality of a drilling job that LaMunyon had performed for Husky. Those talks ended, however, after Mr. McArthur convinced LaMunyon not to settle with Husky; instead, at Mr. McArthur‘s urging, LaMunyon filed liens against a number of Husky‘s wells.
Under the Participation Agreements, contractors filing liens against Husky‘s wells could serve as grounds to remove Husky as operator. Mr. McArthur was well aware of this fact. Indeed, he had reached out to Gastar Exploration (“Gastar“), a participant in several of Husky‘s projects, and offered, in return for over $9 million, to precipitate LaMunyon‘s filing of liens against a number of Husky‘s wells so that Gastar could oust Husky as operator. The day after LaMunyon filed its liens, Mr. McArthur sued Husky to
Mr. McArthur then approached Torchlight Energy Resources, Inc. (“Torchlight“). He offered to sell Torchlight information that he claimed would prove Husky had engaged in misconduct with respect to its transactions with Torchlight. Torchlight agreed, and it later sued Husky in Texаs.
Mr. McArthur‘s actions had significant negative effects on Husky. Although Husky ultimately settled its differences with Gastar, it was forced to give up its interests in the entirety of Chisholm Trail and a section of Prairie Grove. In addition, all past agreements between Gastar and Husky were terminated, and Husky was deprived of the benefit of Gastar‘s participation in its other ventures. Together, Gastar‘s departure and the costs of defending the Gastar suit (as well as the LaMunyon and Torchlight suits) caused Husky to lose several leases and severely limited its ability to drill future wells.
B
Husky sued B55 and Mr. McArthur in state court, alleging breach of contract and tortious interference with contract or business relationships under Oklahoma law. Husky sought a declaratory judgment on the contract-interpretation dispute between it and B55 and to quiet title to leases affected by that dispute. It also sought a permanent injunction prohibiting B55 and Mr. McArthur from contacting several of its business partners. And for the harms arising from the interference and breach of contract claims, Husky
After the suit was removed to federal court under diversity jurisdiction, a six-day trial ensued. The trial ended with a jury verdict in Husky‘s favor on its tortious interference claim. On this claim, the jury awarded Husky $4 million in compensatory damages against both B55 and Mr. McArthur and $2 million in punitive damages against Mr. McArthur individually. The jury rejected the fraud counterclaims presented to it.
After the verdict, the district court held more proceedings concerning the requests for a declaratory judgment and a permanent injunction. The court granted Husky a declaratory judgment on the interpretation of the Participation Agreements and issued a permanent injunction prohibiting B55 and Mr. McArthur from contacting Husky‘s business partners and from further interfering with Husky‘s business. On January 17, 2017, the court entered final judgment.
Later that month, B55 and Mr. McArthur filed a timely notice of appeal, which identified “the final judgment entered in this action on January 17, 2017,” as the decision being appealed. Id., Vol. XXVII, at 6165 (Notice of Appeal, dated Jan. 31, 2017). B55 and Mr. McArthur also moved for a new trial under
II
On appeal, B55 and Mr. McArthur‘s first three claims of error concern the district court‘s order denying their motion for a new trial. For example, in specifying the appellate issues, they ask: “Did the District Court err by denying B55‘s motion for new trial because of the errors in the verdict form and final judgment which awarded liability on a joint and several basis rather than a several basis?”3 Aplts.’ Opening Br. at 3 (emphasis added). Before we consider the merits of these claims, however, we must determine whether we have appellate jurisdiction to do so. Given that B55 and Mr. McArthur did not file a new or amended notice of appeal addressing this denial of relief, we conclude that we lack appellate jurisdiction over these claims.
B
B55 and Mr. McArthur did not file a new or amended notice of appeal with respect to the district court‘s ruling on their
B55 and Mr. McArthur argue that they were not required to file a new or amended notice of appeal because “no issues presented by B55 on appeal were presented solely in its motion for new trial.” Aplts.’ Suppl. Br. at 3; see also id. (“[I]n this case, there is nothing new in the order denying the motion for new trial that changes or alters the
But that argument is untenable in light of the plain text of Appellate Rule 4(a)(4)(B)(ii), which speaks оf the order being challenged, not the issues raised in the specified post-judgment motions. See
Our caselaw confirms the soundness of this conclusion. For example, in Breeden, the plaintiff‘s Rule 59(e) motion challenged the district court‘s failure to award pre-judgment interest, and we dismissed the plaintiff‘s appeal from the district court‘s order denying that motion for failure to file a new or amended notice of appeal. 115 F.3d at
And B55 and Mr. McArthur‘s reliance on Hopkins is unavailing. To begin with, we are not bound by this non-precedential decision. What‘s more, that case actually undermines their position. The Hopkins panel reached a conclusion that B55 and Mr. McArthur seek to avoid in this case—namely, that failure to file a new or amended notice of appeal deprives an appellate court of jurisdiction to review a ruling on a motion governed by Appellate Rule 4(a)(4)(B)(ii). See 318 F. App‘x at 705. As the panel explained, it could review only those rulings made in the district court‘s “underlying order,” with respect to which a notice of appeal had been properly filed. Id. The portion of Hopkins upon which B55 and Mr. McArthur rely merely noted that the plaintiffs’ failure to file an amended notice of appeal “likely ha[d] not prejudiced them” becаuse it did not appear that they raised any issues on appeal that were presented solely in their post-judgment motion. Id. at 705 n.3. That is, the Hopkins panel did not decline to apply
The authorities point to a single conclusion: When an appellant challenges an order ruling on a motion governed by Appellate Rule 4(a)(4)(B)(ii), a new or amended notice of appeal is necessary even if the issue raised in the motion and sought to be challenged could also have been challenged in an appeal from the final judgment. Because we cannot excuse non-compliance with the jurisdictional requirements of Appellate Rule 4, see Torres v. Oakland Scavenger Co., 487 U.S. 312, 317 (1988), B55 and Mr. McArthur‘s failure to comply with these requirements precludes us from considering their challenges to the district court‘s order denying the
Relatedly, B55 and Mr. McArthur have moved to certify to the Oklahoma Supreme Court a question of state law relevant to the denial of their
We turn now to the issues properly before us on appeal.
III
B55 and Mr. McArthur assert that the district court erred in granting Husky‘s request for a permanent injunction. The injunction prohibits them from contacting a number of Husky‘s business partners on the grounds that, absent the injunction, B55 and Mr. McArthur would continue to wrongfully meddle in Husky‘s business. B55 and Mr. McArthur, however, claim that the court erred because Husky could not prove that it would suffer irreparable harm without the injunction.
A
We review the district court‘s grant of a permanent injunction for abuse of discretion. See Sw. Stainless, LP v. Sappington, 582 F.3d 1176, 1191 (10th Cir. 2009) (“The district court‘s discretion in this context is necessarily broad and a strong showing of abuse must be made to reverse it.” (quoting FTC v. Accusearch Inc., 570 F.3d 1187, 1201 (10th Cir. 2009))). A district court “necessarily abuse[s] its discretion if it base[s]
To get a permanent injunction, a party “must prove: ‘(1) actual success on the merits; (2) irreparable harm unless the injunction is issued; (3) the threatened injury outweighs the harm that the injunction may cause the opposing party; and (4) the injunction, if issued, will not adversely affect the public interest.‘” Prairie Band Potawatomi Nation v. Wagnon, 476 F.3d 818, 822 (10th Cir. 2007) (quoting Fisher v. Okla. Health Care Auth., 335 F.3d 1175, 1180 (10th Cir. 2003)).
Proving irreparable harm—the only contested element here—is not “an easy burden to fulfill.” Greater Yellowstone Coal. v. Flowers, 321 F.3d 1250, 1258 (10th Cir. 2003). We do not deem harm “irreparable” unless a petitioner can show “a significant risk that he or she will experience harm that cannot be compensated after the fact by money damages.” Fish v. Kobach, 840 F.3d 710, 751 (10th Cir. 2016) (quoting RoDa Drilling Co. v. Siegal, 552 F.3d 1203, 1210 (10th Cir. 2009)). “Purely speculative harm will not suffice, but ‘[a] plaintiff who can show a significant risk of irreparable harm has
B
According to B55 and Mr. McArthur, because money damages are available, Husky did not prove that it would suffer irreparable harm. Specifically, they contend that the millions of dollars awarded to Husky on the tortious interference claim shows that Husky could be “compensated after the fact by money damages.” Fish, 840 F.3d at 751 (quoting RoDa Drilling, 552 F.3d at 1210). Hence, B55 and Mr. McArthur reason that injunctive relief is unavailable in light of this adequate remedy at law. Aplts.’ Opening Br. at 32-33 (citing, inter alia, Schell v. OXY USA, Inc., 822 F. Supp. 2d 1125, 1142 (D. Kan. 2011) (declining to impose a permanent injunction because “plaintiffs have failed to show that money damages would not be sufficient to compensate any potential future injury” resulting from the defendants’ termination of free gas to the plaintiffs)).
We disagree with the assertion that money damages are “available” in this case. First, the jury‘s award of money damages to compensate for a past injury does not materially inform whether Husky might be irreparably harmed in the future. As this court has explained, a jury‘s monetary award for past conduct does not preclude a court from entering a permanent injunction against similar wrongful conduct that is likely to occur in the future. See Sw. Stainless, 582 F.3d at 1190-92 (affirming award of money damages for past injury and of injunctive relief against future injury).
Damages flowing from anticipated future injury to one‘s livelihood or businеss interests are especially difficult to calculate. We concluded as much in Tri-State Generation & Transmission Ass‘n, Inc. v. Shoshone River Power, Inc., 805 F.2d 351 (10th Cir. 1986), when we reversed the district court‘s denial of a preliminary injunction after observing that “[a] threat to trade or business viability may constitute irreparable
The district court‘s injunction is grounded on the logic of the above cases, and we are therеfore inclined to uphold it. The district court found that “[t]he evidence at trial clearly established that absent an injunction [Mr.] McArthur and B55 w[ould] continue to tortiously interfere with Husky‘s contracts and business relationships in an effort to undermine and destroy Husky‘s business.” Aplts.’ App., Vol. XXVII, at 6161. It continued: “The damages resulting from the ongoing efforts of [Mr.] McArthur and B55 to interfere with Husky‘s the [sic] legitimate business relationships would be difficult, if not impossible, to quantify.” Id. B55 and Mr. McArthur have not meaningfully
Specifically, even if we were to consider this challenge, it would fail on the merits. The record is replete with evidence that B55 and Mr. McArthur relished the prospect of unraveling Husky‘s corporate existence. See, e.g., Aplts.’ App., Vol. XXIV, at 5806 (email from Mr. McArthur to Mr. Long, dated Feb. 26, 2015) (“Either we resolve our issues now or Husky . . . will be in a serious fight for [its] future starting next week.“); id. at 5807 (email from Mr. McArthur to Mr. Long, dated May 25, 2016) (“Your decision to screw me out of our $4.5 million in capital . . . came at [a] heavy price to you . . . . I heard through the grapevine that you are going to throw everything you have at Torchlight . . . . So as you prepare your defense and throw everything at Torchlight, you should know that there are three or, perhaps four more very serious lawsuits that are in the drafting stages. You don‘t even know who or what you are fighting. . . . As I recall, your dad was in the
In sum, at a minimum, B55 and Mr. McArthur posed a significant risk of continuing and future harm to Husky. They had threatened to destroy Husky‘s business before; in fact, they had succeeded in divesting Husky of key business relationships and its interests in numerous oil and gas leases. This threat continued even after Husky filed suit. Destruction of Husky‘s business at some future time would certainly impinge on, if not entirely extinguish, Husky‘s “business viability” — an irreparable harm under our precedent. Tri-State Generation, 805 F.2d at 356. Simply put, the threat of irreparable
IV
Both sides requested a declaratory judgment concerning the proper interpretation of two Participation Agreements between Husky and B55.6 Following briefing and oral argument, the district court adopted Husky‘s interpretation.
On appeal, B55 and Mr. McArthur contend that the district court erroneously overlooked an ambiguity in the Participation Agreements that should have been construed against Husky — the drafter of the documents. Aplts.’ Opening Br. at 38. Reviewing the contractual language de novo, Milk ‘N’ More, Inc. v. Beavert, 963 F.2d 1342, 1345 (10th Cir. 1992), we find no merit in that claim.
A
The Participation Agreements set out the terms of B55 and Husky‘s joint efforts to acquire and develop oil and gas leases within the Prairie Grove and Viking “Project Area[s] of Mutual Interest,” sometimes called “Project AMI[s].” Aplts.’ App., Vol. XXI, at 5494, 5519; see also Aplts.’ Opening Br. at 38 (referencing the “Viking AMI” and the “Prairie Grove AMI“). Each Participation Agreement designated Husky as the
Husky and B55 signed the Participation Agreements in the first half of 2014. According to the record, Husky presented B55 — by way of monthly JIB statements — with lease offerings in June, July, August, and September 2014; B55 paid its share of the costs associated with those leases. But B55 then informed Husky that Husky was no longer authorized to charge “the joint account” for leases or lease brokerage related costs, arguing that the Participation Agreements required Husky to “offer each acquired lease to B55 on a lease by lease basis.” Id., Vol. XXVI, at 6021 (Letter from Mr. McArthur, dated Sept. 30, 2014). Soon thereafter, B55 purported to reject certain leases identified in prior JIBs and asked that the joint account be credited accordingly. Husky disagreed with B55‘s interpretation of the Participation Agreements, arguing that it did not need B55‘s
B
Under Oklahoma law, which governs our analysis, the paramount objective of contract interpretation is to ascertain and give effect to the intention of the parties. See Murphy v. Earp, 382 P.2d 731, 733 (Okla. 1963). The parties’ intent must be discerned from the language of the contract “if the language is clear and explicit[] and does not involve an absurdity.”
If a contract contains apparently contradictory terms, the terms should be reconciled, if possible, by giving the offending clause some effect, “subordinate to the general intent and purposes of the whole contract.”
C
B55 and Mr. McArthur argue that there is an irresolvable contradiction between Paragraph 12, titled “Future Leasing,” and Paragraph 18, titled “AMI,” and that the resulting ambiguity must be construed against Husky, the drafter of the Participation Agreements. The parties share the same reading of Paragraph 12.7 In fact, B55 and Mr.
But B55 and Mr. McArthur assert that Paragraph 12 is not the only applicable provision. They argue that Paragraph 18 contradicts the terms in Paragraph 12 and that
AMI: An Area of Mutual Interest (“AMI“) shall be established within the boundaries of the Project Area as described in Exhibit A . . . . Subject only to the specific terms of this Agreement to the contrary, (1) should HUSKY . . . acquire an interest in any Leases in the AMI, HUSKY shall offer the interest to PARTICIPANT at a cost equal to PARTICIPANT‘s percentage of the leasehold bonus or purchase price to other participants in the Project Area proportionate to their Participation Interest in the Project Area . . . . Should an acquired interest lie both within and outside the AMI, for the purposes of the acquisition, the interest shall be deemed lying wholly within the AMI. Notwithstanding the foregoing, HUSKY shall have the right to identify areas of concentrated leasing and specify terms for advance leasing approval by PARTICIPANT. If and when approved by PARTICIPANT, PARTICIPANT shall authorize HUSKY to acquire leases in the designated area for the joint account, and HUSKY shall not be required to offer the individual leases to PARTICIPANT and PARTICIPANT shall be deemed to have approved same.
Aplts.’ App., Vol. XXI, at 5498–99.
In B55 and Mr. McArthur‘s view, Paragraph 18 grants B55 the option of opting out of new leases without penalty. This reading of Paragraph 18 is grounded principally in its final sentences, which provide that a participant shall “authorize” Husky to acquire leases and ostensibly contemplate that Husky will either obtain “advance leasing approval” from participants or offer “the individual leases” to them, apparently with no adverse consequences flowing from the rejection of any lease so offered. According to B55 and Mr. McArthur, therе is contractual ambiguity in the Participation Agreements because it is unclear whether Paragraph 12‘s stricter forfeiture rules or Paragraph 18‘s more flexible procedures would apply in the event of an unpaid JIB. Aplts.’ Opening Br.
Husky, on the other hand, argues that Paragraph 12 and those portions of Paragraph 18 are reconcilable. Aplee.‘s Resp. Br. at 47–50. First, it contends that Paragraph 18 applies “[s]ubject . . . to the specific terms of this Agreement to the contrary.” Aplts.’ App., Vol. XXI, at 5498. Put differently, Husky claims that Paragraph 18 “applies only if no other specific provision of the contract addresses the issue at hand.” Aplee.‘s Resp. Br. at 47. Moreover, according to Husky, the provisions govern distinct situations. That is, the final sentences of Paragraph 18 apply when a proposed leasehold interest “lie[s] both within and outside the AMI.” Aplts.’ App., Vol. XXI, at 5499. When this is the case, “for the purposes of the acquisition, the interest shall be deemed lying wholly within the AMI.” Id. Thus, the contract grants participants an opportunity to participate in а proposed leasehold even if it stretches beyond the original AMI delineated by the Participation Agreement. But because such a leasehold falls partially outside the area in which a participant agreed to “fully participate,” Husky posits that the contract logically allows a participant an opportunity to decide whether to participate in the lease. Aplee.‘s Resp. Br. at 49. It is to this scenario, and this scenario only, that the prior approval and authorization procedures discussed in the final sentences of Paragraph 18 apply, says Husky. Aside from that scenario, Husky reads Paragraph 18 as generally describing the same basic obligations as Paragraph 12 — i.e., that Husky will offer leases
The district court agreed with Husky. In particular, it observed that the procedures described in the latter half of Paragraph 18 were textually confined to “leases in the designated area,” rather than to leases within an AMI as a whole. Aplts.’ App., Vol. XXVII, at 6153. The court also rejected B55 and Mr. McArthur‘s argument that “the designated area” was shorthand for the AMI, reasoning that, apart from the latter part of Paragraph 18, the drafters “rather consistently” used the term “AMI” to discuss a “geographic area.” Id. It consequently concluded that there was no ambiguity in the contract and that the instant dispute, which concerns leases wholly within the AMI, was governed by Paragraph 12 rather than the latter part of Paragraph 18.
Our independent analysis leads us to uphold the district court‘s decision, largely for the reasons that Husky advances above. Moreover, even if the Participation Agreements are arguably ambiguous — e.g., due to varying interpretations of the effects of the “[s]ubject . . . to the specific terms of this Agreement to the contrary” or “[n]otwithstanding the foregoing” clauses in Paragraph 18 — any ambiguities are resolvable via ordinary canons of contract interpretation without resort to construing the Participation Agreements against Husky as the drafter.
Accordingly, we uphold the grant of a declaratory judgment in Husky‘s favor.
V
B55 and Mr. McArthur‘s final claim on appeal is that the district court erred in twice denying B55 leave to file amended counterclaims against Husky. We discern no error in the district court‘s ruling regarding either attempt.
A
Resolution of this issue requires us to discuss in greater detail this case‘s procedural history. B55 initially filed counterclaims against Husky on February 4, 2015. During the early stages of the case, it twice received leave to amend. The first grant of leave to amend came in June 2015, and B55 timely filed an amended pleading. Several months later, B55 again sought leave to amend. The district court granted thаt request in part on February 17, 2016, advising that failure to submit proposed amended filings by February 24, 2016, would confine B55 to “proceed[ing] on the basis of the existing Amended Answer and Counterclaims.” Aplts.’ App., Vol. IX, at 2372 (Order, dated Feb.
B55, however, did not submit an amended filing before February 24 (the court‘s deadline), and, on March 1, 2016, the district court issued a scheduling order. In the space for setting a deadline for motions to amend the pleadings, the district court entered “N/A [i.e., Not Applicable].” Id. at 2374 (Scheduling Order, dated Mar. 1, 2016). The order set the deadline for discovery as October 15, 2016, and the trial for November 2016. Notably, the parties had first been authorized to begin discovery on March 2, 2015, nearly a year earlier.
In October 2016, about eight months after the scheduling order issued, B55 inserted a number of never-before-seen allegations of fraud into the final pretrial report, to which Husky objected. The district court construed this attempt to add new allegations to the final pretrial report as the equivalent of requesting leave to amend B55‘s counterclaims, which the court then denied. See Smith v. Aztec Well Servicing Co., 462 F.3d 1274, 1285 (10th Cir. 2006) (“[A] plaintiff‘s ‘attempt to add a new claim to the pretrial order [is] the equivalent of asking leave to amend his complaint . . . .‘” (second alteration in original) (quoting Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006))); accord Wilson v. Muckala, 303 F.3d 1207, 1215 (10th Cir. 2002) (“[T]he inclusion of a claim in the pretrial order is deemed to amend any previous pleadings
On October 27, 2016, twelve days after the discovery cut-off set by the scheduling order, B55 moved for time in which to amend the counterclaims — this time through a formal motion under
B
B55 and Mr. McArthur argue that B55 should have been granted leave to amend its counterclaims. Because the decision to grant or deny a motion to amend is committed to the sound discretion of the trial court, we review only “for an abuse of discretion.” Davey v. Lockheed Martin Corp., 301 F.3d 1204, 1208 (10th Cir. 2002); accord Doelle v. Mountain States Tel. & Tel., 872 F.2d 942, 947 (10th Cir. 1989).
At the outset, we note that the district court applied the correct legal standard to the challenged attempts at amendment. “After a scheduling order deadline, a party seeking leave to amend must demonstrate (1) good cause for seeking modification under
Although all parties seemingly agree that both
”
The district court did not abuse its discretion in ruling that both attempts to amend the counterclaims failed to satisfy this
Though meriting a little more discussion, the formal motion to amend fares no better. B55 and Mr. McArthur assert that B55 established good cause under the rule articulated in Pumpco, which permits modifications based on newly-obtained information that a litigant unearths through discovery. See 204 F.R.D. at 668–69. According to B55
The district court was not convinced by this argument, and neither are we. The record — which indicates that B55, through Mr. McArthur, knew of the allegedly “new” information months before the motion to amend — fatally undercuts their ability to demonstrate good cause. See Birch, 812 F.3d at 1248 (stating that movants lack good cause if they “knew of the underlying conduсt but simply failed to raise [their] claims” (alteration in original) (quoting Gorsuch, 771 F.3d at 1240)). As the district court observed, Mr. McArthur‘s “threats of lawsuits against various people, including those [B55] propose[d] now to join as counterclaim defendants . . . make[] [it] abundantly clear that [B55, through Mr. McArthur, was] aware of litigation possibilities against these people months ago.” Aplts.’ App., Vol. XI, at 2903.
For example, Mr. McArthur opined in an email dated April 15, 2016, that Mr. Gregg McDonald, who was listed as a potential new defendant in the formal motion to amend, “[m]ight as well [be] name[d] . . . now.” Id. at 2873 (Email, dated Apr. 15, 2016); see also id. at 2844. Yet, as noted, the formal motion was not filed until October 2016 — more than six months later. Similar emails from May 2016 also evinced B55‘s
And even if B55 had not known the full extent of these litigation possibilities earlier, it squandered any opportunity to raise those claims by not diligently investigating the facts necessary to bring them. Our precedent requires a movant to show that “the scheduling deadlines [could not] be met despite [the movant‘s] diligent efforts.” Gorsuch, 771 F.3d at 1240 (second alteration in original) (quoting Pumpco, 204 F.R.D. at 668); accord Cook v. Howard, 484 F. App‘x 805, 818–19 (4th Cir. 2012) (unpublished) (upholding district court‘s finding of no good cause and noting that “in considering whether ‘good cause’ excuses compliance with a scheduling order deadline, the district court must examine whether the movant had been diligent, though unsuccessful, in attempting to acquire the information that would have formed the basis of a timely motion to amend“); see also Alioto v. Town of Lisbon, 651 F.3d 715, 720 (7th Cir. 2011) (“In making a Rule 16(b) good-cause determination, the primary consideration for district courts is the diligence of the party seeking amendment.“); Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992) (same).
Under these circumstances, the district court found, in effect, that B55‘s showing of good cause was inadequate because it had failed to exercise reasonable diligence in acquiring the supposedly newly discovered information that formed the basis of its motion to amend. The court‘s own words succinctly underscore this failing: “The long and the short of it is that even if this motion is predicated on information that was not in hand . . . until a month ago, these are matters that could have and . . . should have been discovered far before that and long before that.” Id. Thus, the court concluded that B55 made “no semblance of a showing of good cause . . . including a showing of diligent efforts -- or that despite diligent efforts [it] could not comply with the scheduling order.” Id. at 2905.
We agree with the district court. It did not abuse its discretion in finding a lack of good cause because B55 did not act with reasonable diligence in unearthing — through the customary tools of discovery — the ostensibly “newly discovered evidence,” Aplts.’ Opening Br. at 52, that allegedly justified the motion to amend. See S. Grouts & Mortars, Inc. v. 3M Co., 575 F.3d 1235, 1242 (11th Cir. 2009)
To be sure, B55 and Mr. McArthur allege that B55 was somehow hindered by Husky‘s “uncooperative behavior” during discovery. Aplts.’ Opening Br. at 52; see also
In sum, we hold that the district court acted within its discretion to deny B55‘s motion to amend, as it “had ample time to comply with the deadline established in the scheduling order.” Gorsuch, 771 F.3d at 1242. Put another way, we must “affirm the denial of leave to amend because the district court did not act outside its broad range of discretion.” SCO Grp., Inc. v. Int‘l Bus. Machs. Corp., 879 F.3d 1062, 1086 (10th Cir. 2018).
VI
B55 and Mr. McArthur‘s challenges to the district court‘s order denying their motion for a new trial are DISMISSED for lack of appellate jurisdiction, and their motion to certify a related question to the Supreme Court of Oklahoma is accordingly DENIED as moot. We AFFIRM the district court‘s rulings with respect to the issues properly presented to us.
Notes
- Did the District Court err by denying B55‘s motion for new trial because of the errors in the verdict form and final judgment which awarded liability on a joint and several basis rather than a several basis?
- Did the District Court err by denying B55‘s motion for new trial because of the errors in the jury instructions concerning the tortious interference with contract or business relationship claim?
- Did the District Court err by denying B55‘s motion for new trial because of the insufficient evidence of damages and the excessive nature of the damages?
Aplts.’ App., Vol. XXI, at 5496–97 (emphasis added).Future Leasing: PARTICIPANT shall have the right to participate with HUSKY in the future leasing, drilling and development of the Project Area pursuant to the provisions of this Agreement and the agreements through which HUSKY acquires additional leasehold rights within the Project Area. PARTICIPANT shall have the right to participate with an [sic] 10% working interest in the oil and gas leases as follows:
a) Management of Leasing and Leasehold: HUSKY shall conduct, direct and control the future acquisition of additional leasing and drilling rights in the Project AMI . . . . PARTICIPANT agrees to bear its proportionate share of all costs that accrue after the date of this agreement and will carry HUSKY 15% on all future land costs as a Management Fee.
b) Invoicing: HUSKY will send a Joint Interest Billing each month
that will detail PARTICIPANT‘s share of the advanced leasing and drilling Acquisition Costs. PARTICIPANT agrees to send full payment within 15 days of receipt of the invoice. If PARTICIPANT‘s payment is not received within 20 days of the date of invoice, HUSKY may notify PARTICIPANT of such failure and PARTICIPANT failing to fund within ten (ten) [sic] days following receipt of written notice of such funding deficiency shall constitute, at HUSKY‘s election, an election by PARTICIPANT not to participate in the additional leasing and PARTICIPANT shall give up all rights to acquire additional drilling rights in that billing and all future drilling rights that may be acquired in the Area of Mutual Interest.