HUSKY VENTURES, INC., Plaintiff Counterclaim Defendant - Appellee,
B55 INVESTMENTS, LTD., Defendant Counterclaimant -Appellant, and CHRISTOPHER McARTHUR, an individual, Defendant-Appellant.
from the United States District Court for the Western
District of Oklahoma (D.C. No. 5:15-CV-00093-F)
Stephen E. Csajaghy (Marisa Hudson-Arney with him on the
briefs), Condit Csajaghy LLC, Denver, Colorado, for
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
HOLMES, MATHESON, and MORITZ, Circuit Judges.
HOLMES, CIRCUIT JUDGE.
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. 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 Federal Rule of Civil Procedure
("Rule") 59(a) or, in the alternative, to certify a
question of state law to the Oklahoma Supreme Court. The
court denied the motion in all respects.
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.
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.
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. Encouraged by this promising start, Husky
created projects at other prospects, including "Chisholm
Trail," "Prairie Grove," "Cherokee
Ridge," and "Viking."
Husky lacked capital to develop each of these projects
independently, so it entered into agreements 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 ("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 development proposals.").
December 2013, Mr. Long and Mr. McArthur discussed a
collaboration between Husky and B55 in a new oilfield
"completion company." Aplts.' App., Vol. XII,
at 3139 (Tr. of Jury Trial Proceedings, dated Nov. 14, 2016).
Although that company never took form, Husky and B55 signed a
Participation Agreement in March 2014 providing for B55's
participation in the Viking project. Three months later, the
parties executed a separate Participation Agreement for the
Prairie Grove project. Under these agreements, B55 became a
15% participant in the Viking project and a 10% participant
in the Prairie Grove project. B55 also invested $4.5 million
in extant wells and received the right to acquire interests
in future oil and gas leases developed by Husky within the
of trouble quickly emerged. First, Mr. McArthur began making
extra-contractual 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
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 right to participate in future leases.
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
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 talks 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.
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 remove it as operator of the Prairie
Grove project. Gastar, too, notified Husky that it intended
to exercise its rights to remove Husky as the operator of the
Chisholm Trail and Prairie Grove projects.
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 Texas.
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.
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 requested damages. B55
counterclaimed for breach of contract, declaratory judgment,
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.
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
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 Rule 59(a) or, in the alternative, to
certify a question of state law to the Oklahoma Supreme
Court. Relevant to both requests, they argued that Oklahoma
law requires individual apportionment of liability as between
joint tortfeasors. Hence, B55 and Mr. McArthur claimed that
the district court erred by instructing the jury to find a
single sum of compensatory damages against them both. In
April 2017, the district court denied the motion in all
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?" 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.
well established that "[a] timely-filed notice of appeal
is 'mandatory and jurisdictional.'" Yost v.
Stout, 607 F.3d 1239, 1242 (10th Cir. 2010) (quoting
Budinich v. Becton Dickinson & Co., 486 U.S.
196, 203 (1988)). Under Federal Rule of Appellate Procedure
("Appellate Rule") 3(c)(1)(B), the notice of appeal
must "designate the judgment, order, or part thereof
being appealed." And Appellate Rule 4(a)(4)(B)(ii) adds
that, to challenge an order ruling on a timely Rule 59(a)
motion for a new trial, a party must file a timely notice of
appeal or amended notice of appeal "in compliance with
[Appellate Rule] 3(c)." Thus, we lack appellate
jurisdiction over a challenge to an order denying a Rule
59(a) motion for a new trial unless the appellant designated
that order "or parts thereof . . . in the notice of
appeal." Cunico v. Pueblo Sch. Dist. No. 60,
917 F.2d 431, 444 (10th Cir. 1990); cf. Foote v.
Spiegel, 118 F.3d 1416, 1422 (10th Cir. 1997) ("We
have no jurisdiction to review the denial of qualified
immunity . . . because it was not identified in the notice of
Mr. McArthur did not file a new or amended notice of appeal
with respect to the district court's ruling on their Rule
59(a) motion. Thus, Appellate Rule 4(a)(4)(B)(ii) and our
caselaw interpreting it appear to bar any challenge to that
ruling. See Breeden v. ABF Freight Sys., Inc., 115
F.3d 749, 752 (10th Cir. 1997) (holding that, "once the
district court ruled on" a Rule 59(e) motion, a
previously-filed notice of appeal "ripened" and
became effective to appeal "the underlying case"
and any orders specified in the notice of appeal, but failure
to timely amend the earlier notice of appeal deprived this
court of jurisdiction to review the Rule 59(e) ruling);
accord Ysais v. Richardson, 603 F.3d 1175, 1179
(10th Cir. 2010); cf. Smith v. United States, 561
F.3d 1090, 1096 (10th Cir. 2009) (exercising jurisdiction
over appeal of denial of Rule 59(e) motion because plaintiff
filed separate notice of appeal relating specifically to that
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 judgment or rulings made by the district court.").
They cite Hopkins v. I.R.S., 318 Fed.Appx. 703 (10th
Cir. 2009) (unpublished), for the proposition that Appellate
Rule 4(a)(4)(B)(ii) does not apply because there were no
issues unique to the denial of the Rule 59(a) motion.
According to B55 and Mr. McArthur, "the district
court's order denying [their Rule 59(a)] motion did not
change or alter the status quo of the appealable
issues," obviating the need for a new or amended notice
of appeal. Aplts.' Suppl. Br. at 5.
that argument is untenable in light of the plain text of
Appellate Rule 4(a)(4)(B)(ii), which speaks of the
order being challenged, not the issues
raised in the specified post-judgment motions. See
Fed. R. App. P. 4(a)(4)(B)(ii) ("A party intending to
challenge an order disposing of [a Rule 59(a)
motion] . . ., must file a notice of appeal, or an amended
notice of appeal . . . ." (emphasis added)). And the
rule certainly does not speak to whether the issues presented
in those motions might also have been properly the subject of
an appeal from the final judgment. Having elected in their
appellate briefing to frame three of their claims of error as
challenges to the district court's order denying their
Rule 59(a) motion for a new trial, B55 and Mr. McArthur must
abide by the consequences of doing so. See also
Aplts.' Reply Br. at 2 n.1 (reiterating that several
arguments in this appeal challenge the district court's
ruling on the Rule 59(a) motion).
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 752. We did not analyze whether this issue was
unique to or solely appealable from the Rule 59(e) order;
indeed, it seems that this issue could have been raised in a
challenge to the final judgment. See, e.g., Cook
v. Rockwell Intern. Corp., 618 F.3d 1127, 1134 (10th
Cir. 2010) (observing that the district court's final
judgment included an award of prejudgment interest);
Xiong v. Knight Transp., Inc., 77 F.Supp.3d 1016,
1020, 1029 (D. Colo. 2014) (granting the plaintiff's
request for entry of final judgment to include an award of