FROM THE UNITED STATES DISTRICT COURT NO. 1:15-CV-02177-DME
FOR THE DISTRICT OF COLORADO
Jennifer Lynn Peters (Timothy Ryan Odil with her on the
briefs), Otis Bedingfield & Peters, LLC, Greeley,
Colorado, for Appellants.
K. Glenn (Karen L. Spaulding with him on the brief), Beatty
& Wozniak, P.C., Denver, Colorado, for Appellee.
TYMKOVICH, Chief Judge, MURPHY, and HARTZ, Circuit Judges.
Bill Barrett Corporation and YMC Royalty Company are
experienced oil and gas companies with mineral rights in
northeastern Colorado. In 2013, they had the opportunity to
jointly develop two oil wells. To facilitate the drilling
operations, YMC executed documents authorizing joint
expenditures, accepting responsibility for costs, and
electing to participate and share in the revenues. But after
depositing nearly $150, 000 in revenues, YMC asserted it had
never entered into an enforceable joint operating agreement
with Barrett and declined to pay its share of the costs.
Barrett sued for breach of contract. A jury ultimately found
in favor of Barrett. The district court denied YMC's
motions for judgment as a matter of law and for a new trial,
and this appeal followed.
conclude the parties formed an enforceable contract under
Colorado law and a reasonable jury could conclude the parties
should be held to their bargain. We also hold the district
court properly exercised its gatekeeper functions for the
admission of expert testimony and did not abuse its
discretion in excluding YMC's expert witness. Finally, we
hold the district court's comments during the exclusion
of YMC's expert witness did not improperly influence the
further the development of drilling operations in
Colorado's Greasewood Flats oil field, Barrett sent a
proposal to YMC in January 2013. Ijaz Rehman, controller of
YMC, executed Barrett's proposal letter and the attached
"Authorization for Expenditure" form (AFE) for the
Greasewood 11-21H Well. The proposal letter provided that
Barrett "is hereby offering [YMC] an opportunity to
participate in the [11-21 Well] . . . by paying your
proportionate share of the costs." App. 3638. The letter
further stated if YMC elected to participate, it must
"indicate [its] approval by signing in the space
provided below and as provided on the AFE." Id.
Once participation was confirmed, Barrett would then furnish
its "proposed form of Joint Operating Agreement for your
review and approval." Id.
space provided on the proposal letter listed three options.
Mr. Rehman checked the box "I/we elect to participate in
the drilling of the Greasewood 11-21H Well. Enclosed is
my/our signed AFE." Id. at 3639. Mr. Rehman
then signed the signature block, initialed the AFE on the
first and last pages, and notarized the instrument. The AFE
listed the total estimated cost of the 11-21 Well and
YMC's proportionate share of those costs based on a
proposed 12.5% working interest.
two months later, Mr. Rehman executed a second proposal
letter and AFE pertaining to the Greasewood 10-20 Well. This
time, Barrett's proposal offered an 18.75% working
interest in the Well. The documents contained substantially
the same terms as previously, but additionally emphasized
that, "[w]hile this is an estimate and actual costs may
be higher or lower, execution of the AFE constitutes
agreement to pay the actual costs. We understand that you
will tender your share of the costs outlined in the AFE at
the time the well is commenced." Id. at 3654.
Once again, Mr. Rehman signed the signature block, initialed
the AFEs, and notarized the instrument.
August 2013, YMC executed two division orders that listed YMC
as owning 12.5% of the working interest in the 11-21 Well and
18.75% in the 10-20 Well. Internal YMC communications
introduced at trial also indicated that YMC believed it owned
a working interest in both wells. Most tellingly, Barrett
sent monthly revenue checks and statements to YMC from
September 2013 to July 2014 for YMC's ownership interests
in the wells. YMC ultimately deposited $148, 165.26 in
revenue. In July 2014, however, the relationship
deteriorated. Barrett ceased paying YMC when it learned YMC
refused to pay its share of the costs and denied the
existence of a contract. Barrett sued YMC for breach of
jury found YMC breached its contracts and awarded Barrett
damages. Following the trial, YMC renewed its motion for
judgment as a matter of law and moved for a new trial,
arguing there was insufficient evidence indicating
contractual formation, AFEs are unenforceable as a matter of
law, and no reasonable jury could find mutual assent to
contract. YMC also argued the court committed reversible
error in excluding its expert witness on industry custom and
practice (while allowing Barrett's expert witness) and in
making unfair comments about the expert's qualifications
before he was excluded. The district court denied the motions
and YMC appealed.
first consider whether the parties formed an enforceable
contract under Colorado law and whether sufficient evidence
supported the jury verdict for Barrett. We then consider
whether the district court erred in excluding YMC's
expert witness testimony from trial.
federal court sitting in diversity, we apply Colorado
contract law to this dispute. See Specialty Beverages,
L.L.C. v. Pabst Brewing Co., 537 F.3d 1165, 1175 (10th
Cir. 2008). We "look to the rulings of the highest state
court" to guide our interpretation of state law.
Stickley v. State Farm Mut. Auto. Ins. Co., 505 F.3d
1070, 1077 (10th Cir. 2007). When the highest state court has
not addressed the question, we predict how it would rule
after giving "proper regard to relevant rulings of other
courts of the State." Id. (internal quotation
YMC argues that AFEs cannot be enforceable contracts as a
matter of law and that the instrument contained language too
indefinite to constitute a contract under Colorado law.
Second, YMC says the evidence introduced at trial was
insufficient to indicate mutual assent. We disagree on both
Motion for Judgment as a Matter of Law
review a district court's denial of a Rule 50 motion de
novo, applying the same standards as the district
court." Home Loan Inv. Co. v. St. Paul Mercury Ins.
Co., 827 F.3d 1256, 1261 (10th Cir. 2016). "A party
is entitled to [judgment as a matter of law] only if the
court concludes that all of the evidence in the record
reveals no legally sufficient evidentiary basis for a claim
under the controlling law." Wagner v. Live Nation
Motor Sports, Inc., 586 F.3d 1237, 1244 (10th Cir. 2009)
(cleaned up). The court draws "all reasonable inferences
in favor of the nonmoving party" and does not
"weigh evidence, judge witness credibility, or challenge
the factual conclusions of the jury." Id.
(internal quotation marks omitted). Judgment as a matter of
law is "cautiously and sparingly granted and then only
when the court is certain the evidence conclusively favors
one party such that reasonable men could not arrive at a
contrary verdict." Weese v. Schukman, 98 F.3d
542, 547 (10th Cir. 1996) (internal quotation marks omitted).
Colorado Supreme Court has held that "[a]lthough
generally, the question of whether a contract exists is a
matter of fact to be determined by the jury, this is only the
case where the evidence is conflicting or admits of more than
one inference." N.Y. Life Ins. Co. v. K N Energy,
Inc., 80 F.3d 405, 409 (10th Cir. 1996) (internal
quotation marks omitted) (citing I.M.A., Inc. v. Rocky
Mountain Airways, Inc., 713 P.2d 882, 887 (Colo. 1986)).
The "parties do not dispute what happened," but
rather disagree about "what legal significance, if any,
can be attached to the relevant events." Id. at
410. For us to rule as a matter of law, YMC must demonstrate
that the evidence of contractual formation does not conflict
or admit of more than one inference.
law requires parties to agree on all essential terms to form
a contract. See Fed. Lumber Co. v. Wheeler, 643 P.2d
31, 36 (Colo. 1981). Such terms "must be sufficiently
definite to enable the court to determine whether the
contract has been performed or not." Stice v.
Peterson, 355 P.2d 948, 952 (Colo. 1960). "[W]hen
the language in a contract is too uncertain to gather from it
what the parties intended, the courts cannot enforce
it." Id. We construe the proposal letters and
AFEs together "as though they comprise a single
document." Chambliss/Jenkins Assocs. v.
Forster, 650 P.2d 1315, 1318 (Colo.App. 1982); see
also E. Ridge of Fort Collins, LLC v. Larimer & Weld Irr.
Co., 109 P.3d 969, 975 (Colo. 2005).
argues the documents lack essential terms, such as when the
obligation to pay arises, how payment is to be made, and the
terms of payment, relying on Stice v. Peterson, 355
P.2d at 952 (identifying these terms as relevant for
determining the existence of an alleged oral contract). But
Stice does not require precise terms related to
payment to prove the formation of a valid contract.
Stice only requires a contract to be sufficiently
definite for a court to determine whether the parties
performed. The contract in Stice was ...