S. D. Rorem, Appellant, v. Halliburton Oil Well Cementing Company, Appellee, 246 F.2d 427 (5th Cir. 1957)

In this appeal from adverse judgment entered for Halliburton Oil Well Cementing Company, the defendant, on a special issue verdict of the jury, the basic question is whether the conflict in the verdict is such as to require reversal either for remand and a new trial, or rendition here for Rorem, the plaintiff. Presented also is the question of the validity and the effect of the exculpatory work-order contract. The suit was for loss of Rorem's wildcat oil well then being drilled in Bastrop County, Texas, caused by negligence of Halliburton during a squeeze¹  job in (1) allowing cement to get above the packer and (2) giving false assurances that cement had not gotten above the packer, so that the precautionary procedure of reversal of circulation was unnecessary.

By special issue verdict, Fed.Rules Civ. Proc. rule 49, 28 U.S.C.A. the jury found that the cement got into the annular space (between tubing and casing) above the packer because Halliburton's Cementer pumped in too much water²  rather than, as claimed by Halliburton, either through the process of equalization of the two columns of fluid (in the tubing and annular space), or malfunctioning of the packer during the squeeze.

The jury also answered that this negligence was the proximate cause of Rorem's damage, although it found that the well would not have been a producer and had no market value prior to the commencement of the squeeze operation.

The jury, however, with respect to the second ground for recovery, did not return a clear-cut verdict. And it is here that the serious question presented on the appeal arises. For while the verdict on this phase would not itself support a judgment for the plaintiff and thus give him two strings to his bow, it would, if not mutually contradictory, destroy the plaintiff's recovery as a finding of contributory negligence on Rorem's part.

There was evidence from which the jury could conclude that, whether in one or two or more conversations, Rorem asked the Cementer whether in the spotting phase any cement had gotten above the packer in the annular space, and to which inquiries, the Cementer replied positively that none did, and because of that it was not necessary to reverse circulation. There was also evidence from which the jury could infer that the Cementer had said that he was personally of the opinion that no cement had gotten into the annular space, but that if there was any question about it, it would be well to reverse circulation.

The jury, by its answers³  to Issues No. 10, 11, 12, 13, 13-A, 14 and 15, apparently found all these things.

But on this record, we do not think that there is actually any significant conflict. We conclude that the jury was entitled to make the several findings and they all add up to a determination by the jury that prudence called for a reversal of circulation which, not being done, then compelled the entry of the judgment for Halliburton.

In this analysis, we start with the jury finding that it was the negligent act of the Cementer in putting too much water in the tubing that caused the damage. This means that either in his calculations in checking the amount of water he then had in his tanks, the amount of fluid previously introduced, or the amount of water pumped in during the spotting stage, the Cementer made a mistake. But he did not think so. On the contrary, each time — twice during spotting and a third time after the squeeze — he was positive in his own mind that he had not put in too much water. Of course, we must look on "too much" in the light of that operation and not that of the needs of a drouth-scorched ranch, but it turns out that the excess was between five and seven barrels of water at the most.

The significant thing though is that the Cementer refused to believe he had made such a mistake and, with self-confidence, he repeatedly so said. And, in so saying, he conveyed all the while the equally emphatic thought (and which Rorem attributed to him in so many words) that since he had not put in too much water, it was not necessary (i. e., required) to reverse circulation to remove cement then incapable of being there, even though, as he said, and the jury said he said, it might well be done as a precautionary measure.

The jury's answer to Issue No. 10 was therefore a literal affirmation of what the Cementer, as a witness, had so many times sworn to.

Issue No. 11 stands no differently. For it asks whether he then knew that circulation should be reversed. Of course, he knew that for he had been telling Rorem to do that very thing. Indeed, the Issue (13-A), attacked so vigorously, was but a different expression of this same finding. Obviously if he told Rorem it would be well to reverse circulation, it would mean that the Cementer then knew what was reasonably to be done. To answer 13-A as the jury did, it could not have answered No. 11 any differently.

This all becomes quite clear when Issues 10 and 11 are read with No. 12 in which the jury finds the Cementer's action was not negligent, and No. 14 (and No. 27) in which, to the contrary, the jury finds Rorem negligent in not reversing circulation.

Here the jury had to canvass more than the narrow controversy over what the Cementer said, or what he said he said, or what Rorem said the Cementer said, or what the driller said Rorem said the Cementer said. There was abundant evidence to support one of Halliburton's primary contentions that amongst oil men engaged in the business of drilling and bringing in oil wells, that prudence called for a reversal of circulation after a squeeze was completed. Presumably accepting this testimony, this led the jury first to answer No. 11 that the Cementer, a man aware of industry practices, knew that circulation should be reversed. More important, it was enough to permit the jury to conclude, as they presumably did, that while he was mistaken in his belief and his mistaken expression of confidence (Issue No. 10), the Cementer's statements were not made for the purpose of misleading Rorem or inducing him not to follow the accepted practice so that when he said both things (Issues No. 10 and 13-A), it was not a negligent act (Issue No. 12). The finding that the Cementer was not, but that Rorem was, negligent was the jury's way⁴  of concluding, as they had a right to do, that the obligation remained on the well owner to follow all accepted industry precautionary procedures and a failure to do so could not be excused because another (Cementer) might have made an error.

In the climate of this record, such a conclusion was a reasonable one for the jury. The question was twofold: (1) was this the industry practice and (2) did the circumstances (a part of which included the Cementer's mistaken actions and statements) suggest full resort to it? Of major importance was the second. On it the jury had seen and heard about the driller, so confident that the well had been ruined by cement, that he frantically begged Rorem to pull the packer. This contemporary apprehension was reflected by the packer company service operator whose joint written report with Rorem to plaintiff's counsel omitted any reference to misleading information from the Cementer. The jury also heard Rorem's pre-trial deposition and the contrast of his trial testimony in which he first expressed, but later attempted to minimize, an immediate concern that cement was in the annular space. And, to cap it all, it was Rorem who said that it was he, not the Cementer, who first brought up the idea of reversing circulation. With all of this the jury may well have been impressed that Rorem knew of the danger of the cement being there and knew better than anyone on the well what could be done and what ought to be done. On this analysis Rorem's insistence on familiar principles⁵  that Halliburton cannot say that a customer is negligent for acting upon false or incorrect information furnished by an agent has no application. There was no finding that Rorem's failure to reverse circulation was the result of reliance by him on such statements. Where neither submitted nor requested, the finding is deemed made by the Court in support of the judgment entered, FRCP 49(a), and, as actually submitted, the jury's answers were an implied finding against Rorem on this.

What the jury did in other matters is a further demonstration that this analysis of the process of the jury answers is a reasonable⁶  and sensible one free from pedantic, artificial formalism. On many crucial matters where the issue of credibility pitted Rorem against the Cementer or Rorem against Halliburton, the jury frequently rejected the testimony of Rorem. He insisted, and as a witness championed it under oath, that he had a wonderful wildcat well with tremendous dollar value. On ample basis, the jury held it was worthless and would never have been a producer. Rorem, on the trial, denied that he signed the work order contract before the work was done, and with two or three variations, insisted that the Cementer, as a sort of afterthought, came to him after the work was done to obtain the signature. The jury found expressly that Rorem signed it before. Rorem denied that the Cementer ever suggested to him that he should reverse circulation. The jury found (Issue 13-A) it literally as the Cementer had testified.

With his categorical statements many times expressly rejected by the jury as it fulfilled its office of resolving credibility clashes, the jury was certainly not required to accept Rorem's major theme, oft repeated, that he was "relying" on the Cementer. The jury could, and a reasonable construction of its verdict shows that it did, conclude that Rorem then knew enough about that well and that operation and the events of that day for him reasonably to be required to reverse circulation, and that had he done so, no damage would have been done.

The jury verdict was therefore consistent when construed in the light of this record. There was ample basis for it, and judgment for the defendant was compelled. None of the other assignments of error have any merit and they are overruled.

In view of this disposition of the case, we find it unnecessary to pass upon Halliburton's further contention that the work order contract similar to that set forth in Halliburton Oil Well Cementing Company v. Millican, 5 Cir., 171 F.2d 426, footnote 1, 428, was a valid exculpatory agreement since it was signed before the work was commenced and, under Texas law, charged Rorem with knowledge of the terms immediately above his signature whether he was aware of them or not. See 10 Tex.Jur., Contracts, § 57 Indemnity Ins. Co. of North America v. W. L. Macatee & Sons, 129 Tex. 166, 101 S.W.2d 553; Associated Employers Lloyds v. Howard, Tex., 294 S.W.2d 706; Philippine Air Lines, Inc., v. Texas Engineering & Manufacturing Co., Inc., 5 Cir., 181 F.2d 923; cf. Lancaster v. Sanford, Tex.Civ.App., 225 S.W. 808; see 12 Am.Jur., Contracts, § 137; Upton v. Tribilcock, 91 U.S. 45, 23 L. Ed. 203; 2 Corbin, Contracts, § 607. These contentions and related problems are reserved for another day.

Affirmed.