Hartman v. El Paso Natural Gas Co.

763 P.2d 1144, 107 N.M. 679
CourtNew Mexico Supreme Court
DecidedOctober 4, 1988
Docket17094
StatusPublished
Cited by7 cases

This text of 763 P.2d 1144 (Hartman v. El Paso Natural Gas Co.) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hartman v. El Paso Natural Gas Co., 763 P.2d 1144, 107 N.M. 679 (N.M. 1988).

Opinion

OPINION

SOSA, Senior Justice.

PART ONE: PROCEDURAL CONTEXT

A.AMENDED COMPLAINT

On September 12,1986, plaintiff-appellee, Doyle Hartman (Hartman), filed his amended complaint against defendant-appellant, El Paso Natural Gas Company (El Paso), alleging that El Paso had intentionally and maliciously breached various gas purchase contracts entered into between Hartman as seller-producer and El Paso as purchaser-pipeline. Hartman also alleged certain tortious conduct, violations of the New Mexico Antitrust Act, and sought a permanent injunction requiring El Paso to abide by and perform its obligations under the buy-sell contracts, to cease and desist from “shutting in” (closing down) certain of Hartman’s wells, and requesting certain other minor injunctive relief. For purposes of this appeal, the relevant portions of Hartman’s amended complaint are those allegations pertaining to breach of contract and the two items of injunctive relief specified above. Hartman sought both compensatory and punitive damages.

B. EL PASO’S AFFIRMATIVE DEFENSES

In addition to filing a general denial of Hartman’s claims, El Paso, on several occasions, filed certain affirmative defenses. The most recently filed and only relevant affirmative.defenses, insofar as this appeal is concerned, are as follows: (i) El Paso’s force majeure defense, in which it alleged that it was excused from performance under the contracts at issue because “there had been an unforseeable collapse of market demand in the middle portion of” the 1980’s, coupled with new state and federal regulations which substantially changed the scope and thrust of the contracts at issue; (ii) El Paso’s commercial impracticability and frustration of purpose defenses, in which it alleged that policies of the Federal Energy Regulatory Commission (FERC) “erode[d] the demand for higher priced [i.e., Hartman’s] gas produced under contract to the [various gas] pipelines,” thereby excusing its performance under the contracts; (iii) that enforcement of the contracts at issue would violate public policy, as determined by the State of New Mexico’s Energy, Minerals and Natural Resources Department, and the Oil Conservation Division thereof (OCD), thereby excusing El Paso from performance of the contracts at issue; (iv) that the entire substance of the contracts at issue was (a) pre-empted by federal law and regulations promulgated thereunder by FERC, and (b) irreparably transformed to El Paso’s detriment by regulations promulgated by FERC, OCD, and the California Public Utilities Commission, thereby excusing El Paso’s performance under the contracts at issue.

C. PRE-TRIAL ORDERS

The parties filed various pre-trial motions, the full extent of which is not relevant to this appeal. Certain orders, however, issued by the trial court in response to these motions, constitute the core of El Paso’s appeal:

(i) the court’s “Order Pursuant to Rule 56(d), N.M.R.Civ.P [sic]” (correctly cited as SCRA 1986, 1-056(D)), 1986, which eliminated from the case, as a matter of law, a major portion of El Paso’s affirmative defenses, as to five of the natural gas contracts.

(ii) the court’s “Partial Summary Judgment on the Oil Well Casinghead Contracts,” issued on November 12, 1986, which concluded that El Paso was “liable to take all of the gas under the Oil Well Casinghead Contracts 1 and to pay for such gas at the contract price.” (Emphasis added.)

(iii) the court’s “Order Striking Defenses” issued December 2,1986, which extended the above ruling to the remainder of the contracts at issue. Thus, by December 2, 1986, all of El Paso’s affirmative defenses as to all contracts at issue in this case had, as a matter of law, been stricken;

(iv) the court’s “Order Denying [El Paso’s] Motion for Reconsideration,” issued on October 1, 1986, which upheld the court’s earlier ruling that El Paso, in “inadvertently producing” certain documents and giving these documents to Hartman’s counsel, waived its attorney-client privilege as to those documents. Further, by the same order, the court ruled that El Paso had also waived work-product immunity “on the same subject matter,” and thus required El Paso to produce certain other pertinent documents. For reference infra, these documents came to be numbered as Hartman’s exhibits, beginning with Number 124, the crucial “inadvertent document” triggering production of documents later numbered as exhibits 104, 120, 137, 146, 154, 206 and 207. The practical consequence of the court’s order was to require El Paso to produce confidential, in-house information written by key El Paso personnel during the period July 1, 1982 to June 18, 1986, a period when the events complained of in Hartman’s amended complaint were taking place.

D. TRIAL, JURY VERDICT AND JUDGMENT ON THE VERDICT

Jury trial lasted from December 1 to December 19, 1986. The jury found in favor of Hartman and awarded him $2,153,-000 in compensatory damages 2 and $1,080,-000 in punitive damages. The court entered judgment on the verdict on January 22, 1987, awarding post-judgment interest on the combined damages at the rate of fifteen percent.

E. PERMANENT INJUNCTION

On March 24, 1987, the court issued its permanent injunction, issued thirty-five findings of fact and ten conclusions of law, and ruled, in pertinent part, as follows: (i) El Paso is required, as to the contracts covering Hartman’s dry gas wells, to take Hartman’s dry gas “in the maximum proportion of deliverability 3 that gas is being produced within the terms of the applicable ratable take 4 provisions” of the contracts involved; (ii) El Paso is required, as to the contracts covering Hartman’s casinghead wells and gas wells in oil pools, to “take and pay contract price for all gas produced by casinghead wells and by gas wells in oil pools, up to allowable limits 5 for casing-head gas as defined” by certain regulations of the OCD; (iii) El Paso is required to “exercise good faith in the manner in which it performs” the requirements mandated by the permanent injunction.

F. ISSUES RAISED BY EL PASO ON APPEAL

On appeal, El Paso contends: (i) that the trial court’s jurisdiction to decide this case was pre-empted by federal law; (ii) that genuine issues of material fact existed as to the stricken affirmative defenses; (iii) that the OCD’s jurisdiction pre-empted that of the trial court as to “nominations and allowables; ” 6 and (iv) that the trial court abused its discretion in ruling against El Paso as to the documents which El Paso alleged were protected from discovery by attorney-client privilege and work-product immunity.

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Bluebook (online)
763 P.2d 1144, 107 N.M. 679, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hartman-v-el-paso-natural-gas-co-nm-1988.