GREAT WEST CASUALTY COMPANY v. DEEPWELL ENERGY SERVICES LLC (2025)

ORDER

This declaratory judgment action went to a jury trial to sort out one factual issue and one mixed question of law and fact. After a three-day trial, the jury returned a verdict for Defendant Deepwell Energy Services, LLC on December 16, 2024. The jury found that, although the relevant tank at a saltwater disposal facility held “flowback” or produced water from hydrofracking operations, Daniel Calvillo's death did not arise out of storage or disposal of either fluid. With these findings in hand, the Court FINDS that Calvillo's death does not fall under the hydrofracking exclusion and is therefore covered by the relevant insurance policy.

Background

Broadly, the issue for the jury was whether a hydrofracking exclusion applied to preclude coverage of Calvillo's death after an explosion at a saltwater disposal facility. Several times that day, Calvillo took skim oil from storage tanks containing wastewater produced from oil and gas drilling in the Permian Basin. Separating processes in the storage tanks provided a way for Calvillo, as a contractor for an On Point Oilfield entity, to skim marketable oil from saltwater that otherwise would be injected along with wastewater into a disposal well.

Specifically, two questions were posed to the jury. The first, whether “[o]n the occasion in question, is it more likely than not that the fluids skimmed by Daniel Calvillo in their pre-skimmed state included: (1) ‘Flowback’ as defined in the policy, (2) Produced water from hydrofracking, (3) Produced water from conventional drilling?”¹ The second, whether “[o]n the occasion in question, is it more likely than not that the fire or explosion in which Mr. Calvillo was killed arose out of, in whole or in part, storage or disposal of ‘flowback’ or produced water from hydrofracking?”² Along with the second question, the jury received instructions on the relevant causation standard: “You are instructed that to ‘arise out of, in whole or in part’ means that Daniel Calvillo's death must only bear an incidental relationship to storage or disposal of ‘flowback.’ ”³ While the parties hotly disputed this standard in pretrial briefing, the Court ultimately agreed with Great West's interpretation and supporting caselaw.

The jury also received substantial stipulations informing them that (1) the parties had settled underlying personal injury suits in state court, (2) Great West now sought to claw back the $4 million it contributed toward settlement, (3) and Deepwell and the On Point entities had certain “knock-for-knock” indemnities that contextualized Deepwell's presence in the suit.⁴ (4) The parties also stipulated to the relevant policy and exclusion language:

Stipulation 13. In relevant part, the Great West Policy provides: This insurance does not apply to: “Bodily injury”, “personal and advertising injury” or “property damage” arising, in whole or in part, out of “hydrofracking” or the storage or disposal of any “flowback” by any “insured” or by any other person or entity.

***

“Hydrofracking” or hydraulic fracturing means the process by which water, proppants and/or chemicals are injected at high pressure into underground geologic formations to create fractures, to facilitate the extraction of natural gas and/or oil. “Flowback” or produced water means any wastewater containing returned “hydrofracking” fluid, including but not limited to water, proppants, “hydrofracking” fluid additives; and, any hydrocarbon compounds, salts, conventional pollutants, organics, metals, and naturally occurring radioactive material brought to the surface with the wastewater.5

The jury's task was straightforward: determine the contents of the tank Calvillo skimmed and apply a low threshold causation standard to determine whether the relevant “storage or disposal” portion of the policy's hydrofracking exclusion applied to the facts presented. The jury answered, “Yes,” flowback, as defined by the policy, and produced water from hydrofracking were present in the tank Calvillo skimmed (but answered, “No,” to whether it contained produced water from conventional drilling).⁶ As to the second question, the jury found that Calvillo's death did not arise out of, in whole or in part, the storage or disposal of either excludable fluid.⁷

Following trial, the Court asked for supplemental briefing regarding the jury's answers.⁸ Deepwell asks the Court to enter judgment in its favor.⁹ Great West, on the other hand, claims that the verdict is of the “special” variety and that the jury's answers are internally inconsistent with each other and that the second question is against the manifest weight of the evidence.¹⁰ It therefore moves under Rule 49(a) for a new trial or judgment in its favor. Great West also raised a (premature) Rule 50(b) motion ¹¹ and a re-raised Rule 59(a)(1)(A) motion based solely on the factual finding in the first question.¹² Deepwell argues, among other things, that Great West waived its Rule 49 motion by misapprehending the type of verdict presented to the jury—in essence, the jury answered a general verdict with answers to a written question under Rule 49(b), rather than a special verdict under Rule 49(a).¹³ The distinction matters. Rule 49(b) requires objection before the jury's dismissal,¹⁴ which Great West failed to do. Rule 49(a) objections can be raised at any time largely because in such a situation the “jury has not resolved what is necessary for the court to enter judgment.”¹⁵

Discussion

A party waives its arguments about inconsistency in general verdicts with written questions by not raising them until after the jurors are discharged.¹⁶ Unlike special verdicts where the jury merely resolves issues of fact, a general verdict asks the jury to go beyond resolving fact issues and apply law to fact.¹⁷ Of course, “while general verdicts often contain a binary answer—judgment for plaintiff or judgment for defendant—they need not always.”¹⁸ And “where detailed jury instructions apprise the jury of the law, that suggests that the verdict is general, not special. After all, if the written questions submitted to the jury were truly special verdicts, no instruction on the law, and certainly not a detailed one, would be necessary.”¹⁹

The verdict form submitted to the jury here is a general verdict with answers to a written question. True, given alone, the pure resolution of fact in the first jury question—whether the fluids in the tank skimmed by Daniel Calvillo in their pre-skimmed stated included flowback,²⁰ produced water from hydrofracking, or produced water from conventional drilling—surely would have remained in special verdict territory. But both parties requested a causation question requiring the jury to apply law to fact and which cannot be answered without reference to the jury instructions.²¹

Indeed, the Court's second jury question is substantively the same as the one offered by Great West.

[Editor's Note: The preceding image contains the reference for footnotes ²² ,²³ ].

And the Court instructed the jury on the relevant standard—an issue subject to fierce pretrial briefing ²⁴ which the Court likewise resolved in Great West's favor. Where Deepwell insisted on a higher, “but for” causation standard,²⁵ Great West demonstrated that Texas law requires a lower causal relationship be shown.²⁶ The jury then received instructions comporting to that standard: “You are instructed that ‘arise out of, in whole or in part’ means that Daniel Calvillo's death must only bear an incidental relationship to storage or disposal of ‘flowback’ ”²⁷

The jury's task was therefore more than mere factfinding. And for one reason or another, Great West does not engage on this point. Moreover, the second question leaves little to do other than to issue judgment in Deepwell's favor.²⁸ The jury found that the relevant section of the policy's exclusion does not apply to preclude coverage of Daniel Calvillo's death. Given Great West's waiver, the Court does not decide whether an inconsistency exists for resolution beyond opining that Great West has not persuaded that Deepwell's understanding of the jury verdict cannot be logical and probable.²⁹

The Court therefore holds against Great West in its request for declaratory judgment. The jury found that the relevant language in the policy exclusion does not apply to prevent coverage.

Discussion

For the reasons stated above, the Court FINDS that Daniel Calvillo's death is not excludable from the policy at issue. Final judgment will enter by separate order.

It is so ORDERED.

FOOTNOTES

1.   ECF No 264.

2.   Id.

3.   ECF No. 262 at 10.

4.   Id. at 4–6.

5.   Id. at 6.

6.   ECF No. 264.

7.   Id.

8.   ECF No. 267.

9.   See ECF No. 271.

10.   ECF No. 272 at 4–9.

11.   Fed. R. Civ. P. 50 (“If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion. No later than 28 days after the entry of judgment--or if the motion addresses a jury issue not decided by a verdict, no later than 28 days after the jury was discharged--the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59.”).

12.   Id. at 9–10. Great West admits that its motion for a new trial under Rule 59 is duplicative of the arguments it already made. Great West may refile its Rule 59(a)(1)(A) motion after judgment is entered.

13.   ECF No. 274 at 5.

14.   Fields v. Dep't of Pub. Safety, 658 F. App'x 694, 695 (5th Cir. 2016).

15.   Team Contractors, L.L.C. v. Waypoint Nola, L.L.C., 976 F.3d 509, 515 (5th Cir. 2020).

16.   Waypoint 976 F.3d at 515; id. at 521 (“This rule is consistent with “[m]ost of the federal courts that have addressed the issue ․ [A] party's failure to object to an inconsistency between the response to a special interrogatory and the general verdict waives the right to further deliberation by the jury or to the grant of a new trial motion.”) 9B Charles Alan Wright, Arthur R. Miller, Fed. Prac. & Proc. § 2513 (3d ed. 2020).

17.   Lindsley v. Omni Hotels Mgmt. Corp., 123 F.4th 433, 440 (5th Cir. 2024); Waypoint Nola, L.L.C., 976 F.3d at 517 (“If the form satisfies Rule 49(b) except for not stating that the jury finds for one party, it can still be a general verdict. Such a verdict form would not fully comply with Rule 49(b), but it would be an even worse fit for Rule 49(a).”).

18.   Id. (internal citation omitted).

19.   Id. (cleaned up).

20.   The Court presented to the jury in its instructions the parties’ stipulated definition of “flowback” as stated in the policy. ECF No. 262 at 6 (“ ‘Flowback’ or produced water means any wastewater containing returned ‘hydrofracking’ fluid, including but not limited to water, proppants, ‘hydrofracking’ fluid additives; and, any hydrocarbon compounds, salts, conventional pollutants, organics, metals, and naturally occurring radioactive material brought to the surface with the wastewater.”).

21.   See Lindsley, 123 F.4th at 440 (5th Cir. 2024).

22.   ECF No. 225 at 17.

23.   ECF No. 264. Great West never withdrew its tendered question. While later it insisted on changing Question 2 to refer to “arising out of, in whole or in part” the Hydrofracking Exclusion in general rather than the more discrete “storage or disposal of flowback” component, it failed to persuade why such a change mattered. ECF No. 272 at 4 (“Great West objects to the omission of this question as it addresses the second portion of the exclusion at issue (arising out of hydrofracking), whereas the first jury question arguably only addresses the storage and disposal of flowback portion.”). At no point was it developed at trial that hydrofracking occurred or was occurring at the saltwater disposal site. Rather, the trial centered around the storage and disposal activities typically conducted at the site. So widening the charge's aperture to “hydrofracking” seems to be a distinction without a difference—the jury would still be asked to focus on the same sort of storage and disposal activities precluded under the policies. Ultimately, it seems instead that Great West now wishes only Question 1 was sent to the jury. ECF No. 272 at 3. (“As Great West has repeatedly pointed out in pretrial briefing, the Court already resolved the issue of ‘storage and disposal’ generally, the only question that remained was whether the fluids were excludable.”).

24.   See ECF Nos. 223, 226.

25.   See ECF No. 223 8–17.

26.   See, generally ECF No. 226.

27.   ECF No. 262 at 10.

28.   See Waypoint, 976 F.3d at 515.

29.   Both Rule 49(a) and Rule 49(b) verdicts require the trial court to determine whether a jury verdict inconsistency exists. Holmes v. Reddoch, No. CV 19-12749, 2023 WL 3884909, at *2 (E.D. La. June 8, 2023), aff'd, 117 F.4th 309 (5th Cir. 2024) (citing Team Contractors, L.L.C. v. Waypoint NOLA, L.L.C., No. CV 16-1131, 2018 WL 4252553, at *4 (E.D. La. Sept. 6, 2018) (“ ‘The test for determining whether jury answers to special verdicts are inconsistent is ․ whether the [jury's] answers may fairly be said to represent a logical and probable decision on the relevant issues as submitted.’ ”) (quoting Mercer v. Long Mfg. N. C., Inc., 665 F.2d 61, 65 (5th Cir. 1982)); and Brunner v. Maritime Overseas Corp., 779 F.2d 296, 297 (5th Cir. 1986) (“The consideration of this issue would have been better served if appellants had made their objection at least at the time that the jury returned its verdict so that the court could evaluate whether or not it was inconsistent and could have sent it back to the jury to reconsider.”) (emphasis added); and Stancill v. McKenzie Tank Lines, Inc., 497 F.2d 529, 533–34 (5th Cir. 1974) (“But in determining whether Rule 49(b) requires a new trial in this case, a number of serious questions arise, not the least of which is whether an ‘inconsistency’ exists at all. The answers are not inconsistent as a matter of logic[.]”) (emphasis added)).

DAVID COUNTS, UNITED STATES DISTRICT JUDGE