Grano v. RKI Expl. & Prod.

1

MARC GRANO, as Personal Representative of ; and LAURA CEJA, Individually and as Parent and Guardian of CHRISTIAN ANDRADE CEJA and BRANDON ANDRADE CEJA, Plaintiffs-Appellants, v. RKI EXPLORATION &PRODUCTION, LLC, Defendant-Appellee, and AMERIFLOW ENERGY SERVICES, LLC; CRESCENT SERVICES, LLC; CRESCENT CONSULTING, LLC; RANDY WILLIAMSON; LAMB FLOWBACK SERVICES, LLC; and ROADRUNNER ENVIRONMENTAL, INC., Defendants.

No. A-1-CA-40598

Court of Appeals of New Mexico

October 3, 2024

Corrections to this opinion/decision not affecting the outcome, at the Court's discretion, can occur up to the time of publication with NM Compilation Commission. The Court will ensure that the electronic version of this opinion/decision is updated accordingly in Odyssey.

Harada & Winters LLC Christopher P. Winters Nikko Harada Albuquerque, NM Tandy Hunt PC Tandy Hunt Roswell, NM Mathis Law Office, LLC Eugenio S. Mathis Las Vegas, NM for Appellants

Holland & Hart LLP Larry J. Montaño Olga Serafimova Santa Fe, NM Priest & Miller LLP Ada B. Priest Albuquerque, NM for Appellee

MEMORANDUM OPINION

J. MILES HANISEE, Judge

{¶1}This appeal arises from a wrongful death action related to a 2014 oil and gas well explosion that killed Roberto Andrade Magdaleno. Plaintiffs Marc Grano, as personal representative of the estate of Andrade Magdaleno, and Laura Ceja individually and as parent and guardian of the heirs of Andrade Magdaleno, filed a wrongful death complaint against RKI Exploration & Production, LLC (RKI)-as well as additional parties with whom Plaintiffs reached settlement agreements- alleging negligence, strict liability, and joint and several liability for a nondelegable duty. Following trial, the jury found that RKI was negligent but that it was not the proximate cause of Magdaleno's death. Plaintiffs argue the district court erred in granting a directed verdict on their claim for strict liability based on an inherently dangerous activity; excluding evidence of a subsequent remedial measure to prove control; excluding the deposition testimony of two expert witnesses; denying their motion for new trial; and allowing a jury instruction on an independent intervening cause. We affirm.

BACKGROUND

{¶2}The fatal event at issue in this appeal occurred when a sand separator, a machine used in a process called "flowback," which is part of the fracking operation, exploded. Use of a sand separator during flowback is typically a job performed by independent contractors who use specialized equipment.

{¶3}Normally in the fracking process, the oil company pumps thousands of pounds of sand into a well. Flowback specialists then use a sand separator that divides the oil, gas, and water that come out of the well so that oil goes to an oil tank, natural gas goes to a pipeline, and water goes to a water tank. The sand separator can be placed either before or after a choke manifold, which controls the pressure of the fluid coming up from the well bore before it is separated into the different locations. Upon completion of the process, the well is turned over to a production company.

{¶4} In this case, RKI owned and operated a well site called Pecos State 46-4H. RKI hired Maverick Services, LLC (Maverick), an independent contractor, to transport water to and from various well sites. Andrade Magdaleno worked for Maverick as a truck driver in this capacity, including at Pecos State 46-4H.

{¶5} RKI also hired Ameriflow Energy Services, LLC (Ameriflow) as an independent contractor to perform flowback services on the Pecos State 46-4H site. RKI and Ameriflow executed a "Master Services Agreement" (MSA) that covered the work Ameriflow performed for RKI. The sand separator that Ameriflow owned, operated, and used on the Pecos State 46-4H site was manufactured by Roadrunner Environmental, Inc, (Roadrunner). The sand separator was not equipped with a "pop off valve," which is a component of most sand separators that will pop off or open if the machine achieves a specific interior pressure, thereby allowing pressure to escape. Ameriflow never pressure tested the sand separator and did not verify if anyone else had done so. In June 2014, Andrade Magdaleno was at the Pecos State 46-4H site when the sand separator exploded and killed him.

{¶6}Having reached settlement agreements with various defendants including Ameriflow and Roadrunner, Plaintiffs proceeded to trial on their third amended wrongful death complaint against RKI, alleging negligence, strict liability, and joint and several liability for a nondelegable duty. Among other things, Plaintiffs sought punitive damages.

{¶7}Several events before and during trial are at issue in this appeal. First, before trial, RKI moved to exclude nonlive expert testimony, but did not specify to which witnesses its request applied, and the parties fully briefed the issue. The district court granted the motion before trial. Second, the district court limited Plaintiffs' questioning regarding subsequent remedial measures throughout trial. Third, also during trial, Defendants filed a motion for directed verdict arguing that flowback was not an inherently dangerous activity, challenging application of strict, as well as joint and several, liability, which the district court granted. Fourth, at the close of RKI's case, RKI requested an independent intervening cause jury instruction, to which Plaintiffs did not object and which the district court provided to the jury.

{¶8} As stated, the jury found that RKI was negligent but that it was not the proximate cause of Andrade Magdaleno's death. Accordingly, no damages were awarded to Plaintiffs. After trial, Plaintiffs filed a motion for new trial, which the district court denied after full briefing and a hearing. Plaintiffs now appeal.

DISCUSSION

I. Inherently Dangerous Activity

{¶9}Plaintiffs argue the district court erred in failing to submit to the jury the issue of strict liability as related to the performance of an inherently dangerous activity, which it contends flowback to be. We review this issue de novo. See Gabaldon v. Erisa Mortg. Co., 1999-NMSC-039, ¶ 7, 128 N.M. 84, 990 P.2d 197.

{¶10} Generally, "an employer of an independent contractor is not responsible for the negligence of the contractor or [their] employees." Saiz v. Belen Sch. Dist., 1992-NMSC-018, ¶ 10, 113 N.M. 387, 827 P.2d 102. However, our Supreme Court created an exception to this rule when it determined that engaging in "inherently dangerous" work establishes "a nondelegable duty of care that could only be effectively enforced through imposition of joint and several liability." Estate of Saenz v. Ranack Constructors, Inc., 2015-NMCA-113, ¶ 16, 362 P.3d 134 (internal quotation marks and citation omitted), rev'd on other grounds, 2018-NMSC-032, ¶ 42. To determine if an activity is inherently dangerous, we must assess a three- pronged test adopted in Gabaldon. The test requires the following combination of specific facts:

1) the activity must involve an unusual or peculiar risk of harm that is not a normal routine matter of customary human activity; 2) the activity is likely to cause a high probability of harm in the absence of reasonable precautions; and 3) the danger or probability of harm must flow from the activity itself when carried out in its ordinary, expected way, such that reasonable precautions aimed at lessening the risk can be expected to have an effect.

Gabaldon, 1999-NMSC-039, ¶ 13. Our analysis hinges on the third requirement of the test.

{¶11} "The third prong requires analysis of the source of the harm." Id. ¶ 19. It "asks whether the risk of harm flows from the activity itself when carried out in an ordinary expected manner or whether the harm results from the negligence of a particular actor." Valdez v. Yates Petroleum Corp., 2007-NMCA-038, ¶ 8 141 N.M. 381, 155 P.3d 786 (alterations, internal quotation marks, and citation omitted). The "damages caused by an actor's negligence in the operative details of the activity-such as failure to conduct routine maintenance on machinery used in conducting the activity-will not by themselves trigger liability, whether vicarious or direct." Gabaldon, 1999-NMSC-039, ¶ 19 (alteration, internal quotation marks, and citation omitted).

{¶12} As we noted above, flowback is a process wherein specialized independent contractors pump sand into a wellhead to push oil, natural gas, and water out of the well. Plaintiffs' argument regarding this prong is limited to addressing the inherent risks of working in an oilfield based on unexpected pressure fluctuations. RKI contends that the risk of harm from the explosion in this case did not flow from the activity itself, but from the negligence of an actor because when a sand separator is defective by not having a pop off valve-as was here the case-the flowback process is not taking place in its normal manner. RKI points to the fact that none of the witnesses testified to having ever experienced other flowback related incidents.

{¶13} We agree with RKI. The danger at issue in this case is based on a pressurized explosion. The explosion occurred because there was no pop off valve in the sand separator to warn the independent contractor user about excess pressure build-up during the process of flowback. The explosion thus occurred due to a manufacturing defect, because a typical sand separator would include a pop off valve. Using a "reasonable precaution aimed at lessening the risk [of harm]"-here the absent pop off valve-would have reduced the dangerousness of the activity to its normal level. See id. ¶ 13. Thus, the risk of harm in the flowback process arose from the negligence of creating a machine without a pop off valve, as opposed to danger associated directly with the activity undertaken-here flowback as...