{ "id": 15912, "name": "William F. McNEILL, Marilyn Cates, and The Black Trust, Plaintiffs-Appellants, v. RICE ENGINEERING AND OPERATING, INC., Rice Operating Company, Hobbs Salt Water Disposal System whose General Partner is Rice Operating Company, et al., Defendants-Appellees", "name_abbreviation": "McNeill v. Rice Engineering & Operating, Inc.", "decision_date": "2003-04-24", "docket_number": "No. 22,295", "first_page": "804", "last_page": "815", "citations": [ { "type": "official", "cite": "133 N.M. 804" }, { "type": "parallel", "cite": "70 P.3d 794" }, { "type": "parallel", "cite": "2003-NMCA-078" } ], "court": { "name_abbreviation": "N.M. Ct. App.", "id": 9025, "name": "Court of Appeals of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "112 N.M. 371", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 720166 ], "weight": 2, "year": 1991, "pin_cites": [ { "page": "375-76" }, { "page": "1165-66", "parenthetical": "noting that even an intentional breach of contract may not serve as the basis for an award of punitive damages where non-breaching party is fully compensated and inability to perform the contract without substantial financial loss is legitimate business reason" } ], "opinion_index": 0, "case_paths": [ "/nm/112/0371-01" ] }, { "cite": "1998-NMCA-157", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 827438 ], "weight": 6, "pin_cites": [ { "page": "\u00b6 126" }, { "page": "\u00b6 121" } ], "opinion_index": 0, "case_paths": [ "/nm/126/0196-01" ] }, { "cite": "84 N.M. 519", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2764970 ], "weight": 2, "pin_cites": [ { "page": "521" }, { "page": "864" } ], "opinion_index": 0, "case_paths": [ "/nm/84/0519-01" ] }, { "cite": "1999-NMSC-006", "category": "reporters:neutral", "reporter": "NMSC", "case_ids": [ 257638 ], "weight": 3, "pin_cites": [ { "page": "\u00b6 22" } ], "opinion_index": 0, "case_paths": [ "/nm/127/0001-01" ] }, { "cite": "118 N.M. 203", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1563516 ], "weight": 6, "year": 1994, "pin_cites": [ { "page": "210" }, { "page": "307" }, { "page": "211" }, { "page": "308", "parenthetical": "alteration in original" }, { "page": "210" }, { "page": "307" } ], "opinion_index": 0, "case_paths": [ "/nm/118/0203-01" ] }, { "cite": "118 N.M. 266", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1563507 ], "weight": 8, "year": 1994, "pin_cites": [ { "page": "269" }, { "page": "14" }, { "page": "269" }, { "page": "14" }, { "page": "269" }, { "page": "14", "parenthetical": "citation omitted" }, { "page": "269" }, { "page": "14", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nm/118/0266-01" ] }, { "cite": "1999-NMCA-029", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 827366 ], "weight": 3, "pin_cites": [ { "page": "\u00b6\u00b6 20-21" } ], "opinion_index": 0, "case_paths": [ "/nm/126/0717-01" ] }, { "cite": "2002-NMCA-084", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 260677 ], "weight": 6, "pin_cites": [ { "page": "\u00b6 57" }, { "page": "\u00b6 57" } ], "opinion_index": 0, "case_paths": [ "/nm/132/0631-01" ] }, { "cite": "106 N.M. 726", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 707293 ], "weight": 2, "year": 1988, "pin_cites": [ { "page": "729" }, { "page": "1108" } ], "opinion_index": 0, "case_paths": [ "/nm/106/0726-01" ] }, { "cite": "1999-NMSC-029", "category": "reporters:neutral", "reporter": "NMSC", "case_ids": [ 257720 ], "weight": 15, "year": 1988, "pin_cites": [ { "page": "\u00b6 26" }, { "page": "\u00b6 26" }, { "page": "\u00b6 26" }, { "page": "\u00b6 27" }, { "page": "\u00b6 30" } ], "opinion_index": 0, "case_paths": [ "/nm/127/0729-01" ] }, { "cite": "391 N.W.2d 608", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 10655118 ], "pin_cites": [ { "page": "611" } ], "opinion_index": 0, "case_paths": [ "/nw2d/391/0608-01" ] }, { "cite": "93 N.M. 378", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1568767 ], "weight": 2, "pin_cites": [ { "page": "384" }, { "page": "836" } ], "opinion_index": 0, "case_paths": [ "/nm/93/0378-01" ] }, { "cite": "1998-NMCA-103", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 834176 ], "weight": 3, "pin_cites": [ { "page": "\u00b6 11" } ], "opinion_index": 0, "case_paths": [ "/nm/125/0376-01" ] }, { "cite": "311 N.E.2d 741", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1974, "pin_cites": [ { "page": "743", "parenthetical": "holding injection from other leases into a well on leased premises must have some relation to the primary purpose of obtaining production on lessee's property" } ], "opinion_index": 0 }, { "cite": "19 Ill.App.3d 402", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2692360 ], "year": 1974, "pin_cites": [ { "parenthetical": "holding injection from other leases into a well on leased premises must have some relation to the primary purpose of obtaining production on lessee's property" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/19/0402-01" ] }, { "cite": "499 So.2d 953", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 7583854 ], "pin_cites": [ { "page": "955-56" } ], "opinion_index": 0, "case_paths": [ "/so2d/499/0953-01" ] }, { "cite": "17 Kan.App.2d 638", "category": "reporters:state", "reporter": "Kan. App. 2d", "case_ids": [ 370473 ], "weight": 2, "year": 1992, "pin_cites": [ { "parenthetical": "holding oil and gas lease included implied covenant to dispose of salt water produced during operations on leased premises without additional compensation to lessor to accomplish the production of oil and gas on leased premises" }, { "page": "327", "parenthetical": "holding oil and gas lease included implied covenant to dispose of salt water produced during operations on leased premises without additional compensation to lessor to accomplish the production of oil and gas on leased premises" } ], "opinion_index": 0, "case_paths": [ "/kan-app-2d/17/0638-01" ] }, { "cite": "612 So.2d 325", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 11295627 ], "weight": 3, "pin_cites": [ { "page": "328-30" }, { "page": "328", "parenthetical": "finding lease permitted importation of salt water from adjoining properties when lessee's operations extended to those properties and benefitted from the disposal, but lease did not authorize lessees to accept salt water from third parties" }, { "page": "330", "parenthetical": "finding plaintiff had no reason to anticipate the disposal of off-site salt water given the circumstances at time release was executed and \"particularly since the lease agreement did not provide for it\"" } ], "opinion_index": 0, "case_paths": [ "/so2d/612/0325-01" ] }, { "cite": "112 N.M. 504", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 720233 ], "weight": 7, "year": 1991, "pin_cites": [ { "page": "508" }, { "page": "242" }, { "page": "508-09" }, { "page": "242-43" }, { "page": "507" }, { "page": "241" } ], "opinion_index": 0, "case_paths": [ "/nm/112/0504-01" ] }, { "cite": "114 N.M. 778", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 731537 ], "weight": 8, "year": 1993, "pin_cites": [ { "page": "781-82" }, { "page": "1235-36" }, { "page": "782" }, { "page": "1236" }, { "page": "781" }, { "page": "1235", "parenthetical": "\"An ambiguity exists in an agreement when the parties' expressions of mutual assent lack clarity.\"" } ], "opinion_index": 0, "case_paths": [ "/nm/114/0778-01" ] }, { "cite": "2000-NMCA-037", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 1217110 ], "weight": 3, "year": 1993, "pin_cites": [ { "page": "\u00b6 15" } ], "opinion_index": 0, "case_paths": [ "/nm/129/0134-01" ] }, { "cite": "98 N.M. 159", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1582454 ], "weight": 2, "pin_cites": [ { "page": "162" }, { "page": "589" } ], "opinion_index": 0, "case_paths": [ "/nm/98/0159-01" ] }, { "cite": "116 N.M. 422", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 727694 ], "weight": 2, "year": 1993, "pin_cites": [ { "page": "425" }, { "page": "1046" } ], "opinion_index": 0, "case_paths": [ "/nm/116/0422-01" ] }, { "cite": "111 N.M. 779", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 715057 ], "weight": 2, "year": 1991, "pin_cites": [ { "page": "782", "parenthetical": "internal quotation marks and citation omitted" }, { "page": "801", "parenthetical": "internal quotation marks and citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nm/111/0779-01" ] }, { "cite": "1999-NMSC-043", "category": "reporters:neutral", "reporter": "NMSC", "case_ids": [ 106517 ], "weight": 3, "pin_cites": [ { "page": "\u00b6 18" } ], "opinion_index": 0, "case_paths": [ "/nm/128/0328-01" ] }, { "cite": "1997-NMSC-042", "category": "reporters:neutral", "reporter": "NMSC", "case_ids": [ 142267 ], "weight": 3, "pin_cites": [ { "page": "\u00b6 9" } ], "opinion_index": 0, "case_paths": [ "/nm/123/0767-01" ] }, { "cite": "2000-NMCA-036", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 106559 ], "weight": 3, "pin_cites": [ { "page": "\u00b6 4" } ], "opinion_index": 0, "case_paths": [ "/nm/128/0830-01" ] }, { "cite": "1998-NMCA-122", "category": "reporters:neutral", "reporter": "NMCA", "case_ids": [ 834236 ], "weight": 3, "pin_cites": [ { "page": "\u00b6 16" } ], "opinion_index": 0, "case_paths": [ "/nm/125/0814-01" ] }, { "cite": "98 N.M. 357", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1582560 ], "weight": 2, "pin_cites": [ { "page": "360" }, { "page": "818" } ], "opinion_index": 0, "case_paths": [ "/nm/98/0357-01" ] } ], "analysis": { "cardinality": 1582, "char_count": 39242, "ocr_confidence": 0.705, "pagerank": { "raw": 1.4108448975467512e-07, "percentile": 0.646921500056567 }, "sha256": "289f35bb69da7ef4aa54061ed26fbb99d9b044f18448fea23cf7bf09f39034a1", "simhash": "1:4f67e161eb8f1977", "word_count": 6399 }, "last_updated": "2023-07-14T15:37:22.762722+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "WE CONCUR: LYNN PICKARD and JONATHAN B. SUTIN, Judges." ], "parties": [ "William F. McNEILL, Marilyn Cates, and The Black Trust, Plaintiffs-Appellants, v. RICE ENGINEERING AND OPERATING, INC., Rice Operating Company, Hobbs Salt Water Disposal System whose General Partner is Rice Operating Company, et al., Defendants-Appellees." ], "opinions": [ { "text": "OPINION\nBUSTAMANTE, Judge.\n{1} Plaintiffs appeal from a partial summary judgment dismissing their claims of trespass and conversion and from the district court\u2019s ruling granting Defendants\u2019 motion for directed verdict on the issue of punitive damages. We reverse the grant of partial summary judgment and remand the case to the district court for further proceedings on these claims. We affirm the district court\u2019s refusal to instruct the jury on punitive damages.\nFACTUAL BACKGROUND\n{2} Plaintiffs William F. McNeill, Marilyn Cates, and the Black Trust are the owners of the \u201cMcNeill Ranch,\u201d a 110,000-acre property assertedly damaged by salt water disposal undertaken by Defendants over the last forty-plus years. Plaintiffs acquired the ranch by deed in 1995. Defendants are associated with Hobbs Salt Water Disposal System (Hobbs SWDS), which appears to be a partnership or joint venture of Rice Operating Company (Rice Company), and several oil and gas producers. Hobbs SWDS is located near the McNeill Ranch. References to \u201cRice\u201d in this opinion, unless otherwise stated, refer to Defendants collectively.\n{3} On May 29, 1957, the New Mexico Oil Conservation Commission granted Defendants\u2019 predecessor, Pan American Petroleum Corporation (Pan American), authority to drill a salt water disposal well on the McNeill Ranch. An area of approximately 2.75 acres, the well became known as Hobbs SWDS Well E-15 (Well E-15). Approximately one month after drilling was approved, Pan American negotiated a \u201cProperty Damage Release\u201d (Release) for the site with Will Terry (Terry), Plaintiffs\u2019 predecessor and then owner of the McNeill Ranch. Construction and drilling of Well E-15 began after the Release was executed. About two months later, Rice negotiated a right-of-way with Terry for pipelines that would run \u201cover and through\u201d the ranch. These pipelines would eventually connect Well E-15 to the Hobbs SWDS. Three additional pipeline right-of-ways were later negotiated: one in 1960 with Terry and two in 1977 with his daughters, Plaintiffs\u2019 predecessors in interest, Ruth Furneaux and Muriel McNeill.\n{4} A massive project constructed over a two-year period, Hobbs SWDS is a gravity-based disposal system comprised of approximately forty-three miles of underground gathering lines. The gathering lines connect to hundreds of producing oil and gas wells, and dispose of large volumes of salt water, a by-product of oil and gas drilling. The system consists of fourteen disposal systems with between one and five or more disposal wells in each system. Well E-15 is one well in one system, although there are other disposal wells on the McNeill Ranch.\n{5} After Well E-15 was completed, concrete pipelines were laid on top of the ground on the negotiated right-of-ways. Extending beyond the boundaries of the McNeill Ranch and connecting the main line to Well E-15, the pipelines were later buried. Since the completion of the system in 1960, approximately 99% of the salt water disposed into Well E-15 has come from beyond the boundaries of the McNeill Ranch.\nPROCEDURAL BACKGROUND\n{6} Plaintiffs filed a complaint to recover damages against Defendants Rice Engineering and Operating, Inc., Rice Engineering, Inc., and Rice Company, along with a jury demand in October 1998. A second amended complaint added the remaining Defendants. Plaintiffs\u2019 claims are based on two types of alleged wrongful conduct: (1) Rice\u2019s unauthorized use of Well E-15 for the disposal of salt water produced outside the McNeill Ranch, and (2) Rice\u2019s alleged negligence in allowing the salt water disposal system to leak onto Plaintiffs\u2019 land.\n{7} Plaintiffs alleged that in 1995, they discovered Rice had been injecting off-site salt water into Well E-15 since 1958, and this disposal was without authorization or eompensation, thereby constituting a continuing trespass. Plaintiffs further claimed that since 1958, Rice had converted the money which participants in the salt water disposal system paid Rice. Plaintiffs initially alleged Rice had converted the use of the well and the money but later conceded there is no claim for the conversion of real property. Bowman v. Butler, 98 N.M. 357, 360, 648 P.2d 815, 818 (Ct.App.1982) (defining conversion as \u201cthe unlawful exercise of dominion and control over personal property\u201d) (emphasis added); see Harrell v. Hayes, 1998-NMCA-122, \u00b6 16, 125 N.M. 814, 965 P.2d 933. Hence, the claim in this appeal refers to the conversion of money due Plaintiffs for the disposal of off-site salt water into Well E-15.\n{8} The complaint also charged Rice with negligence in allowing a salt water spill from the system on the McNeill Ranch, at a point referred to as the \u201c1-9 spill site.\u201d Compensatory and punitive damages were sought on the trespass, conversion, and negligence claims.\n{9} Prior to trial, Rice filed a Motion for Partial Summary Judgment to dismiss the trespass and conversion claims on several grounds, including that (1) Rice had obtained a prescriptive easement or easement by implication for its disposal into Well E-15, (2) the Release authorized Rice to dispose off-site salt water into Well E-15, (3) Plaintiffs\u2019 claims were limited to the time during which they were in actual possession of the ranch, and (4) a statute of limitations theory. The district court granted summary judgment in favor of Rice on the limited ground that the Release unambiguously granted Rice the right to dispose of off-site salt water produced into Well E-15. The district court\u2019s summary judgment applied equally to the conversion claim as to the trespass claim, and Rice defends the judgment solely on the ground relied upon by the district court-that the Release was unambiguous and allowed the disposal of salt water. We limit our opinion to the issues raised by the parties and ruled on by the district court, and nothing herein is intended to express any opinion on the validity or invalidity of the conversion claim or the defenses raised by Rice in its motion other than release.\n{10} The case proceeded to trial by jury on the negligence claim. The district court directed a verdict in Rice\u2019s favor on Plaintiffs\u2019 punitive damages claim. The jury awarded Plaintiffs $70,000 for compensatory damages.\nDISCUSSION\nPartial Summary Judgment on Claims of Trespass and Conversion\n{11} The issue before this Court is whether there exists a genuine issue of disputed fact as to the meaning of the Release. Before we address the merits of that issue, we dispose of Rice\u2019s claim of lack of preservation. Rice claimed that Plaintiffs\u2019 theory about the Release had broadened on appeal to deny the right to dispose of any salt water into the well. Our understanding of Plaintiffs\u2019 theory, however, is that the Release may have authorized disposal of salt water produced on the ranch, but did not authorize disposal of salt water produced off-site. We next turn to the merits.\n{12} An appeal from a grant of summary judgment presents a question of law that is reviewed de novo. Bartlett v. Mirabal, 2000-NMCA-036, \u00b6 4, 128 N.M. 830, 999 P.2d 1062. Summary judgment is a drastic remedy that courts must apply with caution. Rummel v. St. Paul Surplus Lines Ins. Co., 1997-NMSC-042, \u00b6 9, 123 N.M. 767, 945 P.2d 985. Consequently, a reviewing court must \u201cexamine the whole record for any evidence that places a genuine issue of material fact in dispute, and we view the facts in a light most favorable to the party opposing the motion and draw all reasonable inferences in support of a trial on the merits.\u201d Handmaker v. Henney, 1999-NMSC-043, \u00b6 18, 128 N.M. 328, 992 P.2d 879 (internal quotation marks and citation omitted). In the end, the question raised on a motion for summary judgment is whether \u201cfrom the facts presented, [only] one reasonable conclusion can be drawn, ... [or] if a fair minded factfinder ... could return a verdict for [the nonmovant].\u201d Goradia v. Hahn Co., 111 N.M. 779, 782, 810 P.2d 798, 801 (1991) (internal quotation marks and citation omitted). Summary judgment should be denied where the facts support \u201cequally logical but conflicting inferences.\u201d Johnston v. Sunwest Bank, 116 N.M. 422, 425, 863 P.2d 1043, 1046 (1993).\n{13} Here, the district court granted summary judgment on the ground that the Release was unambiguous in its terms and barred Plaintiffs\u2019 claims. Releases are contractual in nature and thus are governed by traditional principles of contract law. Ratzlaff v. Seven Bar Flying Serv., Inc., 98 N.M. 159, 162, 646 P.2d 586, 589 (Ct.App.1982); see Sitterly v. Matthews, 2000-NMCA-037, \u00b6 15, 129 N.M. 134, 2 P.3d 871. \u201cWhether a contractual provision is ambiguous is a question of law, which we review de novo.\u201d Id.; see Mark V, Inc. v. Mellekas, 114 N.M. 778, 781-82, 845 P.2d 1232, 1235-36 (1993). The standard to be applied in determining whether a contract is subject to equally logical but conflicting interpretations is the same standard applied in a motion for summary judgment. \u201cIf the evidence presented is so plain that no reasonable person could hold any way but one, then the court may interpret the meaning as a matter of law,\u201d id., and summary judgment would be proper. On the other hand, \u201c[i]f the court determines that the contract is reasonably and fairly susceptible of different constructions, an ambiguity exists,\u201d and summary judgment would not be proper. Id. Rather, the jury must resolve any factual issues presented by the ambiguity. Id. at 782, 845 P.2d at 1236. In resolving ambiguity, extrinsic evidence may be admitted to aid the jury in interpreting the intent of the parties. C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 508, 817 P.2d 238, 242 (1991). The jury must then decide if the evidence presented supports one interpretation rather than the other. See UJI 13-825 NMRA 2003. If, after hearing all of the evidence, the jury is unable to resolve the ambiguity and determine the intent of the parties, the contract may fail altogether. See Restatement (Second) of Contracts \u00a7 201 cmt. d (1981).\n{14} For purposes of clarification, we note the district court may consider the circumstances surrounding the making of the contract and of any relevant usage of trade, course of dealing, and course of performance in making its threshold determination of whether the contract terms are ambiguous. C.R. Anthony Co., 112 N.M. at 508-09, 817 P.2d at 242-43. Here, the district court appears to have based its decision on the face of the Release, rather than the evidence submitted by the parties in support of their motions for summary judgment and responses. Hence, we consider only whether the court erred in finding the document unambiguous on its face. We leave the evaluation of the admissible evidence to the jury on remand.\n{15} The district court held that:\n[T]he Surface Damages Agreement between Mr. Will Terry and Pan American is unambiguous in its terms and it is clearly assignable and grants to said Defendants the right to use, occupy, and damage Plaintiffs [sic] property and estate consistent with the construction and operation of one or more salt water disposal wells.\nWe disagree that the Release is unambiguous. The Release provides as follows:\nPROPERTY DAMAGE RELEASE\nWHEREAS, the undersigned (referred to hereinafter in the singular whether one or more) is asserting a claim against Pan American Petroleum Corporation arising out of damages to certain property, to-wit: Damage to land surface incurred for road construction and drilling operations, including permanent use of land for the roadway and a certain tract specifically described below.\nwhich damages resulted from certain occurrences or operations alleged expected to \u25a0have take it place on the following described tract or parcel of land:____\nsaid alleged occurrences or operations being more particularly described as follows: Drilling, equipping and operating one or more salt water disposal wells and/or an oil well if commercial production is encountered on the above described lands together with related facilities excluding, however, right-of-ways for salt water gathering system beyond the boundaries of this tract.\nAND, WHEREAS, there exists a bona fide dispute and difference between the undersigned and Pan American Petroleum Corporation as to the validity of said claim, and although denying liability therefor Pan American Petroleum Corporation is willing to purchase its peace.\nNOW, THEREFORE, for and in consideration of the sum of $500.00, cash in hand paid by Pan American Petroleum Corporation, the receipt and sufficiency of which is hereby acknowledged and confessed, the undersigned does hereby release the said Pan American Petroleum Corporation, its successors and assigns, of and from any and all causes of action, damages, liabilities, expenses and costs whatsoever arising by reason of the said occurrences or operations.\n{16} Rice reads the document to unambiguously release \u201cany and all\u201d damages arising from the operation of a salt water disposal well, excluding any damages caused by the right-of-ways for the salt water gathering system that extends beyond the boundaries of the land. Rice reasons that the reference to surface damages in the first paragraph is merely a recital clause that explains how the Release came into existence and does not form any part of the agreement. To Rice, the core of the Release is the \u201crelease clause,\u201d which expressly releases Rice from \u201cany and all ... damages ... whatsoever \u201d arising from \u201csaid occurrences or operations,\u201d including the operation of a salt water disposal well. By inserting, \u201cexpected to take place,\u201d Rice argues the parties contemplated that the Release would include a release for any and all future damages arising from the operation of a salt water disposal well. Because the Release does not limit the source of salt water to be disposed, Rice argues, the Release allows the disposal of salt water produced off-site into Well E-15.\n{17} Rice construes the exclusion clause-excluding \u201cright-of-ways for salt water gathering system beyond the boundaries of this tract\u201d \u2014 to mean that although Terry released all damages for certain \u201coccurrences or operations,\u201d he retained the right to seek damages arising from such right-of-ways. Rice argues that exclusion of the easements is proof Terry knew Pan American would be importing salt water into the well from lands other than Plaintiffs\u2019.\n{18} Plaintiffs counter that the Release is a release paying $500 for damages to land surface incurred during the original construction of Well E-15 and the infrastructures and facilities needed to complete that construction. The damages released also include surface damages associated with the drilling and operation of oil wells and one or more disposal wells needed to accompany the oil wells on the McNeill Ranch, in the event oil production was encountered on the ranch.\n{19} In construing the Release, Plaintiffs first note that the document is entitled \u201cProperty Damage Release,\u201d which to them indicates it is not a \u201csalt water disposal agreement.\u201d In their view, the first paragraph defines the scope of the claims being released \u2014 \u201c[d]amage to land surface incurred for road construction and drilling operations.\u201d In Plaintiffs\u2019 view, the \u201cany and all\u201d language conflicts with the definition clause, but is more logically tied to the surface damage clause and should be read as \u201cany and all claims for damages to [land] surface\u201d arising by reason of drilling, equipping, and operating one or more salt water disposal wells.\n{20} Plaintiffs next turn to the second and third paragraphs of the Release. They argue that the language \u201cif commercial production is encountered on the described lands\u201d demonstrates an intent to allow those things needed to achieve production on the McNeill Ranch \u2014 drilling, equipping, and operating one or more disposal wells and/or an oil well \u2014 and release the damage caused to the land\u2019s surface as a result. Plaintiffs argue that the exclusion of right-of-ways for the salt water disposal system from beyond the boundaries is consistent with the surface damage clause, and indicates the parties did not agree to the disposal of off-site salt water into Well E-15.\n{21} After reviewing the Release and the parties\u2019 interpretations, we find the Release is susceptible to two reasonable but inconsistent interpretations on its face. Inasmuch as reasonable jurors could find either interpretation correct, the Release is ambiguous on its face. Accordingly, we hold it was error for the district court to dismiss the trespass and conversion claims, at the summary judgment stage, on the basis of the Release.\n{22} First, we observe that the Release was drafted on what appears to be a general release form which was designed to accomplish one objective, but was modified by the parties to accomplish another. Without the changes, the document appears to be nothing more than a general release form for personal injury or property damage. See 6 William J. Flittie, Summers Oil and Gas \u00a7 1418 (West 1967) (General Form Release in Full). With the changes, the document creates ambiguity as to the parties\u2019 intent. Cf. id. \u00a7 1173 (Lease for Salt Water Disposal).\n{23} Prior to its modification, the form was designed to cover existing damages. It was modified to cover future damages, yet there is retroactive language throughout. For example, paragraph two was changed to read prospectively: \u201coccurrences or operations alleged expected to have takes place.\u201d But the tense is unchanged in: (1) paragraph one, which includes the language \u201cis asserting a claim ... arising out of damages\u201d; (2) paragraph two, which begins \u201c[W]hich damages resulted from\u201d; and (3) paragraph four, which relates that \u201cthere exists a bona fide dispute ... as to the validity of said claim.\u201d Even assuming the parties intended the modification to release future damages, it would not be unreasonable for a jury to conclude the waiver related to surface damages as Plaintiffs assert, and did not include unlimited off-site salt water disposal.\n{24} Adding to the confusion, the \u201csurface damage\u201d language in the recital clause was added by the parties, yet the broader waiver of \u201cany and all damages\u201d appears to be form language. We do not believe it is proper to discount the recital clause and ignore the reference to surface damages inserted by the parties. \u201cAlthough their proper role in the interpretation of the main body of the contract has sometimes been unclear, it is plain that [recitals] are frequently intended to, and often do, shed light on the circumstances the parties wished to have considered in the interpretation of the contract.\u201d See 2 E. Allan Farnsworth, Contracts \u00a7 7.10, at 513-14 (2d ed.1990) (footnote omitted). We find this particularly persuasive in this case in view of the other apparently inconsistent modifications to the form described above. Viewed in this light, reasonable jurors could find the Release to read as Plaintiffs urge, to wit: a release for any and all damages to land surface expected to take place as a result of drilling, equipping, and operating one or more salt water disposal wells and/or oil well if commercial production is encountered on-site.\n{25} Second, the Release is indefinite and unclear as to scope and coverage. See Mark V, Inc., 114 N.M. at 781, 845 P.2d at 1235 (\u201cAn ambiguity exists in an agreement when the parties\u2019 expressions of mutual assent lack clarity.\u201d). The Release does not expressly authorize salt water disposal, and any implied authorization would apparently be unlimited in scope and time. Did the parties \u201cexpect\u201d that unlimited amounts of salt water would be injected into the well forever? Does the Release allow disposal from any source or is it limited to salt water produced on the McNeill Ranch? See Farragut v. Massey, 612 So.2d 325, 328-30 (Miss.1992) (finding release ambiguous partly because it did not resolve crucial question whether it authorized lessees to dispose of salt water from third parties holding leases on adjoining lands).\n{26} Our research indicates that where oil production is encountered on a person\u2019s land there may be an implied authorization to dispose of salt water in order for the production of oil and gas on that person\u2019s land to be accomplished. See Colburn v. Parker & Parsley Dev. Co., 17 Kan.App.2d 638, 842 P.2d 321, 327 (1992) (holding oil and gas lease included implied covenant to dispose of salt water produced during operations on leased premises without additional compensation to lessor to accomplish the production of oil and gas on leased premises); see also Leger v. Petroleum Eng\u2019rs, Inc., 499 So.2d 953, 955-56 (La.Ct.App.1986) (concluding although lease merely referenced surface uses, there was implied right to dispose of waste water obtained from production of oil wells located on property where such use caused no damage to the property and was necessary to accomplish overall purpose of production from the leased property). However, the rationale for that rule does not apply to the disposal of salt water produced on other property, Gill v. McCollum, 19 Ill.App.3d 402, 311 N.E.2d 741, 743 (1974) (holding injection from other leases into a well on leased premises must have some relation to the primary purpose of obtaining production on lessee\u2019s property); 4 Eugene Kuntz, A Treatise on the Law of Oil and Gas, \u00a7 50.4(c) (1990) [hereinafter Kuntz] (citing dll with approval); see also Farragut, 612 So.2d at 328 (finding lease permitted importation of salt water from adjoining properties when lessee\u2019s operations extended to those properties and benefitted from the disposal, but lease did not authorize lessees to accept salt water from third parties). Although the facts of these cases are not precisely on point, the principle is consistent with Plaintiffs\u2019 interpretation of the Release.\n{27} Third, if the Release was intended to substitute as a disposal agreement as Rice urges, a jury could be persuaded that there should be terms indicating that was the agreement. See Pope v. The Gap, Inc., 1998-NMCA-103, \u00b6 11, 125 N.M. 376, 961 P.2d 1283 (recognizing the fundamental principle that for a contract to be binding there must be \u201cobjective manifestation of mutual assent by the parties to the material terms of the contract\u201d); see also Farragut, 612 So.2d at 330 (finding plaintiff had no reason to anticipate the disposal of off-site salt water given the circumstances at time release was executed and \u201cparticularly since the lease agreement did not provide for it\u201d); Hyder v. Brenton, 93 N.M. 378, 384, 600 P.2d 830, 836 (Ct.App.1979) (Walters, J., dissenting in part, concurring in part) (\u201c Vagueness of expression, indefiniteness, and uncertainty as to any of the essential terms of an agreement, have often been held to prevent the creation of an enforceable contract.\u2019 \u201d) (quoting 1 A. Corbin, Contracts 615 \u00a7 95, at 394 (1963)); Thompson v. Thompson, 391 N.W.2d 608, 611 (N.D.1986) (in drafting contract, purchaser who intends to purchase existing salt water disposal well must do so explicitly so seller and purchaser contract with regard to the same thing or run the risk that ambiguity will be construed against him). Although a written contract need not detail every term, essential terms must be expressly provided or necessarily implied by construction for a court to find the contract unambiguous on its face. See C.R. Anthony Co., 112 N.M. at 507, 817 P.2d at 241. A jury could find it significant that the Release does not mention the disposal of off-site salt water, and it seems to us that the district court made an unwarranted leap, without more, in construing the Release as unambiguously granting such a broad right, as did the court in Farrar gut on materially similar facts.\n{28} In light of the foregoing, summary judgment on the basis of the Release was error. Accordingly, we remand the case for further proceedings.\nDirected Verdict Dismissing Punitive Damages Claim\n{29} Plaintiffs\u2019 second claim on appeal is that the district court erred by directing a verdict against them on the issue of punitive damages. Plaintiffs\u2019 claim arose from a leak known as the 1-9 spill site. The 1-9 spill occurred when a steel nipple inside a junction box in the pipeline corroded. The spill was discovered by Rice in June 1998. Although it is unknown how long the pipe had been leaking by that time, Rice notified Plaintiffs immediately and repaired the pipe within three to four days.\n{30} The only other major leak in the Hobbs system during its forty years of operation was referred to as the \u201cWest County Road leak\u201d (1993 leak). The 1993 leak was caused when a worker ran a backhoe or grader into the pipe during the construction of a by-pass in 1988. The leak was not discovered until 1993, and was still being remediated at the time of trial in 2001. Rice apparently had nothing to do with the 1993 leak.\n{31} \u201cA directed verdict is a drastic measure that is generally disfavored inasmuch as it may interfere with the jury function and intrude on a litigant\u2019s right to a trial by jury.\u201d Torres v. El Paso Elec. Co., 1999-NMSC-029, \u00b6 26, 127 N.M. 729, 987 P.2d 386; see Melnick v. State Farm Mut. Auto. Ins. Co., 106 N.M. 726, 729, 749 P.2d 1105, 1108 (1988). Hence, a \u201cdirected verdict is appropriate only when there are no true issues of fact to be presented to a jury,\u201d and \u201cit is clear that the facts and inferences are so strongly and overwhelmingly in favor of the moving party that the judge believes that reasonable people could not arrive at a contrary result.\u201d Torres, 1999-NMSC-029, \u00b6 26, 127 N.M. 729, 987 P.2d 386 (internal quotation marks and citations omitted). In reviewing whether a directed verdict was appropriate, we consider all evidence that has been properly admitted at trial, as well as all reasonable inferences deducible therefrom, resolving any conflicts or contradictions in the evidence in a light most favorable to the party resisting the motion. Id.; see Couch v. Astec Indus., Inc., 2002-NMCA-084, \u00b6 57, 132 N.M. 631, 53 P.3d 398. Accordingly, where a court directs a verdict at the end of a plaintiffs case, the district court, as well as the reviewing court, may consider only evidence that has been admitted in the plaintiffs case-in-chief and any evidence a defendant introduced through cross-examination. Torres, 1999-NMSC-029, \u00b6 26, 127 N.M. 729, 987 P.2d 386; Delta Automatic Sys., Inc. v. Bingham, 1999-NMCA-029, \u00b6\u00b6 20-21, 126 N.M. 717, 974 P.2d 1174. We review de novo the question whether sufficient evidence exists as a matter of law to justify a verdict in one party\u2019s favor. Couch, 2002-NMCA-084, \u00b6 57, 132 N.M. 631, 53 P.3d 398.\n{32} To survive a motion for directed verdict on a punitive damages issue, Plaintiffs had to submit evidence from which a jury could find that Rice acted with a culpable mental state, or evil motive, that rose to a level of conduct that was willful, wanton, malicious, reckless, oppressive, or fraudulent. Torres, 1999-NMSC-029, \u00b6 27, 127 N.M. 729, 987 P.2d 386; Clay v. Ferrellgas, Inc., 118 N.M. 266, 269, 881 P.2d 11, 14 (1994); Paiz v. State Farm Fire & Cas. Co., 118 N.M. 203, 210, 880 P.2d 300, 307 (1994). \u201cA mental state sufficient to support an award of punitive damages will exist when the defendant acts with \u2018reckless disregard\u2019 for the rights of the plaintiff-i.e., when the defendant knows of potential harm to the interests of the plaintiff but nonetheless \u2018utterly fail[s] to exercise care\u2019 to avoid the harm.\u201d Id. at 211, 880 P.2d at 308 (alteration in original). In reviewing the question whether evidence is sufficient to establish a culpable mental state, we must bear in mind that the limited purpose of punitive damages is \u201c \u2018punish[ing] a wrongdoer,\u2019 and deterring future tortious conduct.\u201d Torres, 1999-NMSC-029, \u00b6 30, 127 N.M. 729, 987 P.2d 386 (alteration in original) (citation omitted); Clay, 118 N.M. at 269, 881 P.2d at 14; Paiz, 118 N.M. at 210, 880 P.2d at 307.\n{33} Plaintiffs\u2019 theory was that Rice acted with reckless and wanton disregard in failing to adopt an effective leak detection system, despite the damage caused by the 1993 leak. Plaintiffs assert the following evidence adduced at trial rises to the requisite level of recklessness:\n1. The pipeline ... is part of a 40 year old salt water disposal system ... [that] carries] waste fluid from oil production which can be described as \u201cocean water with an oil spill on it.\u201d\n2. Because this is a gravity flow system, the lines have to be buried.\n3. Gravity first pulls any leaks down (toward the water table). [Rice] had no method to detect leaks other than actually seeing the leaks [after] one had finally seeped back up to the surface.\n4. [Rice] knew the pipeline had suffered at least one previous major leak. Indeed, [Rice has] had knowledge for many years prior to the [1-9 spill] that the pipeline had leaked.\n5. [Rice] didn\u2019t have any formal program for \u201cwalking the lines\u201d until 1999.\n6. [Rice] knew the inspection method that it utilized could not detect substantial leaks within the pipeline until such leaks had likely created a major pollution problem. Indeed, ... a major leak was detected in 1993 which had occurred several years previously. The damage from that old leak was still being remediated ... in 2001.\n7. [Rice does not] know how long ... [I-9 spill] existed.\n8. The problems with this design were obvious to persons who had oilfield experience, and to those who had no oil field experience.\n9. A prudent operator would not use an underground system with steel junctions that corrode because of the salt water they carry, and which could not be pressure tested to discover leaks before contaminants entered the water table or ... had created an environmental disaster.\n10. [Rice], for years, consciously disregarded and acted recklessly with respect to the known risk and ... likelihood, that major leaks would go undetected until substantial environmental damage had occurred.\n11. At the time of trial in 2001, [Rice] had no plan to change its operation of the system or make any change that would prevent major leaks from going undetected until they bubbled up to the surface.\n12. Plaintiffs\u2019 expert, Mr. Ron Britton, was of the opinion that there will continue to be major leaks in this system if no changes are made.\nTo Plaintiffs, the cumulation of the evidence showed: Rice knew the pipeline had leaked for many years and knew their inspection method could not detect leaks until significant pollution had already occurred. Rice had replaced similar pipes in other underground systems with pipe that does not corrode and was capable of being pressure tested for leaks. Despite this knowledge and ability to correct the problem, Rice continued to operate the forty-year-old pipeline without an effective method of leak detection and caused substantial damage to Plaintiffs\u2019 land.\n{34} The district court concluded Plaintiffs had not introduced evidence sufficient to establish reckless or wanton conduct. Specifically, the district court found (1) the older leak on the system, caused by a backhoe during the construction of a by-pass, was not sufficient notice to Rice of the potential for future leaks from corrosion in the pipelines; (2) despite the fact that Plaintiffs\u2019 expert testified Rice was reckless to braid a salt water system with steel plugs in its junction boxes because of its corrosive nature, that system had lasted forty years; and (3) despite the absence of a \u201cformal written policy,\u201d Rice had an unwritten policy to walk the lines to inspect the pipelines for leaks. We agree with the district court that Rice\u2019s conduct did not rise to the requisite level of recklessness.\n{35} First, we note that Plaintiffs\u2019 contention that Rice had replaced similar pipes in other systems and therefore had the ability to correct the problem was not in evidence at the close of Plaintiffs\u2019 case. Rather, it was elicited by Plaintiffs on cross-examination of Rice\u2019s witness during the defense case. Hence, the district court did not consider that evidence in reaching its decision to grant a directed verdict. Plaintiffs never requested the district court to reconsider the directed verdict in light of this evidence. As such, Plaintiffs failed to preserve this particular argument and this Court may not now consider the evidence on appeal. See Rule 12-216(A) NMRA 2003; Allsup\u2019s Convenience Stores, Inc. v. N. River Ins. Co., 1999-NMSC-006, \u00b6 22, 127 N.M. 1, 976 P.2d 1; State v. Garcia, 84 N.M. 519, 521, 505 P.2d 862, 864 (Ct.App.1972) (holding that when potential error becomes apparent during trial, motions must be called to trial court\u2019s attention at that time and party cannot rely on earlier motion).\n{36} Second, even though Hobbs SWDS was a forty-year-old system of buried pipelines with steel junctions that had no method of leak detection other than visual inspection and it was likely that some part would corrode eventually, our precedent together with the undisputed facts do not support a finding that Rice\u2019s design and operation of that system was recldess.\n{37} Plaintiffs primarily relied on Rice\u2019s knowledge of the 1993 leak to establish knowledge that such leaks would go undetected until they had caused substantial damage. In Plaintiffs\u2019 view, the relevant similarity between the 1993 leak and the 1-9 spill was not their cause but the fact that both leaks went undetected for some time because the system was inadequate to detect leaks. Although prior similar incidents may support a finding of punitive damages by establishing \u201cknowledge, attitude, or response to dangers [Rice] knew or should have known about prior to Plaintiffs\u2019] injury,\u201d Enriquez v. Cochran, 1998-NMCA-157, \u00b6 126, 126 N.M. 196, 967 P.2d 1136, we do not believe Rice\u2019s knowledge of the risk that leaks would go undetected was sufficient to constitute recklessness under the facts of this case. In reviewing Plaintiffs\u2019 evidence, we bear in mind that Rice\u2019s \u201cconduct should be viewed in light of the risks of danger arising from the activity.\u201d Id. \u00b6 121. \u201c[A]s the risk of danger increases, the duty of care also increases ... [and] conduct that amounts to a breach of duty is more likely to demonstrate a culpable mental state.\u201d Clay, 118 N.M. at 269, 881 P.2d at 14 (citation omitted); Enriquez, 1998-NMCA-157, \u00b6 121, 126 N.M. 196, 967 P.2d 1136. In other words, \u201c[t]he circumstances define the conduct____[and] \u2018the enormity and nature of the wrong\u2019 must be assessed.\u201d Clay, 118 N.M. at 269, 881 P.2d at 14 (citation omitted). For example, where there is a risk of personal injury from certain conduct, such as when the conduct involves a dangerous product, evidence that the defendants breached a duty of care is more likely to be found reckless.\n{38} It is undisputed that Plaintiffs\u2019 land was substantially damaged by Rice\u2019s conduct. Although Rice knew from the 1993 leak that such a leak may go undetected for years, the risk involved was an economic risk to property, for which the jury compensated Plaintiffs. While we assume that waste water could be dangerous to persons or animals if ingested, there was no evidence of such an injury in the instant case.\n{39} Third, there was substantial evidence arguing against any finding of recklessness. Rice established that the salt water disposal system never violated industry standards or government regulations, either at the time of construction or at the time of trial. There was also evidence that the system had operated for over forty years with only two major leaks. The first and only leak which occurred as a result of the system\u2019s design and age was the 1-9 spill, which was the subject of Plaintiffs\u2019 claim. There was evidence Rice detected the 1-9 spill, immediately reported it to Plaintiffs, and repaired it within three to four days. While Rice could not tell how long the leak had existed, Plaintiffs offered no evidence that it was a long-term leak like the 1993 leak. Moreover, while Plaintiffs are correct that Rice had no formal policy to \u201cwalk the lines,\u201d there was evidence Rice did have an unwritten, informal policy to \u201cwalk the lines\u201d to inspect the pipelines for leaks. In fact, since it was Rice who\u2019 discovered the 1-9 spill, it was apparently this procedure that resulted in discovery of the leak.\n{40} We note Plaintiffs did not offer any evidence of what Rice could have done differently to detect leaks, short of replacing the entire forty-three mile system. We know of no precedent, and Plaintiffs cite none, which requires companies to take every means available, no matter how costly or how feasible to avoid any potential economic injury, even if it knows or has reason to know such may be the consequence. Cf. Constr. Contracting & Mgmt., Inc. v. McConnell, 112 N.M. 371, 375-76, 815 P.2d 1161, 1165-66 (1991) (noting that even an intentional breach of contract may not serve as the basis for an award of punitive damages where non-breaching party is fully compensated and inability to perform the contract without substantial financial loss is legitimate business reason). We believe the negligence regime provides an adequate remedy in these circumstances.\n{41} Our conclusion is not shaken by Plaintiffs\u2019 expert\u2019s opinion that Rice was engaged in reckless conduct because there was a reasonable probability major spills would occur in the future if operations remained the same. The opinion is akin to a legal conclusion and adds little if anything to Plaintiffs\u2019 position, especially in light of the facts that the system has been operating for over forty years without any previous leaks caused by the system\u2019s old age and that the 1-9 spill was the first leak caused by corrosion. We agree with the district court \u2014 we find nothing reckless about the design or operation of such a system, even if Rice knew it would eventually wear out.\nCONCLUSION\n{42} We reverse the summary judgment dismissing Plaintiffs\u2019 trespass and conversion claims because we find that reasonable minds could attach different meanings to the Release on its face. Accordingly, we remand the case on the issue of these claims for further proceedings.\n{43} We affirm the district court\u2019s decision to direct a verdict in Rice\u2019s favor on the issue of punitive damages.\n{44} IT IS SO ORDERED.\nWE CONCUR: LYNN PICKARD and JONATHAN B. SUTIN, Judges.\n. We have italicized and underscored the provisions of the Release that were typed in by the parties on what appears to be a printed form document. The lines through certain language are modifications made by the parties to the form.", "type": "majority", "author": "BUSTAMANTE, Judge." } ], "attorneys": [ "James P. Lyle, Law Offices of James P. Lyle, P.C., Turner W. Branch, Branch Law Firm, Albuquerque, NM, Robert Trenchard, Royce Hoskins, Trenchard & Hoskins, L.L.P., Kermit, TX, for Appellants.", "Steven L. Tucker, Tucker Law Firm, P.C., Santa Fe, NM, Franklin H. McCallum, Midland, TX, John M. Caraway, McCormick, Caraway, Tabor & Madrid, Carlsbad, NM, for Appellees." ], "corrections": "", "head_matter": "2003-NMCA-078\n70 P.3d 794\nWilliam F. McNEILL, Marilyn Cates, and The Black Trust, Plaintiffs-Appellants, v. RICE ENGINEERING AND OPERATING, INC., Rice Operating Company, Hobbs Salt Water Disposal System whose General Partner is Rice Operating Company, et al., Defendants-Appellees.\nNo. 22,295.\nCourt of Appeals of New Mexico.\nApril 24, 2003.\nCertiorari Denied, No. 28,070, June 5, 2003.\nJames P. Lyle, Law Offices of James P. Lyle, P.C., Turner W. Branch, Branch Law Firm, Albuquerque, NM, Robert Trenchard, Royce Hoskins, Trenchard & Hoskins, L.L.P., Kermit, TX, for Appellants.\nSteven L. Tucker, Tucker Law Firm, P.C., Santa Fe, NM, Franklin H. McCallum, Midland, TX, John M. Caraway, McCormick, Caraway, Tabor & Madrid, Carlsbad, NM, for Appellees." }, "file_name": "0804-01", "first_page_order": 836, "last_page_order": 847 }