Joshi Technologies International, Inc. v. Chi Operating, Inc.
ORDER OF REFERENCE by District Judge Kenneth J. Gonzales detailing the Special Master's term of appointment, the scope of his duties, his authority, and his compensation. (tah)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
CHI ENERGY, INC.,
ORDER OF REFERENCE
Pursuant to the Court’s “Order Selecting and Appointing the Special Master,” entered on
January 5, 2018, appointing Tim Smith as Special Master under Fed. R. Civ. P. 53, (Doc. 95), the
Court now enters this Order of Reference detailing the term of his appointment, the scope of his
duties, his authority, and compensation.1 The Court appointed Mr. Smith to serve in his capacity
as Special Master as an unbiased and objective advisor, who will evaluate the interests in this
litigation to aid the Court in determining the issues of law and fact.
On January 22, 2018, pursuant to Rule 53(b)(3)(A), Mr. Smith filed a “Special Master
Affidavit,” in which he attested that he is not disqualified to serve as Special Master under 28
U.S.C. § 455(b). (Doc. 96). Neither party has objected to Mr. Smith’s affidavit. Therefore, the
Court now details the scope of Mr. Smith’s appointment as Special Master.
The Court made this appointment pursuant to Rule 53 and the inherent authority of the Court.
See Sibley v. Spirit Nextel Corp., 298 F.R.D. 683, 685 n.3 (D. Kan. 2014) (“Beyond the
provisions of [Fed. R. Civ. P. 53] for appointing and making references to Masters, a Federal
District Court has the inherent power to supply itself with this instrument for the administration
of justice when deemed by it essential.”) (internal quotation marks omitted) (citing Schwimmer v.
United States, 232 F.2d 855, 865 (8th Cir. 1956)).
The Special Master Shall Be Accountable to the Court
The Special Master will be accountable only to the Court and will not be supervised by
Plaintiff or Defendant. The Special Master is independent from Plaintiff and Defendant.
Pursuant to Rule 53(b)(2)(B), however, the Special Master may consult with Plaintiff or
Defendant ex parte for the sole purpose of collecting information regarding the interests at issue
in this litigation.
Duties, Term, and Authority of the Special Master
Considering the September 1, 2012, transaction at the heart of this dispute, the Special
Master’s task is to assist the court in determining what assignments were purportedly made, the
fair market value of such assignments, and any potential damages related to this transaction. The
Special Master will proceed with all reasonable diligence in making his determinations. The
scope of his term, work, duties, and authority include:
A. The Special Master is appointed to serve until September 14, 2018, subject to any
extension the Court deems necessary.
B. The Special Master’s duties are as follows:
1. calculate the fair market value of Joshi’s share of the leasehold interests and
wellbores, in the Assignment and Bill of Sale (Doc. 1-3), including those
listed in Exhibit A (Doc. 1-3 at 4-5) and those properties listed in the
September 10, 2012, letter, (Doc. 1-2), as of September 1, 2012;
2. calculate the fair market value of Joshi’s share of the wellbores listed in
Exhibit A of the Assignment, as of September 1, 2012, (Doc. 1-3 at 4-5);
3. calculate the fair market value of Joshi’s share of the relevant so-called
“Zircon Wells,” as of September 1, 2012;
4. if necessary, calculate the fair market value of Joshi’s deep rights as
described in the Assignment and Bill of Sale (Doc. 1-3), including those
listed in Exhibit A (Doc. 1-3 at 4-5) and those properties listed in the
September 10, 2012, letter (Doc. 1-2), as of September 1, 2012;
5. account for all revenues and costs beginning September 1, 2012, through
March 1, 2018, attributable to Joshi’s share of the leasehold interests and
wellbores, described in the Assignment and Bill of Sale, Exhibit A, and
September 10, 2012, letter (Docs. 1-2 and 1-3);
6. account for all revenues and costs beginning September 1, 2012, through
March 1, 2018, attributable to Joshi’s share of the wellbores listed in Exhibit
A of the Assignment (Doc. 1-3 at 4-5);
C. The Special Master’s duties may be modified, altered, or enlarged, including
updating any information, if necessary, to aid the Court.
D. It is of critical importance to emphasize that the Special Master’s success depends,
to a great extent, on the parties’ full cooperation and willingness to assist him in any
way necessary. This includes making readily available to the Special Master any
and all individuals, information, documents, materials, and files under the parties’
control that the Special Master needs to perform his duties.
E. The Special Master will draft and submit to the Court a status report on May 31,
2018, an interim report for the benefit of the Court on July 16, 2018, and a formal
report on September 14, 2018. The Court will ensure the status and final reports are
electronically entered on the case docket sheet.
F. Pursuant to Rule 53(c)(2), the Special Master may impose on any party any noncontempt sanction as authorized by Rule 37 or 45, and may recommend a contempt
sanction against a party and sanctions against a nonparty.
Compensation, Staff, Expenses, and Payment Procedures
No later than thirty (30) days from the date of entry of this Order of Reference, the
Special Master shall submit a proposed budget for the term of this appointment, including any
expenses necessary to effectively carry out his duties. The Special Master may consider for his
proposed budget the costs including, but not limited to, those associated with employing
necessary consultants and technical, administrative, clerical, and support staff, and costs
associated with necessary equipment, travel, and operating expenses. The parties will have
seven (7) days from the receipt of the proposed budget to file any objections to the proposed
budget. Once the Court has reviewed the proposed budget and any objections, the Court will
decide whether to approve the proposed budget.
The Special Master shall keep a record of his fees and expenses, which will be made
available for inspection upon the request of the Court or the parties. The Special Master will
submit monthly statements to the Court for its approval. Upon the Court’s approval of the
statements as reasonable, the parties will have thirty (30) days to pay their respective equal
portion of the bill. The Court will communicate its approval to the parties via email.
Confidential portions of the record of fees and expenses will reflect general statements of the
action or item charged. The parties will bear the costs equally.
Special Master’s Record
No later than 21 days from the filing of the Special Master’s final report, the parties may
file any objections, as provided by Rule 53(f)(2). The Court will review these objections as
provided by Rule 53(f)(3), (4), (5). Failure to timely object to the Special Master’s findings will
constitute a waiver of those objections. The Special Master must maintain a complete record of
the evidence he considers in making recommendations and findings of fact.
Continuing Court Supervision
At any time during the Special Master’s tenure, either party may file a motion with the
Court concerning the conduct or replacement of the Special Master.
UNITED STATES DISTRICT JUDGE
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