BURAY ENERGY INTERNATIONAL LLC v. PRISM CORPORATION

Filing 123

CLOSED JUDGMENT - ENTRY OF DEFAULT JUDGMENT AND AWARD OF REMEDIES. The court GRANTS IN PART AND DENIES IN PART BuRay's Motion 93 for Default Judgment - see Entry for details. Signed by Judge Richard L. Young on 2/24/2014.(TMD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION

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BURAY ENERGY INTERNATIONAL LLC,
Plaintiff,
vs.
PRISM CORPORATION Default entered
3/22/2012, set aside 7/25/12 and default
entered 9/10/2012,
JOSEPH LOFTIS Default entered 4/19/2012,
set aside 7/25/12 and default entered
9/10/2012,
Defendants.

No. 3:11-cv-00101-RLY-WGH

COURT’S ENTRY ON DEFAULT JUDGMENT AND AWARD OF REMEDIES

Plaintiff, BuRay Energy International LLC (“BuRay”), moves for an entry of
default judgment under Federal Rule of Civil Procedure 55(b) and for several equitable
and legal remedies. Defendants, Prism Corporation (“Prism”) and Joseph Loftis
(“Loftis”) (“collectively “Defendants”), moved for a hearing on the damages requested.
The court granted this request and heard evidence on September 10, 2013. Having
reviewed the evidence and filings, the court GRANTS default judgment in part and
DENIES it in part.
I.

Background

In July of 2010, BuRay entered into an agreement with Burks Oil & Gas Properties,
Inc. (“Burks”), in which Burks agreed to evaluate and market BuRay’s oil and gas
properties in Oklahoma. (Sec. Am. Comp. ¶ 6). Burks acted as a broker for BuRay.
(Damages Hearing Transcript (“Transcript”) 13:14-23). On December 3, 2010, Burks
1

entered into a Confidentiality Letter Agreement (the “Confidentiality Agreement”) with
Prism, a corporation owned by Loftis. As part of this agreement, Burks provided
confidential information regarding BuRay’s properties to Prism in order for Prism to
evaluate the acquisition of the properties. (Confidentiality Agreement ¶ 2). Among other
things, Prism agreed in the Confidentiality Agreement to not compete with BuRay,
including through the acquisition of other leases and interests in the Area of Mutual
Interest (“AMI”).1 (Id. at ¶ 7).
On January 21, 2011, Prism and BuRay executed the Term Sheet – Talihina Field
Area setting forth a sale by BuRay to Prism of the oil and gas leases and operations, gas
wells, and a gas gathering and pipeline system (collectively known as the “Talihina
Prospect”). The parties then entered into several other agreements:
• On February 11, 2011, BuRay and Prism entered into the Purchase and Sale
Agreement (the “Wells and Leases PSA”), whereby BuRay agreed to sell oil
and gas leaseholds located in LeFlore County, Oklahoma and other assets to
Prism;
• On March 22, 2011, BuRay and Prism entered into another Purchase and Sale
Agreement, whereby Prism agreed to purchase from BuRay the operating
1

The Area of Mutual Interest includes sections 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17,
20, 21, 22, 23, and 24 in Township 3 North, Range 22 East of LeFlore County, Oklahoma and
the entirety of sections 4, 5, 6, 7, 8, 9, 16, 17, 18, 19, 20, and 21 in Township 3 North, Range 23
East of LeFlore County, Oklahoma. The AMI was decreased in Amendments I and II due to
representations made by Prism and Loftis that they had investigated the above sections in Range
23 East (the “Upland Leases”) and that real estate was not available for leasing. BuRay alleges
in Count VI that this was a fraudulent misrepresentation. Because default judgment has been
entered, this allegation is true. The court will, therefore, construe the AMI to include the Range
23 East sections.

2

rights and other contractual rights and interests relating to the wells and leases
(the “Operating PSA”);
• On March 22, 2011, Prism and 4 Square Gas, LLC (“4 Square”) entered into
another Purchase and Sale Agreement, whereby Prism agreed to purchase 4
Square’s fractional interest in the Talihina Gas System (“Pipeline Agreement
I”);
• On March 22, 2011, Prism and TAG Petroleum, Inc. (“TAG”) entered into
another Purchase and Sale Agreement, whereby Prism agreed to purchase
TAG’s interest in the Talihina Gas System (“Pipeline Agreement II”); and
• On May 20, 2011, BuRay, Prism, 4 Square, and TAG entered into an
Amendment to Purchase and Sale Agreements – Talihina SE, which amended
the Wells and Leases PSA, the Operating PSA, and Pipeline Agreement I. It
rescinded Pipeline Agreement II, and amended the closing dates for the prior
agreements.
Prism and BuRay closed the Wells and Leases PSA on May 20, 2011. As a result,
BuRay delivered to Prism an Assignment of Oil and Gas Leases and Bill of Sale, which
conveyed the properties and related assets to Prism (“Wells and Leases Assignment”).
The Operating PSA was scheduled to close on June 6, 2011, however this did not occur.
As a result, Prism, BuRay, 4 Square and John J. Buthod, Esq., entered into the Escrow
Agreement. The Escrow Agreement incorporated all the prior agreements with the
exception of the Confidentiality Agreement. Prism failed to make cash payments

3

pursuant to the Escrow Agreement. In fact, BuRay asserts that it has not received
anything of value from Prism. (Transcript 81:11-13).
After this failure, BuRay brought suit against Prism and Loftis for breaching the
Escrow Agreement, the Wells and Leases PSA, the Operating PSA, and the
Confidentiality Agreement. In addition, BuRay alleges fraud and offenses against its
property (the proprietary information). BuRay filed its original Complaint in August
2011, its First Amended Complaint in January 2012, and then its Second Amended
Complaint in February of 2012. Defendants’ counsel then withdrew. (Docket # 50).
The Defendants failed to answer the Second Amended Complaint despite being
granted two extensions of time. The clerk entered default against Defendants on March
22, 2012. (Docket # 58). Defendants obtained new counsel and moved to set aside that
entry. The court set the entry aside on July 25, 2012. (Docket # 76). Defendants’
counsel withdrew after this, and once again, Defendants failed to answer the Second
Amended Complaint. The Clerk entered default on September 10, 2012 (Docket # 89).
BuRay filed the present Motion for Default Judgment (Docket # 93) on March 8, 2013.
Defendants then obtained a third attorney and moved for a hearing on the issue of
damages pursuant to Rule 55(b)(2). The court granted the hearing. Evidence was
presented to the court by both sides on September 10, 2013. Both parties were given an
opportunity to submit their proposed findings of fact and conclusions of law; only BuRay
took advantage of this opportunity in a timely manner. (Docket # 121). Defendant
submitted their proposed findings over a month late. (Docket # 122).

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II.

Standard

Once the Clerk enters default under Rule 55(a), the court has the power and discretion
to enter a default judgment under Rule 55(b). Stillwater of Crown Point Homeowner’s
Ass’n, Inc. v. Kovich, No. 2:09-cv-147-PPS-PRC, 2010 WL 1541188, * 1 (N.D. Ind. Apr.
15, 2010) (citing O’Brien v. R.J. O’Brien & Assocs., Inc., 988 F.2d 1394, 1398 (7th Cir.
1993)). Default judgment is not entered as a matter of right. See Witzlib v. Cohen, No.
08c0342, 2009 WL 4030485, *1 (E.D. Wis. Nov. 20, 2009).
In determining if default judgment is appropriate, the court should consider such
factors as “the amount of money potentially involved, whether material issues of fact or
issues of substantial public importance are at issue, whether the default is largely
technical, whether plaintiff has been substantially prejudiced by the delay involved and
whether the grounds for default are clearly established or are in doubt.” Id. (citing
Federal Practice and Procedure § 2685 (3d ed. 1998).
III.

Discussion
A. Default Judgment

The court finds that default judgment is appropriate here for Counts I – III and V VIII. The court finds that these breaches were clearly established by the record. For
example, Prism breached the escrow agreement by failing to submit the cash payment as
it required. Prism breached the Wells and Leases PSA by failing to improve the BuRay
leases as it required. Prism breached the Operating PSA by failing to make the payments
and damaging one of the wells located on the leased property.

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The court will not grant default judgment for Count IV – Breach of the
Confidentiality Agreement. According to BuRay, Prism and Loftis breached the
Confidentiality Agreement by acquiring interests in the AMI. (Transcript 49:15-17).
However, as Prism and Loftis argue, they were expected and contractually required to
obtain new leases in the AMI. For example, Wells and Leases PSA states under the
heading “Obligations of [Prism]” that:
Prism agrees to undertake the actions described in Exhibit ‘I’ [acquisition
of new leases in the AMI covering up to 7000 gross acres] . . . and the
acquisition of additional leases and acreage in the AMI, subject to [Prism’s]
sole discretion as to the number of acres or ultimate final gross acreage
acquired.
(Wells and Leases PSA ¶1.7) In addition, under the Operating PSA,
[BuRay agrees to continue to assist [Prism] in its efforts to acquire new
leasehold acreage in the AMI up to the Closing Date and agrees not to
impede or interfere with [Prism’s] efforts to acquire such additional
leasehold acreage.
(Operating PSA ¶ 1.4). The evidence further suggests that BuRay was complying with
its obligation under the Operating PSA. Mr. Schofield, the part-owner of BuRay,
testified that he introduced Loftis to landowners in order to assist Loftis in acquiring
those leases. (Transcript 84:2-15). He stated that this was done in order for Mr. Loftis to
“buy our deal and perform.” (Id. 84:12-15).
Because Prism was obligated to acquire these leases, the court finds that the
grounds for default on Count IV are in doubt. The court therefore, DENIES default
judgment for Count IV of the Second Amended Complaint.

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B. Remedies Sought
An entry of default judgment “establishes, as a matter of law, that defendants are
liable to plaintiff on each cause of action alleged in the complaint.” Wehrs v. Wells, 688
F.3d 886, 892 (7th Cir. 2012) (citing United Sates v. Di Mucci, 879 F.2d 1488, 1497 (7th
Cir. 1989). “Upon default, the well-pled allegations of the complaint relating to liability
are taken as true, but those relating to the amount of damages suffered ordinarily are not.”
Wehrs, 688 F.3d at 892. The plaintiff must prove damages. Id. As such, the defaulting
party “may raise the issue of causation as it relates to the calculation of damages.” Id.
BuRay asserts that pure monetary damages are not enough, and therefore seeks the
following to make it whole: (1) termination of all agreements between the parties, except
the Confidentiality Agreement, (2) the return of all materials and documentation relating
to the Information, (3) the transfer back of the BuRay Leases, (4) the cost to drill a well
comparable to the Curtis McCoy Well (“McCoy Well”), (5) the transfer of the Prism
Leases, (6) a permanent injunction, (7) liquidated damages, and (8) attorneys’ fees. The
court will deal with each requested form of relief in turn.
Before determining which remedies BuRay is entitled to, the court must determine
which state law to apply. The Escrow Agreement states that it “shall be construed,
enforced, and administered in accordance with the laws of the State of Indiana.” (Escrow
Agreement ¶ 9). In addition, it amends all of the Purchase and Sale Agreements to the
extent that they are inconsistent with it. (Id. at ¶ 12). Therefore, the Wells and Leases
PSA, the Operating PSA, the Pipeline Agreement I, the Pipeline Agreement II,
Amendment I, Amendment II, and the Escrow Agreement are all governed by Indiana
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law. On the other hand, the Confidentiality Agreement was not amended by the Escrow
Agreement, nor could it have been. The court has been presented with no evidence that
this agreement had been amended by Burks and Prism. Therefore, the forum selection
clause in the Confidentiality Agreement which selected Texas law must govern it.
(Confidentiality Agreement ¶ 15).
i. Termination of the Agreements
BuRay requests that the court terminate all agreements between BuRay and Prism,
except for the Confidentiality Agreement. As support for this remedy, BuRay cites to the
Wells and Leases PSA and the Operating PSA, which both state, in nearly identical
terms, that if “[Prism] default[s] under this Agreement in any material way . . . [BuRay]
may terminate this Agreement . . . .” (Wells and Leases PSA ¶ 11.1; Operating PSA ¶
10.1). Defendants do not provide any evidence or argument as to why the agreements,
with the exception of the Confidentiality Agreement, should not be terminated.
Therefore, the court hereby terminates all agreements, except for the Confidentiality
Agreement between BuRay and Prism.
ii. Return of any and all Documentation
Throughout the course of the dealings between the parties, several types of
information were exchanged. BuRay demands the return of all the Information at Prism’s
and Loftis’ sole cost. As support for this form of relief, BuRay cites to Paragraph 8 of the
Confidentiality Agreement, which states:
in the event that the transaction contemplated by this Agreement is not
consummated . . . all Information (and all copies, summaries and notes of
the content or parts thereof) shall be returned in its entirety . . . and not
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retained by [Prism] . . . in any form or for any reason, except that [Prism]
may retain a summary to document the management decision making
process relative to this potential acquisition.
Prism and Loftis do not contest this form of relief. Therefore, the court orders the
Information returned to BuRay.
iii. Transfer of the BuRay Leases
In order to be made whole, BuRay seeks the return of the BuRay Leases and
related assets that it transferred to Prism. BuRay asserts that it is entitled to the transfer
back of these leases and assets due to Prism’s material default and pursuant to Paragraph
1.7 of the Wells and Leases PSA, which states in pertinent part:
If, in [Prism’s] sole judgment, the production or reserve base does not
indicate a commercial or viable project and [Prism], for any reason,
determines not to proceed with further exploration or development of the
Assets and/or the AMI, then [Prism] agrees to thereupon assign the original
project back to BuRay . . . including the original wells and associated
equipment, access to the gas gathering system, and any leases and acreage
[Prism] has acquired in the AMI . . . .
The court finds that this paragraph does not lend support to the requested relief because it
requires Prism to determine that it is not a commercial or viable project. There is no
evidence in the record that Prism made that determination.
BuRay also relies on Paragraph 11.1 of the Wells and Leases PSA, which states
that upon Prism’s default “[BuRay] shall be free immediately to enjoy all rights of
ownership of the Assets and to sell, transfer, encumber or otherwise dispose of the Assets
to any party . . . .” Although this language does not specifically instruct Prism to assign
the rights back to BuRay, the court can find no other action that could bring effect to such
language. As such, the court agrees that due to the material breach of the contracts and
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Paragraph 11.1 of the Wells and Leases PSA, Prism must transfer back to BuRay all the
interests in the BuRay Leases and assets that it currently possesses. This shall be done
within 30 days.
iv. Cost of a New Well
BuRay also asserts that it is entitled to the reasonable cost of drilling a new well
comparable to the McCoy Well,2 which Prism and Loftis allegedly damaged. The
Second Amended Complaint contains no direct allegations that Prism and Loftis
damaged this well; but merely that Prism breached the Operating PSA by setting a plug
in the McCoy Well. (Second Amended Complaint ¶ 48b). As such, Prism challenged
that its conduct was the cause of the damage; BuRay bears the burden of establishing its
damages. See Wehrs, 688 F.3d at 892. At the hearing, BuRay more specifically alleged
that Prism damaged the well by (1) placing a plug at 9128 feet, (2) pouring sand on top of
the plug, and (3) using an insufficient percentage of Potassium Chloride (“KCl”) water in
the well.
First, BuRay alleges that the placement of a plug in the well has damaged the well.
BuRay presented expert testimony on this matter from Mr. Scott Byrnes, a registered
petroleum engineer and the president of Burks. According to Mr. Byrnes, this placement
is approximately 90 feet above the perforations3 in the well.4 (Transcript 39:7-12).

2

The McCoy Well is one of the wells located on the land in LeFlore County, Oklahoma leased
to Prism by BuRay under the Wells and Leases PSA and Operating PSA.
3
Perforations are holes in the casing of a well through which the natural gas flows into the
wellbore. See perforation,
https://www.osha.gov/SLTC/etools/oilandgas/glossary_of_terms/glossary_of_terms_p.html

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Because the plug may not be drillable, it would interfere with reaching the lower Jack
Fork formations. The cost from losing approximately 90 feet in the lower Jack Fork
formations is unknown and undeterminable. (Transcript 23:25, 24:1-9). Nevertheless,
Mr. Byrnes compared this well to one in a similar formation and concluded that the feet
lost would have produced nearly $4 million dollars worth of gas before royalties when
compared to similar formations. (Transcript 24:23-25, 25:1-24).
Second, according to BuRay, Prism’s use of sand damaged the McCoy Well.
BuRay’s witness, Raymond J. Smith, a directional driller, testified that one should not
“pour” sand on top of a plug, but rather should “spot it.” (Transcript 62:17). Spotting it
involves using a tool or tubing to spot the sand directly on top of the well. (Id. at 62:1719). According to Mr. Smith, if something were to happen to the plug that the sand was
poured on top of, it could damage the well. (Id. at 62:13-17). On the other hand,
BuRay’s expert, Mr. Byrnes, testified that “you would typically pour sand on top of the
plug to protect it.” (Id. at 39:21-22). Furthermore, Prism’s expert, Mr. Stone, testified
that he has previously poured sand on top of a bridge plug, which would not ruin a well
unless it covered up the perforations. (Id. at 130:5-12). Additionally, he testified that the
sand can be removed by “circulating or bailing.” (Id. at 130:22-25). In his opinion, sand
would not generally harm a well. (Id. at 131:1-7). The court finds that BuRay did not
meet its burden to show that the well was damaged by the sand poured on top of the plug.

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The exact depth of the plug remains unknown. A letter from Loftis indicated it was set at 9248
feet; however, a Baker Hughes Invoice indicates it was set at 9128 feet. Because the fish, a piece
of tool left in the well, is located at 9245 feet, the court finds that the plug is more likely set at
9128 feet.

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Third, BuRay presented testimony regarding the KCl water by its expert witness
John Schofield, a part owner of BuRay and registered petroleum engineer. KCl water is
used to prevent the clay in a formation from swelling. (Id. at 127:14-16). Mr. Schofield
testified that from the literature he reviewed, specifically a Halliburton article, 2% KCl is
insufficient to protect the formation and 7% should be used. (Id. at 27:9-15). Therefore,
he concluded that Prism’s use of 2% KCl water would have damaged the formation. (Id.
at 27:19-22). During cross examination, Mr. Schofield admitted he does know how much
clay was in the formation or if that clay had in fact swollen as a result of the 2% KCl
water. (Id. at 27:19-25). Prism’s expert, Mr. Stone, a petroleum engineer, testified that
he was not experienced enough with Oklahoma to know whether 2% KCl is a common
blend to use there; however, he had used it before elsewhere. (Id. at 127:14-17).
The court finds that Prism damaged the McCoy Well by using 2% KCl water and
placing the plug in the well, thereby closing off 90 feet of production from the lower Jack
Fork sands. Finding that BuRay has met its burden, the court turns to the appropriate
remedy. BuRay contends that it should be awarded the costs to build a new well
comparable to the McCoy Well in order to be made whole. BuRay indicates that the cost
to drill a new comparable well would be $3,797,712 (Exhibit 4); Prism presents the court
with a much lower figure of $1,698,250 (Exhibit C). To determine the appropriate
amount, the court must compare the McCoy Well at the time Prism acquired it to the new
well estimates.

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BuRay dug the McCoy Well to a level of approximately 9,410 feet; however, a
fish5 was left in the well by BuRay at a level of 9,245 feet. (Transcript 29:17-21).
Because of the fish, the well could not produce natural gas from the area below 9,245
feet. (Id. at 29:22-25, 30:1-2). The McCoy Well was not fracked,6 which would have to
be completed before it was a commercially productive well. (Id. at 37:16). Thus,
although the McCoy Well produced natural gas, it was not a commercially productive
well when BuRay transferred it to Prism. When BuRay marketed this well, they
indicated that an investment of an additional $1.2 million would be needed to make it
commercially productive. (Transcript 44:2-5).
BuRay’s estimate of $3.797 million is for the construction of a well to 10,000 feet
that has been fracked and would be a commercially productive well. (Exhibit 4). This
estimate, therefore, is not for a comparable well, but for an improved well. Because a
“non-breaching party is not entitled to be placed in a better position than [it] would have
been in if the contract had not been broken,” the court declines to adopt BuRay’s
estimate. Sheppard v. Stanich, 749 N.E.2d 609, 611 (Ind. Ct. App. 2001). Prism’s
estimated cost is from BuRay’s Talihina Field Divestment Data Package Fall 2010.
(Exhibit C). That estimate does not include fracking. (Id.). The court will therefore
5

According to Mr. Byrnes, “a fish is a piece of equipment – in this case it was drill pipe and a
drill bit – that was left in the hole during the initial completion process of the well.” (Transcript
29:18-21). In order to produce gas from below the fish “you would have to attempt to remove
the fish or the piece of pipe out of the hole.” (Id. at 30:1-2).
6
Fracking is also known as hydraulic fracturing. It is an operation in which a specially blended
liquid is pumped down into a well and into a formation under pressure high enough to cause the
formation to crack open, forming passages through which natural gas can flow into the wellbore.
See hydraulic fracturing,
https://www.osha.gov/SLTC/etools/oilandgas/glossary_of_terms/glossary_of_terms_h.html.

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adopt that estimate. Prism is required to pay BuRay the amount of $1,698,250 for the
cost of a new well comparable to the McCoy Well.
v. Transfer of the Prism Leases
BuRay seeks the transfer of the Prism Leases as a remedy for breach of the
Confidentiality Agreement. Because the court denied default judgment for breach of the
Confidentiality Agreement, the court will not grant such relief.
The court notes, however, that Prism had agreed to pay for the Assignment of the
Oil and Gas Leases out of 40% of the gross revenue received from the BuRay and Prism
leases. (Memorandum of Understanding ¶ 2). Therefore, a benefit was due to BuRay for
the use of its confidential information and help in obtaining the Prism Leases. The court
therefore ORDERS Prism to pay 40% of its gross revenues from the Prism Leases
located in the AMI to BuRay.
Should Prism choose not to develop these leases, then the court will deem it as an
admission, for purposes of Paragraph 1.7, that Prism believes the project is not viable. If
that is the case, then Prism must assign any leases and acreage in the AMI to BuRay.
(Wells and Leases PSA ¶ 1.7) (stating “If, in [Prism’s] sole judgment, the production or
reserve base does not indicate a commercial or viable project and [Prism], for any reason,
determines not to proceed with further exploration or development of the Assets and/or
the AMI, then [Prism] agrees to thereupon assign . . . to BuRay . . . any leases and
acreage [Prism] has acquired in the AMI . . .”).
vi. Injunction

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BuRay seeks a permanent injunction against Prism and Loftis. A permanent
injunction may be granted when the moving party satisfies four factors:
(1) that it has suffered an irreparable injury; (2) that remedies available at
law are inadequate to compensate for that injury; (3) that, considering the
balance of harms between the plaintiff and defendant, a remedy in equity is
warranted; and (4) the public interest would not be disserved by a
permanent injunction.
Monsanto Co. v. Geertson Seed Farms, 130 S.Ct. 2747-48 (2010). BuRay argues that
damages alone are insufficient to protect its interests, and thus an injunction is needed to
protect the Information, which Prism and Loftis used to their advantage and BuRay’s
detriment. In addition, BuRay contends that Prism and Loftis have no right to the
property interests or Information and as such will not be harmed by a permanent
injunction being issued against them. Finally, according to BuRay, the public interest
would be served by protecting property rights.
The court agrees that BuRay has suffered an irreparable injury by Prism’s and
Loftis’ use of BuRay’s confidential information. Damages are not sufficient to protect
the properties and BuRay from further action by Prism and Loftis. In addition, the court
finds that the balance of harm favors an injunction. The court therefore GRANTS the
permanent injunction.
vii. Liquidated Damages
BuRay contends that it is entitled to $200,000 in liquidated damages. As support,
BuRay cites to the Wells and Leases PSA and the Operating PSA, which both state, in
nearly identical provisions, that if Prism defaults and BuRay terminates the agreement,
“[Prism] shall immediately pay [BuRay] the cash sum of Two Hundred Thousand Dollars
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($200,000) as liquidated damages for [Prism]’s default.” (Wells and Leases PSA ¶ 11.1;
Operating PSA ¶ 10.1). Defendants did not argue that the liquidated damages provision
does not apply. The court finds the liquidated damages provisions are enforceable, and
thus, the Defendants are liable to BuRay for the amount of $200,000.
viii. Attorneys’ Fees
BuRay contends that it is entitled to its reasonable attorneys’ fees and legal expenses
pursuant to the Operating PSA, the Wells and Leases PSA, and the Confidentiality
Agreement. (¶¶ 59, 60, 63). In addition, BuRay argues that it is entitled to reasonable
attorney’s fees under the Indiana Crime Victims Relief Act, Ind. Code 34-24-3-1.7 (¶
67). Exhibits 12 – 15 from the damages hearing detail the requested attorneys’ fees. The
court finds that attorneys’ fees should be awarded in this case; nevertheless it must first
determine if the proposed fees are reasonable. Prism and Loftis failed to object to the
reasonableness of the attorneys’ fees.
Mr. Buthod’s Fees
The court finds that Mr. Buthod’s affidavit and attachment are insufficient for the
court to make a determination as to reasonableness because the documents lack any
description for the time spent. Mr. Buthod is hereby ordered to submit to the court a
7

The Indiana Crime Victims Relief Act (Ind. Code 34-24-3-1) is a statutory exception to the
general rule in Indiana that each party pays his or her attorneys’ fees. Under this statute, a victim
is entitled to his attorneys’ fees for certain claims. Courts have limited attorneys’ fee awards just
to the prosecution and defense of those specific claims and not to the fees arising out of
additional counts not covered under the Indiana Crime Victims Act. See Rehman v. Anjum, No.
3:10-cv-220, 2013 WL 3322013, * 5 (N.D. Ind. Jul. 1, 2013)(slip copy). Although this would
usually require a more detailed break down of the attorneys’ fees than submitted, the court finds
that such a breakdown is not necessary because attorneys’ fees are to be awarded for the other
counts under the contract provisions.

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supplemental filing with a detailed description of his work on this lawsuit and
corresponding time spent within thirty (30) days from this order.
Bowers Harrison Attorneys’ Fees
Three attorneys from Bowers Harrison LLP submitted affidavits for the award of
attorneys’ fees. Greg Granger charges at an hourly rate of $270 and seeks $11,961 in
fees. Mark Miller also charges at an hourly rate of $270 and seeks $96,550 in fees.
Clifford Whitehead charges at an hourly rate of $175 and seeks $39,758 in fees. The
court finds that the hourly rates charged by each attorney are reasonable in light of the
experience each attorney possesses and for the Evansville, Indiana area. Each attorney
submitted a detailed print out explaining the time charged. In addition, the court notes
that Mr. Miller has been working on this case since December 2010. Prism and Loftis
did not object to the amount of attorneys’ fees requested. The court, therefore, finds that
they are reasonable and awards the requested amounts.
Counsel has thirty (30) days to file an update to the calculations.
IV.

Conclusion

For the reasons stated above, the court GRANTS in part and DENIES in part
BuRay’s Motion for Default Judgment (Docket # 93). The court grants default judgment
for Counts I-III and V-VIII. Therefore, the court hereby ORDERS and ADJUDGES the
following relief:
1. The following agreements between BuRay and Prism are hereby terminated:
a. The Wells and Leases PSA,
b. The Wells and Leases Assignment,
c. The Operating PSA,
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d.
e.
f.
g.
h.

The Pipeline Agreement I,
The Pipeline Agreement II,
The Amendment I,
The Amendment II, and
The Escrow Agreement.

2. Prism and Loftis, at their sole cost and expense, shall return to BuRay within
thirty (30) days from the date of this Entry any and all documentation or materials
relating to the Information. The Information includes, but is not limited to:
a. Any and all documentation provided to or obtained by Prism and/or Loftis
pursuant to the terms of the Confidentiality Agreement, including but not
limited to documentation relating to the following:
i. The wells used in connection with the oil and gas leases within the
AMI located in LeFlore County, Oklahoma (the “BuRay Leases,”
more particularly described in Docket No. 45-1, and attached to this
Entry as Exhibit 1). Those wells located on and used exclusively in
connection with the BuRay Leases (all collectively referred to as the
“Wells”) are more particularly described in Section 1.1(b) of the
Wells and Leases PSA as:
1. Perkins Well #1-16, American Petroleum Institute Number
(the “API Number”) 35-079-21704 located in LeFlore
County, Oklahoma;
2. Perkins Well #2-16, API Number 35-079-21842 located in
LeFlore County, Oklahoma;

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3. Griffith Well #1-15, API Number 35-079-21765 located in
LeFlore County, Oklahoma;
4. Paul Hale Well #1-14, API Number 35-079-21885 located in
LeFlore County, Oklahoma;
5. Curtis McCoy Well #1-13, API Number 35-079-21914
located in LeFlore County, Oklahoma;
6. Fry Well #1-17A, API Number 35-079-21798A located in
LeFlore County, Oklahoma;
ii. The BuRay Leases;
iii. The entirety of Sections 1 through 5, 8 through 17, and 20 through
24 in Township 3 North, Range 22 East of LeFlore County,
Oklahoma and the entirety of Sections 4 through 9 and 16 through
21in Township 3 North, Range 23 East of LeFlore County,
Oklahoma (the “Area of Mutual Interest” or “AMI”).
b. Any and all documentation relating to the BuRay Leases, AMI, Wells, or
related assets given to Prism or Loftis by BuRay’s accountants, Brown
Smith and Settle, including:
i. Operating agreements with working interest owners;
ii. List of royalty owners;
iii. List of payments to royalty owners for shut in payments;
c. Field Logs, Barry Mercer Geological cross sections, electric logs,
engineering well completion reports, drilling reports, reservoir engineering
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reports, geological reports, accounting records, lessor information,
production and sales information, marketing materials, division orders, any
letters for approval of division orders, investor contracts, correspondence
with investors, title opinions, list of royalty owners, and list of payments to
royalty owners for shut in payments as they are related to the Wells, AMI,
BuRay Leases, or related assets.
3. Prism is ordered to assign back to BuRay all the BuRay Leases within thirty (30)
days of the date of this Entry. BuRay shall then be free to immediately enjoy all
of Prism’s rights of ownership in the BuRay Leases.
4. The amount of $1,698,250 is to be paid within sixty (60) days by Prism to BuRay
to compensate BuRay for the damage caused to the McCoy Well.
5. Prism must pay 40% of its gross revenues from the Prism Leases located in the
AMI to BuRay. Should Prism choose not to develop this area within a reasonable
time, then the court will deem it as an admission, for purposes of Paragraph 1.7 of
the Wells and Leases PSA, that Prism believes the project is not viable. If that is
the case, then Prism must assign any leases and acreage in the AMI to BuRay.
6. Prism and Loftis are immediately and permanently enjoined from:
a. Taking or attempting to take any action or causing or inducing others to
take or attempt to take, any action(s) to use, interfere with, profit from,
operate, encumber, sell, convey, transfer, assign, lien or otherwise affect the
Information – in part or as a whole – or any relating documentation or
materials;
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b. Taking or attempting to take any action or causing or inducing others to
take or attempt to take, any action to use, access, enter upon, interfere with,
profit from, operate, encumber, sell, convey, transfer, assign, lien or
otherwise affect the Wells, AMI, BuRay Leases, or related assets or
BuRay’s enjoyment or action concerning any and all rights of ownership –
including the right to sell, transfer, encumber, or otherwise dispose of to
any party without restriction – in the Wells, AMI, BuRay Leases, or related
assets.
7. As a result of Prism’s breach of the Wells and Leases PSA and the Operating PSA,
Prism is ordered to pay liquidated damages in the amount of $200,000 to BuRay
within sixty (60) days.
8. Prism and Loftis, jointly and severally, are ordered to pay attorneys’ fees in the
amount of $11,961 to Greg Granger, $39,758 to Clifford Whitehead, and $96,550
to Mark Miller. The attorneys have thirty (30) days to submit any additional
amounts due with the descriptions for this court to evaluate for reasonableness.
Mr. Buthod has thirty (30) days to submit a revised attachment to his affidavit.
The court shall retain jurisdiction over this action for the purpose of enforcing this Order

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and to consider any post-judgment relief, if necessary.

SO ORDERED this 24th day of February 2014.

________________________________
__________________________________
RICHARD L. YOUNG, CHIEF JUDGE
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
United States District Court
Southern District of Indiana
Southern District of Indiana

Distributed electronically to registered counsel of record.

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