Tank et al v. Burlington Oil and Gas Company LP et al
Filing
164
ORDER Awarding Partial Attorney's Fees and Costs and for Final Judgment. By Magistrate Judge Charles S. Miller, Jr.(KT)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
NORTHWESTERN DIVISION
Greggory G. and Tommie S. Tank,
)
)
Plaintiffs,
)
ORDER AWARDING PARTIAL
)
ATTORNEY’S FEES AND COSTS
vs.
)
AND FOR FINAL JUDGMENT
)
Burlington Resources Oil and Gas
)
Company, LP, and Murex Petroleum
)
Corporation,
)
)
Case No. 4:10-cv-088
Defendants.
)
______________________________________________________________________________
I.
BACKGROUND
In this action, plaintiffs sued defendants Burlington Resources Oil and Gas Company, LP,
(“Burlington”) and Murex Petroleum Corporation (“Murex”) for the failure to timely pay royalty on
production from the “Lassen Well.” Plaintiffs’ entitlement to the payment of royalty arose out of a
lease they had granted to Murex (“Murex Lease”), which lease interest had been pooled with other
interests for the purposes of the drilling and operation of the Lassen Well by Burlington, the well
operator. Plaintiffs requested that the Murex Lease be cancelled, which is one of the remedies
authorized by N.D.C.C. § 47-16-39.1 for failure to timely pay royalty. In the alternative, plaintiffs
sought an award of “penalty interest” at the rate 18%, together with an award of attorney’s fees and
costs, which are also remedies made available by § 47-16-39.1.
In addition to the claims asserted by plaintiffs with respect to the Lassen Well, plaintiff
Greggory Tank asserted a separate claim against Burlington for late payment of statutory royalty due
on production attributable to his unleased mineral interest that was force-pooled for the drilling of the
“Kings Canyon Well” by Burlington on other property. Murex was not a defendant with respect to
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that claim. Further, since Greggory Tank’s interest was unleased, the claims related to the Kings
Canyon Well were limited to a demand for payment of “penalty interest” and recovery of attorney’s
fees and costs as authorized by N.D.C.C. § 47-16-39.1.
Finally, Murex asserted a counterclaim against plaintiffs in response to their demands for lease
cancellation. Murex later moved to dismiss that claim after discovery made it clear there was no basis
for it.
Soon after this action was commenced, plaintiffs filed a motion seeking interim relief. The
court denied plaintiffs’ requests and, in so doing, expressed doubt about plaintiffs’ ability to prevail
on their claim for cancellation of the Murex Lease. However, at the same time, the court also
expressed doubt over defendants’ arguments for “safe harbor” from having to pay “penalty interest”
with respect to the Lassen Well and the fact there appeared to be no defense against liability for
penalty interest with respect to the Kings Canyon Wells. Tank v. Burlington Resources Oil and Gas,
Co., L.P., No. 4:10–cv–088, 2011 U.S. Dist. Lexis 70238, 2011 WL 2600458 (D.N.D. June 28, 2011)
(“Tank I”). As discussed in more detail in a series of subsequent orders issued by the court, Burlington
put plaintiffs on “pay status” with respect to both the Lassen and Kings Canyon Wells in July 2011,
soon after the court issued its order denying interim relief. Burlington concedes this was done because
of the court’s preliminary opinions expressing doubt over the defenses asserted by defendants. The
litigation then continued primarily, but not exclusively, to resolve plaintiffs’ demand for cancellation
of the Murex Lease.
On July 16, 2013, the court issued its order with respect to the cross-motions for summary
judgment filed by the parties. The court concluded that it would not cancel the Murex Lease, but that
“penalty interest” would have to be paid on account of the late payment of royalty with respect to both
the Lassen and Kings Canyon Wells, if it had not already been paid. Also, the court determined that
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the “penalty interest” would not begin to accrue until the 151st day following the initial marketing of
oil or gas from the wells and not from the date of the first marketing of the production as argued by
plaintiffs. Tank, 2013 U.S. Dist. Lexis 99204, 2013 WL 3766526 (D.N.D. July 16, 2013) (“Tank II”).
The fact that plaintiffs prevailed on some issues and defendants on others with respect to the
Lassen Well gave rise to competing requests by the parties for an award of attorney’s fees and costs
under N.D.C.C. § 47-16-39.1, which requires that the court make an award of fees and costs to the
“prevailing party.” Also, plaintiffs separately argued for an award of fees and costs from Murex,
contending that, among other things, Murex had asserted its counterclaim in bad faith. Finally,
Greggory Tank sought recovery of fees and costs against Burlington with respect to the Kings Canyon
Well claims.
On November 22, 2013, the court issued its order resolving the competing requests for
attorney’s fees and costs. The court determined that plaintiffs were the “prevailing party” with respect
to the Lassen Well claims because they had obtained relief on account of the late payment of royalty
in the form of “penalty interest,” even though they had not prevailed on the issues of lease
cancellation or when the “penalty interest” would begin to accrue. The court stated, however, that it
would tailor its award of fees and costs to reflect plaintiffs’ limited success with respect to the Lassen
Well claims. The court also stated it would award Greggory Tank fees and costs for having prevailed
on the Kings Canyon Well claim. Finally, the court denied plaintiffs’ request for fees and costs
associated with the withdrawal and dismissal of Murex’s counterclaim, except for any costs authorized
by Fed. R. Civ. P. 54(d). The court ordered plaintiffs to submit their request for fees and costs in
accordance Local Civil Rule 54.1 and allowed defendants an opportunity to respond. Tank, 2013 U.S.
Dist. Lexis 166382, 2013 WL 6150783 (D.N.D. Nov. 22, 2013) (“Tank III”).
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II.
DISCUSSION
A.
Preliminary analysis
Plaintiffs have now submitted itemized statements of their fees and costs for the entire action.
The amount requested in fees is $141,444.00, which is based on an expenditure of 943.5 hours of
attorney and paralegal time at various rates. The total amount requested in costs is $5,257.66. Even
though the court indicated that only a partial award would be made and that it would likely be based
on some percentage estimates, plaintiffs have not suggested what percentage of their fees and costs
they believe would be appropriate if the court was not to award all of their fees and costs.
Defendants in their response correctly point out that plaintiffs’ itemization of their fees and
costs does not provide sufficient detail for the court to make an award of fees and costs based on actual
time spent on particular issues. However, the court concludes that further itemization would be of
minimal value as only gross percentage estimates are possible given the complexity of the case, the
differing claims for the two wells, and the other reasons explained in Tank III.
Defendants suggest that, if the court is inclined to make an award based on percentage
estimates, plaintiffs be awarded all of their requested fees and costs through July 2011 (which is when
Burlington put plaintiffs on “pay status”), except for the fees associated with their failed motion for
interim relief. For the period after July 2011, defendants suggest that plaintiffs award of fees and
costs be limited to 25% of what they claim, since most of the litigation effort after that was directed
to plaintiffs’ failed attempt to obtain cancellation of the Murex Lease. According to defendants, this
approach would result in an award of $40,960.20 in fees and $1,426.92 dollars in costs, for a total
award of $42,387.12.
Notably, defendants do not question the attorney rates, the hours expended for particular tasks,
or whether any particular item of work was warranted or not. In other words, they have not sought
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to contest the reasonableness of plaintiffs’ claim of total fees in the amount of $141,444.00. Also, in
their proposal, defendants have not attempted to separate out what fees and costs might be associated
with the Kings Canyon Well portion of the litigation in which Murex was not involved.
There is much to be said for defendants’ proposal and, if this was “baseball arbitration,” the
court would adopt it since it is much closer to what the court has in mind than plaintiffs’ request for
100% of their fees and costs. The court’s principal points of disagreement with defendants’ proposals
are twofold. First, even though plaintiffs’ motion for interim relief was denied, it did result in the court
issuing an order that led Burlington to putting plaintiffs on “pay status” for both wells. Consequently,
the court concludes plaintiffs should be awarded something for that effort. Also, even though
defendants are content with treating the Lassen Well and Kings Canyon Wells together, plaintiffs may
not. Moreover, the issues for the two wells were different. For example, if there is an appeal on the
issue of who is the “prevailing party,” the Eighth Circuit could conclude that this court erred in
determining that plaintiffs were the prevailing party with respect to the Lassen Well claims but reach
a different conclusion with respect to the Kings Canyon Well claims, since lease cancellation was not
an issue with respect to that well.
The court does agree, however, with defendants’ approach of distinguishing the fees incurred
through July 2011 from those incurred thereafter given that Burlington put plaintiffs on pay status with
respect to both wells in July 2011, and the court’s view, as expressed in Tank III, that this case could
have been more quickly resolved and with much less expenditure of legal effort if plaintiffs had not
pursued their request for cancellation of the Murex Lease. Consequently, the court will follow that
approach, but will make separate awards for the Lassen and Kings Canyon Wells portions of the
litigation.
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For purposes of the determinations that follow, it appears that, of the $141,444.00 in fees
claimed by plaintiffs, $29,479.00 are for the period through July 2011 and that the remaining
$111,965.00 are for the time period thereafter. Likewise, with respect to the costs claimed of
$5,257.66, it appears only $150 dollars were incurred through July 2011 and that the remaining
$5,107.66 was incurred after that date.
B.
Lassen Well
Given that no royalty had yet been paid when plaintiffs commenced their action, the substantial
overlap of subsidiary issues relevant to both lease cancellation and payment of “penalty interest” at
least through July 2011, and the court’s conclusion that the briefing on the issues raised in plaintiffs’
motion for preliminary relief resulted in a court order that led to Burlington putting the Tanks on “pay
status,” but at the same time recognizing that plaintiffs did not prevail on their claim for lease
cancellation and the separate issues involving the Kings Canyon Well, the court concludes that an
award to plaintiffs of 60% of their fees is appropriate for the Lassen Well portion of the litigation for
the time period through July 2011. With respect to the time period after July 2011, the court concludes
that an award of 25% of the fees is appropriate for the reasons expressed earlier. The net result is a
total award of fees to plaintiffs for the Lassen Well portion of the litigation of $45,678.65. As for the
costs, the court agrees with defendants’ proposal that plaintiffs be awarded all of their costs through
July 2011, which is $150, and 25% of the remaining $5,107.66, for a total cost award of $1,426.92.
The total of the fees and costs to be awarded with respect to the Lassen Well portion of the litigation
is $47,106.00 rounded to the nearest dollar.
C.
Kings Canyon Well
With respect to the Kings Canyon Well, the court concludes that an award of 10% of plaintiffs’
fees incurred through July 2011, which amounts to $2,948.90, is appropriate. Notably, while Kings
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Canyon was a separate claim involving differing facts (and for all the court knows may have involved
more money in term of unpaid royalty), the issues were not as complex as the Lassen Well portion of
the litigation - particularly with respect to defendants’ claims of safe harbor from liability under
N.D.C.C. § 47-16-39.1. Thereafter, the Kings Canyon Well portion of the litigation was a very small
part of the total litigation effort and final resolution of that claim was held up by the resolution of the
remaining issues plaintiffs did not prevail upon, including, relevant to the Kings Canyon Well claim,
when “penalty interest” would begin to accrue. Consequently, the court will not make a separate
award for the Kings Canyon Well for the period after July 2011 on a percentage basis. Rather, the
court will award an additional $750 to cover what the court conservatively (and in the absence of more
definitive proof from plaintiff) estimates to have been the reasonable time required to finally resolve
the claim with respect to the payment of “penalty interest.” This results in a total fee award for the
Kings Canyon Well portion of the litigation of $3,698.00, rounded to the nearest dollar. In addition,
the court will not award any costs since this claim was added after the initial costs of $150 were
incurred and all of the remaining costs appear to have been incurred primarily, if not exclusively, for
the Lassen Well portion of the litigation.1
III.
CONCLUSIONS AND ORDER
Based on the foregoing, and given that all other issues in the case have been resolved either
by agreement of the parties or the court’s earlier orders, the court hereby ORDERS, ADJUDGES,
AND DECREES as follows:
1.
Plaintiffs Greggory G. and Tommie S. Tank are entitled to judgment against
defendants Burlington and Murex, jointly and severally, in the amount of $47,106.00
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Undoubtedly, the fees and costs for the Kings Canyon Well claim would have been more substantial if it had
been sued separately. However, some of what was decided with respect to the Lassen Well carried over to the Kings
Canyon Well.
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for statutory attorney’s fees and costs under N.D.C.C. § 47-16-39.1 with respect to the
Lassen Well claims.
2.
Plaintiff Greggory G. Tank is entitled to judgment against Burlington in the amount
of $3,698.00 for statutory attorney’s fees and costs under N.D.C.C. § 47-16-39.1with
respect to the Kings Canyon Well claims.
3.
All other claims are now finally DISMISSED WITH PREJUDICE.
JUDGMENT SHALL BE ENTERED ACCORDINGLY.
Dated this 17th day of January, 2014.
/s/ Charles S. Miller, Jr.
Charles S. Miller, Jr.
United States Magistrate Judge
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