Musket Corporation v. Star Fuel of Oklahoma LLC et al

Filing 426

ORDER granting 408 plaintiff's Motion for Attorney's Fees, Related Nontaxable Expenses and Expert Deposition Fees (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 3/14/2016. (ks)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
MUSKET CORPORATION,
Plaintiff,
vs.
STAR FUEL OF OKLAHOMA, LLC,
LINCOLN O. CLIFTON,
DAVID A. SELPH, and
MARK LUITWIELER,
Defendants.

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Case No. CIV-11-444-M

ORDER
Before the Court is plaintiff’s Motion for Attorney’s Fees, Related Nontaxable Expenses,
and Expert Deposition Fees, filed June 29, 2015. On July 27, 2015, defendants Star Fuel of
Oklahoma, LLC (“Star Fuel”), Lincoln O. Clifton (“Clifton”), and David A. Selph (“Selph)
(collectively “Defendants”) filed their response, and on August 3, 2015, plaintiff filed its reply.
Based upon the parties’ submissions, the Court makes its determination.
I.

Background
On September 12, 2011, this Court granted summary judgment to Star Fuel on plaintiff’s

breach of contract and breach of settlement agreement claims. On November 18, 2011, the Court
granted Star Fuel’s Motion to Dismiss Counterclaims with Prejudice and dismissed Star Fuel’s
counterclaims against plaintiff for breach of contract, rescission, and accounting with prejudice. The
parties tried this case to a jury from October 9, 2012 through October 29, 2012, and on November
1, 2012, the jury returned its verdict, finding in favor of plaintiff and against Star Fuel on plaintiff’s
claims for breach of implied contract, fraud, constructive fraud, misappropriation of trade secrets,
and unfair competition. The jury awarded plaintiff a total of $2,053,960 in damages against Star

Fuel as follows: (1) breach of implied contract - $1,631,700; (2) fraud – $11,130; (3) constructive
fraud – $11,130; (4) misappropriation of trade secrets – $200,000; and (5) unfair competition –
$200,000. On November 7, 2012, the Court entered judgment against Star and, in accordance with
the Court’s prior orders finding that a personal guarantee subjected Clifton and Selph to personal
liability for any damages awarded on plaintiff’s claim for breach of implied contract, entered
judgment in the amount of $1,631,700 against Clifton and Selph.
On May 6, 2013, the Court granted in part Defendants’ renewed motion for judgment as a
matter of law and held that plaintiff’s claim for breach of implied contract was barred by the statute
of frauds. The Court also determined that Defendants were not equitably estopped from asserting
the statute of frauds as a defense. As a result, the Court found that judgment as a matter of law
should be entered in favor of Defendants in relation to plaintiff’s claim for breach of implied
contract and entered an Amended Judgment accordingly.
Plaintiff appealed, and on April 6, 2015, the Tenth Circuit Court of Appeals reversed this
Court’s determination. The Tenth Circuit agreed with this Court that plaintiff’s implied contract
claim was subject to the statute of frauds but held that Defendants were equitably estopped from
relying on the statute of frauds because the jury found that Star Fuel committed fraud and
constructive fraud. The Tenth Circuit, thus, directed this Court to reinstate the jury’s verdict on
plaintiff’s claim for breach of implied contract. On May 5, 2015, the Court entered a Second
Amended Judgment in accordance with the Tenth Circuit’s opinion.
On May 18, 2015, the Tenth Circuit entered an order finding that plaintiff was entitled to
recover attorney fees under Okla. Stat. tit. 12, § 936 as the prevailing party on an implied claim for
the sale of goods and that the terms of the personal guarantee made Clifton and Selph liable as well

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for the attorney fees. Finally, on March 3, 2016, this Court granted plaintiff’s Motion to Amend
Judgment to Include Prejudgment Interest and entered a Third Amended Judgment awarding
prejudgment interest against Defendants in the amount of $636,228.89.
II.

Discussion
Plaintiff now moves the Court, under Federal Rule of Civil Procedure 54(d)(2) and Local

Civil Rule 54.2, for an award of attorney’s fees in the amount of $924,332 against Defendants and
an award of related nontaxable expenses in the amount of $80,691.38 against Clifton and Selph.
Plaintiff also moves the Court, under Federal Rule of Civil Procedure 26(b)(4)(E), for an award of
deposition-related expert witness fees in the amount of $13,141,25.
A.

Attorney’s fees1

Plaintiff contends that it is statutorily and contractually entitled to an award of appeal- and
trial-related attorney’s fees as the prevailing party on its claim for breach of implied contract.
Plaintiff further contends that it is contractually entitled to an award of attorney’s fees as the
prevailing party on Star Fuel’s counterclaims. Plaintiff asserts that as of May 15, 2015, it has
incurred attorney’s fees in the total amount of $1,771,701.50 in connection with the prosecution of
all of its claims and the defense of Star Fuel’s counterclaims. Plaintiff further asserts that it has
discounted and apportioned these fees substantially to eliminate fees for work attributable solely to
non-fee-bearing claims and fees that are otherwise non-recoverable. As a result, plaintiff seeks a
total fee award in the amount of $924,332.

1

There is no dispute that plaintiff is entitled to recover attorney’s fees related to its claim for
breach of implied contract under Okla. Stat. tit. 12, § 936 and the personal guarantees executed by
Clifton and Selph. The parties dispute the appropriate amount of the attorney’s fees to be awarded.
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Defendants contend that the amount of attorney’s fees requested by plaintiff should be
substantially reduced based upon the following: (1) Star Fuel was awarded summary judgment on
the heart of plaintiff’s case – its breach of contract and breach of settlement agreement claims and
since plaintiff lost these claims, any award should be reduced by the amount plaintiff incurred in
responding to Star Fuel’s Motion for Partial Summary Judgment on said issues; (2) plaintiff first
raised its breach of implied contract claim on April 1, 2011, two and a half years after the case was
initially filed, and plaintiff is not entitled to any attorney’s fees for the time period prior to the
assertion of the breach of implied contract claim; (3) plaintiff is not entitled to recover fees for the
dismissal of Star Fuel’s counterclaims with prejudice; (4) plaintiff’s attorney’s fees should be
reduced for hours that were excessive, redundant, and otherwise unnecessary; and (5) plaintiff’s
other non-fee based claims should be apportioned to prevent an inequitable and unreasonable result.
Defendants, thus, assert that plaintiff is entitled to only $305,038.79 in attorney’s fees.
1.

Fees predating the assertion of the breach of implied contract claim

Plaintiff filed the instant action in November 2008. Plaintiff did not assert its cause of action
for breach of implied contract until April 1, 2011. Defendants assert that it would be inequitable,
as well as unreasonable, to award fees during 2008-2010 for a claim that was not at issue until April
1, 2011.
Plaintiff asserts that the same facts that were required to prevail on its implied contract
theory were also relevant to the principal legal theories it asserted at the beginning of the lawsuit in
late 2008 – namely, breach of contract, breach of settlement agreement, and constructive fraud – as
well as the fraud and conspiracy theories that it alleged in early 2009. Plaintiff further asserts that
its work on these other theories before 2011, including depositions of key witnesses and critical

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document discovery, established the facts that led it to assert its implied contract theory. Plaintiff
contends that this work prior to April 1, 2011 was essential to plaintiff’s ultimate success on its
implied contract theory. Additionally, plaintiff contends that it was required to do the same work
in connection with its implied contract theory regardless of when that theory was first set forth in
a pleading. Plaintiff, therefore, asserts that the Court should reject Defendants’ arguments that
plaintiff is categorically barred from recovering fees for work performed before April 2011.
Having carefully reviewed the parties’ submissions, the Court finds that all fees incurred
prior to April 2011 should not be categorically excluded simply because they were incurred prior
to the date plaintiff asserted its implied contract theory. Specifically, the Court finds that certain of
the discovery conducted prior to April 2011, such as depositions of key witnesses and critical
document discovery, established facts that led to the development of plaintiff’s implied contract
theory and, thus, would be recoverable in relation to plaintiff’s breach of implied contract claim.
“Of course, some of the services performed before a lawsuit is formally commenced by the filing
of a complaint are performed ‘on the litigation.’ Most obvious examples are . . . the work associated
with the development of the theory of the case.” Webb v. Bd. of Educ. of Dyer Cty., Tenn., 471 U.S.
234, 243 (1985). Additionally, the Court finds that work performed on the related breach of contract
and breach of settlement agreement claims, as well as plaintiff’s fraud claims, would have been
necessarily incurred in prosecuting plaintiff’s breach of implied contract claim alone. Specifically,
to prevail on its breach of implied contract claim, plaintiff was required to establish the facts
regarding the parties’ history and prior dealings, plaintiff’s purchase of the 840,000 gallons of fuel
under the parties’ risk-sharing arrangement, Star Fuel’s elections to buy the 840,000 gallons from
plaintiff at a fixed price of $3.35/gallon, Star Fuel’s refusal to perform, and the damages incurred

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by plaintiff. Plaintiff was also required to show that it detrimentally relied on misrepresentations
made by Star Fuel to prove that Star Fuel was equitably estopped from relying on a statute of frauds
defense. The Court finds these same facts were relevant to plaintiff’s earlier asserted claims of
breach of contract, breach of settlement agreement, constructive fraud, fraud, and conspiracy. Thus,
the Court finds that plaintiff is not categorically barred from recovering fees for work performed
prior to April 2011.
2.

Star Fuel’s counterclaims under the Settlement Agreement2

The Settlement Agreement provides for prevailing party attorney’s fees in any lawsuit
concerning “any controversy or dispute arising from, under or related to th[e] Settlement
Agreement.” Settlement Agreement and Mutual Release, attached as Exhibit 2 to Plaintiff’s Motion
for Attorney’s Fees, Related Nontaxable Expenses, and Expert Deposition Fees with Brief in
Support, at ¶ 5.2. In its answer to plaintiff’s Third Amended Petition, Star Fuel asserted three
counterclaims relating to the Settlement Agreement: (1) rescission of the Settlement Agreement on
the ground of fraud, (2) breach of the Ethanol Terminal Agreement (the Settlement Agreement was
a compromise of the parties’ claims and disputes regarding the Ethanol Terminal Agreement), and
(3) an accounting under the Ethanol Terminal Agreement. On November 9, 2011, Star Fuel filed
a Motion for Leave to Dismiss Counterclaims with Prejudice under Federal Rule of Civil Procedure
41(a)(2) and (c). On November 18, 2011, the Court granted Star Fuel’s motion and dismissed the
three counterclaims with prejudice.

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The only attorney’s fees plaintiff is seeking based upon the Settlement Agreement are its
attorney’s fees incurred in relation to Star Fuel’s counterclaims. Plaintiff is not seeking attorney’s
fees based upon the Settlement Agreement for any of its claims brought in this case.
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The Supreme Court’s decision in Buckhannon Bd. and Care Home, Inc. v. W. Va. Dep’t of
Health and Human Res., 532 U.S. 598 (2001) supplies the principles that control the interpretation
of the term “prevailing party.” In Buckhannon, the Supreme Court defined prevailing party as one
who has been awarded some relief on the merits by the court. See id. at 603-04. The Supreme Court
further found that there must be a “material alteration of the legal relationship of the parties.” Id.
at 604. Finally, the Supreme Court emphasized the need for a “judicial imprimatur” or “judicial
relief.” Id. at 605-06.
Plaintiff asserts that it is entitled to recover attorney’s fees related to its defense of Star
Fuel’s counterclaims under the Settlement Agreement. Specifically, plaintiff asserts that because
the dismissal was with prejudice, it operated as a final adjudication on the merits of Star Fuel’s
counterclaims. Further, plaintiff asserts that because the Court ordered the dismissal, it bears the
judicial imprimatur lacking in a voluntary dismissal without court involvement. Plaintiff, therefore,
contends that the dismissal satisfies the Buckhannon test and renders plaintiff the prevailing party
on Star Fuel’s counterclaims.
Star Fuel contends that plaintiff is not entitled to recover attorney’s fees for its defense of
Star Fuel’s counterclaims. Specifically, Star Fuel asserts that the payment of attorney’s fees may
be considered a condition upon which a court grants dismissal, and in this case, the Court did not
make payment of plaintiff’s attorney’s fees a condition to dismissal. Additionally, Star Fuel asserts
that plaintiff cannot be considered the prevailing party because the claims against it were voluntarily
dismissed with prejudice. Star Fuel further asserts that should this Court deem the Settlement
Agreement’s fee-shifting provision applicable, any award of attorney’s fees would be inequitable

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and unreasonable because Star Fuel was awarded summary judgment on plaintiff’s breach of
settlement agreement claim.
Having carefully reviewed the case law, as well as the parties’ submissions, the Court finds
that plaintiff should be considered the prevailing party as to Star Fuel’s counterclaims. In the case
at bar, Star Fuel filed a motion to dismiss its counterclaims with prejudice pursuant to Rule 41(a)(2)
and (c), and this Court entered an order dismissing the counterclaims with prejudice. This order of
dismissal with prejudice clearly effects a material alteration of the legal relationship of the parties
because it serves as a complete adjudication of the issues set forth in Star Fuel’s counterclaims and
acts as a bar to further action on its claims. Further, the Court finds that the Court’s order of
dismissal with prejudice also has the required judicial imprimatur as this Court had the discretion
to approve or disapprove Star Fuel’s motion and was the determining factor as to whether the
counterclaims were dismissed.3 Finally, the Court finds that an award of attorney’s fees to plaintiff
for the work performed in relation to Star Fuel’s counterclaims would not be inequitable or unjust.
As set forth above, plaintiff clearly is the prevailing party on Star Fuel’s counterclaims. While Star
Fuel was granted summary judgment on plaintiff’s breach of settlement agreement claim, plaintiff

3

The Court would note a number of courts have also ruled that a dismissal with prejudice
under Rule 41(a)(2) renders the party against whom the claims were made the prevailing party. See
Claiborne v. Wisdom, 414 F.3d 715, 719 (7th Cir. 2005) (finding defendant was prevailing party
when claims were voluntarily dismissed under Rule 41(a)(2)); Samsung Elecs. Co., Ltd. v. Rambus
Inc., 440 F. Supp. 2d 495, 511 (E.D. Va. 2006) (“A Rule 41(a)(2) dismissal is a court order that
materially alters the legal relationship between the parties. It is only granted after the court exercises
its discretion, and thus bears the necessary judicial imprimatur. The necessary conclusion then is
that the voluntary dismissal with prejudice in this case made Samsung the prevailing party”.);
Capitol Records, Inc. v. Foster, No. Civ. 04-1569-W, 2006 WL 4558154, at *4 (W.D. Okla. July
13, 2006) (finding plaintiffs’ Rule 41(a)(2) voluntary dismissal with prejudice represented judicially
sanctioned material alteration in legal relationship between parties and defendant was prevailing
party); Bryant v. MV Transp., Inc., 231 F.R.D. 480, 482 (E.D. Va. 2005) (finding that Rule 41(a)(2)
has the required “judicial imprimatur” and “judicially sanctioned” relief).
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prevailed on its alternative theory breach of implied contract claim and was awarded all of the
damages requested - the same damages that plaintiff sought in relation to its breach of settlement
agreement claim. The Court finds no inequity under these circumstances.
Therefore, the Court finds that plaintiff is entitled to an award of its reasonable attorney’s
fees incurred in relation to Star Fuel’s counterclaims.
3.

Overstaffing

Defendants contend that the amount of attorney’s fees requested by plaintiff should also be
reduced for excessive, redundant time. Specifically, Defendants assert that Michael Brooks’
substantive work on plaintiff’s appeal was unnecessary and resulted in an unnecessary expenditure
of time and effort. Mr. Brooks was not one of the primary attorneys who worked on this case prior
to the appeal, and Defendants assert that any of the primary attorneys could have written plaintiff’s
appellate briefs in less time and without incurring the unnecessary expense of Mr. Brooks while
maintaining the same chances of success. Alternatively, Defendants contend such time should be
reduced by 25% to account for overstaffing.
Plaintiff contends that its attorney’s fees should not be reduced for alleged overstaffing.
Specifically, plaintiff asserts that Mr. Brooks did significant legal research and briefing prior to the
appeal in this case, including being primarily responsible for researching and drafting plaintiff’s
response to Star Fuel’s renewed motion for judgment as a matter of law, a brief that involved
virtually all of the issues that were raised on appeal. Plaintiff further asserts that Mr. Brooks’ billing
rate is lower than the rates of the primary attorneys referenced by Defendants. Plaintiff, thus,
contends that its appellate briefs were drafted by its lowest-billing attorney who had the most Tenth
Circuit experience and who was already familiar with the issues and law and that this strategy

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resulted in lower fees than plaintiff otherwise would have incurred. Finally, in its motion, plaintiff
states that its attorneys engaged in a three-step discounting and apportionment process to arrive at
an appropriate lodestar figure and that the first step involved a pre-apportionment discount where
the attorneys discounted the fees incurred for particular entries in order to account for potentially
duplicative billing and time billed for discrete projects by summer clerks or attorneys not assigned
to the case.
Having carefully reviewed the parties’ submissions, the Court finds the attorneys’ fees
requested by plaintiff should not be reduced to account for overstaffing. Specifically, the Court
finds that Mr. Brooks’ work on the appeal in this case was necessary and did not result in an
unnecessary expenditure of time and efforts. Mr. Brooks had greater appellate experience and was
familiar with the issues and the law as he drafted plaintiff’s response to Star Fuel’s renewed motion
for judgment as a matter of law, and his billing rate was lower than the primary attorneys in the case.
Additionally, the Court finds there is no need to reduce the time expended by plaintiff’s counsel by
25% to account for overstaffing. The Court finds that plaintiff’s pre-apportionment discount
adequately accounts for any overstaffing in this case.4
4.

Reasonableness of attorney’s fees and need for any additional apportionment

Under Oklahoma law, an award of attorney’s fees must be reasonable. See Finnell v.
Seismic, 67 P.3d 339, 346 (Okla. 2003). Determination of a reasonable fee involves a two-step
process. First, the Court must calculate the lodestar by multiplying the number of hours reasonably

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In the pre-apportionment discount step, the total amount of attorney’s fees was reduced from
$1,771,701.50 to $1,500,252.95, a reduction of $271,448.55, or 15.32% of the original fee total.
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expended on the litigation by a reasonable hourly rate.5 See id. The Oklahoma Supreme Court has
adopted “a strong presumption that the lodestar method, alone, will reflect a reasonable attorney
fee.” Parsons v. Volkswagen of Am., Inc., 341 P.3d 662, 671 (Okla. 2014). Second, the Court must
consider whether to adjust the lodestar based on the Burk6 factors. See Finnell, 67 P.3d at 346.
Those factors are:
time and labor required; novelty and difficulty of the questions; skill
requisite to perform the legal service; preclusion of other
employment; customary fee; whether the fee is fixed or contingent;
time limitations; amount involved and results obtained; experience,
reputation and ability of the attorneys involved; risk of recovery;
nature and length of relationship with the client; and awards in
similar causes.
Spencer v. Okla. Gas & Elec. Co., 171 P.3d 890, 895 (Okla. 2007). “In all cases, the attorney fees
must bear some reasonable relationship to the amount in controversy.” Parsons, 341 P.3d at 667.
Additionally, as a general rule, Oklahoma law requires apportionment between fee-bearing
and non-fee-bearing claims. See Green Bay Packaging, Inc. v. Preferred Packaging, Inc., 932 P.2d
1091, 1098 (Okla. 1996). However, “a prevailing party can recover fees for that portion of his
attorney’s work not expended solely in prosecuting a related [non-fee-bearing claim].” Transpower
Constructors, a Div. of Harrison Int’l Corp. v. Grand River Dam Auth., 905 F.2d 1413, 1423 (10th
Cir. 1990). Thus, if fees devoted to prosecuting a non-fee-bearing claim would have been
necessarily incurred in connection with the fee-bearing claim alone, those fees are properly awarded
without any apportionment. Id. See also Arnold Oil Props., L.L.C. v. Schlumberger Tech. Corp.,
508 F. App’x 715, 716-17 (10th Cir. 2013) (“While apportionment is the rule, its bears an exception.

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Defendants do not dispute the hourly rate charged by plaintiff’s attorneys.

6

State ex rel. Burk v. City of Okla. City, 598 P.2d 659 (Okla. 1979).
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If a court finds all of the time devoted to the alleged non-fee-bearing claim . . . “would have been
necessarily incurred” in connection with a claim that is fee-bearing . . . , then apportionment is not
required”) (emphasis in original); Travelers Indem. Co. v. Hans Lingl Anlagenbau Und
Verfahrenstechnik GMBH & Co. KG, 189 F. App’x 782, 788 (10th Cir. 2006) (holding that trial
court properly declined to apportion fees awarded to prevailing defendant where defense to feebearing and non-fee-bearing claims was the same).
In this case, plaintiff’s attorneys engaged in a three-step discounting and apportionment
process to arrive at the lodestar figure of $924,332. At the first stage of the discounting and
apportionment process, plaintiff’s attorneys reviewed the time entries and discounted the fees
incurred for particular entries in order to account for potentially duplicative billing, unsuccessful
motion practice, time billed for discrete projects by summer clerks or attorneys not assigned to the
case, and additional billable time that is otherwise not compensable. The cumulative effect of these
reductions was to reduce the total amount of fees from $1,771,701.50 to $1,500,252.95, a reduction
of $271,448.55, or 15.32% of the original fee total. At the second stage of the discounting and
apportionment process, plaintiff’s attorneys reviewed each time entry in an effort to apportion the
remaining fees between the fee-bearing claims on which plaintiff prevailed – breach of implied
contract and Star Fuel’s counterclaims – and the non-fee-bearing claims. The cumulative effect of
this stage of the process resulted in a further reduction of attorney’s fees from $1,500,252.95 to
$1,027,035.56. At the third stage of the discounting and apportionment process, plaintiff’s attorneys
discounted the fees by an additional 10% to account for any time that may have been spent solely
on the related non-fee-bearing claim. After this 10% reduction, the total amount of fees plaintiff

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seeks to recover is $924,332. This final amount represents 52.71% of the total fees incurred by
plaintiff in this case.
Additionally, plaintiff retained Steven L. Barghols to provide his opinions regarding the
reasonableness of the attorney fees that were incurred by plaintiff in this case.7 Mr. Barghols has
opined as follows:
In my opinion, the method of apportionment used by HCCN and the
total amount of attorney’s fees apportioned to the compensable
claims are reasonable. The total amount of attorney fees apportioned
to the fee-bearing claims is consistent with the amounts that would
reasonably be expected had each claim been prosecuted or defended
individually, and without the inclusion of other non-compensable
claims.
Based upon my experience, the total amount of fees sought to be
recovered by Musket pursuant to its pending Motion is entirely
proportionate to the dollar amount of claims and risks involved in this
litigation matter.
In my opinion, both the discounting and apportionment process used
by HCCN and the total amount of fees sought to be recovered by
Musket in connection with its implied contract claim and Star Fuel’s
counterclaims are reasonable.
Affidavit of Steven L. Barghols, attached as Exhibit 4 to Plaintiff’s Motion for Attorney’s Fees,
Related Nontaxable Expenses, and Expert Deposition Fees with Brief in Support, at ¶¶ 32, 34, 35.
Plaintiff contends that its requested amount of attorney’s fees, $924,332, is reasonable under
the facts and circumstances of the case. Further, plaintiff contends that the fees billed to plaintiff
were reasonable and necessary to properly prosecute the claims asserted by plaintiff and to defend
against the counterclaims asserted by Star Fuel. Specifically, plaintiff asserts that given the
interrelated nature of plaintiff’s claim for breach of implied contract and plaintiff’s claims for breach
of express contract, breach of settlement agreement, fraud, constructive fraud, and civil conspiracy,

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Defendants do not dispute the qualifications of Mr. Barghols to give his opinion in this case.
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as well as the common core of facts underlying all of the claims, the overwhelming majority of fees
incurred on the related non-fee-bearing claims were not for legal work performed solely in
connection with those claims – the fees would have been necessarily incurred in the successful
prosecution of plaintiff’s implied contract claim alone. Plaintiff further asserts that it would not
have prevailed on its implied contract claim without proving its fraud and constructive fraud claims.8
Plaintiff also asserts that even if it had never asserted its claims for breach of express contract and
breach of the settlement agreement, it would have been required to discover and present all of the
facts related to the negotiation and execution of the Settlement Agreement in order to prove its
constructive fraud claim. Additionally, plaintiff asserts that its civil conspiracy claim was founded
on the same conduct that gave rise to plaintiff’s breach of implied contract and fraud claims.
Further, plaintiff contends that the amount of attorney’s fees that it seeks to recover is
reasonably related to the amount in controversy and plaintiff’s overall success in the litigation. The
amount of damages plaintiff sought on its claim for breach of implied contract represents 51.52%
of the total damages sought by plaintiff at trial, and the $1,631,700 that the jury awarded to plaintiff
on its implied contract claim equals 79.44% of the total damages awarded to plaintiff against
Defendants. Additionally, plaintiff contends that given that the result is what matters and that result
cannot be described as anything but a resounding victory for plaintiff, the Court should not reduce
its fees simply because plaintiff did not prevail on every contention in the lawsuit. Finally, plaintiff
contends that consideration of the Burk factors confirms the reasonableness of the attorney’s fees
requested.

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On appeal, the Tenth Circuit determined that Star Fuel was equitably estopped from relying
on the statute of frauds because the jury found that Star Fuel committed fraud and constructive fraud
based on the same facts underlying plaintiff’s claim for breach of implied contract.
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Defendants contend that plaintiff’s attorney’s fees must be apportioned to prevent an unjust
and unreasonable assessment. Specifically, Defendants assert that a court is required to apportion
attorney fees between fee-bearing and non-fee-bearing claims and should employ a reasonable
method of determining which fees are attributable to which claims, even if they are considered to
be closely related. Defendants further assert that Star Fuel obtained summary judgment on
plaintiff’s breach of contract claim and an award of attorney’s fees to plaintiff, on a claim it lost on
summary judgment, would virtually negate Star Fuel’s judgment and result in a windfall to plaintiff,
which is contrary to the policy behind awarding attorney’s fees. Defendants also assert that plaintiff
should not recover any fees for its attorneys’ work in defending against Star Fuel’s Motion for
Partial Summary Judgment, including the filing of its Motion for Reconsideration and Motion for
Leave to Amend, both of which were denied, and its fees should be reduced by such amount.
Additionally, Defendants assert that permitting plaintiff to recover attorney’s fees for its fraud
claims and its unfair competition claims would be unjust and unreasonable as Oklahoma law does
not permit attorney’s fees for fraud claims and there is no statutory or contractual basis to award fees
for an unfair competition claim. Defendants further assert that plaintiff is entitled to no fees for its
civil conspiracy, tortious interference and violation of the Computer Fraud and Abuse Act
(“CFAA”) claims because the jury rejected plaintiff’s civil conspiracy claim and the Court granted
Star Fuel judgment as a matter of law on plaintiff’s tortious interference and violation of the CFAA
claims. Finally, in light of the circumstances, Defendants contend that an additional reduction of
25% would be appropriate.
Having carefully reviewed the parties’ submissions, and particularly the detailed billing
records, and having considered the Burk factors, the Court finds plaintiff’s method of apportionment

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and three-step discounting and apportionment process are appropriate and have resulted in a
reasonable amount of attorney’s fees. Specifically, the Court finds that because the vast majority
of the time spent in relation to plaintiff’s breach of contract and breach of settlement agreement
claims would have been necessarily incurred in the successful prosecution of plaintiff’s breach of
implied contract claim alone, an award of attorney’s fees for this time is reasonable and appropriate.
However, the Court finds that any award of attorney’s fees for the time plaintiff’s attorneys spent
in relation to Star Fuel’s Motion for Partial Summary Judgment, which solely involved plaintiff’s
breach of contract claim, is not reasonable or appropriate in that the time spent on this matter would
not have been necessarily incurred in the prosecution of plaintiff’s breach of implied contract claim
alone. The Court, therefore, finds that plaintiff’s attorney’s fees should be reduced by $34,819.22,
resulting in an award of $889,512.78. The Court also finds that the time spent in relation to
plaintiff’s fraud and constructive fraud claims would have been necessarily incurred in the
successful prosecution of plaintiff’s breach of implied contract claim alone, as a showing of fraud
was required for a finding that Star Fuel was equitably estopped from raising the statute of frauds
as a defense, and, thus, an award of attorney’s fees for this time is reasonable and appropriate.
Further, the Court finds the three-step discounting and apportionment process resulted in an
extremely reasonable amount of attorney’s fees. The Court also finds that the amount of attorney’s
fees bears a reasonable relationship to the amount in controversy, particularly noting the amount the
jury awarded to plaintiff on its implied contract claim equals 79.44% of the total damages awarded
to plaintiff against Defendants. Finally, the Court finds that none of the Burk factors justify any
upward or downward adjustment to the lodestar amount in this case.

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Accordingly, the Court finds that plaintiff is entitled to an award of attorney’s fees in the
amount of $889,512.78.
B.

Related nontaxable expenses

Plaintiff also seeks to recover related nontaxable expenses9 in the amount of $80,691.38
against Clifton and Selph. Federal Rule of Civil Procedure 54(d)(2) allows a party to move for an
award of related nontaxable expenses “when recoverable under governing law incident to the award
of fees.” Advisory Committee’s Note to 1993 Amendment to Fed. R. Civ. P. 54(d)(2). Under
Oklahoma law, “parties may agree by contract to pay for litigation expenses.” Whitehorse v.
Johnson, 156 P.3d 41, 48 (Okla. 2007).
Plaintiff asserts that in their personal guarantees, Clifton and Selph agreed to reimburse
plaintiff for attorney’s fees, costs, and other expenses incurred in the successful prosecution of
plaintiff’s claim for breach of implied contract. Specifically, plaintiff seeks to recover the following
related nontaxable expenses: (1) non-deposition-related expert witness fees for David Payne in the
amount of $42,850.50, (2) trial graphics/technical trial support in the amount of $18,703.43, (3)
computer legal research in the amount of $13,835.24, (4) travel expenses in the amount of
$2,348.56, (5) shipping and postage fees in the amount of $1,651.73, (6) in-town meals in the
amount of $1,018.56, and (7) courier fees in the amount of $550.00. Plaintiff asserts that attorneys
in the Oklahoma City community routinely itemize and bill these types of expenses to their clients
in addition to their normal hourly rates and that courts have found each of these categories of
expenses to be recoverable under contracts or statutes authorizing the recovery of litigation

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These “related nontaxable expenses” are litigation expenses, other than attorney’s fees, that
are not taxable as costs under Federal Rule of Civil Procedure 54(d)(1) and 28 U.S.C. § 1920.
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expenses. Further, plaintiff asserts that it is seeking to recover only those expenses that were
reasonably and necessarily incurred to prosecute its breach of implied contract claim. Additionally,
plaintiff states that the amounts listed above represent only 51.52% of the total expenses incurred
in each category.
In their response, Clifton and Selph contend that plaintiff is not entitled to recover
$21,475.10 for these nontaxable expenses because it has failed to provide proper documentation
substantiating the travel, meals, computer research, and courier fees. Additionally, Clifton and
Selph contend that plaintiff has failed to provide the requisite documentation substantiating the
requested expert fee. Clifton and Selph also contend that plaintiff achieved only mixed success on
its breach of implied contract and tort claims and it would be inappropriate to tax the entire amount
of Mr. Payne’s fees on these issues and that plaintiff’s expert witness fee request should be reduced
by 50% to reflect the actual success on said claims.
Having carefully reviewed the parties’ submissions, the Court finds that the Affidavit of
William A. Johnson and the exhibit to that affidavit listing each item of nontaxable expenses sought
is proper documentation substantiating the travel, meals, computer research, and courier fees. This
Court’s Local Civil Rules provide that an affidavit is proper support for a request for costs and
attorney’s fees. See LCvR 54.1 (“The prevailing party shall provide either receipts, documents, or
an affidavit in support of the requested itemized costs.”) (emphasis added); LCvR 54.2 (requiring
that the brief in support of the motion for attorney’s fees should be accompanied by an affidavit).
Therefore, the Court finds that plaintiff is entitled to recover the $21,475.10 for travel, meals,
computer research, and courier fees. Additionally, the Court finds that the Affidavit of William A.
Johnson also provides proper documentation substantiating the requested expert fee for Mr. Payne.

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Further, because plaintiff has already reduced Mr. Payne’s fees by nearly 50% to account for only
those expenses that were reasonably and necessarily incurred to prosecute its breach of implied
contract claim and because plaintiff was fully successful on its breach of implied contract claim, the
Court finds that Mr. Payne’s expert fees should not be reduced any further.
Accordingly, the Court finds that plaintiff is entitled to recover related nontaxable expenses
in the amount of $80,691.38 against Clifton and Selph.
C.

Deposition-related expert witness fees

Federal Rule of Civil Procedure 26(b)(4)(E) provides, in pertinent part:
Unless manifest injustice would result, the court must require that the
party seeking discovery:
(i)
pay the expert a reasonable fee for time spent in responding
to discovery under Rule 26(b)(4)(A) . . . .
Fed. R. Civ. P. 26(b)(4)(E)(i). Rule 26(b)(4)(A) relates to depositions of an expert who may testify
in a case. See Fed. R. Civ. P. 26(b)(4)(A).
Plaintiff asserts that it is entitled under Rule 26(b)(4)(E) to reimbursement from Defendants
for the fees billed by Gavin Manes and David Payne in connection with their deposition preparation
and attendance. Plaintiff states that Dr. Manes billed a total of $5,650 for deposition time,
preparation time, and travel time, and Mr. Payne billed a total of $7,491.25 for deposition time and
preparation time. Further, in his affidavit, Mr. Johnson states that Dr. Manes billed at a rate of $175
per hour for his travel time, $300 per hour for his deposition preparation time, and $500 per hour
for time spent testifying at his deposition, and Mr. Payne billed at a rate of $325 per hour for time
spent preparing for and testifying at his deposition. Plaintiff contends that the rates and total fees
charged by these experts are reasonable given the experts’ experience, the nature of their testimony,
the volume of materials they had to review, and the complexity of the case.
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Defendants contend that plaintiff is not entitled to recover for its experts’ preparation time
for their depositions. Additionally, Defendants contend Dr. Manes is not entitled to recover his full
rate for travel. Finally, Defendants contend that plaintiff has provided no evidence to support its
interpretation of a reasonable rate for Dr. Manes and Mr. Payne and plaintiff’s request should,
therefore, be denied or, alternatively, an hourly rate of $200 is appropriate for both experts.
Courts are split on whether a party can recover for the time spent by its expert in preparing
for his deposition. The majority of courts have found that preparation time is compensable. See 8A
Charles A. Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 2034
(3d ed. 2010). Some of the courts allowing for compensation for preparation time, however, provide
a caveat that time spent by the expert preparing the attorney who retained him is not compensable.
Having carefully reviewed the case law, the Court finds the more persuasive authority is the majority
of courts that allow compensation for preparation time, but the Court is also persuaded that
preparation time spent by the expert in preparation with the attorney who retained him should not
be compensated.
Accordingly, the Court finds that plaintiff is entitled to recover Dr. Manes’ and Mr. Payne’s
preparation time, with the exception of the 1.5 hours Mr. Payne spent on August 6, 2012 meeting
with Mr. Elder, Mr. Johnson, and Mr. Brockman to prepare for his deposition.
Regarding Dr. Manes’ rate for travel, Defendants are mistaken that plaintiff is seeking to
recover his full rate for travel. As set forth in Mr. Johnson’s affidavit, as well as in Exhibit D to his
affidavit, Dr. Manes charged a reduced rate ($175.00) for his travel time. Finally, having reviewed
the parties’ submissions, and particularly Mr. Johnson’s affidavit, the Court finds that the rates
charged by Dr. Manes and Mr. Payne are reasonable. The Court would particularly note that

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Defendants’ computer forensic expert charged the same rates as Dr. Manes and Defendants’ forensic
accounting expert billed at a higher rate than Mr. Payne.
Accordingly, the Court finds that plaintiff is entitled to recover deposition-related expert
witness fees in the amount of $12,653.75 against Defendants.
III.

Conclusion
For the reasons set forth above, the Court GRANTS plaintiff’s Motion for Attorney’s Fees,

Related Nontaxable Expenses and Expert Deposition Fees [docket no. 408] and AWARDS plaintiff
attorney’s fees in the amount of $889,512.78 against Defendants, related nontaxable expenses in the
amount of $80,691.38 against Clifton and Selph, and deposition-related expert witness fees in the
amount of $12,653.75 against Defendants.
IT IS SO ORDERED this 14th day of March, 2016.

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