Huggins v. Royalty Clearinghouse, Ltd.

Filing 46

ORDER GRANTING IN PART AND DENYING IN PART 44 Motion for Attorney's Fees. Signed by Judge Sam Sparks. (td)

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IN THE UNITED STATES DISTRICT COURT2615
DEC
FOR THE WESTERN DISTRICT OF TEXAS
.
AUSTIN DIVISION

.,

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P

3

WILLIAM 0. HUGGINS, III,
Plaintiff,
Case No. A-14-CA-1058-SS

-vs-

ROYALTY CLEARINGHOUSE, LTD.,
Defendant.

iJ!Ji1L
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and
specifically Defendant Royalty Clearinghouse, Ltd.' s Motion for Attorney's Fees [#44]. No response

was filed. Having reviewed the documents, the governing law, and the file as a whole, the Court
now enters the following opinion and orders.

Background
This case arose from an oil and gas transaction betweenpro se PlaintiffWilliam 0. Huggins,
III, and Defendant Royalty Clearinghouse, Ltd. (RCH), an oil and gas property management and

acquisition company. In November 2007, Huggins executed a deed conveying to RCH all of his
interest in the oil, gas, other minerals,' and associated royalties produced from "[a]ll of the lots,
tracts, or parcels of land owned by [Huggins] in the Alfred Kennon Survey, A-32, Burleson County,

Texas."

See Order of July 31,2015

[#35] at 3. Subsequently, EnerVest, the company then operating

the three units encompassing the Burleson County land, sent Huggins and RCH an incorrect transfer

order showing Huggins had transferred only half, not all, of his royalty interest in the land via the

1

Save a one-half interest in hard-core minerals. See Def.'s Mot. Summ. J. [#30-2] Ex. A-2 (Deed) at 2.

I

deed. Nevertheless, both Huggins and RCH signed the incorrect transfer order, and Huggins began

erroneously receiving half-interest royalty payments on production from the units.
In September2008, RCH asked Huggins for reimbursement of the November and December

2007 half-interest royalty payments (yet, oddly, did not ask for reimbursement of amounts paid in

any other months, or attempt to correct the erroneous transfer order). Through May 2009, Huggins
and RCH sporadically corresponded regarding the November and December 2007 royalties, but
Huggins never reimbursed RCH. After May 2009, RCH apparently stopped pursuing the matter.

Huggins continued to receive royalty payments on two of the units until they ceased producing in
2010 and 2012, respectively; he was still receiving royalty payments on the third unit, the Yegua-

Yegua unit, at the time he filed this action in November 2014. Quixotically, in August 2013 and
again in September 2014, RCH sent Huggins letters offering to purchase "his" one-half royalty

interest in the Yegua-Yegua unit. Finally, in September and October 2014, RCH and Huggins both
leased their interests in the other two units to an exploration company.
Huggins filed suit against RCH on November 21, 2014, bringing claims for (1) "voidance

of deed for insufficient property description in violation of the statute of frauds"; (2) reformation;
(3) quiet title; (4) "adverse possession pursuant to the

3

year statute of limitation"; (5) "adverse

possession due to the 5 year statute of limitation"; (6) ratification; (7) "termination of royalty interest
held by RCH by operation of law"; (8) unjust enrichment; and (9) breach of the covenant of good
faith and fair dealing.

See

First Am. Compl. [#18] ¶J 47-55. RCH answered and asserted

counterclaims against Huggins for breach of contract and, in the alternative, unjust enrichment.

Answer & Countercls. [#26] at 11.

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See

On April 24, 2015, Huggins filed a motion for partial summary judgment, arguing the deed

evidencing his transaction with RCH violated the statute of frauds and was voidable as a matter of
law. See P1. 's Mot. Summ. J. [#24] at

1.

RCH filed a cross-motion for summary judgment on both

Huggins's claims and its own counterclaims on May 15, 2015. See Def.'s Mot. Summ. J. [#30] at
1.

The Court held a hearing on the cross-motions on May 29, 2015.
Following hearing, on July 31, 2015, the Court entered an order denying Huggins ' s motion

for partial summary judgment, dismissing RCH ' s counterclaim for breach of contract, and granting

RCH' s motion for summary judgment in all other respects. See Order of July 31, 2015 [#35] at 19.
The Court found Huggins' s myriad claims lacked any basis in law, and further opined his suit against
RCH was "little more than a disingenuous attempt to capitalize on an administrative error." Id.
The Court rendered final judgment in this case on August 14, 2015. See Final J. [#43]. In

that judgment, the Court ordered Huggins to payRCH $27,657.69, the amount of royalties Huggins
erroneously received on the units from November 2007 through December 2014, plus pre- and post-

judgment interest. See id. at 2-3. The instant motion for attorney's fees followed.
Analysis
RCH now requests Huggins be charged with $121,668.70 in attorney's fees, as RCH
prevailed on its unjust enrichment claim against Huggins. As this is a diversity case, state rules
concerning attorney's fees apply. At!. Richfield Co.

(citing Alyeska Pipeline Co.

v.

v.

Manges, 702 F.2d 85, 87 (5th Cir. 1983)

Wilderness Society, 421 U.S. 250, 259 n.31 (1975)). Under Texas

law, courts will grant attorney's fees from an opposing party where a statute authorizes such recovery
or an agreement between the parties provides for it. Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 165

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(Tex.

App.El Paso 1997, no writ) (citations omitted).

Any award of fees is within the discretion

of the trial court. Id. (citations omitted).
Texas Civil Practice and Remedies Code

§

38.001 authorizes recovery of attorney's fees in

the types of suits listed, including suits where "the claim is for.
Civ. PRAc.

. .

an oral or written contract." TEx.

& REM. CODE § 38.001(8). Unjust enrichment, however, does not sound in contract:

rather, it "give[s] rise to an implied or quasi-contractual obligation to return the benefits." Amoco,
946 S.W.2d at 164, 166.

In Amoco Products Co.

award attorney's fees under

v.

Smith, a Texas appellate court upheld a trial court's refusal to

§ 3 8.001(8)

to an oil and gas production company that prevailed on an

unjust enrichment claim seeking recovery of royalty overpayments, reasoning that "an implied
contract is a legal fiction and not a true contractual obligation at all." Id. at 166. The Amoco court
also recognized, however, that a fee award under

§

38.001(8) in an unjust enrichment action "may

under some circumstances be appropriate," but stated any such award would be "within the
discretion of the trial court." Id. at 166.
RCH directs the Court to the Texas Supreme Court's decision in Gavenda v. Strata Energy,

Inc., 705 S.W.2d 690 (Tex. 1986), for the proposition it may recover its fees under

§

38.001.

Gavenda differs somewhat from this case on its facts: in Gavenda, an oil and gas operator prepared

incorrect division and transfer orders which erroneously underpaid the royalty owners, and the
operator kept part of the underpayment. Id. at 692-93. The Texas Supreme Court held the operator
was liable to the royalty owners for the amount of the underpayment it retained for itself, and the

royalty owners moved for attorney's fees under the predecessor statute to

§

38.001. See id. at 693.

The Court noted that fees "are recoverable in suits for royalty payments owed under oil and gas

leases," and without elaboration, held the royalty owners could recover their fees "[b]ecause we see
no distinction between allowing attorney's fees on underpaid royalty suits based on leases and those

based on deed reservations." Id.
Based on all of the above, the Court concludes it may exercise its discretion to award RCH
fees under § 38.001(8). However, considering the time and labor required by this action, the amount

of money involved, the level of difficulty of the case, and this Court's own knowledge and
experience,

see Tuthill v. Sw. Pub. Serv.

Co., 614 S.W.2d 205, 212-13

(Tex.App.Amarillo 1981,

writ ref d n.r.e.) (articulating the factors a court should consider in making an award of attorney's
fees), the Court finds RCH's requested $121,668.70 fee award is excessive. This was not a complex

or difficult case, it implicated a relatively small amount of money, and it required a minimal

expenditure of time and effort by counsel for RCHthe only motions filed were the cross-motions
for summary judgment which resolved the case, the parties appeared before the Court only once, and
only two depositions were taken.

Additionally, RCH's requested attorney's fees appear to be based on hourly rates ranging
from $400 to $695 per hour although the median hourly rate for an oil and gas specialist in the

Austin area is approximately $247 per hour,2 and all of the time records submitted by RCH in
support of its request are redacted, so it is not possible for the Court to ascertain how much time was
spent on any particular task, or even what tasks were actually performed. Finally, the Court notes

while RCH properly won the day, RCH's profoundly sloppy record-keeping was the soil that brought

2

STATEBAROF TEXAS, 2013 HOURLYRATEFACT SHEET 10, https://www.texasbar.comlAlM/Template.cfm?
Section=Demographic and Economic Trends&Template=/CM/ContentDisplay.cfm&ContentlD=27264.

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this dispute to blossom. The Court therefore awards RCH a total of $35,000 in attorney's fees,

inclusive of expenses.

Conclusion
Accordingly:
IT IS ORDERED that Defendant Royalty Clearinghouse, Ltd.'s Motion for

Attorney's Fees [#44] is GRANTED IN PART and DENIED IN PART as described in this
opinion.
SIGNED this the

day of December 2015.

U
SAM SPARKS
UNITED STATES DISTRICT JUDGE

1058 atty fees ord ba.frm

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