Opinion ID: 2586675
Heading Depth: 3
Heading Rank: 3

Heading: Did the district court abuse its discretion by awarding plaintiffs over $3.9 million in attorney fees?

Text: [¶ 156] The operator defendants, Shell and Ultra, claim the district court erred when it granted the plaintiffs' request for over $3.9 million dollars in attorney fees. [25] They claim the plaintiffs failed to properly segregate their recoverable fees from the non-recoverable fees, including those pertaining to: the non-operator defendants; the plaintiffs' fall-back claims including breach of the duty of good faith and fair dealing, conversion, slander of title, punitive damages, equitable relief and rescission; the settling defendants Questar and Wexpro; and claims and motions that were resolved in favor of the defendants. The operator defendants also assert that the district court abused its discretion by allowing fees based, in part, on an unreasonable hourly rate of $400. [¶ 157] We start with the operator defendants' argument regarding segregation of fees among claims and parties. [S]egregation of fees between multiple clients and/or multiple claims is required when it is possible. Cline v. Rocky Mountain, Inc., 998 P.2d 946, 952 (Wyo.2000). However, as we stated above, the attorney fees provision of the WRPA is broad and allows for fees to the party who improves his position as a result of the litigation in any proceedings under the act. To the extent that the operator defendants claim that the plaintiffs were only entitled to fees for the discrete WRPA claims, we reject that argument. Many of the claims that the defendants argue should have been segregated were intertwined with the WRPA claims and the breach of contract claim that had to be litigated in order to recover under the WRPA. For example, the plaintiffs' conversion, rescission, slander of title, etc., causes of action were all based upon the underlying issue of whether the NPI continued to burden the leases. Similarly, the breach of the covenant of good faith and fair dealing claim was inextricably intertwined with the breach of contract claim, which was the primary claim upon which the entire litigation was based. See, Hladky, ¶ 110, 196 P.3d at 212. [¶ 158] The fact that plaintiffs may not have been successful on individual motions, etc., does not change the fact that they were the prevailing parties in the litigation as a whole. The defendants' argument that the attorney fees for those matters should have been segregated reveals a misunderstanding of the scope of the WRPA attorney fees provision and the definition of prevailing party. It is also noteworthy that, while the defendants assert that the fees attributable to various claims should be segregated and not allowed in the fee award, they do not provide a comprehensive analysis of why those fees are not allowable. Although the party seeking attorney fees has the burden of proving its entitlement before the district court, the party challenging the order on appeal on the basis that the fees should have been segregated, has the burden of showing that the district court abused its discretion. Hladky, ¶ 110, 196 P.2d at 212-13. The defendants have failed to establish that the district court abused its discretion by refusing to require the plaintiffs to allocate fees to specific claims. [¶ 159] With regard to the settling defendants Questar and Wexpro, the defendants are correct that the plaintiffs and settling defendants each agreed to bear their own attorney fees. Thus, the remaining defendants should not be responsible for the attorney fees plaintiffs incurred in prosecuting their claims against those specific defendants. Questar and Wexpro did not, however, settle with plaintiffs until just a couple of months before the bench trial. Prior to that, many of Questar and Wexpro's claims and defenses mirrored those of the other defendants. [¶ 160] The plaintiffs' submission evidenced that it took steps to remove many items pertaining to Questar and Wexpro, especially when those matters did not pertain to the other defendants. For example, they eliminated, entirely, fees incurred in the settlement with Questar/Wexpro and in an associated lawsuit between Questar/Wexpro and plaintiffs. The plaintiffs also reduced the fees requested in association with the court-ordered mediation by 30% to reflect the time pertaining to Questar and Wexpro. [¶ 161] As a practical matter, much of the plaintiffs' work pertained to all of the defendants' claim that the NPI no longer existed, making it impossible, and ultimately unnecessary, to separate the fees applicable to their claims against Questar and Wexpro and the non-operator defendants. In addition, because the Unit NPI Contract called for consolidated accounting, revenues and expenses of all the defendants had to be figured into the net profit calculation. The district court accepted the plaintiffs' efforts to segregate the non-applicable Questar/Wexpro fees. On appeal, the defendants have not convinced us that the district court abused its discretion. [¶ 162] Finally, we consider the defendants' argument that the fee award, as a whole, was unreasonable. Wyoming has adopted the two-factor federal lodestar test to determine the reasonableness of attorney fee awards. This test requires a determination of whether: 1) the fee charged represents the product of reasonable hours times a reasonable rate; and 2) other factors of discretionary application should be considered to adjust the fee upward or downward. Hladky, ¶ 112, 196 P.3d at 213. The factors to be considered in awarding fees are set forth in Wyo. Stat. Ann. § 1-14-126(b) (LexisNexis 2009): (b) In civil actions for which an award of attorney's fees is authorized, the court in its discretion may award reasonable attorney's fees to the prevailing party without requiring expert testimony. In exercising its discretion the court may consider the following factors: (i) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (ii) The likelihood that the acceptance of the particular employment precluded other employment by the lawyer; (iii) The fee customarily charged in the locality for similar legal services; (iv) The amount involved and the results obtained; (v) The time limitations imposed by the client or by the circumstances; (vi) The nature and length of the professional relationship with the client; (vii) The experience, reputation and ability of the lawyer or lawyers performing the services; and (viii) Whether the fee is fixed or contingent. [¶ 163] The plaintiffs' fee request was very detailed and included the affidavits of counsel and hundreds of pages of supporting documentation. The submissions established that, although the plaintiffs' attorneys had actually charged their clients over $5 million in fees, they limited their request for an attorney fees award to just over $3.9 million. One of the defendants' primary claims that the fee request was unreasonable involves the $400 per hour fee charged by some of the plaintiffs' attorneys. They indicate that the fees exceed those charged by Wyoming attorneys, which should be capped at $300 per hour. [¶ 164] While on its face that hourly fee may seem high, it was not charged by all of the plaintiffs' attorneys or even throughout the litigation by the attorneys who did charge that hourly fee. The defendants' argument that the highest reasonable fee for Wyoming attorneys is $250 per hour (although they would not dispute hourly rates of $300 per hour) is not borne out by the record. Michael J. Sullivan is, unquestionably, a Wyoming attorney and charged and was paid $350 per hour throughout the litigation. He also stated in his affidavit that billing rates of $400.00 per hour for senior attorneys and $300.00 per hour for experienced oil and gas litigation attorneys are appropriate in Wyoming. The various filings and affidavits of plaintiffs' attorneys established that this case involved unique and extremely complicated matters of oil and gas litigation and accounting. In addition, the claims involved matters of obviously significant value. We can confirm that the file in this case was massive and the issues were complex. After carefully reviewing the plaintiffs' submissions and the defendants' responses, the district court concluded: The Court finds that the plaintiffs' request for attorneys' fees is fair and reasonable under the circumstances of this case given the nature, extent, status of, and defendants' opposition to, these proceedings. Having dealt with this case for a very long period of time, the district court was in the best position to analyze the attorneys' efforts and time. The defendants have not persuaded us that the district court abused its discretion in doing so.