Avitts v. Amoco Production Co.

• Decision Date: 04 January 1994
• Docket Number: G-90-390 Thru G-90-392 and G-91-52.,G-90-339,No. G-90-317 Thru G-90-326,G-90-338,G-90-317 Thru G-90-326
• Citation: 840 F. Supp. 1116
• Parties: W.H. AVITTS, et al., Plaintiffs, v. AMOCO PRODUCTION COMPANY, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

840 F. Supp. 1116

W.H. AVITTS, et al., Plaintiffs, v. AMOCO PRODUCTION COMPANY, et al., Defendants.

Nos. G-90-317 Thru G-90-326, G-90-338, G-90-339, G-90-390 Thru G-90-392 and G-91-52.

United States District Court, S.D. Texas, Galveston Division.

January 4, 1994.

Michael M. Todaro, Houston, TX, for W.H. Avitts, Ophelia Avitts.

Alton C. Todd, Todd & Hagood, Alvin, TX, for O.F. Westinghouse, Lillie Westinghouse.

A. Andrew Gallo, Amoco Production Co., Alton J. Hall, Wickliff & Hall, Houston, TX, for Amoco Production Co., Kermitt W. Walrond.

William R. Hurt, Houston, TX, for Exxon Corp.

Roxanne Armstrong, Apache Corp., Alton J. Hall, Wickliff & Hall, Houston, TX, for M.W. Petroleum Corp., Apache Corp.

Andrew S. Hanen, Hanen, Alexander & Spalding, William R. Hurt, Peggy O. Donley, Houston, TX, William Rollins Hurt, Exxon Co. USA, New Orleans, LA, Peggy O'Neill Montgomery, Exxon Co. USA, Houston, TX, Ridgely C. Bennett, Asst. Atty. Gen., Austin, TX, for Exxon Co., U.S.A.

ORDER AND FINAL JUDGMENT ON PLAINTIFFS' APPLICATION FOR INTERIM ATTORNEY'S FEES

KENT, District Judge.

This cause came to trial on November 8, 1993, on the Plaintiffs' claims for nuisance, trespass, negligence, and breach of contract. Essentially, the Plaintiffs sought relief for the surface and subsurface contamination of their property brought on by the oil exploration operations of the Defendants. After four days of testimony, including that of James Trickett, head of the environmental section for Defendant Amoco Production Company, it became apparent that final and just relief in this matter could not be accurately decided until the Defendants determined the extent of the contamination suggested by their preliminary investigations. Therefore, the Court suspended all proceedings in this cause, save Plaintiff's interim application for attorney's fees, pending the completion of a Phase II environmental study by the Defendants. See Order of November 18, 1993. Before the Court is said application. For the reasons stated below, the Court GRANTS the application to the extent it requests $328,266.00 in attorney's fees, and $315,875.99 in expenses.

I. Background

The Plaintiffs in this case are surface and/or royalty interest owners in the West Hastings Oil Field, in between Alvin and Friendswood, Texas. This field was first discovered in 1934, and at one point produced 70,000 barrels per day. Today the field has 110 producing wells, all requiring some type of artificial lift.

Production from the West Hastings Field is characterized by a rather high ratio of salt water. Historically, the field operators disposed of this salt water in open collection pits that provided for natural evaporation. The use of such pits ultimately became severely restricted by law. Salt water has also been disposed of by re-injection into abandoned wells.

Defendants are past and current operators of the West Hastings Field. Plaintiffs contend that Defendants' operations have contaminated both the area's subsurface freshwater supply and the surface of their properties, in derogation of their common-law rights and of state and federal regulations. In particular, Plaintiffs allege that Defendants have negligently allowed salt water to pollute the subsurface, that they are using lift systems which allow subsurface pollution, that they have failed to plug abandoned well to prevent seepage, and that on occasion they allow oil and waste products to spill on the surface.

II. The American Rule

It is, of course, axiomatic to both Federal and Texas jurisprudence that — with narrow exceptions — a litigant cannot recover the cost of his attorney's fees from his adversary absent specific statutory or contractual authorization. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975); Dallas Cent. Appr'l Dist. v. Seven Inv. Co., 835 S.W.2d 75 (Tex.1992). Accordingly, to establish their claim for reimbursement the Plaintiffs must demonstrate either that their application falls within one of the common-law exceptions to this "American Rule," or that a fee-shifting statute applies to their claims.

The Supreme Court has strictly limited the common-law exceptions to the American Rule in civil actions to three narrow circumstances, each purportedly arising from the federal courts' "historic power of equity." Alyeska, 421 U.S. at 257, 95 S.Ct. at 1621. Two of the common-law exceptions are clearly inapplicable to the case at bar: where a party has willfully violated a court order, see Toledo Scale Co. v. Computing Scale Co., 261 U.S. 399, 426-28, 43 S.Ct. 458, 465-66, 67 L.Ed. 719 (1923), and where a party has acted in bad faith or has engaged in oppressive litigation practices. See Alyeska, 421 U.S. at 258-59, 95 S.Ct. at 1622-23. The third exception arises where successful parties have, through their efforts at litigating their individual claims, created a common monetary fund or other substantial benefit which inures to a larger discrete class, over whom the court has jurisdiction. See Hall v. Cole, 412 U.S. 1, 5-6, 93 S.Ct. 1943, 1946-47, 36 L.Ed.2d 702 (1973) (granting attorney's fees against a union in favor of member who had vindicated free speech rights of all members); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391-92, 90 S.Ct. 616, 625, 24 L.Ed.2d 593 (1970) (granting fees against corporation in favor of plaintiff stockholders, where litigation had vindicated rights of all stockholders). By spreading the cost of litigation over the class of beneficiaries, this exception prevents the unjust enrichment of the class at the expense of the plaintiff who took the initiative to pursue the classes' claim.

The common fund/substantial benefit exception almost describes the circumstances of this case. Even if the Plaintiffs in this case fail to establish the monetary liability of the Defendants for pollution in the West Hastings field, they will have succeeded in determining the extent of any contamination or potential contamination of the acreage overlying the field. Moreover, because the dynamics of fieldwide migration require that this determination be made through fieldwide testing, this information will benefit not only the named Plaintiffs, but also the larger (and arguably discrete) class consisting of the thousands who reside over West Hastings.

The posture of this case, however, does not present the Court with one indispensable requirement for applying the substantial benefit exception: jurisdiction over the beneficiary class. See Johnson v. United States Dep't of Housing & Urban Dev., 939 F.2d 586, 590 (8th Cir.1991); Sierra Club v. Lynn, 502 F.2d 43, 64-65 (5th Cir.1974), cert. denied, 421 U.S. 994, 95 S.Ct. 2001, 44 L.Ed.2d 484 (1975). Without some means of imposing the costs on the class, as opposed to an independent third party, the equitable theory behind the exception is inapplicable. In other words, this exception does not allow fee shifting of litigation costs to a wrongdoer; it only allows fee spreading among the beneficiaries. This principle is easily applied where a common fund is created: the attorney's fees and expenses are simply paid out of the common fund prior to its distribution. When the benefit is non-monetary, however — as in this case — this principle effectively limits the application of the exception to those cases in which the beneficiaries and the defendant to be charged are associated in such a way that the expense will flow through to the class. This occurs when, for example, the characterization of the plaintiff/defendant/class relationships are unionmember/union/union-membership, see Hall, supra, or shareholder/corporation/shareholders, see Mills, supra.

Prior to the Alyeska decision, many courts held that their inherent equitable powers called for a fourth exception to the American Rule, for cases where private citizens prosecuted lawsuits in which the outcome would vindicate substantial public rights with little prospect of direct monetary benefit to the plaintiff. These cases did not qualify for the "substantial benefit" exception because the rights vindicated were those of the public at large, rather than of a discrete group, and the private defendants were not in a position to distribute their losses to the public.¹ Nonetheless, the courts reasoned that equity required reimbursement to these parties, acting as "private attorneys general" on behalf of the citizenry, with the wrongdoer bearing the expense. See Alyeska, 421 U.S. at 282-288, 95 S.Ct. at 1634-37 (Marshall, J., dissenting).

The "private attorneys general" theory would allow the shifting of attorney's fees in this case; indeed, the theory largely found its genesis in environmental litigation. The plaintiffs here, at great expense, have sought the abatement of potentially large-scale environmental damage. The Plaintiffs' efforts have benefited a large segment of the public at large, none of whom will even indirectly share in the cost of this effort. Equity would certainly fail to balk at shifting this expense to the Defendants, who have reaped substantial profits over many decades from the activities causing the damages complained of here.

The Alyeska Court, however, squarely rejected this theory, strictly limiting the common-law American Rule exceptions to those which it had recognized prior to 1975. In Alyeska, the plaintiffs — a non-profit environmental association — had succeeded in blocking the construction of the Alaska Pipeline prior to Congressional intervention. The circuit court awarded the plaintiffs a portion of their attorneys' fees against the pipeline consortium because their action had directly furthered the purposes of then-existing law under the National Environmental Policy Act (NEPA), as authorized by that act. Nonetheless, reasoning that the costs statute specifically denied plaintiffs the right to attorney's fees absent statutory authorization, and failing to distinguish how the other three...