Gamble, Simmons & Co. v. Kerr-McGee Corp.

• Decision Date: 09 April 1999
• Docket Number: KERR-M,98-6033,Nos. 97-6413,s. 97-6413
• Citation: 175 F.3d 762
• Parties: 1999 CJ C.A.R. 2117 GAMBLE, SIMMONS & COMPANY, Plaintiff-Appellant, v.cGEE CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 762

175 F.3d 762

1999 CJ C.A.R. 2117

GAMBLE, SIMMONS & COMPANY, Plaintiff-Appellant, v. KERR-McGEE CORPORATION, Defendant-Appellee.

Nos. 97-6413, 98-6033.

United States Court of Appeals, Tenth Circuit.

April 9, 1999.

Submitted on the briefs. ^*

Donald K. Funnell of Lytle Soule & Curlee, P.C., Oklahoma City, Oklahoma, for Plaintiff-Appellant.

Burck Bailey and Dino E. Viera of Fellers, Snider, Blankenship, Bailey & Tippens, P.C., Oklahoma City, Oklahoma, for Defendant-Appellee.

Before BALDOCK, McKAY and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

This appeal involves the interpretation of a contract between Appellant, Gamble, Simmons and Company ("Gamble Simmons") and Appellee, Kerr-McGee Corporation ("Kerr-McGee"), for tax consulting services. Gamble Simmons claims Kerr-McGee undercompensated the company for an audit review it performed and now brings this consolidated appeal challenging the district court's grant of summary judgment and an award of attorneys' fees in favor Kerr-McGee. We exercise jurisdiction pursuant to 28 U.S.C. § 1291, and affirm in part, reverse in part, and remand.

I. Introduction

Gamble Simmons is a tax consulting firm specializing in the review and evaluation of audits by state taxing authorities. In September 1988, shortly after the Louisiana Department of Revenue and Taxation ("the Department") issued Kerr-McGee a "Notice of Tax Due," including tax, interest and penalties based on Sales and Use tax assessments for the years 1982-1984, Gamble Simmons approached Kerr-McGee with an offer to review the company's records and determine whether it properly owed the taxes assessed, and whether the amount of tax could be reduced. Concerned about its tax liability, Kerr-McGee accepted Gamble Simmons' offer; and, in May 1991, the parties entered a contract (hereinafter "contract" or "agreement") under which Gamble Simmons agreed to perform its tax consulting services for Kerr-McGee. The payment provisions of the agreement specifically obligate Kerr-McGee to pay Gamble Simmons "an amount equal to forty percent (40%) of the amount, if any, by which the total amounts of taxes, penalties and/or interest ... heretofore paid by Kerr-McGee ... and/or assessed by the Department ... are refunded or reduced."

Gamble Simmons performed under the agreement for the next three years, ultimately obtaining a very favorable outcome for Kerr-McGee. As a result of Gamble Simmons' efforts, the Department admitted Kerr-McGee owed no additional taxes or interest for the years 1982-1984 and that it had actually overpaid taxes in the amount of $1,447,985. The Department subsequently refunded a portion of that amount directly to Kerr-McGee and applied the balance to offset taxes and interest Kerr-McGee owed for 1985-1987.

After obtaining the favorable result, Gamble Simmons billed Kerr-McGee $1,095,439 for its services. However, Kerr-McGee disputed the charges and paid Gamble Simmons only $665,418, a figure Kerr-McGee arrived at through its own independent calculations. The difference between the parties' figures resulted from their conflicting interpretations of certain contract provisions and disagreement over what amounts to include in determining the contingency fee owed to Gamble Simmons. After settlement efforts failed, Gamble Simmons filed suit in the district court of Harris County, Texas to recover the difference in the amount claimed and the amount Kerr-McGee actually paid. Kerr-McGee subsequently removed the diversity action to federal court in the Western District of Oklahoma.

Gamble Simmons' final amended complaint stated several alternative causes of action. First, Gamble Simmons argued that by choosing to take a refund of tax and interest generated by its efforts rather than applying the credit to subsequent years' tax liability--which would have resulted in reduced penalty and interest liability for those years--Kerr-McGee deprived Gamble Simmons of its forty percent fee on the savings. Second, Gamble Simmons alleged, as an alternative to its first cause of action, that Kerr-McGee received total benefits from Gamble Simmons' efforts in the amount of $2,738,597.53 in tax, interest, and penalty reductions and refunds, and that the contract entitles Gamble Simmons to forty percent of those benefits. Specifically, Gamble Simmons claimed its compensation should include statutory interest paid to Kerr-McGee by the Department as part of the refund for overpayment. In its third cause of action, Gamble Simmons asserted, in the alternative, that because Kerr-McGee representatives admitted the contract entitles Gamble Simmons to its percentage share of interest included as part of the refund, and some of Kerr-McGee's own calculations indicate it owed Gamble Simmons $982,156.70, Kerr-McGee must pay Gamble Simmons the balance due of $316,738.60 plus pre-judgment interest. Fourth, as an alternative to its third cause of action, Gamble Simmons asserted that based on the actual refund Kerr-McGee received from the Department of $1,274,732.10, the correct amount payable to Gamble Simmons based on Kerr-McGee's own calculation methods was $1,016,917.29, leaving an unpaid balance of $351,499.19 plus pre-judgment interest. Fifth, Gamble Simmons argued that even if the court found the contract did not permit it to share in interest Kerr-McGee received as part of the refund from the Department, the agreement at least entitles Gamble Simmons to its fee on the benefits conferred minus the interest. Gamble Simmons asserted this alternative amount was $787,498.94, and requested relief in the amount of the deficiency, $122,080.84, plus pre-judgment interest. Finally, in its sixth cause of action, Gamble Simmons contended Kerr-McGee breached the contract by refusing to allow Gamble Simmons to review Kerr-McGee's books for periods beyond 1982-1984, and as a result, Gamble Simmons suffered the loss of fees it could have generated through reviewing later years' records.

In September 1995, both parties filed simultaneous cross-motions for summary judgment to resolve Gamble Simmons' claims. The district court issued an order on June 20, 1996 in which it addressed the parties' motions and granted summary judgment in favor of Gamble Simmons in the amount of $769,850 less payments already made by Kerr-McGee. In reaching this conclusion, the district court decided the contract is not ambiguous and does not entitle Gamble Simmons to a portion of the interest paid to Kerr-McGee as part of the refund for overpayment. However, this initial interlocutory order did not dispose of all the issues in the case, and the parties subsequently filed additional cross-motions for summary judgment pertaining to the remaining issues.

On June 4, 1997, the district court issued a comprehensive Memorandum Opinion and Order covering the remaining claims. The court decided the contract entitles Gamble Simmons to forty percent of the 1982-1984 refund generated through its efforts; but, the agreement does not allow Gamble Simmons to collect forty percent of the incidental interest and penalty reductions in subsequent years resulting from the application of 1982-1984 tax refund to the later periods. The district court based its decision primarily on the fact that the incidental interest or penalty savings Kerr-McGee realized on the 1985-1987 audit were not based directly on Gamble Simmons' work product or information. Additionally, the district court ruled the contract between the parties only contemplated a single audit involving the examination of Kerr-McGee's 1982-1984 records. The court refused to grant Gamble Simmons' request to review Kerr-McGee's 1985-1991 records for any other purposes. ¹

After the court's summary judgment rulings, the parties were unable to reach an accord on a proposed judgment as ordered by the court. Consequently, on October 27, 1997, the district court issued its own final judgment granting Kerr-McGee's motion for summary judgment and awarding Gamble Simmons $665,418 for its services--the exact amount Kerr-McGee had already paid.

On appeal, Gamble Simmons raises several issues. First, it contends the district court erred in finding Gamble Simmons was not entitled to a percentage of the interest the Department paid to Kerr-McGee as part of a refund for overpayment of taxes. Second, Gamble Simmons claims the district court should have considered extrinsic evidence it submitted regarding the formation of the agreement, the parties' subjective interpretations of the agreement, and certain alleged admissions made by Kerr-McGee representatives regarding amounts owed to Gamble Simmons. Third, Gamble Simmons argues the district court erred when it decided the agreement only covered the audit of tax years 1982-1984. Fourth, Gamble Simmons claims the district court should have granted its Motion to Settle Contents, entered final judgment in its favor, and granted its motion for an evidentiary hearing on the contract interpretation issues. Finally, in a consolidated appeal, Gamble Simmons disputes the district court's award of attorneys' fees to Kerr-McGee.

II. Standard of Review

Because this appeal is based solely on the district court's summary judgment rulings, we review the case de novo, employing the same legal principles as the district court and construing the factual record and the reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. See Byers v. Albuquerque 150 F.3d 1271, 1274 (10th Cir.1998); Kane v. Capital Guardian Trust Co., 145 F.3d 1218, 1221 (10th Cir.1998). Summary judgment is appropriate if the record shows "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue of material fact is genuine only if the nonmovant presents facts sufficient to show that a reasonable jury could find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106...