Kay v. Venezuelan Sun Oil Co.

• Citation: 806 P.2d 648,1991 OK 16
• Decision Date: 26 February 1991
• Docket Number: No. 69521,69521
• Parties: William H. KAY and Virginia Kay, Appellees, v. VENEZUELAN SUN OIL COMPANY, Golden Oil Company, St. Mary Parish Land Company, Anderman Oils Limited, a Limited Partnership, KRM Petroleum Corporation, Wyco Royalty, Phillips Petroleum Company, a corporation, Bigheart Pipe Line Corporation, Sun Production Company, a division of Sun Oil Company, a corporation, Rex Petroleum Company, a/k/a Rex Petroleum Corporation, and Republic Gas & Oil Company, Appellant.
• Court: Supreme Court of Oklahoma

Page 648

806 P.2d 648

1991 OK 16

William H. KAY and Virginia Kay, Appellees, v. VENEZUELAN SUN OIL COMPANY, Golden Oil Company, St. Mary Parish Land Company, Anderman Oils Limited, a Limited Partnership, KRM Petroleum Corporation, Wyco Royalty Phillips Petroleum Company, a corporation, Bigheart Pipe Line Corporation, Sun Production Company, a division of Sun Oil Company, a corporation, Rex Petroleum Company, a/k/a Rex Petroleum Corporation, and Republic Gas & Oil Company, Appellant.

No. 69521.

Supreme Court of Oklahoma.

Feb. 26, 1991.

Certiorari to the Court of Appeals, Division No. II.

Appellees filed an action in the District Court for Osage County for an accounting of casinghead gas proceeds, money judgment for recovery of casinghead gas proceeds and quiet title to an overriding royalty interest in casinghead gas minerals pursuant to an assignment of an overriding royalty interest in oil. The overriding royalty interest was assigned as part of the agreed payment for mineral lease consulting services. District Judge J.R. Pearman granted summary judgment in favor of defendants, including Appellant Golden Oil Company. Summary judgment was affirmed by the Court of Appeals, Oklahoma City Divisions, Case No. 68,589, petition for certiorari was denied and the mandate has issued.

Appellant filed a post-summary judgment motion for attorney fees under 12 O.S.1981, § 936 in the trial court. The motion was denied on the basis that the action is not one for recovery for labor and services. Appellant filed this appeal for review of the order denying attorney fees. Court of Appeals, Division II reversed and remanded.

CERTIORARI PREVIOUSLY GRANTED; OPINION OF THE COURT OF APPEALS VACATED; JUDGMENT OF THE TRIAL COURT AFFIRMED.

Thomas M. Klenda, Newton & O'Connor, Tulsa, for appellees.

David E. Strecker, Katie J. Colopy, Conner & Winters, Tulsa, L. Wayne Woodyard, Pawhuska, for appellant.

ALMA WILSON, Justice:

The issue presented is whether the action below is one to recover for labor or services as contemplated by 12 O.S.1981, § 936. We hold that § 936 does not authorize attorney fees in the action below and that the "labor and services" provisions of § 936 authorize attorney fees to prevailing parties in actions for the recovery of money due for labor and services performed, and reaffirm our established rule of strict application of the "labor and services" provisions of § 936.

In 1973, William H. Kay (Kay), Appellee, agreed to evaluate mineral leases and act as consultant on production prospects in Osage County for Golden Oil Company (Golden), Appellant. For these services, Golden agreed to pay Kay $1,000.00 per month plus expenses and to assign to Kay a one percent overriding royalty interest in all leases acquired by Golden for which Kay had rendered consulting services. Kay performed the agreed services in 1973 and 1974. Golden paid Kay the agreed monthly amounts. Golden assigned to Kay and his wife, appellee herein, a one percent overriding royalty interest in the Osage County leases. Dated February 25, 1975, the assignment granted to the Kays an overriding royalty interest in all oil which may be produced, saved and marketed from the described leases. Kay received oil royalty proceeds pursuant to the assignment. In 1976, Kay became aware of the production of casinghead gas on these leases and endeavored to collect the one percent overriding royalty on the casinghead gas production.

When Kay was refused a one percent interest in the gas proceeds, suit was filed seeking an accounting of all proceeds from the sale of casinghead gas produced from the oil production leases, money judgment for the amount of the gas proceeds due under the overriding royalty assignment and quiet title in and to one percent of the casinghead gas on said leases. Golden moved for summary judgment, asserting that under the specific and unambiguous terms of the assignment, Golden was entitled to judgment as a matter of law. ¹ The trial court granted Golden summary judgment. ²

As prevailing party, Golden moved for an award of attorney fees and other expenses under 12 O.S.1981, § 936. The trial court denied the motion concluding "... this is not 'a civil action to recover on ----- a contract for labor or services'." The Court of Appeals reversed and remanded with instructions. We previously granted certiorari.

The American Rule is firmly established in this jurisdiction. ³ That is, each litigant bears the cost of his/her legal representation and our courts are without authority to assess and award attorney fees in the absence of a specific statute or a specific contract therefor between the parties. Exceptions to the American Rule are narrowly defined. ⁴ Similarly, the mandatory provisions of § 936 ⁵ that the prevailing party in an action to recover for labor and services shall be allowed a reasonable attorney fee are strictly applied. ⁶

In Russell v. Flanagan, the "for labor and services" provisions of § 936 were strictly limited to actions brought to recover for labor and services rendered. We specifically rejected an interpretation of § 936 which would authorize the courts to award attorney fees to the prevailing party in an action alleging injury that was merely related to a contract for labor and services. The controversy in Russell v. Flanagan arose from an alleged breach of warranty on the sewer line services rendered. Thus, the nature of the action was for breach of warranty and not for recovery of a money judgment on a debt for labor and services rendered as contemplated by § 936. ⁷

In Ferrell Construction Co., Inc. v. Russell Coal Co. we again rejected a liberal interpretation of § 936. In that case the subject matter of the action was a contract for strip mining services which had been unilaterally terminated. The relief sought was damages for loss of anticipated profits. In reinstating the trial court's denial of § 936 attorney fees, we said the action was clearly for the recovery of profits and not for labor and services performed. ⁸

In Holbert v. Echeverria, affirming the trial court denial of Echeverria's § 936 attorney fees motion, we said that § 936 is inapposite if the action is one for damages arising from the breach of an agreement relating to the performance of labor and services; that the gravamen of the action is the breach of the contract to convey improved realty; and, that § 936 is applicable if the action sought recovery for labor and services, as in the case of failure to pay. ⁹

Finally, in ABC Coating Company, Inc. v. J. Harris & Sons Limited, the trial court granted Harris' request for attorney fees and we reversed. ABC Coating Company sued for damages allegedly caused by breach of agreements for the use of a secret manufacturing process. We said that attorney fees may be awarded only if the action involves the type of contract enumerated in § 936; that none of the involved quasi-contracts arose directly from the rendition of labor and services; and, that any labor and services rendered was collateral to the quasi-contracts. ¹⁰

The revisit of our previous opinions confirms the rule of strict application of the "labor and services" provisions of § 936. And, a plain reading of § 936 in view of the amendatory history commands strict application of the statute. ¹¹ As originally enacted, § 936 authorized the award of attorney fees for collection on an open account, and was subsequently amended to include seven additional specific categories evidencing contractual indebtedness sought to be recovered. ¹² Our strict application rule preserves the obvious legislative intent to authorize awards of attorney fees to the prevailing parties in actions for money judgments for debts created by the contracts enumerated in the statute. Accord: Hicks v. LLoyd's General Insurance Agency, Inc., 763 P.2d 85, 86 (Okla.1988), wherein the prevailing party for purposes of § 936 was determined by the offer and settlement provisions of 12 O.S.1981, § 1101, expressly applicable to actions for money judgments only; and, Doyle v. Kelly, 801 P.2d 717, 720 (Okla.1990), wherein § 936 attorney fees were affirmed in an action on a contract to collect commissions and bonus commissions earned for services rendered.

In support of the claimed attorney fees, Golden contends that the assignment of the overriding royalty interest was given in payment for consulting services rendered and the action is one for collection for services rendered. Clearly, the gravamen of the action below is the interpretation and effect of the language in the executed assignment of the overriding royalty interest. Summary judgment was sought and granted on Golden's assertion that the language in the assignment entitled it to judgment as a matter of law. Indeed, neither Golden nor Kay listed the amount to be paid or due and owing for the consulting services rendered as a material fact, disputed or undisputed, in the summary judgment proceeding. An assignment of an overriding royalty interest is not one of the contracts enumerated in § 936. The action below is only collaterally related to the agreement for labor and services. The district court was without authority to assess and award attorney fees under § 936 in this action and its order denying the motion for attorney fees is therefore affirmed.

OPALA, C.J., LAVENDER, SIMMS, DOOLIN and HARGRAVE, JJ., concur.

HODGES, V.C.J., and SUMMERS, J., concur by reason of stare decisis: Russell v. Flanagan, 544 P.2d 510 (Okla.1975).

KAUGER, J., dissents.

KAUGER, Justice, dissenting:

I would overrule Russell v. Flanagan, 544 P.2d 510 (Okla.1975) and its progeny.

1 Appellant designated the entire trial court record on appeal. The petition and amended petition filed in the trial court allege that the parties intended the assignment of the overriding royalty interest would include all production of minerals. This allegation does not refer to the consulting services agreement. Otherwise,...