In The
Court of=20
Appeals
For The
First =
District of=20
Texas
____________
NO. 01-04-00077-CV
____________
DEVON SFS OPERATING, INC., AND IMC =
GLOBAL, INC.,=20
Appellants
V.
FIRST SEISMIC CORPORATION, Appellee
On Appeal from the 80th =
District=20
Court
Harris County, =
Texas
Trial Court Cause No. =
2002-32651
MEMORANDUM =
OPINION
<=
/SPAN>This=20
declaratory judgment case resolved competing interpretations of an =
indemnity provision in a contract transferring ownership of =
seismic=20
data. ![3DFootnote](3D"")
Appellee and plaintiff below, First =
Seismic=20
Corporation (First Seismic), prevailed in the trial court on its =
claim for=20
indemnity against appellants, Devon SFS Operating, Inc.=20
(Devon)
and IMC Global, Inc. (IMC). Trial was to =
the=20
court, which filed findings of fact and conclusions of law. In =
four issues=20
on appeal, Devon and IMC argue that the trial court erred in =
interpreting=20
the indemnity provision and by permitting Seismic to recover =
attorney=E2=80=99s=20
fees and expenses that Devon and IMC contend are either =
nonrecoverable or=20
unreasonable. We affirm.
Facts =
and=20
Procedural Background
<=
/SPAN>In=20
early 1980, Adobe Resources Corporation (Adobe), Freeport McMoran =
Oil=20
& Gas Company (McMoran) and McKenzie Management, Inc. =
(McKenzie)=20
entered into a joint venture agreement to develop seismic data, =
screen=20
leads and prospects, acquire acreage on prospects, and drill test =
wells in=20
the East Texas basin area. Adobe, McMoran, and McKenzie owned=20
participating interests in the joint venture=E2=80=99s assets in =
proportions of=20
37.5 percent, 50 percent, and 12.5 percent, respectively. The =
venture=20
agreement expired by its own terms on December 31, 1987. Devon is =
Adobe=E2=80=99s=20
successor-in-interest and IMC is McMoran=E2=80=99s =
successor-in-interest.=20
McKenzie=E2=80=99s successors-in-interest to its 12.5 percent =
interest are East=20
Texas Seismic Data LLC (ETSD) and Capmac Eighty-Two Limited =
Partnership=20
(Capmac).
A. September=20
1990 Data Exchange: First Seismic and Adobe and McMoran=20
<=
/SPAN>Lance=20
Moreland, former vice-president of First Seismic Corporation =
(First=20
Seismic), explained at trial that his company=E2=80=99s offshore =
market=20
concentration had ceased by 1990. By summer of that year, =
operations had=20
become reduced to winding down the company=E2=80=99s existing =
business in that=20
market, under the supervision of the company president, Rogers =
Beal.=20
Simultaneously, Adobe and McMoran, which had shifted its market =
focus from=20
the East Texas basin to developing an offshore market, proposed =
the=20
following transaction: Adobe and McMoran would transfer their =
ownership of=20
the joint venture=E2=80=99s =E2=80=9C1,000 plus miles=E2=80=9D of =
seismic data assets to First=20
Seismic; in exchange, First Seismic would surrender its licenses =
to 5,000=20
miles of offshore seismic data to Adobe and McMoran. Under the =
terms of=20
the proposed transfer, First Seismic would forego any right to =
sell=20
further licenses pertaining to the data that it was transferring =
and would=20
also absorb the costs of required reprocessing of the data before=20
releasing it to Adobe and McMoran.
Kenneth J. Huffman, McMoran=E2=80=99s =
vice-president for=20
exploration, served as chief negotiator among the parties, and =
Moreland=20
drafted the agreement that memorialized the negotiations.=20
<=
/SPAN>As=20
negotiations for the transfer progressed, however, Adobe and =
McMoran=20
proved =E2=80=9Cunable to communicate=E2=80=9D with McKenzie about =
transferring its 12.5=20
percent interest in the joint venture. Hoffman ultimately =
represented that=20
McKenzie had either abandoned the joint venture or was in =
bankruptcy and=20
could not be located in order to transfer the 12.5% minority =
interest. At=20
that point, Beal asked that Adobe and McMoran provide $50,000 to=20
compensate First Seismic for that interest, which Adobe and =
McMoran could=20
not convey because McKenzie retained it. In addition, although =
indemnity=20
provisions were not initially contemplated as part of the =
transfer, First=20
Seismic=E2=80=99s general counsel required that the =
parties=E2=80=99 final agreement=20
include an indemnity provision in favor of First Seismic in the =
event of=20
claims by the 12.5 percent ownership or by others claiming through =
them.=20
In turn, Adobe and McMoran required indemnity provisions by First =
Seismic=20
for the data that it was transferring.
<=
/SPAN>In=20
September 1990, the parties executed their agreement for the =
mutual=20
exchange of data. The agreement recites that (1) Adobe and =
McMoran, the=20
=E2=80=9Cmajority owners=E2=80=9D of the seismic data, would =
transfer to First Seismic=20
=E2=80=9Call of [their] right, title, and interest=E2=80=9D in the =
data, but that (2)=20
McKenzie, =E2=80=9Cthe minority owner,=E2=80=9D would =
=E2=80=9Cretain a 12.5% interest in said=20
data,=E2=80=9D and that (3) McMoran
would =E2=80=9Ccompensate First Seismic =
$50,000 for said=20
interest=E2=80=9D on delivery of First Seismic=E2=80=99s Exxon =
data to McMoran. The=20
agreement also includes an indemnity provision, paragraph 5, which =
reflects the parties=E2=80=99 reciprocal agreements to indemnify =
each other=20
against claims related to the seismic data they had exchanged. =
Paragraph=20
5.B., on which First Seismic relies in this lawsuit, addresses =
Adobe=E2=80=99s and=20
McMoran=E2=80=99s transfer of their combined 87.5 percent =
ownership and McKenzie=E2=80=99s=20
retained 12.5 percent interest in the seismic data as follows:=20
McMoran and Adobe hereby indemnify and =
hold=20
harmless FIRST SEISMIC from and against any and all claims, cost, =
expenses=20
or causes of action that may be asserted by the referenced =
minority owners=20
or other owners should they exist.
[Upper case in original.] =
B. Oklahoma=20
Litigation against First Seismic and =
Seitel
<=
/SPAN>In=20
1997, McKenzie=E2=80=99s legal successors-in-interest, ETSD and =
Capmac, filed suit=20
in the United States District Court for the Northern District of =
Oklahoma=20
against Devon and IMC, Adobe=E2=80=99s and McMoran=E2=80=99s legal =
successors-in-interest,=20
First Seismic, and Seitel, to which First Seismic had transferred =
its=20
interest in 1994. ETSD and Capmac (collectively, the current =
minority=20
interests) asserted claims for damages, including punitive =
damages, for=20
conversion of their 12.5 percent proportionate interest and sought =
an=20
accounting for proceeds from sales by the defendants that arose =
from that=20
interest. The current minority owners initially sought more than =
$1.2=20
million in damages. In 1998, the federal district court rendered =
summary=20
judgment in favor of Devon and IMC on the conversion claim, on the =
grounds=20
that the 1990 agreement unequivocally granted Adobe and McMoran =
the right=20
to transfer their proportionate interest in the joint venture, =
without=20
consent of the former minority owner or successors to that owner, =
two=20
years after the joint venture expired on its own terms in December =
1987.=20
Because the transfer occurred in 1990, there was no conversion. =
The United=20
States Court of Appeals for the Tenth Circuit (the Tenth Circuit)=20
affirmed. E. Tex. Seismic Data LLC v. Seitel Data, Inc., =
201 F.3d=20
447 (10th Cir. 1999) (unpublished table =
disposition).
<=
/SPAN>Following=20
a February 5, 2002 remand from the Tenth Circuit on the existing =
minority=20
owners=E2=80=99 claim for accounting, First Seismic amended its =
pleadings to=20
assert a limitations bar and equitable defenses that included =
waiver,=20
estoppel, ratification l=C3=A2ches, and abandonment. In addition, =
First Seismic=20
also conducted an extensive inquiry into whether the current =
minority=20
owners actually owned the 12.5 percent McKenzie interest and =
pursued a=20
summary judgment on that issue, but did not prevail. Trial was set =
for=20
December 2002 before a different district-court judge on an =
expedited=20
discovery schedule complicated by a lack of supporting First =
Seismic=20
records, due to First Seismic=E2=80=99s having ceased business =
operations in 1994.=20
First Seismic=E2=80=99s defense in the accounting case focused on =
close scrutiny=20
of each of the 120 transactions to which the current minority =
owners=20
asserted a right to share First Seismic=E2=80=99s proceeds, with a =
view of=20
reducing that total.
<=
/SPAN>The=20
accounting case was tried to the federal district court, jury, =
which filed=20
findings of fact and conclusions of law. The court ruled that the =
present=20
minority owners had standing to sue, as McKenzie=E2=80=99s =
successors-in-interest,=20
and identified 33 transactions for which the minority owners were =
entitled=20
to a 12.5 percent share in First Seismic=E2=80=99s proceeds. The =
court further=20
ruled that, on acquiring its 87.5 percent interest in the seismic =
data=20
through the September 1990 transfer with Adobe and McMoran, First =
Seismic=20
became a cotenant with the minority owners. The court rejected, =
however,=20
Adobe=E2=80=99s and McMoran=E2=80=99s claim that, because First =
Seismic did not notify the=20
cotenant minority owners of either the September 1990 transfer or =
its own=20
transfer of the data to Seitel, the cotenancy terminated on either =
of=20
those events. Finally, and after rejecting the current minority =
owners=E2=80=99=20
claims to a share of proceeds for several licensing transactions, =
the=20
federal district court ruled that First Seismic owed its =
cotenants, the=20
current minority owners, 12.5 percent of its proceeds, for a total =
of=20
$193,973.49, derived from $831,899.00 of license proceeds. The =
total owed=20
included $9,681 allocated as costs.
C. This=20
Litigation
<=
/SPAN>First=20
Seismic demanded and was refused indemnity pursuant to paragraph =
5.B. of=20
the September 1990 agreement from Adobe=E2=80=99s and =
McMoran=E2=80=99s=20
successors-in-interest, Devon and IMC, and then filed this =
lawsuit. Devon=20
and IMC responded by filing a combined answer, special exceptions, =
and=20
plea-in-abatement, but obtained no ruling on the latter =
two.=20
Devon and IMC moved for summary =
judgment, to which=20
First Seismic filed a response and its own cross-motion for =
summary=20
judgment, and both sides filed supplemental responses to the =
corresponding=20
motions. The trial court set the case for trial without ruling on =
either=20
motion. Neither side requested a jury trial.
<=
/SPAN>In=20
response to notices of deposition by First Seismic, Devon and IMC =
filed a=20
formal, pretrial stipulation with the trial court. This =
stipulation=20
includes recitals that (1) they were the legal =
successors-in-interest of=20
Adobe and McMoran, respectively, (2) they were unable to locate=20
representatives of either company, but (3) if they were to =
designate=20
representatives to respond to the matters identified in First =
Seismic=E2=80=99s=20
notices of deposition, which included inquiries concerning =
negotiations=20
for the 1990 agreement and the parties=E2=80=99 intent in =
including certain=20
provisions in the agreement, those representatives would answer =
=E2=80=9CI don=E2=80=99t=20
know.=E2=80=9D
<=
/SPAN>First=20
Seismic=E2=80=99s three witnesses at the bench trial were =
Moreland, who testified=20
concerning the seismic data industry and licensing, in particular, =
and the=20
two counsel who represented First Seismic in Oklahoma and in this=20
litigation, who testified on the issue of attorney=E2=80=99s fees. =
Devon and IMC=20
presented only one witness, an attorney, who testified as an =
expert to=20
challenge the reasonableness of the attorney=E2=80=99s fees and =
expenses that=20
First Seismic claimed. The trial court signed a final judgment on =
October=20
16, 2003.
<=
/SPAN>The=20
trial court=E2=80=99s final judgment declares that the indemnity =
provision of the=20
1990 agreement required Devon and IMC to indemnify First Seismic =
for the=20
$203,654.66 judgment and costs awarded against First Seismic in =
the=20
Oklahoma litigation. The judgment also awarded interest on that =
judgment,=20
$237,387.68 in attorney=E2=80=99s fees and $34,081.94 in costs =
incurred in that=20
lawsuit, $109,017 in attorney=E2=80=99s fees incurred in this =
lawsuit, prejudgment=20
interest on the award of attorney=E2=80=99s fees and costs awarded =
by the Oklahoma=20
judgment, postjudgment interest on the attorney=E2=80=99s fees and =
costs awarded=20
in this lawsuit, and conditional attorney=E2=80=99s fees for this =
and any=20
subsequent appeal to the Supreme Court of Texas. The trial =
court=E2=80=99s second=20
amended findings of fact and conclusions of law resulted from the=20
respective parties=E2=80=99 proposing and challenging earlier =
versions. After the=20
trial court signed and filed second amended findings and =
conclusions,=20
Devon and IMC superseded the judgment and perfected their=20
appeal.
Devon=E2=80=99s and IMC=E2=80=99s=20
Duty to Indemnify First Seismic
<=
/SPAN>In=20
their first issue, Devon and IMC contend that the trial court =
erred in=20
construing the indemnity provisions of paragraph 5.B. of the 1990=20
agreement to include the current minority owners=E2=80=99 demand =
for an=20
accounting. We construe this issue as challenging paragraph one of =
the=20
trial court=E2=80=99s judgment and conclusions of law one through =
eleven, and any=20
supporting findings, either expressly stated or implied, of the =
trial=20
court=E2=80=99s second amended findings and =
conclusions.
Through these conclusions, the trial =
court=20
construed the indemnity provision as encompassing the claims of =
ETSD and=20
Capmac in the Oklahoma lawsuit, in part because First Seismic, =
Adobe and=20
McMoran =E2=80=9Cspecifically negotiated=E2=80=9D the provision =
and =E2=80=9Cintended that it=20
cover all claims asserted by any owner of the East Texas Data, =
including=20
but not limited to, a claim for an accounting for 12.5% of all =
amounts=20
attributable to sales and licenses of said =
data.=E2=80=9D
A. Standards=20
of Review
<=
/SPAN>Devon=E2=80=99s=20
and IMC=E2=80=99s issue requires that we apply a confluence of =
standards of=20
review. We invoke those that govern interpretation of contracts, =
those=20
that govern challenges to the sufficiency of the evidence, as well =
as=20
those that govern the trial court=E2=80=99s exercise of its=20
discretion.
<=
/SPAN>1. Interpr=
etation=20
of Indemnity Agreement
<=
/SPAN>Indemnity=20
agreements are strictly construed, pursuant to the same, =
well-settled=20
principles that control interpretation of contracts, to give =
effect to the=20
parties=E2=80=99 intent as expressed in the agreement. See =
Ideal Lease Serv.,=20
Inc. v. Amoco Prod. Co., 662 S.W.2d 951, 953 (Tex. 1984). =
These=20
principles dictate that courts construe contracts as a matter of =
law, and=20
that their rulings are subject to de novo review. See J.M. =
Davidson,=20
Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003) =
(applying rule=20
in arbitration-agreement context) (citing Coker v. Coker, =
650=20
S.W.2d 391, 394 (Tex. 1983); C.M. Asfahl Agency v. Tensor, =
Inc.,=20
135 S.W.3d 768, 780 (Tex. App.=E2=80=94Houston [1st Dist.] 2004, =
no pet.)=20
(interpreting asset-purchase agreement); Tesero =
Petroleum Corp.=20
v. Nabors Drilling USA, Inc., 106 S.W.3d 118, 125 (Tex. =
App.=E2=80=94Houston=20
[1st Dist.] 2002, pet. denied) (interpreting indemnity =
agreement).=20
<=
/SPAN>In=20
construing a written contract, the court=E2=80=99s primary concern =
is to ascertain=20
the true intent of the parties, as expressed in the instrument. =
J.M.=20
Davidson, Inc., 128 S.W.3d at 229; see C.M. Asfahl =
Agency, 135=20
S.W.3d at 780. Accordingly, the court must examine and consider =
the entire=20
writing in an effort to harmonize and give effect to all =
provisions so=20
that none is rendered meaningless. J.M. Davidson, Inc., 128 =
S.W.3d=20
at 229. The court may not consider any single provision, taken in=20
isolation, as controlling, but must consider all provisions in =
context of=20
the entire instrument. Id.
<=
/SPAN>If=20
considering all provisions enables the court to construe the =
contract as=20
giving a =E2=80=9Cdefinite or certain legal meaning,=E2=80=9D the =
contract is not=20
ambiguous; it may be construed as a matter of law and enforced as=20
written. See id.; Stewart Title Guar. Co. v. Aiello, =
941=20
S.W.2d 68, 73=E2=80=9374 (Tex. 1997). If applying the principles =
of construction=20
results in two or more reasonable interpretations, the contract is =
ambiguous as a matter of law and presents a factual dispute =
concerning the=20
intent of the parties. J.M. Davidson, Inc., 128 S.W.3d at =
229.=20
Because ambiguity in a contract is a question of law, the trial =
court may=20
conclude that an agreement is ambiguous without the =
parties=E2=80=99 having=20
asserted that argument. See id. at 229, 231 (citing =
Sage=20
Street Assoc. v. North Dale Constr. Co., 863 S.W.2d 438, =
444=E2=80=9345 (Tex.=20
1993)).
<=
/SPAN>2. Legal=20
and Factual Sufficiency Evidentiary =
Challenges
<=
/SPAN>When,=20
as here, a trial court files findings of fact and conclusions of =
law in=20
support of its judgment, we review both under well-settled =
principles.=20
Findings of fact in a case tried to the trial court have the same =
force=20
and effect as a jury=E2=80=99s verdict on =
questions and=20
are reviewable for legal and factual sufficiency. Anderson v. City of Seven=20
Points, 806=20
S.W.2d 791, 794 (Tex. 1991); Min v. =
Avila, 991 S.W.2d 495, =
500 (Tex.=20
App.=E2=80=94Houston [1st =
Dist.] 1999, no=20
pet.). The trial court=E2=80=99s =
conclusions of law=20
are reviewable de=20
novo. =
McDermott v.=20
Cronin, 31=20
S.W.3d 617, 623 (Tex. App.=E2=80=94Houston [1st =
Dist.] 2000, no=20
pet.). Because the appellate record here contains a complete=20
reporter=E2=80=99s record of the =
trial, the=20
trial court=E2=80=99s findings of fact =
are not=20
conclusive, but are subject to the same, well-settled standards =
that=20
govern legal and factual sufficiency challenges to jury findings.=20
Comm=E2=80=99n of Contracts of =
the Gen.=20
Executive Comm. of the Petroleum Workers Union v. Arriba,=20
Ltd., 882=20
S.W.2d 576, 582 (Tex. App.=E2=80=94Houston [1st =
Dist.] 1994, no=20
writ); In=20
the Interest of M.J.Z., 874 S.W.2d 724, =
728 (Tex.=20
App.=E2=80=94Houston [1st =
Dist.] 1994, no=20
writ).
<=
/SPAN>For=20
this Court to sustain a challenge by Devon and IMC to the legal=20
sufficiency of the evidence to support findings on which First =
Seismic, as=20
plaintiff, had the burden of proof at trial, Devon and IMC must =
show that=20
no evidence supports the trial court=E2=80=99s implied factual =
resolution of the=20
parties=E2=80=99 intent in including both the $50,000 =
consideration provision and=20
the indemnity provision in the September 1990 agreement. See =
Croucher=20
v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983) (stating =
burden on=20
appeal for party challenging legal sufficiency of evidence to =
sustain=20
finding on which party did not have burden of proof). =
<=
/SPAN>In=20
City of =
Keller v.=20
Wilson. 168=20
S.W.3d 802 (Tex. 2005), the supreme court concluded that =
=E2=80=9C[t]he final test =
for legal=20
sufficiency must always be whether the evidence at trial would =
enable=20
reasonable and fair-minded people to reach the verdict under =
review. . . .=20
[L]egal-sufficiency review in the proper light must credit =
favorable=20
evidence if reasonable jurors could, and disregard contrary =
evidence=20
unless reasonable jurors could not.=E2=80=9D =
Id. at 827. =
The court=20
further held that an appellate court =E2=80=9Ccannot substitute =
its judgment for=20
that of the trier-of-fact, so long as the evidence falls within =
its zone=20
of reasonable disagreement.=E2=80=9D Id. at 822. Although =
the court must=20
=E2=80=9Cconsider evidence in the light most favorable to the =
judgment, and=20
indulge every reasonable inference that would support it . . .[,] =
if the=20
evidence allows of only one inference, neither jurors nor the =
reviewing=20
court may disregard it.=E2=80=9D Id.
<=
/SPAN>Evidence=20
may be legally insufficient because =E2=80=9C=E2=80=98(a) there is =
a complete absence =
of=20
evidence of a vital fact, (b) the court is barred by rules of law =
or of=20
evidence from giving weight to the only evidence offered to prove =
a vital=20
fact, (c) the evidence offered to prove a vital fact is no more =
than a=20
mere scintilla, or (d) the evidence conclusively establishes the =
opposite=20
of the vital fact.=E2=80=99=E2=80=9D See Volkswagen of =
Am., Inc. v. Ramirez,=20
159 S.W.3d 897, 903 (Tex. 2004) (quoting Merrell Dow Pharm., =
Inc. v.=20
Havner, 953 S.W.2d 706, 711 (Tex. 1997) (in turn quoting=20
Calvert, =E2=80=9CNo Evidence=E2=80=9D and =
=E2=80=9CInsufficient Evidence=E2=80=9D Points of=20
Error, 38 Tex. L. =
Rev.=20
361, 362=E2=80=9363 (1960)).=20
=
=
For=20
this Court to sustain any challenge by Devon and IMC to the =
factual=20
sufficiency of the evidence, Devon and IMC must show that =
insufficient=20
evidence supports the trial court=E2=80=99s findings. See =
Lofton v. Texas Brine=20
Corp, 720 S.W.2d 804, 805 (Tex. 1986); see also M.D. =
Anderson Hosp.=20
& Tumor Inst. v. Felter, 837 S.W.2d 245, 247 (Tex. =
App.=E2=80=94Houston=20
[1st Dist.] 1992, no writ) (holding that single standard =
applies to=20
factual-sufficiency review, whether affirmative or negative =
finding=20
challenged and irrespective of burden of proof at trial). In =
assessing the=20
factual sufficiency of the evidence to support the trial =
court=E2=80=99s express=20
or implied findings, we must weigh all the evidence, both =
supporting and=20
conflicting with the finding, and may set the finding aside only =
if it is=20
so contrary to the overwhelming weight of the evidence as to be =
clearly=20
wrong and manifestly unjust. See Cain v.=20
Bain, 709=20
S.W.2d 175, 176 (Tex. 1986); Arriba, 882 S.W.2d at =
582;=20
Felter, 837 S.W.2d at 247. In reviewing this challenge, we =
again=20
examine the evidence to determine if some evidence supports the =
trial=20
court=E2=80=99s finding, =
see=20
Lofton, 720 S.W.2d at 805, and, if so, must =
then=20
determine, in light of the entire record, whether the finding is =
so=20
against the great weight and preponderance of the evidence that =
the=20
finding is clearly wrong and manifestly unjust. Cain, =
709 S.W.2d=20
at 176; Felter, 837 S.W.2d at 247. In conducting our =
review,=20
however, we must be mindful of the factfinder=E2=80=99s role as =
the sole=20
determiner of credibility of the witnesses and the weight to give =
their=20
testimony and may not substitute our opinion for the =
factfinder=E2=80=99s solely=20
because we might have resolved the facts differently. Herbert =
v.=20
Herbert, 754 S.W.2d 141, 144 (Tex. 1988); Felter, 837 =
S.W.2d at=20
247.
<=
/SPAN>3. Discret=
ionary=20
Rulings
<=
/SPAN>A=20
trial court abuses its discretion when it rules arbitrarily, =
unreasonably,=20
without regard to guiding legal principles or without supporting =
evidence.=20
See Bocquet v. Herring, 972 S.W.2d 19, 21 =
(Tex.1998);=20
Dunn v. Dunn, 177 S.W.3d 393, 395 (Tex. =
App.=E2=80=94Houston [1st Dist.]=20
2005, pet. denied). The abuse-of-discretion standard has different =
applications in different circumstances. See Walker v. =
Packer 827=20
S.W.2d 833, 839 (Tex. 1992). Because a trial court has no =
discretion in=20
determining what the law is, which law governs, or how to apply =
the law,=20
we review these rulings de novo. See id. at 840. In =
contrast, when=20
we review a trial court=E2=80=99s resolution of any facts that may =
underlie its=20
discretionary rulings, we must defer to the trial court=E2=80=99s =
factual=20
resolutions, as well as any credibility determinations that =
possibly=20
affected those resolutions, and may not substitute our judgment =
for its=20
judgment. See id. Although the legal and factual =
sufficiency of the=20
evidence are not independent grounds for asserting error in =
determining=20
whether the trial court abused its discretion, they are relevant =
factors=20
to that inquiry. Dunn, 177 S.W.3d at 396 (citing Lindsey =
v.=20
Lindsey, 965 S.W.2d 589, 592 (Tex. App.=E2=80=94El Paso 1998, =
no=20
pet.)).
B.=20
Unambiguous=20
Interpretation
=
Each=20
side of this controversy contends that the September 1990 =
agreement=20
unambiguously precludes the interpretation proffered by the =
opposing side.=20
<=
/SPAN>Devon=20
and IMC emphasize that paragraph 1.B. of the 1990 agreement, which =
acknowledges the $50,000 paid to =E2=80=9Ccompensate=E2=80=9D =
First Seismic for the 12.5=20
percent interest retained by McKenzie, is the only provision of =
that=20
agreement that pertains specifically to the retained McKenzie =
interest.=20
Because paragraph 1.B. refers specifically to McKenzie=E2=80=99s =
retained=20
interest, Devon and IMC contend that paragraph 1.B. not only =
contrasts=20
with, but also controls over, the language of the indemnity =
provisions of=20
paragraph 5.B. Further emphasizing that paragraph 1.B. =
=E2=80=9Ccompensate[s]=E2=80=9D=20
First Seismic for the McKenzie retained interest, Devon and IMC =
argue that=20
taking those specific terms and considering with them paragraph =
4.A.,=20
which recites that the parties exchanged =E2=80=9Cno additional =
monies or=20
additional data=E2=80=9D other than the $50,000 referred to in =
paragraph 1.B., and=20
also with paragraph 6., which disclaims =E2=80=9Call general and =
specific=20
warranties,=E2=80=9D compels the conclusion that the $50,000 =
consideration recited=20
in paragraph 1.B. controls over the indemnity provisions of =
paragraph 5.B.=20
Devon and IMC further assert that paragraph 1.B., which recites =
the=20
$50,000 paid to First Seismic for the retained minority interest, =
controls=20
to the exclusion of the indemnity provisions of paragraph 5.B., =
and that=20
construing the 1990 agreement in its entirety compels an =
interpretation=20
that the indemnity provision protected First Seismic solely =
against claims=20
arising out of the 1990 transfer that First Seismic might assert =
against=20
Adobe and McMoran.
<=
/SPAN>The=20
arguments presented by Devon and IMC, however, ignore that =
paragraph 5.B.=20
also refers, specifically, to =E2=80=9Cthe referenced majority =
owner,=E2=80=9D who is=20
undisputedly McKenzie, =E2=80=9Cor other owners, should they =
exist.=E2=80=9D We conclude=20
that Devon=E2=80=99s and IMC=E2=80=99s proposed interpretation of =
the provisions of the=20
1990 agreement would render meaningless the indemnity provisions =
of=20
paragraph 5.B., which broadly, inclusively, and without limitation =
or=20
restriction, warrants not only (1) an indemnity in First =
Seismic=E2=80=99s favor,=20
but also (2) to hold First Seismic harmless =E2=80=9Cfor and =
against any and=20
all claims, cost, expenses, or causes of action that may be =
asserted by=20
[McKenzie] or other owners, should they exist.=E2=80=9D =
(Emphasis added.)=20
J.M. Davidson, Inc., 128 S.W.3d at 229. The broad, =
inclusive,=20
unlimited, and unrestricted language of paragraph 5.B. is =
irreconcilable,=20
as a matter of law, with the limited circumstances envisioned by =
Devon and=20
IMC as triggering its applicability. Nothing in paragraph 5.B. =
itself, nor=20
the remainder of the 1990 agreement, demands that we reject the =
broad=20
grant of indemnity envisioned by paragraph 5.B. and the agreement =
as a=20
whole.
<=
/SPAN>On=20
construing the 1990 agreement de novo and as a matter of law and=20
considering the parties=E2=80=99 varying interpretations, we =
conclude that First=20
Seismic properly relied on the indemnity provisions of paragraph =
5.B. of=20
the 1990 agreement, which unambiguously applies and is triggered =
by the=20
accounting claims, as well as the costs and the attorney=E2=80=99s =
fees,=20
adjudicated in the Oklahoma litigation. Accordingly, the trial =
court=20
properly ruled, in its first conclusion of law, that the claims by =
the=20
current minority owners adjudicated in the Oklahoma litigation are =
=E2=80=9Cclaims=20
or causes of action asserted by the referenced minority owner or =
other=20
owners of the East Texas Data that are within the scope and =
coverage of=20
the Indemnity Provision.=E2=80=9D
<=
/SPAN>Given=20
its broad and inclusive language and the lack of the restrictions=20
suggested by Devon and IMC, we discern no conflict between =
paragraph 5.B.=20
and paragraph 1.B., which recites the $50,000 consideration paid =
to First=20
Seismic by McMoran for the McKenzie minority interest, nor =
paragraph 6.=E2=80=99s=20
disclaimers of additional =E2=80=9Cmonies or additional =
data=E2=80=9D conveyed as=20
consideration for the 1990 agreement. In short, the indemnity =
provision of=20
paragraph 5.B. that benefitted First Seismic, like the indemnity =
provision=20
of paragraph 5.A., which benefitted Adobe and McMoran, formed part =
of the=20
bargain to both sides of the transaction that resulted in their =
1990=20
agreement to exchange their seismic data.
C. Ambiguity=
<=
/SPAN>Even=20
if the trial court concluded that the 1990 agreement is ambiguous, =
our=20
holding would remain the same. The trial court=E2=80=99s findings =
do not expressly=20
address the question of the parties=E2=80=99 intent in including, =
in the=20
agreement, both an acknowledgment of payment of $50,000 to First =
Seismic=20
as compensation for the 12.5 percent minority interest that =
McKenzie=20
retained and, in addition, provisions for (1) indemnity for the =
risk that=20
McKenzie or other claimants might assert claims and (2) =
disclaimers of=20
warranties by any of the parties to the agreement. To the extent =
that the=20
court may have conducted the trial to reconcile possibly perceived =
inconsistencies among these provisions, based on the circumstances =
surrounding negotiations for the 1990 agreement, the record also =
supports=20
the trial court=E2=80=99s rulings when the record is viewed in =
that light.=20
<=
/SPAN>Moreland,=20
First Seismic=E2=80=99s former vice-president and the only witness =
who testified=20
at trial court concerning the parties=E2=80=99 negotiations, =
testified on this=20
issue without objection.
Moreland explained that, although the =
parties=E2=80=99=20
negotiations did not initially contemplate indemnity provisions, =
when=20
Adobe and McMoran acknowledged their inability to locate the =
owners of the=20
12.5 percent interest, First Seismic required both the =
$50,000=20
payment, recited in paragraph 1.B., and the indemnity =
provision of=20
paragraph 5.B. The $50,000 payment was included at the behest of =
First=20
Seismic=E2=80=99s president, Rogers Beal, and the indemnity =
provision recommended=20
by First Seismic=E2=80=99s general counsel, when it became =
apparent that McKenzie=20
could not be located to transfer the 12.5 percent minority =
interest. Devon=20
and IMC neither rebutted Moreland=E2=80=99s testimony on this =
issue nor offered=20
testimony themselves on this issue.
<=
/SPAN>Moreover,=20
the record reflects that Devon and IMC filed a stipulation in =
response to=20
First Seismic=E2=80=99s pretrial discovery request to depose the =
corporate=20
representatives of Adobe and McMoran to respond to inquiries that=20
encompassed the =E2=80=9Cfact[s] and circumstances concerning =
negotiation and=20
execution=E2=80=9D of the 1990 agreement and the =
=E2=80=9Cintentions of the parties . . .=20
including but not limited to the intentions with respect to the =
indemnity=20
language=E2=80=9D in paragraph 5.B. and =E2=80=9Cthe consideration =
for=E2=80=9D the agreement. In=20
the stipulation, representatives of Devon and IMC stated that, if =
they=20
were able to locate representatives of Adobe and McMoran, each=20
representative would state, based on =E2=80=9Cmatters known or =
reasonably=20
available to the corporation,=E2=80=9D that he =E2=80=9Cdid not =
know.=E2=80=9D
<=
/SPAN>The=20
only evidence before the trial court on these inquiries, =
therefore, was=20
the testimony of Moreland, First Seismic=E2=80=99s former =
vice-president, whose=20
uncontroverted testimony unequivocally established, not only that =
there=20
was no conflict between paragraph 1.B. and paragraph 5.B., but =
that First=20
Seismic expressly required both provisions. As confirmed by =
Moreland=E2=80=99s=20
uncontroverted testimony, First Seismic required both $50,000 in =
immediate=20
compensation for the acknowledged 12.5 percent retained minority =
interest=20
and an indemnity provision in the event of possible future claims =
that=20
McKenzie=E2=80=99s known minority interest =E2=80=9Cor other =
owners should they exist=E2=80=9D=20
might assert.
<=
/SPAN>We=20
conclude that the evidence before the trial court was legally =
sufficient=20
to support the findings that support the trial court=E2=80=99s =
second conclusion=20
of law, which states that the parties =E2=80=9Cspecifically =
negotiated the=20
Indemnity Provision and intended that it cover all claims asserted =
by any=20
owner of the East Texas Data, including but not limited to, a =
claim for=20
accounting for 12.4% of all amounts attributable to sales and =
licenses of=20
said data.=E2=80=9D See Croucher, 660 S.W.2d at 58; =
Arriba, 882=20
S.W.2d at 582. We further conclude that the evidence, which =
consisted of=20
Moreland=E2=80=99s uncontroverted testimony, is factually =
sufficient to support=20
the implicit and express findings supporting the trial =
court=E2=80=99s second=20
conclusion of law. See Lofton, 720 S.W.2d at 805; =
Felter,=20
837 S.W.2d at 247.
<=
/SPAN>To=20
any extent, therefore, that the trial court may have perceived an=20
ambiguity in the 1990 agreement and may have conducted the trial =
on the=20
merits to resolve that ambiguity, the trial court properly =
exercised its=20
role as the factfinder in resolving that issue by crediting the =
only=20
evidence presented on that issue and, based on that evidence, =
properly=20
concluded, as a matter of law, that the 1990 agreement =
contemplated and=20
covered the claim that Devon and McMoran indemnify First Seismic =
for the=20
accounting claims adjudicated in favor of the current minority =
owners in=20
the Oklahoma litigation.
D. Dresser/Ethyl Rule Does Not=20
Apply
<=
/SPAN>In=20
their final challenge to the trial court=E2=80=99s interpretation =
of the September=20
1990 agreement, Devon and IMC contend that the agreement and, in=20
particular, paragraph 5.B., its indemnity provision, of 1990 =
agreement,=20
did not adequately provide =E2=80=9Cfair notice=E2=80=9D to Adobe =
and McMoran that they=20
had agreed, pursuant to paragraph 5.B., =E2=80=9Cto become =
insurers=E2=80=9D of First=20
Seismic against =E2=80=9Cthe consequences of its own wrongful =
conduct.=E2=80=9D Devon=E2=80=99s=20
and IMC=E2=80=99s arguments evoke the =E2=80=9Cexpress =
negligence=E2=80=9D rule, which they=20
contend, applies =E2=80=9Cby analogy=E2=80=9D to the 1990 =
agreement. We construe this=20
argument as challenging the legal sufficiency of the evidence to =
support=20
the trial court=E2=80=99s interpretation of the agreement, on the =
grounds that=20
=E2=80=9Cthe rules of law or evidence,=E2=80=9D specifically, the =
express-negligence rule,=20
precluded the trial court =E2=80=9Cfrom giving weight to the only =
evidence offered=20
to prove a vital fact.=E2=80=9D See Ramirez, 159 S.W.3d at =
903=20
(citing Havner, 953 S.W.2d at =
711).
<=
/SPAN>The=20
=E2=80=9Cexpress negligence=E2=80=9D rule, first enunciated in =
Ethyl Corp. v. Daniels=20
Constr. Co., 725 S.W.2d 705, 707 (Tex. 1987), applies to =
=E2=80=9Creleases and=20
indemnity clauses in which one party exculpates itself from its =
own future=20
negligence.=E2=80=9D Green Int=E2=80=99l, Inc. v. =
Solis, 951 S.W.2d 384, 387=20
(Tex. 1997) (emphasis added); see also Dresser Indus., Inc. v. =
Page=20
Petroleum, Inc., 853 S.W.2d 505, 509=E2=80=9310 (Tex. 1993) =
(holding that lack=20
of fair notice renders construction contract unenforceable as =
matter of=20
law). As reaffirmed most recently in Solis, the supreme =
court has=20
consistently limited application of the express negligence rule to =
negligence cases.
<=
/SPAN>The=20
indemnity provisions of the 1990 agreement at issue here do not =
attempt to=20
exculpate First Seismic from its own future negligence, but rather =
from=20
claims or causes asserted by the acknowledged, existing 12.5 =
percent=20
=E2=80=9Cminority owner or other owners, should they =
exist.=E2=80=9D Despite the broad=20
language of the provision, the agreement is limited to claims =
relating to,=20
or the ownership of, the retained minority interest, like those =
here, for=20
which First Seismic sought indemnity from Devon and IMC, rather =
than=20
claims for negligence. Because the Ethyl rule does not =
apply on its=20
face, the trial court did not err by not extending the rule to =
this case=20
by analogy to preclude the trial court=E2=80=99s affording =
probative effect to the=20
evidence First Seismic offered in support of its interpretation of =
the=20
September 1990 agreement.
<=
/SPAN>We=20
overrule Devon=E2=80=99s and IMC=E2=80=99s first =
issue.
Challenges to=20
Award of Attorney=E2=80=99s Fees and =
Costs
<=
/SPAN>In=20
their second, third, and fourth issues, Devon and IMC challenge =
the award=20
of attorney=E2=80=99s fees and expenses to First Seismic for =
defending the=20
Oklahoma litigation and the award of attorney=E2=80=99s fees for =
pursuing its=20
indemnification claim in this litigation.
Issues two and three pertain to the =
award of=20
$237,387.68 in attorney=E2=80=99s fees and $34,081.94 in expenses =
incurred in the=20
Oklahoma litigation. In issue two, Devon and IMC contend that the =
trial=20
court=E2=80=99s award included fees and expenses that are not =
recoverable as a=20
matter of law because they pertain to First Seismic=E2=80=99s =
defense of Seitel in=20
the Oklahoma litigation. In issue three, Devon and IMC contend =
that a=20
portion of the fees awarded were unreasonable as a matter of law. =
In issue=20
four, which pertains to the award of $109,017 in =
attorney=E2=80=99s fees for=20
pursuing the indemnity claim in this litigation, Devon and IMC =
challenge=20
the award on the grounds that it includes fees that are not =
recoverable as=20
a matter of law, either because they were unnecessary or relate to =
defense=20
of Seitel.
A. Standard=20
of Review
<=
/SPAN>We=20
review legal and factual sufficiency challenges stated in =
Devon=E2=80=99s and=20
IMC=E2=80=99s second, third, and fourth issues in accordance with =
the=20
sufficiency-of-the-evidence standards recited more fully in our =
analysis=20
of Devon=E2=80=99s and IMC=E2=80=99s first issue. See =
Croucher, 660 S.W.2d at 58;=20
Arriba, 882 S.W.2d at 582 (legal sufficiency); =
Lofton, 720=20
S.W.2d at 805; Felter, 837 S.W.2d at 247 (factual=20
sufficiency).
B. Principles=20
Governing Attorney=E2=80=99s Fee Awards
<=
/SPAN>1. Party=20
Must Prevail.
<=
/SPAN>A=20
party must establish a basis for recovery of attorney=E2=80=99s =
fees. See=20
Martin v. Amerman, 133 S.W.3d 262, 263 (Tex. 2004) =
(holding=20
that party could not assert trespass-to-try-title claim as claim =
for=20
declaratory relief in order to recover attorney=E2=80=99s fees). =
Although the=20
judgment here does not specify on what basis the trial court =
awarded=20
attorney=E2=80=99s fees, it is undisputed, and the record =
reflects, that First=20
Seismic sought recovery of fees pursuant to section 38.001(8) of =
the Civil=20
Practice and Remedies Code, which authorizes recovery of =
reasonable=20
attorney=E2=80=99s fees, in addition to the amount of damages and =
costs, when a=20
party prevails in a suit on an oral or written contract. See =
Tex. Civ. Prac. & Rem. Code =
Ann. =C2=A7 38.001(8) (Vernon 1987); Solis, 951 =
S.W.2d at 390=20
(holding that party must prevail and recover damages to be =
entitled=20
to attorney=E2=80=99s fees under section 38.001(8)); Johns v. =
Ram-Forwarding,=20
Inc., 29 S.W.3d 635, 637 (Tex. App.=E2=80=94Houston [1st =
Dist.] 2000, no pet.)=20
(rejecting contention that parties=E2=80=99 boundary suit =
governed by=20
Declaratory Judgments Act and holding that =
trespass-to-try-title=20
statute controlled claims, which precluded recovery of =
attorney=E2=80=99s fees).=20
Paragraph 5.B., the indemnity provision of the September 1990 =
agreement,=20
the contract that First Seismic sought to enforce, both for =
defending the=20
Oklahoma litigation and pursuing this litigation, authorizes =
recovery of=20
all =E2=80=9Ccosts=E2=80=9D and =E2=80=9Cexpenses.=E2=80=9D Having =
prevailed on its breach of contract=20
claim, by pursuing this indemnity action and recovering damages, =
section=20
38.001(8) entitled First Seismic to the attorney=E2=80=99s fees, =
expenses, and=20
costs authorized by paragraph 5.B. of the September 1990 =
agreement.=20
<=
/SPAN>2. Fees=20
and Costs Must be Reasonable and Necessary.
<=
/SPAN>An=20
attorney=E2=80=99s-fee claimant must also establish that the =
amount of fees=20
incurred was both reasonable and necessary to the prosecution of =
the case,=20
and the factfinder, in this case the trial court, must award fees =
in a=20
specific dollar amount and not as a percentage of the judgment. =
Arthur=20
Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 819 =
(Tex.=20
1997) The reasonableness of fees and their necessity are questions =
of=20
fact. Bocquet, 972 S.W.2d at 20.
<=
/SPAN>Reasonableness=20
is the determining factor for attorney=E2=80=99s fees, which are =
governed by rule=20
1.04 of the Rules of Professional Conduct: =E2=80=9CA lawyer shall =
not enter into=20
an arrangement for, charge, or collect an illegal fee or =
unconscionable=20
fee . . .; a fee is unconscionable if a competent lawyer could not =
form a=20
reasonable belief that the fee is =
reasonable.=E2=80=9D See=20
Tex. Disciplinary R. =
Prof=E2=80=99l=20
Conduct 1.04(a), reprinted in Tex. Gov=E2=80=99t Code Ann., =
tit. 2,=20
subtit. G app. A (Vernon 1998) [emphasis added]. In determining =
whether an=20
award of attorney=E2=80=99s fees is reasonable and necessary, the =
trial court is=20
guided by the factors stated in the Rules of Professional Conduct =
that=20
govern attorney=E2=80=99s fees. Bocquet, 972 S.W.2d at 20; =
Arthur=20
Andersen & Co., 945 S.W.2d at 818-19) (quoting =
Tex. Disciplinary R. =
Prof=E2=80=99l=20
Conduct 1.04(b), reprinted in Tex. Gov=E2=80=99t Code Ann., =
tit. 2,=20
subtit. G app. A); see C.M. Asfahl Agency, 135 S.W.3d at =
802=20
(applying factors to claims of breach of contract). The=20
=E2=80=9CAndersen-Rule 104(b)=E2=80=9D factors are as =
follows:
(1) the time and labor required, the =
novelty and=20
difficulty of the questions involved, and the skill required to =
perform=20
the legal service properly;
(2) the likelihood . . . that the =
acceptance of=20
the particular employment will preclude other employment by the=20
lawyer;
(3) the fee customarily charged in the =
locality=20
for similar legal services;
(4) the amount involved and the results=20
obtained;
(5) the time limitations imposed by the =
client or=20
by the circumstances;
(6) the nature and length of the =
professional=20
relationship with the client;
(7) the experience, reputation, and =
ability of the=20
lawyer or lawyers performing the services; and
(8) whether the fee is fixed or =
contingent on=20
results obtained or uncertainty of collection before the legal =
services=20
have been rendered.
Arthur Andersen, 945 S.W.2d at =
818; Tex. Disciplinary R. =
Prof=E2=80=99l=20
Conduct 1.04(b), reprinted in Tex. Gov=E2=80=99t Code Ann., =
tit. 2,=20
subtit. G app. A; see C.M. Asfahl Agency, 135 S.W.3d at =
802.=20
<=
/SPAN>3.=20
Nonrecoverable =
Fees=20
Must be Segregated.
<=
/SPAN>A=20
party seeking attorney=E2=80=99s fees has a duty to segregate =
nonrecoverable fees=20
from recoverable fees and to segregate fees owed by different =
parties.=20
See Aiello, 941 S.W.2d at 73; Stewart Title Guar. Co. v. =
Sterling, 822 S.W.2d 1, 11 (Tex.1991). Parties may segregate=20
recoverable from nonrecoverable fees and expenses through =
estimated=20
percentages of amounts attributable to each. See Flagship =
Hotel, Ltd.=20
v. City of Galveston, 117 S.W.3d 552, 566 n.7 (Tex. =
App.=E2=80=94Texarkana=20
2003, pet. denied).
<=
/SPAN>An=20
exception to the duty to segregate arises when the party incurs =
attorney=E2=80=99s=20
fees in connection with claims that depend =E2=80=9Cupon the same =
set of facts or=20
circumstances and thus are intertwined to the point of being =
inseparable,=E2=80=9D=20
in which case, =E2=80=9Cthe party seeking attorney=E2=80=99s fees =
may recover the entire=20
amount covering all claims.=E2=80=9D Aiello, 941 S.W.2d at =
73 (internal=20
quotations omitted); see Sterling, 822 S.W.2d at 11; =
Panizo v.=20
Young Men=E2=80=99s Christian Ass=E2=80=99n, 938 S.W.2d 163, =
170 (Tex. App.=E2=80=94Houston=20
[1st Dist.] 1996, no writ).
C. Evidence=20
before the Trial Court on Attorney=E2=80=99s Fees and=20
Costs
<=
/SPAN>James=20
McGraw and Scott Funk, of the Looper Reed & McGraw law firm =
(Looper=20
Reed) represented First Seismic in both the Oklahoma litigation =
and the=20
trial court. Both demonstrated their experience as seasoned oil =
and gas=20
practitioners. It is undisputed that the Oklahoma litigation was=20
protracted through two appeals to the Tenth Circuit, but then =
accelerated=20
on remand to the federal district court, with resulting =
complications for=20
discovery that had been deferred pending the appeals to avoid =
pursuing=20
theories that could prove without merit as a result of the =
appeals.=20
<=
/SPAN>McGraw=E2=80=99s=20
and Funk=E2=80=99s firm, Looper Reed, retained Lee McLain as =
counsel to present=20
their evidence on attorney=E2=80=99s fees at trial. McGraw and =
Funk testified that=20
it was necessary, in the Oklahoma litigation, to pursue both the =
defensive=20
challenge to the standing of the current minority claimants and =
First=20
Seismic=E2=80=99s equitable counterclaims. As first chair in the =
Oklahoma=20
litigation, McGraw testified extensively to explain the strategies =
that=20
resulted in First Seismic=E2=80=99s reducing the current minority =
owners=E2=80=99 claimed=20
damages from over $1.2 million to less than $200,000. Funk =
clarified,=20
through detailed charts and tables, the actual amounts that First =
Seismic=20
sought to recover. Both McGraw and Funk testified in support of =
the=20
reasonableness and necessity of the attorney=E2=80=99s fees and =
expenses First=20
Seismic sought, and both described their efforts to minimize both =
fees and=20
expenses by utilizing paralegals and other alternatives to counsel =
whenever possible. Both demonstrated that work on this case =
precluded=20
their accepting other work. Moreover, questioning posed to both =
McGraw and=20
Funk concerning attorney=E2=80=99s fees and expenses and their =
responses to those=20
questions reflect concerted effort to demonstrate their compliance =
with=20
the Andersen factors listed in rule 1.04(b) of the =
Disciplinary=20
Rules of Professional Conduct.
<=
/SPAN>Devon=20
and IMC presented Dick Watt as an expert witness to challenge the=20
attorney=E2=80=99s fees and expenses requested by Looper Reed. =
Watt, however, was=20
not able to suggest an alternative, specific calculation of either =
attorney=E2=80=99s fees or costs for the Oklahoma litigation. Watt =
initially=20
challenged the wisdom and utility of pursuing, in the Oklahoma =
litigation,=20
whether the current minority owners actually owned the McKenzie =
minority=20
interest. Yet, he conceded, under cross-examination, that he =
lacked=20
familiarity with Looper Reed=E2=80=99s billing records for the =
Oklahoma litigation=20
and, moreover, ultimately yielded that establishing a =
party=E2=80=99s standing to=20
sue is a =E2=80=9Cbasic=E2=80=9D issue in any lawsuit. Although it =
is undisputed that the=20
current minority owners settled their claims against Seitel for =
only=20
$30,000, Watt nonetheless suggested that the fees documented in =
the charts=20
and summaries that Looper Reed offered to substantiate their fees =
and=20
expenses be split, in equal proportions of 50 percent each, =
between=20
representation of First Seismic and representation of Seitel.=20
<=
/SPAN>Watt=20
ultimately conceded nonetheless that he =E2=80=9Chad no quarrel =
with the work=E2=80=9D=20
done in the Oklahoma litigation and acknowledged that he was =
familiar with=20
the Looper Reed firm, whom he described as competent attorneys, =
who kept=20
good time records and charged a reasonable hourly rate. =
D. Duty=20
to Segregate Nonrecoverable Fees
<=
/SPAN>In=20
their second issue and a portion of their fourth issue, Devon and =
IMC=20
contend that the trial court erred by awarding attorney=E2=80=99s =
fees for both=20
the Oklahoma litigation and this litigation that are attributable =
solely=20
to defending Seitel. Devon and IMC argued in the trial court that =
First=20
Seismic was not entitled to attorney=E2=80=99s fees and costs =
attributable to=20
defending Seitel because Seitel was not a party to the September =
1990=20
agreement and because any duties that First Seismic owed to Seitel =
derived=20
from the 1994 transaction by which First Seismic transferred its =
ownership=20
of the seismic data to Seitel.
<=
/SPAN>Yet,=20
the record reflects that, as soon as the trial court deemed these=20
arguments persuasive, McGraw and Funk immediately revised, =
wherever=20
necessary, both their testimony and the calculations in the charts =
and=20
tables they offered into evidence. Thus, attorney=E2=80=99s fees =
and costs=20
directly allocable to defense of Seitel were promptly identified,=20
segregated and noted as nonrecoverable. The record further =
reflects that,=20
as both McGraw and Funk testified and were presented with =
challenges that=20
certain fees and costs described in their exhibits and testimony =
included=20
nonrecoverable items, they responded by proportionately reducing =
the=20
claimed amounts based on calculations that represented percentages =
of time=20
allocable to defense of Seitel. Both McGraw and Funk excluded from =
these=20
proportionate reductions, however, fees and costs that, in their =
opinions,=20
First Seismic would have incurred in any event because they =
related not=20
only to defense of Seitel, but also to defense of First Seismic.=20
<=
/SPAN>Devon=20
and IMC further dispute McGraw=E2=80=99s and Funk=E2=80=99s =
detailed calculations and=20
their sometimes slightly differing percentages of reduction for =
Seitel=20
fees and expenses. But, calculations need not be disregarded =
solely=20
because they are percentages or, alternatively, because =
McGraw=E2=80=99s and=20
Funk=E2=80=99s percentages may have differed slightly. See =
Flagship Hotel,=20
Ltd., 117 S.W.3d at 566 n.7. Devon and IMC also dispute the=20
extensively detailed testimony and documentary evidence presented =
through=20
McGraw and Funk, who not only testified based on their own =
experience in=20
both the Oklahoma litigation and this litigation, but also =
spontaneously=20
revised their calculations in response to objections that they =
included=20
nonrecoverable Seitel fees and expenses.
<=
/SPAN>Yet,=20
Devon=E2=80=99s and IMC=E2=80=99s sole counter to McGraw and Funk =
in the trial court was=20
through their own expert, Watt. As we have noted, Watt conceded =
McGraw=E2=80=99s=20
and Funk=E2=80=99s expertise and his own lack of familiarity with =
the records of=20
the fees incurred in the Oklahoma litigation and ultimately =
yielded that=20
he had =E2=80=9Cno quarrel=E2=80=9D with those fees. Watt =
nevertheless offered the=20
unsupported suggestion that an equal, 50 percent split was a more =
accurate=20
calculation to segregate recoverable from nonrecoverable fees, =
simply=20
because, in his opinion, that is the better practice when clients =
are=20
represented jointly. Watts did not refute, in any respect, =
McGraw=E2=80=99s and=20
Funk=E2=80=99s assertions that they retained certain fees and =
expenses because=20
they were integral to defense of First Seismic and, therefore, =
could not=20
be segregated. See Aiello, 941 S.W.2d at 73;=20
Sterling, 822 S.W.2d at 11; Panizo, 938 S.W.2d at =
170.=20
<=
/SPAN>Ample=20
evidence demonstrates that the trial court awarded only properly=20
recoverable attorney=E2=80=99s fees and costs in favor of First =
Seismic, and the=20
evidence is, therefore, legally sufficient to support the trial =
court=E2=80=99s=20
judgment. Furthermore, Devon=E2=80=99s and IMC=E2=80=99s contrary =
evidence does not so=20
greatly preponderates against the propriety of the trial =
court=E2=80=99s awards of=20
properly recoverable attorney=E2=80=99s fees and costs that the =
awards are clearly=20
wrong and manifestly unjust. The evidence is, therefore, factually =
sufficient to support the trial court=E2=80=99s =
judgment.
<=
/SPAN>Accordingly,=20
we overrule Devon=E2=80=99s and IMC=E2=80=99s second issue and the =
portion of their fourth=20
issue in which they contend that the trial court awarded fees and =
costs=20
attributable to defense of Seitel.
E. =E2=80=9CReasona=
ble=E2=80=9D=20
and =E2=80=9CNecessary=E2=80=9D Determinations =
<=
/SPAN>In=20
their third issue and in portions of their fourth issue, Devon and =
IMC=20
contend that the trial court awarded attorney=E2=80=99s fees and =
costs that were=20
either unreasonable or unnecessary.
<=
/SPAN>With=20
respect to the Oklahoma litigation, Devon and IMC argue that the=20
litigation was =E2=80=9Csimple=E2=80=9D and therefore did not =
warrant the award of=20
$237,387.68 in attorney=E2=80=99s fees and $34,081.94 in costs and =
expenses=20
incurred in that litigation. Devon and IMC further contend that =
time spent=20
by the Looper Reed firm pursuing claims on which First Seismic did =
not=20
prevail should be disregarded as =E2=80=9Cunproductive.=E2=80=9D =
They cite no authority=20
that supports the latter contention, and we know of none. We =
construe=20
these contentions broadly, as challenges to the sufficiency of the =
evidence to support the findings of reasonableness and necessity =
that=20
underlie the trial court=E2=80=99s thirteenth and fourteenth =
conclusions of law,=20
which awarded First Seismic =E2=80=9Creasonable, necessary, and =
customary=E2=80=9D=20
attorney=E2=80=99s fees and =E2=80=9Creasonable and =
necessary=E2=80=9D costs incurred in defending=20
the Oklahoma litigation.
<=
/SPAN>We=20
conclude that the evidence is legally sufficient to support both =
the=20
reasonableness and necessity of the trial court=E2=80=99s awards =
of attorney=E2=80=99s=20
fees and costs incurred in the Oklahoma litigation because, as =
outlined in=20
the summary above, McGraw and Funk repeatedly tracked the =
Andersen=20
factors and established the diligence that resulted in their =
reducing the=20
current minority owners=E2=80=99 claims from over $1.2 million in =
damages to less=20
than $200,000. We further conclude, on reviewing the factual =
sufficiency=20
of the evidence, that any controverting evidence offered by =
Devon=E2=80=99s and=20
IMC=E2=80=99s expert does not so greatly preponderate against the =
trial court=E2=80=99s=20
determinations of the reasonableness and necessity of the fees and =
costs=20
awarded that the trial court=E2=80=99s awards of fees and costs =
incurred in the=20
Oklahoma litigation are clearly wrong and manifestly unjust.=20
<=
/SPAN>We=20
overrule Devon=E2=80=99s and IMC=E2=80=99s third =
issue.
<=
/SPAN>Concerning=20
this litigation, a portion of Devon=E2=80=99s and IMC=E2=80=99s =
fourth issue contests the=20
necessity of the attorney=E2=80=99s fees attributable to Looper =
Reed=E2=80=99s retaining=20
Lee McLain, an independent counsel employed by their firm, to =
conduct the=20
direct examination of McGraw and Funk on the issue of First =
Seismic=E2=80=99s=20
entitlement to attorney=E2=80=99s fees and costs. In support of =
this contention,=20
Devon and IMC suggest, for the first time on appeal, that McGraw =
and Funk=20
might have readily conducted direct examination of each other. =
Also for=20
the first time on appeal, Devon and IMC dispute the reasonableness =
and=20
necessity of =E2=80=9Chiring three lawyers to sit through=E2=80=9D =
this litigation =E2=80=9Cwhen=20
two were more than adequate.=E2=80=9D Devon and IMC offered no =
evidence to contest=20
McLain=E2=80=99s fees in the trial court. Their trial expert, =
moreover, offered no=20
opinion that contested the reasonableness or the necessity of =
hiring=20
McClain for this litigation. We therefore hold that the trial =
court did=20
not err in awarding McLain=E2=80=99s fees.
&nbs=
p;We=20
overrule the portion of Devon=E2=80=99s and IMC=E2=80=99s fourth =
issue in which they=20
contend that the trial court awarded fees that were unreasonable =
or=20
unnecessary.
Conclusion
<=
/SPAN>We=20
affirm the judgment of the trial court.
Elsa=20
Alcala
Justice
Panel consists of Chief Justice Radack =
and=20
Justices Alcala and=20
Bland. |