Opinion
No. X01 CV-02-0174090-S
April 27, 2004
MEMORANUM OF DECISION
The plaintiff in the original action, Wyatt Energy, Inc. ("Wyatt") filed an action alleging the defendant, Motiva Enterprises, LLC ("Motiva"), the assignee of defendant Shell Oil Products Company, LLC ("Shell"), breached a contract titled "Terminating Agreement" (hereafter, "Agreement"). That Agreement regulated the use by Shell and subsequently Motiva of a gasoline distributing facility owned by Wyatt and located in New Haven. Both parties sought a prejudgment attachment which went to a full hearing and was the subject of a December 12, 2002, ruling (Hodgson, J.); the appeal of that ruling has subsequently been dismissed. Motiva and Shell filed a counterclaim asserting Wyatt's breach of the Agreement. At the time of trial, each of the various causes of action originally asserted by Wyatt had either been withdrawn or were found to be arbitrable under the terms of the Agreement. Motiva and Shell proceeded only upon the First Count of its counterclaim on a breach of contract theory.
On May 1, 1997, Wyatt and Shell entered into the ten-year Agreement providing for Shell's use of Wyatt's New Haven facility. Shell subsequently assigned its interest in the Agreement to Motiva. Approximately three (3) years into the contract, Motiva acquired the only other major gasoline loading terminal in New Haven ("Cargill") and began shifting a significant portion of its volume to the Cargill terminal. Wyatt claims the Agreement required Motiva to use the Wyatt terminal exclusively and that Motiva's purchase and use of the second terminal justified its termination of the Agreement on June 23, 2000, and the sale of its terminal to a third party ("Williams"). Motiva claims Wyatt breached by terminating the contract as it did without proper notice or cause and without requiring Williams, as a condition of the sale, to assume Wyatt's contractual obligations under that Agreement. Specifically, Motiva claims Wyatt had a contractual obligation to require Williams to continue to permit Motiva exclusive use of the Wyatt (subsequently, Williams') terminal for the seven (7) years remaining on the contract. The contract included several pages of "Additional Terms and Conditions" made a part of the Agreement. Exh. #501, p. 5, Para. N. Under Para. 20 of the "Additional Terms and Conditions," all claims arising under the contract are to be decided by Texas law. Texas courts require a party seeking recovery for breach of contract prove: a) the existence of a valid contract between the parties; b) the breach of a material duty under the contract; and c) that the claimant has sustained damages from the breach. Cadle Co. v. Castle, 913 S.W.2d 627, 631 (Tex.App. 1995).
As stated, this claim is not before the court.
Certain of the provisions of the Terminalling Agreement are relevant to the court's findings and the resolution of Motiva's claim. Specifically:
1) Wyatt agreed to dedicate — for the term of the Agreement — "all current or future gasoline truck loading racks within the Facility or any other facility obtained by purchase or lease by Wyatt or its affiliates located in New Haven, CT." (emphasis added) . . . to "Shell or its Customers." Exh. #501, p. 1, Para. B. That paragraph continues, "Wyatt agrees to consult with Shell before any changes are made that may reduce the facilities (sic) capability or level of service."
2) Shell was to pay Wyatt a terminalling fee for use of its facility and for services specifically required to be provided by Wyatt. A schedule established the sharing of throughput fees for throughput across the truck rack or into the Buckeye Pipeline for gasoline, jet fuel, and distillates. "Throughput" was defined as "the total revenue generated from a customer including any dock use fee, rack access fee, additive injection verifications and record keeping fees (excluding additive product costs), transshipment fee or any other fee collected for throughput of Shell's or its customers' products." Exh. #501, p. 2, Para. C.
Shell was to pay Wyatt eighty percent (80%) of the throughput fees paid Shell by its customers for throughput of up to 10,000 barrels per day and sixty percent (60%) of the terminalling fees generated for throughput of products over 10,000 barrels per day. Exh. #501, p. 2, Para. C(1) and (2).
3) Shell guaranteed Wyatt minimum payment of $37,000/mo. through December of 1997 and $65,000/mo. beginning January 1, 1998, and continuing through the end of the Agreement. Exh. #501, p. 2, Para. D.
4) In the event Wyatt had a bona fide written offer of purchase for its facility and intended to accept such offer, it was obligated to provide Shell written notice of the same together with a copy of the offer and Shell was guaranteed the exclusive right, within forty-five (45) days of receipt of the offer to enter into a binding agreement with Wyatt for Shell's purchase of the facility under the same terms and conditions provided in the written offer. If Motiva elected not to purchase the Wyatt Terminal, Wyatt was free to sell to the third party provided that party "be bound to accept assignment of this Agreement and honor all terms and obligations of this Agreement for terminal services to Shell and its customers, (sic) should they desire the same services . . ." Exh. #501, p. 3, Para. F.
5) Mutual indemnification clauses provided, "In no event shall either party be liable for consequential, incidental or punitive loss, damage, or expenses (including lost profits or savings) even if it has been advised of their possible existence." Additional Terms and Conditions, p. 5, Para. 11.
The same provision is replicated at Additional Terms and Conditions, p. 10, Para. B.
6) The Agreement could not be modified except by writing. Additional Terms and Conditions, p. 7, Para. 16.
7) An integration clause provided:
The Agreement constitutes the entire agreement of the parties regarding the matters contemplated herein or related thereto, and no representations or warranties shall be implied or provisions added hereto in the absence of a written agreement to such effect between the parties hereafter. Additional Terms and Conditions, p. 8, Para. 20.
In addition to the above-stated and express provisions, the court, based upon close examination of the contract and the evidence adduced at trial, finds:
1) Shell did not guarantee any particular level of use of Wyatt's facility but rather was required to make minimum monthly payments as of January 1, 1998, of $780,000/yr.
2) Shell was not required by the contract to use Wyatt as its exclusive source for gasoline loading in the New Haven area.
At the time of the Agreement, Shell also used terminalling facilities in Bridgeport and nothing in the Agreement either prohibited or affected that practice.
3) The Agreement neither prevented Shell from using the services of another facility nor of acquiring another facility.
4) Shell had no obligation to maximize the use of the Wyatt terminal.
5) As of September 1998, Shell and Shell Oil Products Company assigned the Terminalling Agreement to Motiva.
On or about August of 1999, Williams, a distributor of petroleum products, expressed interest in purchasing the Wyatt terminal. On divers dates between September and December of that year, Williams made preliminary offers including one, inter alia, for thirty-one million three hundred seventy-five thousand ($31.375 million) and one for thirty-five to forty million ($35-$40 million). Exhs. 4, 6, 11, and 12. While Motiva considered the purchase of the Wyatt terminal, it was unwilling to meet Williams' then offer of $31.375 million and, at or about the same time, Motiva became aware of the possibility it could purchase the Cargill terminal facility in New Haven for approximately thirteen million dollars ($13 million). That price was of particular relevance to Motiva because of Motiva's obligation, under its contract with Wyatt to continue to pay it $65,000 per month for the seven (7) years remaining under the Agreement. Though Wyatt requested Motiva amend their contract so as to eliminate Motiva's right of first refusal to purchase the terminal under the same conditions Williams had proposed in its offer to purchase, Motiva declined, opting instead to purchase the Cargill facility in May of 2000 and moving many of its gasoline loading functions there. Nothing in the Agreement precluded such purchase of the Cargill Terminal since no provision, Wyatt's argument to the contrary, required Shell/Motiva to use only the Wyatt terminal in New Haven. On June 23, 2000, Wyatt advised Motiva by letter it was terminating their Agreement effective immediately and, effective September 1, 2000, it in fact sold its terminal to Williams without requiring Williams to assume Wyatt's obligations (in particular, to dedicate exclusive use of the truck racks to Motiva under the Agreement). Exh. #574.
Exh. 22. Wyatt stated therein the termination was as a result of Motiva's breach of the Agreement in view of its purchase of the Cargill terminal in New Haven; however, no breach of contract claim earlier asserted by Wyatt remained at the time of trial.
Clearly, the counterclaim defendant breached the Agreement in selling its New Haven facility to Williams without at the same time assigning the rights and obligations under Paragraph F of the Agreement. Exh. #501, p. 3. Mr. Boling, President of Wyatt Energy, testified no assignment occurred. Just as clearly, Wyatt was more attractive to Williams as an acquisition without the Agreement in place. The price paid for Wyatt following Wyatt's termination of the. Agreement was $31.375 million; the preliminary offer to purchase (in mid-April of 2000) with the Agreement in place was, according to Jay Wiese (Williams' lead negotiator), $15.7 million. Exh. #590, p. 279. Wiese testified Williams bought "cash flow" — as opposed to buying assets. Id., at 218. Because Williams believed Motiva, following its purchase of the Cargill facility in New Haven, would move a significant portion of the business it had been doing at the Wyatt terminal to Cargill (Exh. #590, p. 279), Williams valued the purchase of Wyatt less highly because the "cash" coming to Wyatt from Motiva would then be less. On the other hand, if the Agreement were not in place, Williams, considered to be an aggressive marketer, would be free to negotiate its own — more advantageous — terminalling agreements (which, in fact, it did). Motiva was consistent in its position that it intended to honor the Agreement and to continue to pay Wyatt the $65,000 per month — $780,000 per year — as obligated by Paragraph D of the Agreement. Exh. #501, p. 2. See also Exh. #563. That was so whether Wyatt sold to Williams or Motiva purchased another New Haven terminal (Cargill). Further, Motiva had, by letter dated August 9, 2000 (prior to the Wyatt/Williams closing), reminded Wiese that, as provided by the Agreement, Motiva had the right to consent to the assignment. Exh. #572. It was deprived of that right by Wyatt's decision to terminate the Agreement and selling to Williams without assignment of the Agreement — the effect of which included the denial to Motiva of its exclusive use of the truck racks at the Wyatt terminal as well as dedicated storage space for the seven (7) years remaining under the Agreement.
The contract provided Wyatt would provide up to 500,000 barrels of storage tank capacity for gasoline and 100,000 barrels of storage tank capacity in jet fuel.
Having concluded Wyatt breached the contract and that such breach caused injury, the issue next presented is how properly to measure damages. Wyatt's argument any damages sustained were as a result not of the breach by Wyatt but as a result of Shell/Motiva's largest customer at the Wyatt terminal — Shell — not moving to the Cargill terminal in New Haven is unpersuasive. There is no authority for the general proposition the conduct of someone not a party to the contract (Citgo vis-a-vis Shell/Wyatt) may determine whether, when a material breach has been proven, the non-breaching party recovers damages. To so conclude would not only encourage breaches for failure of a remedy but also would promote secret business arrangements and encourage fraudulent transactions to avoid damage awards contrary to the public policy of every state. Such a conclusion additionally ignores the testimony of Julie Barnett, Citgo's Manager of Product Exchange and Terminalling Services, that Citgo intended only to do business in New Haven at the Wyatt terminal and, though later invited by Motiva to move its New Haven business to the Cargill facility, it declined, opting to remain at the Wyatt terminal. In fact, after Motiva exited the Wyatt terminal, Williams and Citgo entered into their own agreement which specified the Wyatt terminal as the location of the throughputting services. Paragraph II, Exh. #506.
All of Wyatt's earlier claims it was justified in terminating the Agreement were withdrawn prior to trial and the issue of anticipatory breach was never before this court.
She testified the Shell/Citgo contract required performance of the throughputting services in New Haven at the Wyatt terminal, a fact confirmed on p. 1 of Exh. #502 wherein the "facility" is specifically identified as that terminal. It was also her testimony that Shell had so provided in order to ensure Citgo be there "long term." Exh. #601, p. 172.
The Agreement between these parties provides Texas law "shall be applicable in the construction of the terms and obligations of the parties hereunder." Paragraph 20, Additional Terms and Conditions, Exh. #501. "The universal rule for measuring damages for the breach of a contract is just compensation for the loss or damage actually sustained." Lafarge Corporation v. Wolff, 977 S.W.2d 181, 187 (1998) (citation omitted). "By the operation of that rule a party generally should be awarded neither less nor more than his actual damages." Id. Under Texas law, the general rule regarding the proper measure of damages in a breach of contract or tortious interference with contract case for loss of profits is net profits or that which remains in the conduct of a business after deducting from its total receipts all of the expenses incurred in carrying on the business. Adkins Adjustment Services, Inc. dba A.A.S., Inc. v. Neal, 2001 WL 1231685 (Tex.App.-Dallas), 2001. Motiva has argued it is not seeking lost profits but seeks instead lost revenues. In other words, it asks the court to award it the amounts it would have received had the Agreement not been breached and it had been permitted to be at the Wyatt terminal until the initial term of the Agreement would have expired on May 1, 2007. That measure is often referred to as a party's "expectation interest" and, under Texas law, the measure of a party's expectation interest is the same as net profits. "A party's expectation interest is measured by his anticipated receipts and losses caused by the breach less any cost or other loss he has avoided by not having to perform." Lafarge, supra, at 187, citing to Restatement (Second) of Contracts § 347 (1981). In other words, it is not anticipated gross receipts but anticipated net profits which constitute the proper measure of damages. In a footnote, the Texas Appellate Court (Austin) noted the non-breaching party there was in substance asking it to consider the "base amount" due under the contract to be a provision for liquidated damages. It, however, declined to do so since, as is true here, that contract contained no provision for stipulated damages. Id. at 188, fn 13.
The Additional Terms and Conditions are made part of the Agreement under Paragraph N of the Terminalling Agreement (Exh. #501).
Not designated for publication under Texas Rule of Appellate Procedure 47.7, this opinion may be cited but has no precedential value.
Wyatt argues Motiva ought be denied recovery because it failed to introduce evidence of lost net profits. Wyatt has cited to a number of Texas cases wherein recovery was denied for failure to distinguish between gross and net profits. See e.g., Lafarge, supra; Adkins, supra; Atlas Copco Tools, Inc. v. Air Power Tool Hoist, Inc., 2004 WL 102387 at 4-5 (Tex.App. Fort Worth) (unpublished). In each of these cases, the court concluded there were overhead or operating expenses that should have been included in the lost profit calculations. Wyatt also cites to Holt Atherton Industries, Inc. v. Heine, 835 S.W.2d 80 (1992), which arose over repairs to bulldozers. There, the Supreme Court of Texas, while confirming the correct measure of damages was lost net profits reversed the appellate court's holding the evidence at trial supporting the award of lost profits was legally sufficient because there was no testimony there that there was enough work to keep two bulldozers working full-time over the thirteen-month period for which damages were sought and because there was no evidence supporting one complete calculation as required by Texas law. Wyatt also claimed damages for lost profits ought not be awarded because not proven to a reasonable degree of certainty required by Texas law. See e.g. Federal Land Assn. of Tyler v. Sloane, 793 S.W.2d 692, 699 (Tex.App. 1990) ("[Lost profits may be recovered where the claimant proves the `actual existence' of future contracts from which lost profits can be calculated with reasonable certainty."). In Atlas, supra, a case cited by Wyatt, the Court of Appeals of Texas, Dallas, offered this summary of Texas law regarding the quantum and kind of evidence required to meet that standard:
In Lafarge, supra, there was evidence of costs associated with the non-breacher's performance even during those months when the breaching party's requirements were zero. 977 S.W.2d 181, at 188. In Adkins, supra, there was evidence that a percentage of the adjusting claim income was paid to the adjuster and that certain clerical fees were incurred. In Atlas, supra, the tool distributor deducted only the incremental costs of selling the tools and not other expenses incurred by a distributor authorized to sell within parts of Texas and Louisiana.
While this test is a flexible one, in order to accommodate the myriad circumstances in which claims for lost profits arise, at a minimum, opinions or estimates of lost profits, must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained (emphasis added) (citations omitted). In other words, "reasonable certainty" is not demonstrated when the profits claimed to be lost are largely speculative or a mere hope for success, as from an activity dependent on uncertain or changing market conditions, on chancy business opportunities, or on promotion of untested products or entry into unknown or unproven enterprises (citations omitted) 2004 WL 102387, *2, 2004 (Tex.App. — Forth Worth)
The court, for reasons here to be discussed, rejects both the argument there was no evidence of lost net profits and that damages were not established by reasonable certainty.
Though Wyatt — surprisingly — does not specifically argue the same in its opposing memorandum of March 16, 2004, the court is compelled to briefly address the following language in Paragraphs 10 and 21B of Additional Terms and Conditions, "In no event shall either party be liable for consequential, incidental, or punitive loss, damage, or expenses (including lost profits or savings) even if it has been advised of their possible existence." Exh. #501. The first time the language appears — in Paragraph 10 —, it is with regard to the parties' obligations to defend, indemnify, and hold harmless and prohibits the recovery of consequential damages in one party's indemnification claim against the other and then only for claims or losses arising from: a) injury, disease, or death of persons; b) property damage or loss; or c) product discharges, spills, or leaks. The prohibition in Paragraph 10 is not here applicable. The language next appears in Paragraph 21B — "Additive Terms and Conditions." A fair reading of 21B suggests consequential damages (to include "lost profits") may not be recovered in one party's claim against another, which claim arises from their agreement to install an additive injection system for use by Shell or its customers. That prohibition is not relevant here. Further, there is nowhere in the Agreement a general prohibition barring recovery of consequential damages and the inclusion of such language only in those parts of the document dealing with indemnification and additive issues strongly recommends the conclusion that the parties were aware of an issue regarding consequential damages and lost profits, could have included a general prohibition regarding the same, but did not for specific reasons. Thus, even were lost profits considered to be "consequential" damages, the court is satisfied the Agreement does not bar recovery of the same under the circumstances here presented. This court, however, concludes the damages for which recovery is here sought are direct — as opposed to consequential — damages. Texas law has defined direct damages as "the necessary and usual result of the defendant's wrongful act; they flow naturally and necessarily from the wrong." Arthur Anderson Co., Inc. v. Perry Equipment Corp., 945 S.W.2d 812, 816 (Tex. 1997). Contrarily, consequential damages "result naturally, but not necessarily, from the acts complained of." Frost Nat. Bank v. Heafner, 12 S.W.3d 104, 111 fn5 (Tex.App. 1999). Wyatt earlier argued the damages here sought did not flow "necessarily" from the breach but were instead the result of independent decisions by Hess and Citgo. Evidence presented at trial demonstrates the flaw in this reasoning — at least with regard to Citgo.
The statement on p. 19 of Hodgson, J. in her Ruling on Applications for Prejudgment Attachments (Dec. 12, 2002) that "neither party may recover consequential damages" was limited to consideration of Paragraph 21B (as above discussed) and was considered by Judge Hodgson on the issue whether Motiva had "established probable cause with regard to its claim of loss of the value of equipment it had installed at the Wyatt Terminal and the need to install jet fuel filters at Cargill." No such claim is here advanced and, because there was not the occasion for Judge Hodgson to consider whether damages for lost profits are direct or consequential damages and, if the latter, whether they may be recovered under the circumstances here presented, Judge Hodgson's conclusion does not constitute the law of the case.
Citgo was Shell's (later Motiva's) primary customer at the Wyatt terminal. It was Citgo that created for Shell the largest (by far) volume and the greatest revenue both for Wyatt and Shell. Citgo had always been Shell's customer there; it was never Wyatt's customer as was testified to by Joseph Ahern, Venture Business Development Manager for Shell. Ahern's job in part was to develop third-party business for Shell and involved him in the areas of new business acquisitions and new product development. Shell (specifically, Shell Oil Company) and Citgo (specifically, Citgo Petroleum Corporation) had entered into a terminalling agreement effective August 1, 1997. Exh. # 502. Thus, Citgo commenced throughputting as Shell's customer at the Wyatt terminal virtually concurrent with the execution of the Agreement between Shell and Wyatt. The Citgo/Shell agreement identified the locus of the parties' throughputting services as the Wyatt Energy Terminal, 280 Waterfront, New Haven, CT. It called for an initial term of five (5) years beginning on the effective date (August 1, 1997) and thereafter to "continue for one (1) year terms unless terminated by either party upon one hundred eighty (180) days written notice prior to the commencement of the next term." Exh. #502, Paragraph E. Such provisions as state the agreement is automatically renewable unless proper notice is given are known in the industry as "evergreen" provisions. When Wyatt terminated the Agreement three (3) years into the contract and failed to assign the Agreement to Williams, it, inter alia, deprived Shell the exclusive use of the gasoline truck loading racks (as provided on p. 1 of #501), up to 500,000 barrels of gasoline storage tank capacity, and 100,000 barrels of storage tank capacity for jet fuel and thereby deprived Shell of the revenue and/or profits it would otherwise have had from Citgo's throughputting for the two (2) years remaining under the initial term of the Shell/Citgo agreement. By contract, that amount consisted of twenty percent (20%) of the throughput fee paid to Shell by Citgo for throughput of up to 10,000 barrels per day and forty percent (40%) for throughput above 10,000 barrels per day. Exh. #501, Paragraph C. Furthermore, for the reasons earlier herein stated, Wyatt's argument such damages were caused not by the breach but by Citgo's declining to move to the Cargill terminal in New Haven is eclipsed by Julie Barnett's testimony Citgo never intended to use any New Haven facility other than the Wyatt terminal at any time and that intent was punctuated by later execution of a terminalling agreement with Williams, which agreement specifically stated the services were to be performed at the Wyatt terminal. Exh. #506, Paragraph II.
As defined in Exh. #501, throughput is the "total revenue generated from a customer including any dock use fee, rack access fee, additive injection verification and record keeping fees (excluding additive product costs), transshipment fee or any other fee collected for throughput of Shell's or its customers' products." Paragraph C.
The Citgo/Williams agreement called for an initial term of three (3) years (9/1/02-8/31/05) and contained an evergreen provision with a ninety (90) day written notice of termination requirement.
It is so, as counsel for Wyatt established at trial, that contracts (such as Citgo's) with evergreen provisions may cancel for a variety of reasons — i.e., better rates at another terminal, better dock position at another place, the desire to accommodate or preserve other relationships, etc. In view, however, of the evergreen provision in the Shell/Citgo contract, the existence of the same provision in the Citgo/Williams contract, and the clear and unrefuted testimony of Citgo it always intended to stay at the Wyatt terminal in New Haven, an intent underscored by Citgo's refusal to move to the Cargill terminal following Shell's purchase of the same and its contracting with Williams in July of 2000 to remain at the Wyatt terminal for another three (3) years (terminating August 31, 2005) as a result of an agreement with an evergreen provision (Exh. # 506, Para. I), it is likely — and the court so finds — Citgo would have remained a customer of Shell/Motiva at the Wyatt terminal at least until April 30, 2007 — when the initial term of Shell's agreement with Wyatt would have expired had Wyatt not breached the contract.
To conclude the counterclaim plaintiff may not recover lost profits because the Agreement cites lost profits as an example of consequential damages (in the two [2] referenced provisions of the Agreement) is additionally inappropriate because the parties agreed to be bound by Texas law and, as will later herein be discussed, Texas law provides lost profits are an appropriate measure of damages for breach of contract under certain circumstances. Finally, to deprive Shell/Motiva of its lost profits with regard to Citgo would, under the circumstances of this case, encourage parties to breach their agreements with immunity because, under like circumstances, no other remedy would be afforded them under Texas law and that would be violative of the public policy to promote compliance with contractual obligations in the conduct of business so as to effect predictability and discourage uncertainty.
The rule applicable to an action for damages for lost profits is that, when it is shown that the loss is the natural and probable consequences of the act or omission complained of and their amount is shown with sufficient certainty, there may be recovery. Where, however, anticipated profits are dependent upon uncertain and changing conditions such as the chance of business or market fluctuations or where there is no evidence from which they may be intelligently estimated, they may not be awarded. Texas Instruments, Inc. v. Teletron Energy Management, Inc., 877 S.W.2d 276, 279 (1994 Supreme Court of Texas). Summarized, the loss must be shown by competent evidence with reasonable certainty. Id. "It is not necessary that profits should be susceptible of exact calculation, (sic) it is sufficient that there be data from which they may be ascertained with a reasonable degree of certainty and exactness." Id. What constitutes reasonably certain evidence of lost profits is a fact intensive determination. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Sup.Ct. 1992). "As a minimum, opinions or estimates of lost profits must be based on objective facts, figures or data . . ." Id. "Furthermore, in calculating the loss, it is proper to consider the normal increase in business which might have been expected in the light of past development and existing conditions." Texas Instruments, supra, at 279. It is net lost profits to be awarded. Adkins Adjustment Services, Inc. dba v. Neal, 2001 WL 1231685 (Tex.App.-Dallas). Net profit is that which remains in the conduct of a business after deducting from its total receipts all of the expenses incurred in carrying on the business. Id. One complete calculation of lost net profits must be demonstrated. Edmunds v. Sanders, 2 S.W.3d 697, 705 (Tex.App.-El Paso). Finally, to recover lost profits, a party must show either a history of profitability or the actual existence of future contracts from which lost profits can be calculated with reasonable certainty. Id. In the instant case, the counterclaim defendant has argued the plaintiff did not sustain its burden of proving net lost profit because it did not put on evidence of business expenses incurred in the carrying on of its business. The court is not persuaded. There was evidence that Wyatt tracked the monthly throughput data, additive costs, etc. for Shell/Motiva customers at the terminal and forwarded the data to Tulsa. There, Shell performed the accounting function of calculating the monthly revenue both to it and to Wyatt and forwarded Wyatt the appropriate amount. Ahern's testimony was that Shell's expenses in that regard were negligible because the accounting department performed the same task with regard to all of their terminalling agreements and it performed other corporate accounting tasks. Cross-examination did not uncover any expenses unique to this Agreement and whatever accounting expenses were incurred by Shell in this regard were neither significant nor capable of measurement because typical of Shell's terminalling agreements and an insignificant part of the company's corporate accounting function. "Precise calculation of anticipated profits has never been essential to recovery by any business. It is sufficient if there is data from which the loss may be ascertained with reasonable certainty." Capital Metropolitan Transportation Authority v. Central Tennessee Railway, 114 S.W.3d 573, 579 (Tex.App.-Austin, 2003) (Citation omitted). A party's expectation interest is measured by his anticipated receipts and losses caused by the breach less any cost or other loss he has avoided by not having to perform. See Restatement (Second) of Contracts § 347 (1981). There is no reason to believe Shell's loss of Citgo revenues resulted in a cost savings because it was no longer required to send Wyatt monthly revenue statements particularly where, as here, the largest single function — that of tracking the daily volumes and throughputting activities — was performed not by Shell but by Wyatt. Shell's function was to determine the revenue split based upon the daily records kept by Wyatt and to remit to Wyatt the appropriate income based upon the Agreement's revenue sharing provision. Shell incurred no accounting or other overhead costs it did not already have as a result of this contract nor was it able to save costs or reduce overhead expenses following the breach. Ahern's testimony to that effect was not refuted. In Houston Chronicle Publishing Co. v. McNair Trucklease, Inc., 519 S.W.2d 924, 932 (Tex.App.-Houston, 1975), the court cited with approval to the following language from 5 Corbin on Contracts § 1038 (1964)
The only saving that is to be deducted is the saving expense with respect to performance by the plaintiff that the defendant's breach has made unnecessary . . . If the defendant's breach causes a reduction in the extent of business done by the injured party, but does not create any reasonable opportunity for the latter to reduce his general overhead expenditures, of course the defendant is entitled to no reduction in the damages awarded against him with respect to overhead costs.
The court held there was error in the trial court's finding the plaintiff's general overhead expenses were not reduced by the loss of the defendant's business but nevertheless deducting $32,000 in overhead expenses from the recovery. This exception to the general rule that net rather than gross profits is the proper measure of damages was recognized in another Texas case in which a breach of contract or fraud reduces the volume of a plaintiff's business but creates "no reasonable opportunity . . . to reduce general overhead expenses . . ." F.S. New Products v. Strong Industries, Inc., No. 01-01-00086CV, 2004 Tex.App., LEXIS 1137, at 42. (Unpublished; may be cited but without precedential value). There, the court concluded the appropriate measure of damages was lost revenues without deduction in fixed overhead expenses. Id. Further, Texas utilizes a "no evidence" legal insufficiency standard under which a court considers only the evidence and inferences tending to support a finding and disregards all contrary evidence and inferences. Atlas Capco, supra, 2004 WL 102387, *1. "Anything more than a scintilla of evidence is legally sufficient to support the finding . . . More than a scintilla of evidence exists if the evidence furnishes some reasonable basis for differing conclusions by reasonable minds about the existence of a vital fact." Id. Ahern's testimony considered together with the evidence regarding the performance of the accounting function is sufficient to overcome the no evidence standard.
Shell's damage expert was Daniel Grinstead, the Director of Business Development for Motiva Distribution. He has an undergraduate degree in Finance and Economics from Ball State University. His corporate experience has included profit and loss responsibilities for networks of terminals and the formulations of an annual plan which involved the forecasting of revenues, expenses, capital improvements, etc. Following Wyatt's termination of the Agreement, Grinstead was given the responsibility of calculating the damages caused by the breach. The starting point of that calculation was September of 2000. To do that, he painstakingly constructed a portrait of revenues realized from Citgo business at the Wyatt terminal for the three (3) years prior to the breach (specifically, 9/97-8/98; 9/98-8/99; 9/9-8/00) based upon actual invoices from Wyatt (Exh. #512), which invoices were then summarized both as to pipeline and truck rack volumes (Exh. #596). For each of those periods, he considered only the months for which Wyatt provided invoices and days for which Citgo throughputted at the terminal. He calculated the average number of barrels throughputted daily for those periods by taking the sum of all of the monthly quantities and dividing that number by the actual number of days for which actual data existed. The same methodology was employed for both volumes over the truck racks and into the pipeline. Having been provided data from Williams for the post-breach period beginning September of 2000 and ending January of 2004 regarding Citgo's activities at the Wyatt terminal (as well as for Valero, Hess, Exxon Mobil and Morgan Stanley), he employed the same methodology to determine post-breach throughput volumes. That is, he used daily averages on an annualized basis to arrive at his damages calculation bearing in mind the Agreement called for Wyatt receiving eighty percent (80%) of the revenue for up to 10,000 barrels throughputted per day and Shell receiving twenty percent (20%) and, for daily volumes over 10,000 barrels, applying a 60%/40% split of revenue. The price per barrel employed in his calculations was as fixed by Exh. #502 — specifically, fifteen cents (15¢) per barrel through the pipeline (p. 2 of Exit. #502) and twenty-one cents ($.21¢) per barrel for throughputting across the rack (Exit. #502 — p. 1) with a charge for additive included beginning October of 2000 (That charge was not included in the Agreement's definition of "throughput" and was therefore appropriately added.). As to the next (and final) three (3) years under the ten (10) year Agreement between these parties (through April 30, 2007), Mr. Grinstead used the same figures for volumes as had existed in prior years. The data obtained from prior invoices provided by Wyatt/Williams underscored Grinstead's testimony that the quantities throughputted by Citgo on a yearly (or even a monthly) basis were consistent. As to the per barrel price for the remaining term of the Agreement, Grinstead used the pricing structure called for in the agreement between Williams and Citgo. Exh. #506 as amended 8/1/03 (Exh. # 507). Regarding damages for future periods, Grinstead included interest owed for revenue not received and used prime rates (downloaded from the federal reserve's website). Exh. #584. The court finds that readily available and generally accepted information was a reasonable approximation of such rates. With regard to the interest rate applicable to future periods (the present to April of 2007), Grinstead used the interest rate as of the time of trial because "no better data is available to estimate future interest rates than present interest rates." Trial testimony, 2/11/04, Vol. I, p. 63. Those interest rates were discounted to reflect revenues due in the future and the intent to bring the damage calculation back to present value.
Invoices were provided for most months during these periods. The months of January and February of 1998 were, for example, an exception as next discussed.
Thus, where no invoices were provided — as they were not for January and February of 1998, he subtracted from 365 the thirty-one (31) days in January and the twenty-eight (28) days in February. Grinstead trial testimony, 2/11/04, Vol. I, p. 21.
Exhibit #598.
Though Wyatt questioned that methodology and suggested Shell's revenue was more appropriately measured by viewing volume on a day to day basis, Grinstead rejected that approach as not the approach used by Wyatt in its preparation of invoices. Referencing Wyatt's invoices specifically, it is clear that Wyatt dedicated the first 10,000 barrels throughputted to Citgo and anything over 10,000 barrels was attributed to other customers. That, he stated, was consistent with his approach. See Exh. #512 and Grinstead trial testimony, 2/13/04, Vol. III, pp. 33-39.
Interest as calculated and shown on Exh. #584 is an average of monthly interest rates for years in which revenue was not received as a result of Wyatt's breach except where the agreement between Williams and Citgo called for application of a specific rate of interest.
The discount amount utilized varied depending upon how far into the future the revenues were projected.
As shown in Exhibit #595A, the damage calculation regarding Shell/Motiva's share of lost net profits from revenue generated by Citgo at the Wyatt terminal through April 30, 2007, is $3,200,801.00. For all of the reasons earlier stated, it is reasonable to conclude Citgo would have remained a customer of Williams Energy. The court finds such calculation to be reasonable, conservative, and premised upon actual volume data provided by Williams Energy and price estimations based on contractual language. That amount is awarded.
Exh. #507 is an amendment to the contract between Citgo and Williams which states therein the contract expires 10/31/08 and provides for a termination payment if the agreement is prematurely terminated.
For the period beginning January 1, 2001, ending April 30, 2007, the counterclaim plaintiff asks damages of $1,140,464.00 based on its share of 40% of the lost net profit generated from the throughput activities of Amerada Hess Corporation (hereinafter, "Hess") at the Wyatt terminal. That calculation employs the same methodology as above described and is based upon data provided by Williams and based upon a terminalling agreement between Hess and Williams Energy. Exh. #508. No throughputting activities into the Buckeye pipeline were included in Mr. Grinstead's damages calculation despite data provided by Williams evidencing Hess did in fact engage in pipeline throughputting because the Shell/Wyatt Agreement provided Shell had exclusive rights only to the truck racks and not to the pipeline. Grinstead testimony, 2/13/04, Vol. II, p. 76. Motiva's claim regarding lost net profits from Hess is that, had Wyatt not breached, it (Motiva) would be entitled to its share of all such profits because it was foreseeable Motiva would have acquired other customers at the Wyatt terminal in the period 9/00-4/07. The court is not persuaded.
Under Shell/Motiva's Agreement with Wyatt/Williams, forty percent (40%) was to have been Shell's percentage of all revenue for quantities over 10,000 barrels per day and Citgo's volume, well over that amount, was presumed by Wyatt to constitute the first 10,000 barrels.
Hess at one time had its own terminal in New Haven. For the period Motiva and Wyatt's Agreement was in effect (5/97-8/00), Hess never chose to do business at the Wyatt terminal. Once Hess closed its terminal (date of closure unclear but believed to be after Wyatt's breach), it opted to throughput in New Haven at what was then the terminal owned by Williams (the former Wyatt terminal) It could then have chosen to do business with Motiva at the Cargill terminal Motiva had purchased — but it did not. Hess became Williams' customer under an agreement which provided for Williams to provide additive only to gasoline supplied by Morgan Stanley to Hess. Exh. #508. The original term of that agreement between Williams and Hess was 1/1/01-12/31/03; it had an evergreen provision but the contract could be terminated anytime after expiration of the original term with one hundred twenty (120) days written notice. Hess was a customer of Morgan Stanley with whom Shell/Motiva had not contracted. To accept that Motiva's lost net profits included any portion of the fees generated by Hess is to accept Motiva's broadbrush argument it was reasonably foreseeable some other truck rack customers would come along before April 30, 2007, and, since Hess did in fact begin throughputting across the racks in January of 2001 (months after Wyatt breached), they are entitled to damages attributable to Hess' activities. The court will not speculate whether Hess' throughputting of gasoline at the Williams terminal beginning in January of 2001 was because it did not want to do business with Motiva (in which case Hess would not have done any throughputting at the Williams terminal for so long as Motiva was there) or was as a result of Morgan Stanley's presence at that terminal, etc. Hess' presence at the Wyatt/Williams terminal significantly differs from Citgo's presence; Citgo had a terminalling agreement with Shell/Motiva whereas Hess never did and Citgo wanted always to be at the Wyatt terminal when we know from the testimony of Fred Boling, President of Wyatt Energy, that Wyatt had previously tried to solicit Hess' business at the Wyatt terminal but was unsuccessful. Finally, there was no future contract between Hess and Motiva nor was there — as regards Hess — any evidence of one complete calculation of lost net profits as was demonstrated with Citgo by way of pre-breach profits. The standard enunciated by Texas decisional law as applicable to recovery for lost profits has not been met with regard to Hess.
Fred Boling testified Hess would not do business at the terminal while Motiva was there though he did not specifically state Motiva was the reason why that was so. As noted, Hess had its own terminal for at least a part of the period Motiva did business at the Wyatt terminal.
For similar reasons, no damages are awarded for lost net profits for Valero's activities at the Wyatt terminal. Valero did not begin gasoline throughputting at the Wyatt terminal until 9/17/02 (Exh. #598) — more than two (2) years after the breach. The evidence suggested it, like Hess, was being supplied by Morgan Stanley. When this Agreement was terminated Valero, who previously had terminated at the Cargill terminal in Bridgeport, moved over to the Cargill terminal in New Haven (then owned by Shell/Motiva) and, in 2002, Valero moved back to the Williams terminal. Grinstead testimony, 2/13/04, Vol. III, p. 15. That is consistent with the testimony of Fred Boling that Valero was an "off and on" customer, that there was no consistency regarding their terminalling activities because they were "in and out of gasoline and heating oil," and that they would move their business based upon the quality of the service they received, the rate, and, access to the dock. Unlike its relationship with Citgo, Shell/Motiva had no contract with Valero and clearly could not demonstrate one full calculation of profits as required by Texas law. Interestingly, though Mr. Grinstead testified Motiva would not, in his opinion, be entitled to revenue generated by others through the pipeline but weld be so entitled if the business moved across the truck racks (presumably because the Agreement gave Shell/Motiva exclusive rights to the racks), that does not dictate a conclusion the plaintiff is entitled to damages from Valero activities. Grinstead also testified pipeline customers could as well be direct customers of Wyatt, Morgan Stanley, or someone else as they could be Shell direct customers. Grinstead testimony, 2/13/04, Vol. III, p. 8. Further, since Valero, after this Agreement was terminated, moved directly to the Cargill terminal (New Haven) and did not return to the Williams/Wyatt terminal until 2002, to award Shell/Motiva damages for lost Valero revenue beginning in September of 2002 when, for whatever reason, they had made the conscious decision to leave Shell at the New Haven Cargill terminal to return to the Williams/Wyatt terminal prompts both the conclusion Valero had no commitment to Shell/Motiva and the finding the counterclaim plaintiff failed to establish its burden of proof vis-a-vis Valero. The court so finds.
Mr. Grinstead testified Valero was one of Shell's customers at the terminal but, other evidence suggests that was probably not so. If in fact it is so, it is more likely that Valero was a pipeline customer of Shell's since, prior to the Agreement which is the subject of this litigation, Shell was a pipeline customer at the terminal.
There was testimony that Motiva had significant inventory problems at the Wyatt terminal and there was the suggestion of accounting problems there as well although, as earlier discussed, accounting was largely a function assumed by Wyatt.
The plaintiff on the counterclaim has requested the court award $891,224.98 in attorneys fees and costs in the amount of $11,338.44. Tex. Civ. Prac. Rem. Code § 38.001 provides, "A person may recover reasonable attorneys fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for . . . (1) rendered services . . . or (8) an oral or written contract." This request for award is for services rendered and Motiva's counterclaim is for breach of a written agreement (Exh. #501). The counterclaim defendant objects to the award of attorneys fees or costs on the following grounds:
(1) By virtue of Paragraph 14 of the Agreement, Additional Terms and Conditions, the parties were to bear their own costs, expenses, and attorneys fees;
(2) Texas law doesn't apply to such recoveries because Texas law was applicable only "in the construction of the terms and provisions hereof and in the determination of the rights and obligations of the parties . . ." Agreement, Additional Terms and Conditions § 20; thus, Wyatt argues, Connecticut law applies and recovery of attorneys fees is not permitted except as provided by statute or contractual provision, neither of which here applies;
(3) Even if Texas law applied, recovery ought be barred here because the counterclaim plaintiff should not recover attorney fees for all of the reasons asserted by the counterclaim defendant in opposition to the plaintiff's contract claim; and
Specifically, the defendant claims the plaintiff failed to introduce evidence of lost net profits, failed to prove such damages to a reasonable degree of certainty, and failed to prove the damages claimed were "direct" as opposed to "consequential" under Texas law.
(4) The requested attorneys fees are unreasonable.
The prohibition barring recovery of attorneys fees and costs is included in the provision entitled "Arbitration" which calls for arbitration of "any controversy or claim, whether based on contract, tort, statute or other legal or equitable theory arising out of or related to the Agreement . . . or the breach of termination thereof . . ." Paragraph 14, Agreement, Additional Terms and Conditions. Relevant is that the contract claim was litigated — not arbitrated — and that it was Wyatt who opposed arbitration. To now seek the benefit of a forum it actively opposed is disingenuous and any claim Hodgson, J., in a prior ruling, even addressed — much less decided — this issue is inaccurate.
Nor does the court accept that the parties intended Connecticut law apply on this issue. This Agreement was negotiated by sophisticated corporate businessmen who are presumed to know what they wanted to achieve and expressed those desires in the Agreement. Wyatt cites to Wheelways Insurance Company et al. v. Hodges, 872 S.W.2d 776 (Tex.App.-Texarkana, 1994) for the proposition the award of attorneys fees is "in the nature of a penalty or punishment for failure to pay a just debt." Id. at 783, FN8. The defendant fails to note that, in the line immediately preceding the quoted language, the court noted "[a]ttorneys fees are authorized in a successful suit for breach of contract." Id. In Wheelways, the basis for not awarding attorneys fees was the inability of the plaintiff to prove actual damages as a result of the wrongful conduct. Id. at [16]. The court's statement that attorney fees are in the nature of a penalty or punishment was to distinguish such an award from actual damages upon which, in Texas, the statutory exemplary damages cap is calculated. Id. at fn8. The application and calculation of statutory exemplary damages was an issue before that Texas court. No language in Wheelways suggests that court's disapproval of awarding attorneys fees where a breach of contract and actual damages had been established despite its acknowledgment such recovery was both "authorized" under those circumstances and served as "a penalty or punishment for failure to pay a just debt." 872 S.W.2d 783, FN8.
In fact, there was testimony Shell always included the Additional Terms and Conditions in its terminalling agreements underscoring the importance of the choice of law issue to this Texas Company. That Wyatt agreed to the same is evidence only of its eagerness to have Shell at its terminal (entirely consistent with Mr. Boling's testimony).
Wyatt's argument Texas law does not apply is also unpersuasive. Paragraph 20 of the Agreement (#501) provides Texas law shall apply "in the determination of the rights and obligations of the parties hereunder." Black's Law Dictionary, Fifth Edition, 1979, p. 1189 defines a "right" as a "power, privilege, or immunity guaranteed under . . . statutes . . ." As stated earlier herein, § 38.001 of Texas Civil Prac. Rem. Code provides reasonable attorneys fees may be recovered to the party prevailing in a breach of contract claim. Under § 38.002, recovery requires the non-breaching party be represented by counsel, have presented its claim to the breaching party, and the breaching party must not have tendered payment of the claim within thirty (30) days of presentment. Motiva presented its claim of breach to Wyatt by letters dated June 5 and June 28, 2000, (Exhibits # 561, 559) and August 29, 2000. Wyatt's response was to sell to Williams without assignment of the Agreement, no payment ever having been tendered. The right to recover attorneys fees and costs having been provided by Texas statute and all prerequisites having been met, they are recoverable. Texas law also establishes a rebuttable presumption "the usual and customary attorneys fees for a claim of the type described in Section 38.001 are reasonable." Tex. Civ. Prac. Rem. Codes, § 38.003. Arthur Anderson v. Perry Equip. Corp., 945 S.W.2d 812 (Tex., 1997) provides that, in evaluating attorneys fees, the court should consider the time and labor required, the novelty and difficulty of questions involved, the skill required to perform the services properly, the likelihood such representation will preclude other employment by the lawyer, the fee customarily charged locally for similar services, the amount involved and results obtained, and whether the fee is contingent. Id. at 818. Motiva has submitted an affidavit from its lead attorney with regard to the reasonableness of the fees sought. Excluding fees for work not incurred in connection with its breach of contract claim and Wyatt's special defenses thereto and beginning in September of 2002, Motiva seeks recovery of fees for 3,700.4 hours of work performed by fourteen (14) different lawyers at rates discounted 10-20% and ranging from $319/hr. to $160/hr. depending upon the status, level of skill, and the experience of the lawyer involved in the task. Wyatt's primary objection on the grounds of unreasonableness is that its (Wyatt's) lawyers billed "only a total of 2,727 hours for all work done in this case during the same period." Memorandum in Opposition, March 16, 2004, at p. 6. Because it states, Motiva billed for 35% more hours than it did, the amount requested should be "denied or substantially reduced." Id. at p. 7. Of interest is that the memorandum in opposition does not indicate the hourly rate billed by Wyatt's attorneys; thus, it is conceivable Wyatt's bill for services could equal or exceed Motiva's bill despite the representation it billed the work of fewer attorneys for 1,000 fewer hours. Additionally, Wyatt contests the billing for one (1) hour — or $211.20 — by a bankruptcy litigation partner whose assignment was to analyze the effect of a bankruptcy filing on this litigation.
The firm has handled and is handling multiple matters for the named client — thus, the discounted fee arrangement.
Motiva also provided a four-page summary of hours and fees, a supporting memorandum of law and a Reply to Wyatt's objection re fees, approximately one-hundred fifty-three (153) narrative pages providing the dates of services, the identity of the lawyers performing the tasks, the hours (in 10-minute increments) devoted to each task and a description of the tasks involved, a brief resume of the fourteen (14) lawyers working on the matter over the seventeen (17) month period for which recovery is sought, and copies of bills rendered to the client for the same period.
No fees for multiple post-trial briefs were submitted.
It needs be said at the outset that the level of skills exhibited by all of the lawyers in the trial of this matter which consumed just shy of three (3) weeks was very high. All lawyers conducted themselves in a professional and courteous way; the evidence — substantially technical — was presented efficiently and cogently; the witnesses were well-prepared and informative; the knowledge of both Texas and Connecticut law demonstrated by the parties was wide and appropriate to the issues considered; the many many memoranda and briefs submitted during discovery, at trial, and post-trial were of considerable assistance to the court. It is also relevant that this litigation, instituted by Wyatt, consisted of multiple causes of action, none of which remained at the time of trial. Motiva asserted a counterclaim in response to which Wyatt asserted sixteen (16) special defenses, all of which Motiva was required to defend. Discovery was aggressively conducted — in this court's view, unnecessarily so. Subpoenas were litigated; issues arose over the conduct of out-of-state depositions and the breadth of those depositions; at every step along the way, objections were interposed (always lengthy and often accompanied by memoranda); dispositive motions were de rigeur; motions in limine were numerous (again, lengthy and often accompanied by memoranda); on occasion, motions on matters earlier resolved by the court were re-filed. Hundreds of exhibits were offered at trial. Ultimately, the matter comprised thirty-six (36) volumes (redwelds). It is, however, entirely appropriate to state that Wyatt was — more often than not — the party to initiate the motion and pleading practice conducted and this court feels compelled to note the breach of contract by Wyatt was early obvious as was the fact damages resulted. (There was a legitimate dispute with regard to the extent of the same.) In fact, at trial, Wyatt witnesses conceded many of the issues they later continued to litigate (and which thereby required Motiva to defend). The value of Motiva's rights under the contract was underscored by Williams Energy's offer to pay Wyatt an additional $15 million if the agreement with Motiva were not in place; Wyatt's response was to terminate the Agreement and to agree to a sale to Williams for $31.375 million. The court rejects any other explanation of or justification for the sale under the circumstances then existing. Texas law not only permits Motiva recovery of fees for prosecuting its contract claim and defending against Wyatt's sixteen (16) special defenses but also permits recovery of fees incurred with respect to any defenses or claims "inextricably intertwined" with that claim of breach or defenses asserted as against it. See e.g., Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 11 (Tex., 1991); West Beach Marina, Ltd. v. Erdeljac, et al., 94 S.W.3d 248, 268-69 (Tex.App.-Austin, 2002); Pegasus Energy Group, Inc. v. Cheyenne Petroleum Co., 3 S.W.3d 112, 131 (Tex.App.-Corpus Christi, 1999). Primarily, the claims "inextricably intertwined" with Motiva's prosecution of its claims and defense of its breach of contract claim arose with regard to Motiva's obligation to defend against Wyatt's aggressively prosecuted antitrust and CUTPA claims. The same facts, discovery and analysis required to defend against those assertions were largely intertwined with the facts and analysis required to prosecute Motiva's claim of breach. As to those of Wyatt's claims clearly unrelated to contract claims (i.e., Wyatt's claim of conversion and its claim of unjust enrichment), Motiva has excluded from its request any attorneys fees referable thereto.
Some causes of action were declared arbitrable by a prior court; the last remaining causes of action asserted by Wyatt were withdrawn on the eve of trial.
For example, Wyatt witnesses conceded Motiva's purchase of the Cargill Terminal in New Haven was not precluded by any contract provision and was not contrary to any applicable law unless that purchase were violative of antitrust laws, a claim Wyatt withdrew before trial. They conceded Motiva was obligated only to pay the monthly minimums required by the Agreement and that Motiva made known its intent to continue to pay the same when it became clear Wyatt wanted to sell to Williams.
The court has seriously pondered the requested award of attorneys fees largely for reason of the amount sought. It is of some relevance that, had Motiva taken this matter on a contingency fee basis and were this state's statutory requirements governing the determination of attorneys fees in personal injury, wrongful death, or property damage cases applicable, the fees here requested are not disproportionate given actual damages of $3,200,801.00 and the complexity of the issues. Although the court does not by this award of fees intend in any way to encourage either the filing of unnecessary motions or those of such length and with so many attachments that the pleading loses its effectiveness and while the involvement of fourteen (14) lawyers from one firm gives one pause, it unfortunately is not an uncommon practice either among very large firms or on the complex litigation docket. Nor is it surprising that the largest firms in the state are well represented on this docket. This court's function, however, is to determine the reasonableness of the fee in light of all of the factors earlier referenced herein and carefully considered. The hourly rates were reasonable; the issues were varied and complicated requiring concentrated time to understand and master. The argument is strong that, had less time been spent in preparation, the greater the trial time required. For all of these reasons and because the court is without any reason to doubt the time documented was time in fact spent, this court eschews the suggestion the fees requested be substantially reduced. The number of billing hours devoted to a particular matter or the number of lawyers from within a firm committed to that matter must be considered on a case by case basis and are more appropriately addressed by a given firm's management committee or a professional organization addressing those issues. Attorneys fees in the amount of $891,224.98 are awarded as are costs in the amount of $11,338.44, all of which have been well documented, were reasonably incurred, and to which no objection was interposed.
C.G.S. § 52-251c.
The moving party has justified the involvement of some of the lawyers by explaining the three (3) month leave of absence for the primary associate handling the matter necessitated other lawyers become active in the file.
Judgment for the counterclaim plaintiff in the amount of $3,200,801.00 plus counsel fees and costs as above stated enters this date.
Sheedy, J.