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Nautilus Marine Enters., Inc. v. Exxon Mobil Corp.

Supreme Court of Alaska

August 22, 2014


Page 555

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Sen K. Tan, Judge. Superior Court No. 3AN-07-10901 CI and 3AN-09-07869 CI (Consolidated).

Charles W. Coe, Law Office of Charles W. Coe, Anchorage, for Appellant.

John Clough III, Clough & Associates, P.C., Auke Bay, and Carla J. Christofferson and Dawn Sesito, O'Melveny & Myers LLP, Los Angeles, California, for Appellee Exxon Mobil Corporation.

Douglas J. Serdahely and Barat LaPorte, Patton Boggs LLP, Anchorage, for Appellees Exxon Mobil Corporation and Exxon Shipping Company.

Before: Fabe, Chief Justice, Stowers, Maassen, and Bolger, Justices. [Winfree, Justice, not participating.].


Page 556

MAASSEN, Justice.


The superior court issued a declaratory judgment interpreting a settlement agreement between Nautilus Marine Enterprises (Nautilus) and Exxon,[1] then decided that Exxon was the prevailing party. Nautilus appeals the ensuing awards of attorney fees and costs as excessive. It focuses particularly on the out-of-state hourly billing rates that the superior court accepted, the number of hours billed, and the court's imposition of a fee enhancement and sanction. Nautilus also contests the court's determination of prevailing party status, its award of costs, and its failure to apportion fees and costs. We reverse and remand for the superior court to recalculate the attorney fees award based on Alaska rates and for apportionment of fees and costs; we affirm on all other issues.


Exxon entered into a settlement agreement in 2006 with Nautilus and Cook Inlet Processing, resolving a lawsuit related to the 1989 Exxon Valdez oil spill. The settlement agreement reserved the question of the rate of prejudgment interest for the federal district court. U.S. District Judge H. Russel Holland ruled that interest should be 10.5% compounded annually, but the Ninth Circuit reversed, holding that Judge Holland had erroneously failed to consider extrinsic evidence of whether the parties had agreed to compound interest.

In 2009, Exxon filed a complaint against Nautilus and Cook Inlet Processing in Alaska state court, and further federal proceedings were stayed pending resolution of the state case. Exxon's complaint asked that the superior court either reform the settlement agreement to comply with what Exxon alleged to be the parties' intent (that interest not be compounded) or issue a declaratory judgment that the contract did not require compound interest. Exxon was represented by lawyers from two law firms: the Anchorage office of Patton Boggs LLP and the Los Angeles office of O'Melveny & Myers LLP.

Cook Inlet Processing settled with Exxon in early fall 2010.[2] A three-day trial of the remaining claims took place in November 2011. After trial the superior court found that the settlement agreement did not require Exxon to pay compound interest in all circumstances; instead, it found, " the parties intended that Judge Holland of the U.S. District Court determine both the correct rate of interest and the method of computing that interest under federal or state law." The court also found that Exxon was the prevailing party and addressed alleged misconduct by Nautilus's president, Thomas Waterer.

During his deposition, Waterer had refreshed his memory by reviewing personal telephone logs. Exxon hired a forensic expert who concluded that the logs had been altered by the addition of references to compound interest and the excision of several pages covering the period of the settlement negotiations. Exxon filed a motion shortly before trial alleging spoliation of evidence; the court deferred a ruling until after trial. The court then denied the spoliation motion on grounds that Waterer's testimony had not proven to be relevant anyway,[3] but it found that Waterer had " intentionally altered his notebooks to support [Nautilus's] position," justifying sanctions.

Page 557

Exxon moved for attorney fees and submitted a cost bill. The court began its analysis under Alaska Civil Rule 82(b)(2) with the standard 30% of reasonable actual fees for a case that goes to trial and does not result in a money judgment; it then adjusted this amount upward by 5% in order to account for the time Exxon's attorneys had spent responding to Waterer's bad-faith conduct. The court found that Exxon's retention of O'Melveny & Myers was reasonable, and it awarded fees for that firm's work based on its Los Angeles billing rates. The total attorney fees awarded were $725,873. The court also awarded 60% of the fees of Exxon's forensic expert as a sanction under Civil Rule 37.

The clerk of court approved the cost bill in April 2012, including costs for computer research, copying, travel, and depositions. Nautilus moved for superior court review, which resulted in the apportionment of some of the deposition and travel costs to Cook Inlet Processing. The court entered a revised final judgment on October 12, 2012, incorporating its findings on the settlement agreement, its award of attorney fees, and its award of costs. We affirmed the merits of the court's underlying decision on Nautilus's appeal.[4] This second appeal involves the remaining issues of attorney fees and costs.


We review for abuse of discretion both the determination of prevailing party status and the award of attorney fees.[5] " An award constitutes an abuse of discretion only when it is manifestly unreasonable." [6] But " [i]f the award of attorney's fees requires interpretation of Alaska Civil Rule 82, we perform an independent review." [7] We also review for abuse of discretion the superior ...

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