United States District Court, D. Alaska
In re THE EXXON VALDEZ This document relates to: NAUTILUS MARINE ENTERPRISES, M. THOMAS WATERER, and the EXXON DEFENDANTS
ORDER MOTION TO LIFT STAY AND FOR ENTRY OF
Russel Holland United States District Judge.
Mobil Corporation and Exxon Shipping Company (referred to
collectively as “Exxon” hereinafter)
to lift the stay that was entered in this case in 2009 and
for entry of final judgment in favor of Nautilus Marine
Enterprises in the amount of $2, 245, 622.87 less an offset
of $496, 724.26 for fees and costs awarded to Exxon in state
court. This motion is opposed in part and Nautilus Marine
Enterprises and M. Thomas Waterer (referred to collectively as
“NME” hereinafter) cross-move for entry of
judgment in their favor in the amount of either $8, 537,
834.23 or $7, 044, 360.28, with no offset. The cross-motion
is opposed. Oral argument was not requested and is not
about September 29, 2006, Exxon, NME,  and Cook Inlet
Processing (“CIP”) entered into a settlement
agreement, which resolved NME's and CIP's
claims against Exxon for 1992 and 1993 damages
arising out of the grounding of the Exxon Valdez.
However, the parties were not able to agree as to the amount
of prejudgment interest that should be paid on the principal
amount of the settlement. Exxon contended that federal law
controlled the prejudgment interest question; NME and CIP
contended that Alaska law controlled the prejudgment interest
question. The parties agreed that the prejudgment interest
dispute would be submitted to this court for resolution.
February 20, 2007, NME and CIP filed motions on the
prejudgment interest issue.After the briefing was completed
on those motions, but before this court had ruled on the
motions, the Ninth Circuit issued a decision in the Sea
Hawk Seafoods case. See In re Exxon Valdez, 484
F.3d 1098 (9th Cir. 2007). Sea Hawk was a fish processor
which, like NME and CIP, had pursued claims against Exxon
arising out of the grounding of the Exxon Valdez.
Sea Hawk and Exxon reached a settlement as to Sea Hawk's
claims but could not agree on whether federal or state law
should apply to the determination of prejudgment interest.
This court had ruled that federal law applied, but the Ninth
Circuit reversed, holding that state law governed prejudgment
the Sea Hawk decision issued, this court called for
supplemental briefing from the parties. The parties
agreed that pursuant to Sea Hawk, the Alaska
prejudgment interest rate of 10.5 percent should be applied
to them. The parties also agreed that Alaska state law
provides that prejudgment interest should be simple interest,
unless the parties had otherwise agreed. Exxon contended that
there was no agreement between the parties as to whether
prejudgment interest should be simple or compound. NME and
CIP contended that the parties had agreed that prejudgment
interest would be compound no matter which rate governed.
Order No. 370,  this court held that NME and CIP were
“entitled to prejudgment interest at a rate of 10.5%
compounded annually.” In reaching this holding, the
court focused upon the structure and text of the parties'
integrated Settlement Agreement. The integrated Settlement
Agreement included a proposed final judgment which provided
for compounded interest, regardless of what rate of
interest applied. After observing that the Settlement
Agreement was silent about the compounding of interest issue,
this court found that it was “the unequivocal statement
of the agreed judgment form that the prejudgment interest
should be compounded.”
moved for reconsideration of Order No. 370 and for leave
to file a Supplemental Answer to NME's
complaint. Exxon sought to amend its answer to
include a claim for reformation of the Settlement Agreement.
This court denied the motion for reconsideration and the
motion for leave to supplement.
Exxon's motions for reconsideration and leave to
supplement were denied, this court entered a Final
Judgment. On August 17, 2007, Exxon appealed Order
No. 370 and the Final Judgment.
October 17, 2007, Exxon filed a complaint in state court
which alleged a single cause of action for reformation of the
Settlement Agreement. On November 2, 2007, NME and CIP
removed the reformation case to this court pursuant to 28
U.S.C. § 1441. Exxon moved to remand, arguing that there
was no jurisdictional basis for removal. On April 22, 2008,
this court denied the motion to remand. NME and CIP
then moved to dismiss Exxon's complaint. On November 18,
2008, this court granted the motion to dismiss, holding that
Exxon's reformation claim was barred by res judicata,
and a final judgment dismissing the reformation case was
appealed. However, before the parties had begun briefing the
appeal, on March 10, 2009, the Ninth Circuit ruled on
Exxon's appeal of Order No. 370 and the Final Judgment in
the interpretation case. The Ninth Circuit held that this
court “erred in failing to consider extrinsic evidence
regarding whether the parties agreed to compound
interest.” In re Exxon Valdez, Case No.
07-35715, 2009 WL 605900, at *2 (9th Cir. March 10, 2009).
The court of appeals also held that this court “did not
abuse its discretion in denying leave to supplement the
answer to add a counterclaim for reformation.”
Id. Thus, the court of appeals reversed in part and
remanded the interpretation case to this court. Upon remand,
this court vacated the Final Judgment, Order No. 370, and the
portion of its July 23, 2007 order that addressed Exxon's
motion for reconsideration.
14, 2009, the Ninth Circuit vacated the judgment in the
reformation case because it was based upon the Final Judgment
in the interpretation case, which had been reversed in
part. The reformation case was remanded to
this court for further proceedings.
5, 2009, Exxon filed a second complaint in Alaska state court
seeking a declaratory judgment interpreting the parties'
rights and obligations under the Settlement Agreement, or, in
the alternative, for reformation of the Settlement Agreement.
NME and CIP removed the 2009 case to this
court. Exxon moved to remand both the original
reformation case and the 2009 case to state
court. The court granted both motions to
remand and stayed the interpretation case
pending the outcome of the state court cases.
state court cases were consolidated and trial was scheduled
for November 2010. Shortly before the trial, CIP and Exxon
reached a settlement.
Exxon proceeded to trial. On March 17, 2011, the state court
judge entered Findings of Fact and Conclusions of
Law. The state court judge
[a]fter reviewing the written exchange of offers and
counteroffers, the Letter Agreement, as well as the testimony
of Mr. Daum and Mr. Weidner [the two attorneys who negotiated
the Settlement Agreement], ... f[ound] there is no evidence
that the parties discussed and reached agreement that only
compound interest would apply regardless of whether state or
federal law controlled.
short, the state court judge concluded that “[a]ll of
the extrinsic evidence demonstrates that the parties never
agreed that interest would be compounded” and
“that the proposed judgment ... was intended to provide
a form of judgment that [this court] could use to implement
the parties' agreement” but that “[t]he
proposed judgment was not intended to include or be an
agreement to pay compound interest.”
was entered in the consolidated state court case in
Exxon's favor and Exxon was awarded attorney's fees.
NME appealed the trial court's conclusion that the
parties had not agreed that interest would be compound. On
July 19, 2013, the Alaska Supreme Court affirmed the trial
court's decision. Nautilus Marine Enterprises, Inc.
v. Exxon Mobil Corp., 305 P.3d 309, 312 (Alaska 2013).
NME also appealed the award of attorney's fees to Exxon.
On August 22, 2014, the Alaska Supreme Court
“reverse[ed] the awards of attorney fees and costs and
remand[ed] for a recalculation of the fees award based on
local rates and for the apportionment of fees and
costs” but affirmed as to “all other
issues.” Nautilus Marine Enterprises, Inc. v. Exxon
Mobil Corp., 332 P.3d 554, 565 (Alaska 2014).
the attorney's fees were re-calculated, on October 8,
2015, the state trial court entered a second revised final
judgment. The second revised final judgment
1. The September 2006 settlement between Exxon ... and NME
did not require Exxon to pay compound interest regardless of
the applicable law. 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.
2. Plaintiff Exxon's request for reformation is denied.
3. It is for Judge Holland to decide the appropriate law that
applies, the proper interest rate, and the method of
calculating that interest rate.
4. Exxon is awarded attorneys' fees in the amount of
$340, 211, expert costs in the amount of $67, 500 and costs
of $89, 013.26 for a total award of $496,
state court proceedings having been completed, Exxon now
moves to lift the stay of this case (the interpretation case)
and for entry of judgment in NME's favor. NME does not
oppose lifting the stay nor does NME oppose entry of judgment
in its favor. However, the parties disagree as to the amount
of the judgment to be entered.
being no disagreement between the parties, the stay is
the stay lifted, what remains is for the court to enter
judgment. In order to enter judgment, the court must
determine the amount that is still owed to NME under the
the Settlement Agreement, Exxon paid NME and CIP an initial
settlement amount of $8, 500, 000. This amount represented
$824, 601.09 for CIP's 1992 and 1993 damages and $3, 726,
556.16 for NME's 1992 and 1993 damages plus prejudgment
interest on both of those amounts calculated at the
applicable federal rate. NME received $5 million of the
initial settlement amount and CIP received $3.5
million. Exxon also agreed to pay a Supplemental
Settlement Amount, which would be “the amount, if any,
that may become payable pursuant to the provisions of
paragraphs 3.1, 3.2 and/or 3.3” of the Settlement
3.1 requires Exxon to pay the difference between prejudgment
interest calculated at the federal rate and prejudgment
interest calculated at whatever rate the court finds is the
correct rate. There is now no dispute the correct rate
of prejudgment interest is the state rate of 10.5% simple.
The parties agree that the difference between prejudgment
interest calculated at the federal rate up to November 1,
2006 and the state rate of 10.5% simple is $3, 470,
470, 716.32 number is based on the report of Exxon's
expert, Bruce Budge. Budge reached this number by calculating
prejudgment interest at a rate of 10.5% simple on CIP's
and NME's combined 1992 damages ($3, 778.584.56) and on
CIP's and NME's combined 1993 damages ($2, 862,
112.94). Adding these two numbers together
results in the total prejudgment interest on CIP's and
NME's 1992 and 1993 damages through November 1, 2006,
when calculated at 10.5% simple, being $6, 640,
697.50. In the initial settlement amount, ...