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In re Oil Spill

United States District Court, E.D. Louisiana

November 7, 2017

IN RE OIL SPILL BY THE OIL RIG “DEEPWATER HORIZON” IN THE GULF OF MEXICO ON APRIL 20, 2010 THIS DOCUMENTS RELATES TO NO. 11-916

         SECTION “J”

          BARBIER JUDGE.

          ORDER AND REASONS ON MOTION

          JOSEPH C. WILKINSON, JR. UNITED STATES MAGISTRATE JUDGE.

         Martzell, Bickford & Centola, APC; David Landry, Esq.; and King, Krebs & Jurgens, P.L.L.C. (collectively “Intervenors” or “Special Counsel”), received leave to file a complaint in intervention against their former client, plaintiff Plaquemines Parish Government (the “Parish”). Record Doc. Nos. 23576, 23577. Intervenors allege that the Parish breached its contingency fee contract with them (the “Fee Agreement”) by failing to pay any attorney's fees or costs in connection with their representation of the Parish in its claims against BP, p.l.c. (“BP”) arising from the Deepwater Horizon oil spill.

         Intervenors filed “Plaquemines Parish Special Counsel's Motion for Fees and Costs Pursuant to Contingency Fee Agreement, ” Record Doc. No. 23266, in which they seek to recover from plaintiff's recent settlement with BP the attorney's fees and costs that plaintiff allegedly owes them under the Fee Agreement. Because no submission date has been set regarding Intervenors' motion for fees and costs, no opposition memorandum is due or has been filed. See Record Doc. No. 23446 (providing that the court would set a briefing schedule for Intervenors' motion for attorney's fees and costs and their anticipated filing of a motion for summary judgment, if necessary, after determining the then-pending motion to intervene and the Parish's motion for dismissal).

         In response to Intervenors' motion, the Parish filed a Motion for Dismissal of Motion for Fees and Costs or in the Alternative, Removal to Forum Conventionally Agreed to by the Parties and for Stay on Hearing of Motion for Fees and Costs Pursuant to Contingency Fee Agreement. Record Doc. No. 23280. The Parish argues that Intervenors' motion for fees and costs should be dismissed because the Fee Agreement contains a forum selection clause that requires any dispute arising from the contract to be adjudicated in the 25th Judicial District Court in Plaquemines Parish. As discussed below, plaintiff's motion for dismissal disingenuously tries to avoid, but necessarily implicates, the arguments it made in opposition to other motions that the Fee Agreement is invalid, which directly conflict with its argument that the court should enforce the forum selection clause and dismiss Intervenors' motion for attorney's fees and costs.

         Intervenors filed a timely memorandum in opposition to the Parish's motion. Record Doc. No. 23501. The Parish received leave to file a reply memorandum, Record Doc. Nos. 23568, 23572, 23573, and a supplemental reply memorandum to correct an error in its original reply. Record Doc. Nos. 23571, 23583, 23584. Intervenors' Motion for Fees and Costs and the Parish's Motion for Dismissal are pending before me pursuant to the consent of the parties under 28 U.S.C. § 636(c). Record Doc. No. 23495.

         For the following reasons, IT IS ORDERED that the Parish's motion for dismissal is GRANTED. IT IS FURTHER ORDERED that Intervenors' motion for fees and costs is DISMISSED WITHOUT PREJUDICE so that Intervenors may seek relief in the 25th Judicial District Court in Plaquemines Parish pursuant to the valid forum selection clause in their contract with the Parish.

         I. FACTUAL BACKGROUND AND ARGUMENTS OF THE PARTIES

         Intervenors allege in their complaint in intervention, their motion for fees and costs and their opposition to plaintiff's motion to dismiss that they entered into a Fee Agreement with the Parish effective April 15, 2011. Agreement for Professional Legal Services, Exh. D to Special Counsel's Motion for Fees and Costs, Record Doc. No. 23266-4 at pp. 5-17. The Fee Agreement states that the Parish executed it pursuant to two ordinances adopted by the Parish Council on April 14 and August 11, 2011. Id. at p. 5, preamble. The ordinances are attached to the contract. Id. at pp. 15-17. The two ordinances authorized the Parish President to negotiate and execute a professional legal services contract with, initially, David Landry and the firm of Martzell and Bickford, and then with the addition of King, Krebs & Jurgens, for the development of claims and filing of litigation against BP and other entities involved in the oil well blowout and spill.

         Although the ordinances do not state the contract's payment method, a video recording of the Parish Council meeting on April 14, 2011 establishes, and plaintiff does not dispute, that a member of the Parish government read aloud at the meeting from the proposed contract the contingency fee percentages to be paid from any gross recovery and the provision that the attorneys would advance all costs, to be reimbursed by the Parish from the net recovery. Notice of Manual Attachment, Record Doc. No. 23266-3; video recording, filed as Record Doc. No. 23259. The Council voted to authorize execution of the contract on that date and approved the addition of the King, Krebs firm on August 11, 2011. The Parish President and Intervenors signed the Fee Agreement on August 24, 2011, effective on April 15, 2011. Record Doc. No. 23266-4 at pp. 5, 14.

         The Fee Agreement, which was drafted by the Parish Attorney, provides for contingent attorney's fees of 15 percent of the first $25, 000, 000 of gross recovery from BP and related entities and 10 percent of gross recovery in excess of $25, 000, 000. Intervenors agreed to advance all litigation costs, which the Parish would reimburse from its net recovery. Id. at pp. 6-7, § 5. The Fee Agreement “shall automatically terminate upon satisfactory completion . . . or two (2) years from the date of its execution, . . . subject to the right of either party to extend this agreement for three two (2)-year terms where the services are still required.” Id. at p. 8, ¶ 7.2.

         Intervenors exercised their option to extend the contract for two-year terms by letters to the Parish President, Parish Attorney and Chairman of the Parish Council on July 16, 2013 and August 13, 2015, Record Doc. No. 23344-2 at pp. 34-37, and to the Parish Attorney on June 12, 2017. Id. at pp. 38-39. There is no evidence that the Parish ever objected to those extensions, until after the Interim Parish President attempted on June 30, 2016 to terminate the Fee Agreement with King, Krebs only. Plaintiff's Exh. 14 to its opposition to Intervenors' motion to intervene, Record Doc. No. 23502-14. When King, Krebs denied that the contract could be terminated without Parish Council approval, Plaintiff's Exh. 15, Record Doc. No. 23502-15, the Parish Attorney responded by arguing, apparently for the first time in the five-year history of the Fee Agreement, that it was void because section 7.06(B) of the Parish's Home Rule Charter required that such contracts not exceed two years. Plaintiff's Exh. 16, Record Doc. No. 23502-16. The Parish discharged all three Intervenors, allegedly for cause, on August 18, 2017, after they filed their motion for attorney's fees and costs in this court. Intervenors' Exh. A to Motion for Leave to Intervene, Record Doc. No. 23344-2 at p. 1.

         Intervenors assert that they represented the Parish in this litigation for six years and obtained a $45, 000, 000 settlement with BP in June 2017, payable to the Parish over five years, with the first $15, 000, 000 installment due on August 1, 2017.[1] In anticipation of that payment, Intervenors provided the Parish with a “Fee Disbursement Schedule” detailing their claimed contingent fee of $5, 750, 000 and litigation expenses of $685, 056.62. Special Counsel's Exh. F, Record Doc. No. 23266-4 at p. 24. The Parish refused to pay any fees or costs and discharged Intervenors after the Settlement Agreement was signed. The disputed portions of the first two installments paid by BP have been deposited into this court's registry, Record Doc. Nos. 23450, 23482, pending resolution of Intervenors' motion for attorney's fees and costs and plaintiff's motion for dismissal of the motion for fees and costs. Intervenors ask the court to enforce the Fee Agreement by awarding them contingent attorney's fees and litigation costs pursuant to the contract or, if the contract is invalid, a quantum meruit award of their fees and costs.

         The Parish moved for dismissal with prejudice of Intervenors' motion for fees and costs or “removal” of the motion to the 25th Judicial District Court in Plaquemines Parish, based on the choice of forum clause in the Fee Agreement. Section 9 of the Fee Agreement provides in relevant part:

If there is any dispute concerning this agreement, the laws of the State of Louisiana shall apply, its conflict of laws rules excepted if the interpretation of such would require the application of laws other than those of Louisiana. Proper venue and jurisdiction for all lawsuits, arbitration, claims, disputes, and other matters in questions [sic] between the parties to this agreement or any breach thereof, shall be in the 25th Judicial District Court for the Parish of Plaquemines, State of Louisiana.

         Record Doc. No. 23266-4 at p. 12, § 9 (emphasis added). Plaintiff argues that this provision is mandatory and enforceable, precludes Intervenors from pursuing their claims in this court and requires that Intervenors' motion for fees and costs be dismissed under the doctrine of forum non conveniens.

         Because the Parish asks the court to enforce the forum selection clause, plaintiff avoids arguing in its motion that the Fee Agreement as a whole is invalid. However, the Parish argued briefly in its opposition to BP's motion for leave to deposit settlement funds in the court's registry that “the legality and enforceability” of the Fee Agreement are at issue. Record Doc. No. 23468 at p. 2. In that separate memorandum, the Parish “questioned . . . whether the Contingency Fee Agreement was even valid, due to the flawed Ordinances, ” and stated that “the Plaquemines Parish Council never approved of a contingency fee contract at all.” Id. at pp. 3, 4. Further, in its opposition to the motion to intervene, the Parish argued ...


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