Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:05-CV-645-Sarah Evans Barker, Judge.
The opinion of the court was delivered by: " Wood, Circuit Judge.
Before BAUER and WOOD, Circuit Judges, and KENNELLY, District Judge.
Though the parties' voluminous filings might suggest otherwise, this case had humble beginnings and there is not much left of it at this point. Pamela and Daniel Wickens owned a small shoe store in Anderson, Indiana. The store rested on a plot of land that once had been used as a Shell gas station. In 2004, when the Wickenses began preparing to sell the store and retire, they received the unwelcome news that their store rested on a bed of contaminated soil.
Not long after, the Wickenses retained Mark Shere as their attorney and began talks with Shell regarding its liability for the contamination. Their discussions centered largely on Shell's responsibilities under Indiana's Underground Storage Tank Act (the "Act"or the "USTA"), Ind. Code § 13-23-13-8. This statute provides that any person who takes corrective action to remedy damage caused by an underground storage tank may obtain a contribution from the owner or operator of the tank. Ind. Code § 13-23-13-8(b). If the party taking corrective action brings a successful suit, she is also entitled to attorneys' fees. Id.
"Of the Northern District of Illinois, sitting by designation.
Dissatisfied with the outcome of those discussions, the Wickenses filed suit on March 24, 2005. Much legal wrangling followed, but eventually the parties hammered out a settlement agreement that resolved most of the lingering liability issues. Critically for our purposes, the agreement provided that the calculation of corrective action costs and attorneys' fees would be left to the court.
The district court granted most, but not all, of the Wickenses' requests for corrective action costs and attorneys' fees. After the court issued its decision, Shere revealed for the first time that the Wickenses' litigation team had been funded in part by Employers Fire Insurance Company ("Employers"). Shell quickly filed a Rule 60(b) motion to vacate, which the court denied. Both parties have appealed. We conclude that the district court made the best of a fractious situation and but for a small calculation mistake, we find nothing erroneous in its judgment. Thus, we affirm in part and reverse and remand in part for further proceedings consistent with this opinion.
The district court's opinion provides an exhaustive account of the background to this case. See Wickens v. Shell Oil Co., 569 F. Supp. 2d 770, 773-83 (S.D. Ind. 2008). Much of that detail is unnecessary to the resolution of this appeal, however, and so we limit ourselves to a brief rehearsal of the facts that remain pertinent.
Before putting their land on the market, in July 2004 the Wickenses hired HydroTech Corporation to conduct an environmental investigation of the soil. Borings revealed that the land was contaminated with pollutants that probably had leaked from an underground gasoline storage tank. Acting pursuant to notification requirements imposed by Indiana law, HydroTech reported the leak to the Indiana Department of Environ-mental Management ("IDEM"). IDEM then sent a letter to the Wickenses informing them that they were responsible as the property owners for carrying out further investigations into the nature of the leak. The Wickenses responded by hiring Shere and authorizing HydroTech to pursue further investigatory work.
As part of its investigation, HydroTech examined the soil of a neighboring property owned by Richard Gardner and found that it too was contaminated. The Gardner property also had formerly hosted a gas station, but it had been affiliated with a different oil company. After HydroTech submitted its findings to IDEM, the Department sent a letter in November 2004 informing the Wickenses that they were now responsible for investigating the Gardner property as well. This proved to be a turning point in the parties' dispute; in the months that followed, they fought bitterly over the source of the contaminants and Shell's responsibility for remediating the Gardner property. Relying on HydroTech's deter-mination that the Wickenses' property was the likely source of the contamination, the Wickenses believed that Shell should have assumed full responsibility for the entire IDEM investigation. Shell, on the other hand, found HydroTech's analysis wanting and insisted that IDEM bifurcate the investigation of the two parcels.
Unable to convince Shell to agree to the Wickenses' list of demands, Shere filed this lawsuit in March 2005. Over the course of the next year, the parties offered competing environmental assessments and vied for control of the IDEM investigation. Bombarded with the parties' conflicting ideas for further investigations, IDEM decided that it would deal exclusively with the Wickenses as of November 2006. Making matters worse for Shell, the district court denied the company's motion for summary judgment, finding that Shell in all likelihood bore full responsibility for the contamination.
At this point, the Wickenses had a significant amount of leverage, which put Shell in a bind. As the district court put it, "[s]o long as the litigation continued and the Wickenses retained ownership of the real estate, Shere and HydroTech controlled any and all responses to the IDEM-directed investigation and remediation and could elect to continue to incur, or generate, costs that, under USTA, would be on Shell's dime." 569 F. Supp. 2d at 779-80. The parties spent a lot of time haggling over the terms of a settlement agreement, but they were unable to reach any consensus. In the meantime, Shere and HydroTech continued to rack up additional attorneys' fees and corrective action costs.
In an effort to staunch the runaway fees and promote settlement, the district court entered an order on January 9, 2007, temporarily freezing the parties' liability for each other's attorneys' and experts' fees. It instructed the parties to use this time to select a mutually acceptable independent consultant, who would investigate the property and submit a joint report to IDEM. Though the freeze was to last only three months, Shere submitted an emergency motion challenging the so-called "time-out period," arguing that it undermined the purpose of the Act. The court was not moved to reconsider its decision, but it did leave open the possibility of recovery for fees "upon a showing of extremely good cause and clear necessity." Despite the court's warnings, the parties both continued to incur substantial expenses during this period; ostensibly, those expenses were for oversight of the work of the independent consultant. After the "time-out period" expired, HydroTech continued to work on the land pursuant to a work plan IDEM approved on March 28, 2007.
After a series of meetings with a magistrate judge, the parties eventually were able to nail down the details of a settlement agreement. Under the agreement, Shell promised to purchase the Wickenses' property for $139,900 and to pay $60,100 in "property damages." The parties stipulated that the Wickenses were entitled to attorneys' fees and corrective action costs, but they delegated to the court the job of calculating the amount of those costs.
In calculating the fee award, the district court awarded the Wickenses most of what they wanted, but it declined to award anything for attorneys' fees incurred after January 9, 2007. Shere's work after that date, the court explained, was aimed at achieving successes unrelated to the goals of the Act and thus it was not compensable. Similarly, the court refused to put Shell on the hook for HydroTech's expenses past this date, with the exception of the costs related to work devoted to carrying out IDEM's March 2007 work plan. Since the fee award was not easily ascertainable, the court decided not to award prejudgment interest.
Naturally, this was not the end. Shell filed post-judgment motions under both FED. R. CIV. P. 59(e) and 60(b). The court granted in part Shell's Rule 59(e) motion to modify or alter the judgment by deducting fees that Shere received for the legal services attributable to his wife, Colleen Shere. Although Colleen Shere had once been licensed to practice law in Indiana, she had allowed her law license to lapse. The court concluded that Shere had improperly billed her hours as attorney services and thus those amounts should not have been ...