ca10|Gamble, Simmons v. Kerr-McGee, 97-6413 (1999) -- eLawyers

Filed: Apr. 09, 1999
Latest Update: Feb. 21, 2020

Summary: UNITED STATES COURT OF APPEALS TENTH CIRCUIT GAMBLE, SIMMONS & COMPANY, Plaintiff-Appellant, v. Nos. 97-6413 & 98-6033 KERR-MCGEE CORPORATION, Defendant-Appellee. ORDER Filed April 22, 1999 Before BALDOCK, McKAY and BRORBY, Circuit Judges. On the Court’s own motion the opinion filed on April 9, 1999, is withdrawn. A revised opinion issued nunc pro tunc to April 9, 1999, is attached to this order. Entered for the Court PATRICK FISHER, Clerk of Court By: Keith Nelson Deputy Clerk F I L E D Unite

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

GAMBLE, SIMMONS & COMPANY,

Plaintiff-Appellant,

v. Nos. 97-6413 & 98-6033

KERR-MCGEE CORPORATION,

Defendant-Appellee.

ORDER
Filed April 22, 1999

Before BALDOCK, McKAY and BRORBY, Circuit Judges.

On the Court’s own motion the opinion filed on April 9, 1999, is

withdrawn. A revised opinion issued nunc pro tunc to April 9, 1999, is attached

to this order.

Entered for the Court
PATRICK FISHER, Clerk of Court

By:
Keith Nelson
Deputy Clerk
F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
APR 9 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

GAMBLE, SIMMONS & COMPANY,

Plaintiff-Appellant,

v. Nos. 97-6413 & 98-6033

KERR-MCGEE CORPORATION,

Defendant-Appellee.

Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. 95-CV-256)

Submitted on the briefs. *

Donald K. Funnell of Lytle Soulé & Curlee, P.C., Oklahoma City, Oklahoma, for
Plaintiff-Appellant.

Burck Bailey and Dino E. Viera of Fellers, Snider, Blankenship, Bailey &
Tippens, P.C., Oklahoma City, Oklahoma, for Defendant-Appellee.

Before BALDOCK, McKAY and BRORBY, Circuit Judges.

*
After examining the briefs and appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G).
The case is therefore ordered submitted without oral argument.
BRORBY, Circuit Judge.

This appeal involves the interpretation of a contract between Appellant,

Gamble, Simmons and Company (“Gamble Simmons”) and Appellee, Kerr-

McGee Corporation (“Kerr-McGee”), for tax consulting services. Gamble

Simmons claims Kerr-McGee undercompensated the company for an audit review

it performed and now brings this consolidated appeal challenging the district

court’s grant of summary judgment and an award of attorneys’ fees in favor Kerr-

McGee. We exercise jurisdiction pursuant to 18 U.S.C. §1291, and affirm in

part, reverse in part, and remand.

I. Introduction

Gamble Simmons is a tax consulting firm specializing in the review and

evaluation of audits by state taxing authorities. In September 1988, shortly after

the Louisiana Department of Revenue and Taxation (“the Department”) issued

Kerr-McGee a “Notice of Tax Due,” including tax, interest and penalties based

on Sales and Use tax assessments for the years 1982-1984, Gamble Simmons

approached Kerr-McGee with an offer to review the company’s records and

determine whether it properly owed the taxes assessed, and whether the amount

of tax could be reduced. Concerned about its tax liability, Kerr-McGee accepted

Gamble Simmons’ offer; and, in May 1991, the parties entered a contract

-2-
(hereinafter “contract” or “agreement”) under which Gamble Simmons agreed to

perform its tax consulting services for Kerr-McGee. The payment provisions of

the agreement specifically obligate Kerr-McGee to pay Gamble Simmons “an

amount equal to forty percent (40%) of the amount, if any, by which the total

amounts of taxes, penalties and/or interest ... heretofore paid by Kerr-McGee ...

and/or assessed by the Department ... are refunded or reduced.”

Gamble Simmons performed under the agreement for the next three years,

ultimately obtaining a very favorable outcome for Kerr-McGee. As a result of

Gamble Simmons’ efforts, the Department admitted Kerr-McGee owed no

additional taxes or interest for the years 1982-1984 and that it had actually

overpaid taxes in the amount of $1,447,985. The Department subsequently

refunded a portion of that amount directly to Kerr-McGee and applied the

balance to offset taxes and interest Kerr-McGee owed for 1985-1987.

After obtaining the favorable result, Gamble Simmons billed Kerr-McGee

$1,095,439 for its services. However, Kerr-McGee disputed the charges and paid

Gamble Simmons only $665,418, a figure Kerr-McGee arrived at through its own

independent calculations. The difference between the parties’ figures resulted

from their conflicting interpretations of certain contract provisions and

-3-
disagreement over what amounts to include in determining the contingency fee

owed to Gamble Simmons. After settlement efforts failed, Gamble Simmons

filed suit in the district court of Harris County, Texas to recover the difference in

the amount claimed and the amount Kerr-McGee actually paid. Kerr-McGee

subsequently removed the diversity action to federal court in the Western District

of Oklahoma.

Gamble Simmons’ final amended complaint stated several alternative

causes of action. First, Gamble Simmons argued that by choosing to take a

refund of tax and interest generated by its efforts rather than applying the credit

to subsequent years’ tax liability – which would have resulted in reduced penalty

and interest liability for those years – Kerr-McGee deprived Gamble Simmons of

its forty percent fee on the savings. Second, Gamble Simmons alleged, as an

alternative to its first cause of action, that Kerr-McGee received total benefits

from Gamble Simmons’ efforts in the amount of $2,738,597.53 in tax, interest,

and penalty reductions and refunds, and that the contract entitles Gamble

Simmons to forty percent of those benefits. Specifically, Gamble Simmons

claimed its compensation should include statutory interest paid to Kerr-McGee by

the Department as part of the refund for overpayment. In its third cause of

action, Gamble Simmons asserted, in the alternative, that because Kerr-McGee

-4-
representatives admitted the contract entitles Gamble Simmons to its percentage

share of interest included as part of the refund, and some of Kerr-McGee’s own

calculations indicate it owed Gamble Simmons $982,156.70, Kerr-McGee must

pay Gamble Simmons the balance due of $316,738.60 plus pre-judgment interest.

Fourth, as an alternative to its third cause of action, Gamble Simmons asserted

that based on the actual refund Kerr-McGee received from the Department of

$1,274,732.10, the correct amount payable to Gamble Simmons based on Kerr-

McGee’s own calculation methods was $1,016,917.29, leaving an unpaid balance

of $351,499.19 plus pre-judgment interest. Fifth, Gamble Simmons argued that

even if the court found the contract did not permit it to share in interest Kerr-

McGee received as part of the refund from the Department, the agreement at least

entitles Gamble Simmons to its fee on the benefits conferred minus the interest.

Gamble Simmons asserted this alternative amount was $787,498.94, and

requested relief in the amount of the deficiency, $122,080.84, plus pre-judgment

interest. Finally, in its sixth cause of action, Gamble Simmons contended Kerr-

McGee breached the contract by refusing to allow Gamble Simmons to review

Kerr-McGee’s books for periods beyond 1982-1984, and as a result, Gamble

Simmons suffered the loss of fees it could have generated through reviewing later

years’ records.

-5-
In September 1995, both parties filed simultaneous cross-motions for

summary judgment to resolve Gamble Simmons’ claims. The district court issued

an order on June 20, 1996 in which it addressed the parties’ motions and granted

summary judgment in favor of Gamble Simmons in the amount of $769,850 less

payments already made by Kerr-McGee. In reaching this conclusion, the district

court decided the contract is not ambiguous and does not entitle Gamble

Simmons to a portion of the interest paid to Kerr-McGee as part of the refund for

overpayment. However, this initial interlocutory order did not dispose of all the

issues in the case, and the parties subsequently filed additional cross-motions for

summary judgment pertaining to the remaining issues.

On June 4, 1997, the district court issued a comprehensive Memorandum

Opinion and Order covering the remaining claims. The court decided the

contract entitles Gamble Simmons to forty percent of the 1982-1984 refund

generated through its efforts; but, the agreement does not allow Gamble Simmons

to collect forty percent of the incidental interest and penalty reductions in

subsequent years resulting from the application of 1982-1984 tax refund to the

later periods. The district court based its decision primarily on the fact that the

incidental interest or penalty savings Kerr-McGee realized on the 1985-1987

audit were not based directly on Gamble Simmons’ work product or information.

-6-
Additionally, the district court ruled the contract between the parties only

contemplated a single audit involving the examination of Kerr-McGee’s 1982-

1984 records. The court refused to grant Gamble Simmons’ request to review

Kerr-McGee’s 1985-1991 records for any other purposes. 1

After the court’s summary judgment rulings, the parties were unable to

reach an accord on a proposed judgment as ordered by the court. Consequently,

on October 27, 1997, the district court issued its own final judgment granting

Kerr-McGee’s motion for summary judgment and awarding Gamble Simmons

$665,418 for its services – the exact amount Kerr-McGee had already paid.

On appeal, Gamble Simmons raises several issues. First, it contends the

district court erred in finding Gamble Simmons was not entitled to a percentage

of the interest the Department paid to Kerr-McGee as part of a refund for

overpayment of taxes. Second, Gamble Simmons claims the district court should

have considered extrinsic evidence it submitted regarding the formation of the

agreement, the parties’ subjective interpretations of the agreement, and certain

1
The court noted the parties allowed Gamble Simmons to examine other
years’ records but only for purposes related to the 1982-1984 audit of Sales and
Use taxes.

-7-
alleged admissions made by Kerr-McGee representatives regarding amounts owed

to Gamble Simmons. Third, Gamble Simmons argues the district court erred

when it decided the agreement only covered the audit of tax years 1982-1984.

Fourth, Gamble Simmons claims the district court should have granted its Motion

to Settle Contents, entered final judgment in its favor, and granted its motion for

an evidentiary hearing on the contract interpretation issues. Finally, in a

consolidated appeal, Gamble Simmons disputes the district court’s award of

attorneys’ fees to Kerr-McGee.

II. Standard of Review

Because this appeal is based solely on the district court’s summary

judgment rulings, we review the case de novo , employing the same legal

principles as the district court and construing the factual record and the

reasonable inferences therefrom in the light most favorable to the party opposing

summary judgment. See Byers v. Albuquerque

150 F.3d 1271

, 1274 (10th Cir.

1998); Kane v. Capital Guardian Trust Co.      ,

145 F.3d 1218

, 1221 (10th Cir.

1998). Summary judgment is appropriate if the record shows “there is no

genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” Fed. R. Civ. P. 56(c). An issue of material fact is

genuine only if the nonmovant presents facts sufficient to show that a reasonable


                                         -8-
jury could find in favor of the nonmovant.         Anderson v. Liberty Lobby, Inc.   ,

477 U.S. 242

, 248 (1986); see also Lawmaster v. Ward ,

125 F.3d 1341

, 1346-47

(10th Cir. 1997). If our inquiry reveals no genuine issue of material fact in

dispute, then we review the case to determine if the district court correctly

applied the substantive law.   Kaul v. Stephan ,

83 F.3d 1208

, 1212 (10th Cir.

1996).



                                 III. Contract Claims

      The present case requires us to ascertain the intent of the parties as

expressed under the terms of their agreement with regard to Gamble Simmons’

compensation. We must decide what portion of the tax reduction and refunds

attributable to Gamble Simmons’ efforts are properly included as elements of its

contingency fee under the agreement and what tax years the agreement

encompasses.



      As a preliminary matter, we emphasize the law of the forum where the

contract is made or is to be performed generally governs contract actions of this

sort. Bohannan v. Allstate Ins. Co. ,

820 P.2d 787

, 793 (Okla. 1991);         see also

Okla. Stat. tit. 15, § 162. In this diversity action the parties agree, and we find,

the law of Oklahoma controls our inquiry.


                                             -9-
       In Oklahoma, a comprehensive statutory scheme governs contractual

agreements. See Okla. Stat. tit. 15, §§ 151 - 178. These statutes provide that

whenever possible we must give effect to mutual intent of the parties as

expressed in the language of the contract, so long as it is unambiguous on its face

and there exists no “fraud, accident, or pure absurdity” affecting the agreement.

Public Serv. Co. of Okla. v. Burlington Northern R.R. Co.   ,

53 F.3d 1090

, 1097

(10th Cir. 1995); Okla. Stat. tit. 15, § 154. If the contract is ambiguous, then we

may resort to extrinsic evidence, including the subsequent statements and actions

of the parties, in order to construe the agreement.   See Pierce Couch Hendrickson

Baysinger & Green v. Freede ,

936 P.2d 906

, 912 (Okla. 1997). However, if the

contract is unambiguous its language is the only legitimate evidence of what the

parties intended, see Mercury Inv. Co. v. F.W. Woolworth Co.    , 706 P.2d, 523m

529 (Okla. 1985), and we will not rely on extrinsic evidence to vary or alter the

plain meaning. See, e.g., Empire Oil & Ref. Co. v. Babson    ,

77 P.2d 682

, 684

(Okla. 1938) (ruling that resort to extraneous evidence is proper only if the

contract is ambiguous.)



       A.     The Question of Ambiguity

       Because Gamble Simmons seeks to prove the parties’ intent by utilizing

extrinsic evidence, we must determine the admissibility of such evidence by first


                                            -10-
deciding as a matter of law whether the terms of the contract between Kerr-

McGee and Gamble Simmons are ambiguous.           Kerr-McGee Corp. v. Admiral Ins.

Co.,

905 P.2d 760

, 762 (Okla. 1995). Oklahoma law states “[a] contract is

ambiguous if reasonably susceptible of more than one interpretation.”     Williams

v. Shearson Lehman Bros., Inc .,

917 P.2d 998

, 1004 (Okla. Ct. App. 1996), or

“through vagueness of expression it has a double meaning.”       See Cinocca v.

Baxter Labs., Inc. ,

400 F. Supp. 527

, 532 (E.D. Okla. 1975). In other words, a

contract is ambiguous if reasonably intelligent persons, on reading the contract,

would honestly differ as to its proper meaning.    See United States Fidelity &

Guar. Co. v. Guenther ,

281 U.S. 34

, 37 (1930).



      In this case, we acknowledge the parties’ basic disagreement over the

interpretation of several provisions of the contract. However, the mere fact that

the parties disagree about the meaning of a contract or argue for a different

construction does not necessarily make the agreement ambiguous. A party cannot

manufacture an ambiguity in a contract that is clear on its face merely by filing a

lawsuit contesting its meaning or claiming an alternative interpretation.

Moreover, if a contract is plain and unambiguous, it does not become ambiguous

because its operation will work a hardship upon one of the parties and a

corresponding advantage to the other. The dispositive factor in our analysis is


                                           -11-
not whether the parties disagree or inequity results, but whether an examination

of the entire agreement reveals more than one reasonable interpretation.

Bartmann v. Maverick Tube Corp .,

853 F.2d 1540

, 1545 (10th Cir. 1988)

(finding “[a] term is unambiguous where it is reasonably and fairly susceptible of

only one meaning”).



      In order to decide whether the contract is ambiguous, we look at the whole

contract and construe the words as they are “understood in their ordinary and

popular sense, rather than according to their strict legal meaning, unless used by

the parties in a technical sense, or unless a special meaning is given to them by

usage.” Okla. Stat. tit. 15, §160. In the present case, the parties’ intent is

apparent, regardless of whether the terms are read in their ordinary, legal, or

technical sense. The compensation clause at the heart of this contract dispute

plainly and succinctly enumerates the elements of tax savings properly included

in calculating Gamble Simmons’ contingency fee, as well as the tax years for

which Gamble Simmons is permitted to perform its services. Although Gamble

Simmons urges us to find the terms ambiguous and thereby allow the introduction

of extrinsic evidence tending to contradict the express contract language, we

decline to indulge its strained construction of the agreement to “create and then

construe an ambiguity so as to import a favorable consideration to either party


                                          -12-
than that expressed in the contract.”

Kerr-McGee, 905 P.2d at 763

(internal

quotation marks & citation omitted);     see also Max True Plastering Co. v. United

States Fidelity & Guar. Co. ,

912 P.2d 861

, 869 (Okla. 1996) (refusing to indulge

in constrained interpretations of contracts to find ambiguity). Our review of the

record reveals contract terms that are unambiguous, readily understood, and not

“fairly susceptible” of various interpretations. Therefore, in the absence of any

“fraud, deception, or unfair dealing” by either party in procuring the agreement,

or “legal impediment shown” that prevented the parties from entering into the

contract and expressing it in language of their own choosing, we will not resort

to extrinsic evidence to interpret or revise the agreement.   Northwestern Oil &

Gas Co. v. Branine ,

175 P. 533

, 534 (Okla. 1918).      2




       B.     Applying the Terms of the Contract

       Having decided the contract is unambiguous and a clear reflection of the

parties’ intentions, we now apply the terms of the contract to resolve the



       2
         Because we find the terms pertaining to contested issues in this lawsuit
unambiguous, we ignore Gamble Simmons’ proposed evidence of telephone
conversations with Kerr-McGee representatives and any other extrinsic evidence
tending to disturb or alter the plain meaning of the contract terms. See
Prudential Ins. Co. v. Glass,

959 P.2d 586

, 594 (Okla. 1998) (ruling that if a
contract is complete in itself and is unambiguous when viewed in its entirety, "its
language is the only legitimate evidence of what the parties intended").

-13-
contested contractual issues in this case. The agreement plainly reveals the

parties’ intent with regard to both the amounts to include in calculating Gamble

Simmons’ contingency fee and the permissible scope of its right to review Kerr-

McGee’s records.

1. Refund Amounts Properly Included the Contingent Fee

In terms of compensation, the contract states that Gamble Simmons should

receive

an amount equal to forty percent (40%) of the amount, if any, by
which the total amounts of taxes, penalties and/or interest calculated
through the date of this Agreement heretofore paid by Kerr-McGee
to its vendors, the State of Louisiana and/or assessed by the
Department but remain unpaid as of the date hereof, are refunded or
reduced ....

(Emphasis added). Interpreting this clause, the district court correctly decided

the agreement entitles Gamble Simmons to no more compensation for its services

than forty percent of any refund or reduction in taxes previously paid or assessed

as part of the 1982-1984 audit. In other words, the statutory interest the

Department included as part of the refund to Kerr-McGee is not an amount

subject to Gamble Simmons’ contingency fee under the contract because it does

not reflect an amount paid by Kerr-McGee or assessed against it for the years

1982-1984. The statutory interest actually represents a reasonable return on the

-14-
amount the Department erroneously charged Kerr-McGee in prior years.

Nowhere does the contract contemplate Gamble Simmons sharing in this statutory

interest either expressly or impliedly. We note, however, the contract provides

Gamble Simmons should receive forty percent of the refund or reduction based

on the total amount of 1982-1984 taxes overpaid or assessed in 1982-1984,

regardless of whether the overpayment is actually repaid directly to Kerr-McGee

or applied to later years’ tax liability – as long as those amounts are based on

Gamble Simmons’ efforts during the its review of the 1982-1984 audit.

We find Gamble Simmons’ counter-arguments on this point unavailing.

Our interpretation of the contract does not, as Gamble Simmons contends, render

the term “refund” in the contract a nullity. Rather, it reflects the intent of the

parties as clearly expressed in the terms of the contract by giving effect to the

meaning of “refund” as used in conjunction with other language in the contract to

limit Gamble Simmons’ contingency fee to refund amounts “heretofore paid” by

Kerr-McGee or “assessed” by the Department. Moreover, our reading of the

contract does not have the effect of eliminating the reduction of assessed interest

as part of Gamble Simmons’ contingent compensation. On the contrary, we

recognize the contract clearly requires Kerr-McGee to pay Gamble Simmons its

contingent share of reductions in interest assessed against Kerr-McGee for the

-15-
1982-1984 audit period. The “interest” not subject to Gamble Simmons’

contingent fee is the statutory interest awarded to Kerr-McGee as part of the

refund for overpayment.

We are similarly unpersuaded by Gamble Simmons’ argument asserting

that because Louisiana Rev. Stat. Ann. § 47:1624(A) mandates the payment of

interest as part of a Department refund for tax overpayments, the statute must be

read into Gamble Simmons’ contract with Kerr-McGee to make the term “refund”

include the statutory interest. Gamble Simmons’ argument on this point refers to

a sound legal principle of contract construction which states “ unless the contract

discloses a contrary intention , an existing statute will be read into it to the same

effect as an express provision.” United States v. Essley,

284 F.2d 518

, 520 (10th

Cir. 1960) (emphasis added). Nevertheless, we question the applicability of this

principle in the present case because the contract expresses an intention contrary

to the statute. Again, we emphasize the terms of the contract expressly limit

Gamble Simmons’ contingent share to amounts “heretofore paid” or “assessed”

that are “refunded or reduced.” In light of this limiting language in the contract

that discloses an intention not to include the statutory interest as part of the

refund, we decline to interpret the term refund as used in the contract to

incorporate Louisiana Rev. Stat. Ann. § 47:1624(A).

-16-
All other arguments aside, the basic problem with Gamble Simmons’

position is that it urges us to imply contract provisions that simply are not there.

For example, in its brief Gamble Simmons states that “paragraph 4 of the

Agreement clearly contemplates that to the extent Kerr-McGee received any

benefit in reduction of taxes, interest and penalties, Gamble Simmons’ fee would

be 40% thereof.” (Emphasis added). However, Gamble Simmons’ statement

does not reflect the agreement of the parties as expressed in the unambiguous

terms of the contract. The agreement between the parties is not to pay Gamble

Simmons a portion of any benefit Kerr-McGee received through Gamble

Simmons’ efforts, but a contingent interest in the amount by which Gamble

Simmons’ services resulted in the refund or reduction of taxes, interest, and/or

penalties previously paid by Kerr-McGee or assessed by the Department during

the audit period. The contract enumerates a specific range of compensable

interests, not the wide-open “benefit” approach Gamble Simmons advocates.

2. Application of the Refund to Subsequent Years’ Tax Liability

We also agree with the district court’s assessment with regard to the

application of the contract to later years’ taxes. Gamble Simmons is only entitled

to its contingent share of the refund or reduction in amounts previously paid or

assessed for tax years 1982-1984, whether such amounts are actually paid directly

-17-
to Kerr-McGee or applied to later years’ taxes.

In addition to its share of the 1982-1984 refund amounts applied to Kerr-

McGee’s 1985-1987 tax liability, Gamble Simmons also claims Kerr-McGee

owes it forty percent of the interest reductions Kerr-McGee realized in the 1985-

1987 audit period through application of the 1982-1984 refund. However,

Gamble Simmons’ claim again contravenes the language of the contract. Our

reading of the agreement persuades us that Gamble Simmons is entitled to

compensation only for whatever amount its efforts directly caused the

Department to refund or reduce taxes, interest and penalties previously paid by or

assessed against Kerr-McGee with regard to the 1982-1984 audit. The indirect,

incidental benefit of interest reduction that occurred as a result of the

Department’s unilateral application of a portion of the 1982-1984 refund to Kerr-

McGee’s later years’ tax liability is not subject to Gamble Simmons’ forty

percent contingent fee because the interest reduction is not the direct result of

Gamble Simmons efforts with regard to its 1982-1984 audit review. In other

words, the incidental benefit to Kerr-McGee for the interest reduction in 1985-

1987 represents the consequence of the Department’s decision to apply the 1982-

1984 refund to subsequent audits – not the result of Gamble Simmons’ efforts.

-18-
This result makes sense if we hypothesize for a moment about what amount

Gamble Simmons would have received if the Department had refunded the entire

sum directly to Kerr-McGee and not applied any amount toward subsequent tax

liabilities. Under those circumstances, Gamble Simmons would still receive its

forty percent share of the refunded amount as provided by the contract, but it

would have no further claim for compensation from any incidental or secondary

financial benefit Kerr-McGee might enjoy through the productive use of the

refund. For example, if Kerr-McGee took the refund and immediately paid off an

outstanding debt, Gamble Simmons clearly would not have a viable claim for a

share of the interest savings Kerr-McGee would realize from the transaction.

Likewise, if Kerr-McGee took the refund and immediately paid its tax liability

for the 1985-1987 audit, Gamble Simmons would have no claim to the

accompanying reduction in interest on the tax liability. We see no difference of

any significance between these hypothetical examples and what actually

happened in the present case. The Department’s unilateral decision to apply a

portion of the 1982-1984 refund to the later audit has the same effect as if Kerr-

McGee itself had received the refund and immediately paid its 1985-1987 tax

liability.

If the contract had stated the parties’ intention for Gamble Simmons to not

-19-
only share in the reduction or refund of taxes, penalties or interest Kerr-McGee

realized from Gamble Simmons efforts with regard to the 1982-1984 audit, but

also whatever incidental reduction resulted from the application of the 1982-1984

refund to later years’ tax liability, then Gamble Simmons would have a viable

claim for its share of the incidental benefit. However, understood in its entirety,

the contract simply does not evidence Gamble Simmons’ right to share in the

secondary benefits realized by Kerr-McGee through the Department’s unilateral

application of the 1982-1984 refund to the 1985-1987 audit. Therefore, we

affirm the district court’s conclusion that refunds and reductions in taxes,

penalties, and interest previously paid or assessed in 1982-1984 are subject to

Gamble Simmons’ forty percent fee, but the incidental reductions in interest or

penalties resulting from the application of the 1982-1984 refund are not. 3

3
Gamble Simmons makes a very puzzling argument in its brief contesting
the district court’s finding on this issue we feel compelled to address. It asserts
that if the district court’s conclusion regarding the interpretation of the contract is
taken to its logical extreme, it would mean Gamble Simmons would receive no
compensation if the entire refund it generated had been applied to subsequent
years’ taxes, interest, and penalties. If this is Gamble Simmons’ understanding of
the district court’s ruling, we believe it has misinterpreted the findings. Our
decision to deny Gamble Simmons any compensation for benefits realized by
Kerr-McGee from the application of a portion of the refund to subsequent years’
taxes under the terms of the contract, in no way means Gamble Simmons would
get nothing for its services if the refund was applied entirely to subsequent years.
On the contrary, Gamble Simmons is entitled to everything the contract allows –
forty percent of taxes, interest, and/or penalties previously paid or assessed during
the 1982-1984 audit period which the Department refunded or reduced because of
Gamble Simmons efforts. As long as the refund represents such amounts, Gamble

-20-
3. Access to Later Years’ Records

To the extent Gamble Simmons requests access Kerr-McGee’s records for

later years’ taxes, we find the terms of the contract do not so provide. The

agreement only allows

Gamble Simmons to review Kerr-McGee’s books and records with
respect to transactions involving Louisiana Sales and Use Taxes for
the applicable statutory periods for the purpose of evaluating said
audits and assessments and advising Kerr-McGee with respect
thereto ....

Although, viewed in isolation, this provision contains no express limitations on

Gamble Simmons’ asserted right to audit Kerr-McGee’s records, we must

interpret it in light of the entire contract. See Okla. Stat. Ann. tit. 15, § 157

(1991) ("The whole of a contract is to be taken together, so as to give effect to

every part, if reasonably practicable, each clause helping to interpret the

others."). In addition to the clause noted, the contract also contains other

provisions that lend context and perspective to our application. The opening

recitals are especially helpful to objectively analyze the intent of the parties with

regard to the scope of the audit. They discuss the Department’s audit of Kerr-

Simmons is entitled to its share whether the refund is paid directly to Kerr-McGee
or applied to subsequent years. What Gamble Simmons does not share in as part
of its compensation, is the resulting incidental tax, penalty and/or interest
reduction realized through application of the refund to later tax years because that
reduction is not directly attributable to services Gamble Simmons performed in its
review of the 1982-1984 audit.

-21-
McGee’s Sales and Use taxes paid in 1982-1984, and imply that the Department’s

audit was the driving force behind Kerr-McGee’s decision to contract for Gamble

Simmons’ services. Using these initial recitals as a backdrop, we find the only

reasonable construction of the subsequent terms of the contract is that the parties

intended to limit the scope of Gamble Simmons’ work to the 1982-1984 audit.

When the contract refers specifically to “the applicable statutory periods”, we

believe that clause plainly makes reference to the aforementioned 1982-1984

audits discussed in the opening recitals of the contract, not “applicable statutory

periods” in the some general sense. Accordingly, we find the agreement contains

no compelling support for Gamble Simmons’ argument that it is entitled to

examine Kerr-McGee’s records for additional statutory periods, other than where

necessary as incidental to its audit for 1982-1984. 4

4
Moreover, even if we strained the language to find the contract allowed
Gamble Simmons to review later tax years, in no way does the contract indicate
the parties mutually agreed to have Gamble Simmons perform its services and
receive compensation for tax years beyond the 1982-1984 period specifically
discussed in the opening recitals of the contract.

-22-
IV. Post-Summary Judgment Proceedings

A. Background

Following the district court’s June 4, 1997 Memorandum & Order granting

Kerr-McGee’s motion for summary judgment, the court instructed the parties to

submit a proposed final judgment reflecting the court’s ruling. However,

negotiations failed and the parties were unable to reach an accord regarding the

content of the final judgment. The parties essentially disagreed about how to

calculate Gamble Simmons’ final compensation, while giving effect to the district

court’s interpretation of the contract. The major point of contention was whether

to exclude from Gamble Simmons’ compensation certain refunds the Department

made to Kerr-McGee of payments Kerr-McGee rendered after the execution of

the agreement (hereinafter “post-agreement payments”). Because the parties

could not agree, Gamble Simmons filed a motion to settle the contents of the

final judgment and a request for an evidentiary hearing on the compensation

calculation issue. After consideration of the parties’ arguments, the district court

denied Gamble Simmons’ post-summary judgment motion to settle contents and

request for an evidentiary hearing in an order dated October 27, 1997. In its

order, the district court stated its summary judgment orders already resolved all

the issues presented, and it would enter judgment in favor of Kerr-McGee.

-23-
In its brief on appeal and in post-summary judgment proceedings before

the district court, Gamble Simmons argues that even under the contractual

interpretation outlined in the district court’s orders, Kerr-McGee still owes

money for services Gamble Simmons rendered. In support of its contention,

Gamble Simmons submits an affidavit including calculations showing that, even

excluding statutory interest refunded to Kerr-McGee and any benefit to Kerr-

McGee from the application of the refund to later audits as instructed by the

district court, Gamble Simmons still produced a benefit to Kerr-McGee in tax,

penalty and interest refunds and reductions totaling $1,750,446.75. After taking

forty percent of that amount ($700,178.70) and subtracting what Kerr-McGee has

already paid ($665,418.10), Gamble Simmons claims Kerr-McGee still owes it

the difference of $34,760.60 plus prejudgment interest.

In reply to Gamble Simmons’ arguments, Kerr-McGee claims it has paid

Gamble Simmons everything it owes, and explains the relatively small monetary

difference between the amount it paid and the amount Gamble Simmons requests

as attributable to certain “post-agreement payments” it made to the state of

Louisiana. Kerr-McGee claims it made these payments to satisfy tax liabilities

arising from Department audits encompassing the years 1985-1987, and that the

Department later refunded the payments after it determined Kerr-McGee had

-24-
overpaid its tax liabilities for 1982-1984. Kerr-McGee argues that because it

made the payments after contracting with Gamble Simmons, it need not include

these amounts in its compensation calculations. In support of this claim, Kerr-

McGee cites the terms of the contract which limit Gamble Simmons contingent

interest to forty percent of any refund or reduction of amounts paid or assessed as

of the date of the agreement .

B. Discussion

We agree with Kerr-McGee to the extent that the contract unambiguously

limits Gamble Simmons’ compensation to payments or assessments made prior to

the execution of the agreement. The contract specifically requires Kerr-McGee to

pay Gamble Simmons forty percent of any reduction or refund in “total amounts

of taxes, penalties and/or interest calculated through the date of this Agreement .”

(Emphasis added). In other words, Gamble Simmons has no viable claim under

the strict contractual language to any refund of payments Kerr-McGee made, if

any, subsequent to the agreement date. The contract is clear on this point, and its

interpretation is properly the subject of summary adjudication. Nevertheless, we

find the court’s order problematic because it does not specifically address the

issue of the alleged post-agreement payments, or sufficiently explain its rationale

for determining that Kerr-McGee only owes Gamble Simmons what it had

-25-
previously paid.

In our estimation, the district court overlooked a valid, additional issue

raised by Gamble Simmons at this stage in the proceedings, specifically Kerr-

McGee’s alleged post-agreement payments. We find no evidence of such

payments in Kerr-McGee’s brief on appeal or in the proceedings below. In its

brief, Kerr-McGee makes a general citation to the affidavit of its Assistant Tax

Director for Research and Audits to support its claim. However, Kerr-McGee

never explains how or where the affidavit shows any evidence of post-agreement

payments, nor does our independent study of the affidavit reveal any support for

Kerr-McGee’s post-agreement payment claim. 5

Consequently, we must reverse the district court to the extent its decision

rests upon Kerr-McGee’s unsubstantiated assertions of post-agreement payments.

We remand for further proceedings with regard to the discrete issue of the post-

5
Perhaps somewhere buried in the record there is some support for Kerr-
McGee’s position, but our review found no evidence either in the affidavit or
other portions of the record. In the absence of sufficient citation to record
support for a party’s allegations, we decline to search for the proverbial needle in
a haystack. See Gross v. Burggraf Constr. Co.,

53 F.3d 1531

, 1546 (10th Cir.
1995). If we have overlooked some crucial evidence, the parties will no doubt
expose it on remand.


                                        -26-
agreement payments and their effect on the ultimate calculation of Gamble

Simmons’ compensation. On remand, the district court should afford the parties

the opportunity to present evidence on the issue of the disputed post-agreement

payments and provide a final, accurate calculation of Gamble Simmons’

compensation based on our rulings in this case. As the case now stands on the

record before us, we find no evidence to support the court’s summary judgment

relating to the discrete issue of post-agreement payments and the effect, if any,

on the amount owed to Gamble Simmons for its services under the contract.



                                V. Attorneys’ Fees

      As part of this consolidated appeal, we also consider Gamble Simmons’

challenge to the district court’s award of attorneys’ fees and costs to Kerr-

McGee. In its first claim of error, Gamble Simmons asserts the district court

should have stayed the determination of costs and attorneys’ fees pending our

review of the underlying contract issues. Second, Gamble Simmons argues the

district court committed error by failing to make findings of fact and conclusions

of law regarding the award of attorneys’ fees and refusing to grant an evidentiary

hearing on the reasonableness of the attorneys’ fees. Finally, Gamble Simmons

claims the district court’s ultimate award of attorneys’ fees to Kerr-McGee was

unreasonable.


                                         -27-
      Oklahoma law provides "[i]n any civil action to recover on ... [a] contract

relating to ... labor or services, ... the prevailing party shall be allowed a

reasonable attorney fee to be set by the court, to be taxed and collected as costs."

Okla. Stat. tit. 12, § 936. The award of attorneys’ fees to the prevailing party

under this provision is mandatory.    Arkla Energy Resources v. Roye Realty and

Developing, Inc .,

9 F.3d 855

, 865 (10th Cir.1993) (citing    Ellis v. Lebowitz ,

799 P.2d 620

, 621 (Okla. 1990)). However, the determination of reasonableness and

amount of the fee award is generally left to the sound discretion of the district

court. Harris Mkt. Research v. Marshall Mktg. & Communitcations, Inc.            ,

948 F.2d 1518

, 1527 (10th Cir. 1991) (applying an abuse of discretion standard and

noting “an appellate court plays a ‘limited role’ in reviewing a district court’s

award of attorneys’ fees and costs, and deference is given to a district court’s

judgment on the matter, since the court is in a better position to assess the course

of litigation and quality of work.” (Internal quotation marks & citation omitted)).

Often, a hearing may be necessary to resolve material factual disputes between

the parties over the reasonableness and amount of attorneys’ fees,     see Michael A.

Cramer, MAI, SRPA, Inc. v. United States     ,

47 F.3d 379

, 383 (10th Cir. 1995)

(finding “an evidentiary hearing is generally preferred, if not required, when

factual diputes exist in connection with a request for attorneys fees”), unless the

district court determines it has sufficient knowledge to make a decision without a


                                           -28-
hearing based on its experience with the case, and briefs and affidavits submitted

by the parties

id. at 383-84;

Harris Mkt. Research , 948 F.2d at 1528 (affirming

grant, without evidentiary hearing, of prevailing party's request for attorneys' fees

pursuant to contract where "[n]o hearing was necessary to aid the trial court's

determination"). In any event, the district court should consider: (1) what

attorney services were performed; (2) which services were necessary; (3) the

value of the necessary services; and (4) what a reasonable fee for the services

would be. Darrow v. Spencer ,

581 P.2d 1309

, 1314 (Okla. 1978). The court

should then make an adequate record of its findings in the event appellate review

is required. See King v. McCord ,

621 F.2d 205

, 207 (5th Cir. 1980) (holding

district court’s ruling on attorneys’ fees without proper explication of its

rationale renders appellate review of the award a “meaningless gesture”).

Although these principles establish the bases for our review of an

attorneys’ fees award, we decline to address any of the procedural and

substantive issues raised by Gamble Simmons at this point. Although the parties’

dispute over attorneys’ fees would have been ready for our review had we

affirmed the district court’s judgment in all respects, because our decision to

reverse in part and remand for further proceedings may require the district court

to alter or amend its final judgment, we feel a decision on the merits of the

-29-
attorneys’ fees claim would be premature. If, for example, the district court

ultimately determines Kerr-McGee still owes Gamble Simmons some degree of

compensation, the court may alter its decision regarding the amount of attorneys’

fees to award or perhaps even change who qualifies as the “prevailing party”

under Okla Stat. tit. 12, § 936. Accordingly, due to the unsettled nature of the

underlying judgment, we refrain from rendering an opinion on the attorneys’ fees

issues raised by Gamble Simmons. We leave the attorneys’ fees issue open for

unfettered reconsideration by the district court at the conclusion of these

proceedings on remand.

VI. Conclusion

In summary, upon de novo review of these proceedings, we find the

contract between Gamble Simmons and Kerr-McGee is unambiguous and any

extrinsic evidence tending to alter the reasonable interpretation of the agreement

is inadmissible. The contract clearly indicates Gamble Simmons should receive

forty percent of the amount by which its efforts caused the Department to refund

or reduce Kerr-McGee’s taxes, penalties and/or interest previously paid or

assessed for 1982-1984. Accordingly, Gamble Simmons’ contingent fee should

not include statutory interest included as part of the Department’s refund paid to

Kerr-McGee, additional benefits realized by Kerr-McGee from the application of

-30-
a portion of the refund to tax liabilities for later years, or post-agreement

payments, if any, later refunded to Kerr-McGee. Also, we find the contract does

not permit Gamble Simmons to review Kerr-McGee books and records for later

years, other than incident to Gamble Simmons’ review of the 1982-1984 audit.

Therefore, we affirm the decision of the district court to the extent its summary

judgment rulings reflect these conclusions. However, we reverse in part and

remand for the district court to consider whether Kerr-McGee’s claimed post-

agreement payments find sufficient evidentiary support to merit summary

adjudication. Finally, in light of our decision, we decline to address the issues

pertaining to the district court’s award of attorneys’ fees pending the outcome of

the proceedings on remand.

We AFFIRM in part, REVERSE in part and REMAND for further

proceedings consistent with this opinion.

-31-
F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
APR 9 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT