United States District Court, E.D. Arkansas, Northern Division
OPINION AND ORDER
LEON HOLMES, UNITED STATES DISTRICT JUDGE
question before the Court is whether to award attorney's
fees and costs to the prevailing party, Unimin Corporation.
Kathy Roberts and Karen McShane, currently the lessors under
a 1961 mineral lease, sought a declaratory judgment that the
lease was terminable at will under Arkansas law. The Court
granted summary judgment in favor of the lessee, Unimin,
holding that the lease was not terminable at will and
dismissing the action with prejudice. Unimin has now filed a
motion seeking attorney's fees pursuant to Federal Rule
of Civil Procedure 54(d)(2) and Ark. Code Ann. §
16-22-308, as well as costs under Rule 54(d)(1). Unimin asks
this Court to award $103, 347.93 in attorney's fees and
$2, 225.60 in costs. For the following reasons, Unimin's
motion for attorney's fees is denied and the request for
costs is granted.
lease at issue was the third in a series of leases dating
back almost a century. In 1918, J.W. Williamson and Lizzie
Williamson entered into a lease that granted Odell-Daly
Material Company the right to mine the property for siliceous
materials for a term of twenty years. The lease contained a
royalty provision that provided:
For the first Five (5) years of said term the royalty shall
be five (5) cents per ton on all materials shipped in crude
form and three (3) cents per ton on all materials shipped in
milled or pulverized form; that during the remainder of said
term it is agreed that the royalty shall be five (5) cents
per ton on all materials alike.
1934, J.W. Williamson entered into another lease for the
property with similar royalty language: “Five cents
(5¢) per ton on all material shipped, whether in crude
form or shipped in milled or pulverized form.” When
J.W. Williamson died in 1943, he left the property to his two
sons, Ray Williamson and Collie Williamson. Then in 1961,
after Collie Williamson's death, a new lease was entered
into between Ray Williamson and the devisees of Collie
Williamson, as lessors, and the Silica Products Company, Inc.
Unimin is the successor in interest to Silica. Kathy Roberts
and Karen McShane, who are Ray Williamson's
granddaughters, now own the subject property and are
assignees of the 1961 lease.
1961 lease provides for the following royalty structure:
1. In consideration of the premises, the Lessee covenants and
agrees to pay to Lessor the following royalties of all
materials mined from or hauled over, across or under the
above described lands . . . and shipped by Lessee whether in
crude form or shipped in milled or pulverized form, which
amount shall be net to Lessors;
(a) Five (5) cents per ton for all siliceous materials mined
or quarried from the [subject property];
(b) Two (2) cents per ton for all siliceous materials mined
or quarried from lands other than the above [subject
property] and hauled over, across or under the above [subject
property] . . .
(c) Provided, however, that lessee agrees to pay to Lessor a
minimum royalty of five (5) cents per ton of twenty five
(25%) per cent of all siliceous materials mined or quarried
from or hauled over, across or under the property of Lessors:
and the royalty paid on the siliceous materials mined or
quarried from Lessors property shall be chargeable against
this 25% minimum royalty.
The provision establishing the term of the 1961 lease states:
TO HAVE AND TO HOLD . . . unto the lessee and to its
successors and assigns for and during the term beginning the
1st day of March 1961 and ending the 31st day of January,
2007, and as long thereafter as mining and/or mining
operations are prosecuted on [the subject property] and/or
siliceous materials are hauled, transported over, across or
under [the subject property] . . . .
provision of the lease is called “the habendum
clause” because it defines the mineral estate's
duration. Black's Law Dictionary 838 (4th ed. 1968);
Gulf Oil Corp. v. Southland Royalty Co., 496 S.W.2d
547, 552 (Tex. 1973). The language at the center of this
dispute was the “thereafter” clause, which
provides that the lease continues so long as Unimin is mining
or engaged in certain mining operations on the property. The
plaintiffs contended that after January 31, 2007, the lease
term became indefinite and, therefore, terminable at will.
The issue was one of first impression in Arkansas.
Ultimately, the Court predicted that the Arkansas Supreme
Court would hold that such a lease is not terminable-at-will.
a diversity action, state law governs the availability of
attorney's fees where no conflicting federal statute or
court rule applies.” FutureFuel Chem. Co. v. Lonza,
Inc., 756 F.3d 641, 649 (8th Cir. 2014); see also
All-Ways Logistics, Inc. v. USA Truck, Inc., 583 F.3d
511, 520 (8th Cir. 2009). Arkansas law generally precludes an
award of attorney's fees, unless a statute or contractual
agreement provides for such an award. Stokes v.
Stokes, 2016 Ark. 182, 10, 491 S.W.3d 113, 120. Unimin
asks this Court to award attorney's fees pursuant to Ark.
Code Ann. § 16-22-308, which provides:
In any civil action to recover on an open account, statement
of account, account stated, promissory note, bill, negotiable
instrument, or contract relating to the purchase or sale of
goods, wares, or merchandise, or for labor or services, or
breach of contract, unless otherwise provided by law
or the contract which is the subject matter of the action,
the prevailing party may be allowed a reasonable
attorney's fee to be assessed by the court and collected
(Emphasis added). Enacted in 1987, section 16-22-308 and the
scope of its application have been the subject of numerous
court opinions. The Arkansas Supreme Court noted in its first
encounter with the then recently-enacted statute that it
would “no doubt have a considerable impact on [the law
concerning attorney's fees].” Damron v. Univ.
Estates, Phase II, Inc., 295 Ark. 533, 537, 750 S.W.
402, 404 (1987). The issue here is whether this action is one
to recover for breach of contract. If so, then the statute
gives the Court discretion to award attorney's fees to
Unimin, the prevailing party. See Crockett v. C.A.G.
Invs., Inc., 2011 Ark. 208, 12, 381 S.W.3d 793, 801.
recently, the Arkansas Supreme Court analyzed the scope of
section 16-22-308 in Stokes, where a son filed a
petition against his father to quiet title. 2016 Ark. at 2,
491 S.W.3d at 116. The son asked the trial court to set aside
a quitclaim deed, to award damages for conversion, fraud, and
negligence, and to permit recovery of rents and government
payments based on unjust enrichment. Id. The son
prevailed and the trial court awarded him attorney's fees
pursuant to section 16-22-308. Id. at 3, 491 S.W.3d
at 117. The father appealed the award, arguing that section
16-22-308 was inapplicable because the son did not allege a
claim for breach of contract. Id. at 11, 491 S.W.3d
at 121. The Arkansas Supreme Court agreed with the father for
two reasons. Id. First, based on the pleadings, the
dispute between the parties did not concern a breach of a
contract; rather, the complaint alleged a quiet-title action.
Id. Second, the son sought damages based on unjust
enrichment, not breach of contract. Id. at 12, 491
S.W.3d at 121.
16-22-308 is inapplicable to this action for similar reasons.
First, the action was for declaratory judgment, and second,
the plaintiffs sought restitution for unjust enrichment, not
breach of contract. The plaintiffs sought a declaration that
the lease was terminable-at-will or, if the lease was not
terminable-at-will, that the lease was unconscionable. They
also sought restitution based on unjust enrichment. The
plaintiffs abandoned the unconscionability argument and the