A California-based law firm has sued Limetree Bay Ventures to recover $2.8 million in legal fees and other compensation it says it is owed after it was hired in early 2020 to represent the company for “equity and debt counseling.”
According to the suit filed Aug. 16 in Dallas County District Court, Gibson, Dunn & Crutcher was awarded $2,883,284 at an arbitration proceeding in June that Limetree Bay did not attend. It has asked the court to confirm the award.
Limetree Bay Ventures was the ownership company formed to oversee the St. Croix refinery, marine terminal, and oil storage facility when private equity firm ArcLight Capital Partners and partners purchased the former Hovensa plant out of bankruptcy in 2016 for $190 million. It had been shuttered since 2012.
By July 2021 — after several disastrous startup attempts that sprayed oil over neighboring homes, and a 60-day shutdown ordered by the Environmental Protection Agency — the refinery filed for Chapter 11 bankruptcy. Efforts began soon after to dissolve Limetree Bay Ventures, according to reports at the time. Port Hamilton Refining and Transportation subsequently acquired the refinery for $62 million at auction that December.
According to Gibson Dunn, Limetree Bay signed an engagement letter in February 2020 for the firm to provide equity and debt counseling. That letter was amended in January 2021 to expand the scope of legal services to include a potential restructuring transaction, it said.
However, according to the arbitrator’s order dated July 31, Limetree Bay began to fall behind on payments beginning in early 2021 and indicated to Gibson Dunn that it intended to pay the outstanding invoices. Despite these assurances, Limetree Bay failed to pay 11 invoices totaling more than $2.2 million, it said.
“The evidence showed that there was no basis for Respondent’s failure to pay the invoices. Legal services were requested and provided at Respondent’s direction and with its full knowledge. Invoices were submitted, and no issues of any kind were raised by Respondent within the 30-day period provided for in the Engagement Letter or at any time afterward. Respondent never objected to the amounts reflected in the invoices. … Respondent never refused to pay or objected to paying the outstanding amounts owed to Claimant for the legal services provided. Respondent simply failed to pay in breach of its contract with Claimant,” according to the arbitrator.
Moreover, Limetree Bay did not participate in arbitration despite receiving due notice and all pleadings related to the matter, he said.
In addition to contract claim and awards damages of $2,790,276, Gibson Dunn was also awarded attorney fees of $79,713 and arbitration fees of $13,295.
According to its engagement letter with Limetree Bay, the hourly rate for the Gibson Dunn attorneys assigned to the matter ranged from $860 to $1,295. The firm was founded in 1872 in Los Angeles and has more than 1,900 lawyers with offices in the U.S., Europe, South America, the Middle East and Asia, according to its website.
Separately, Limetree Bay Ventures was also named along with Limetree Bay Terminals and Limetree Bay Refining in a class-action suit filed in V.I. District Court by residents of St. Croix who claim their properties and cisterns were impacted by toxic flares from the refinery when it attempted to restart in 2021.
In May, Judge Wilma Lewis ordered Limetree Bay Terminals to supply water to those who relied solely on cistern water in the vicinity of the oil sprays in 2021 and for whom buying water would be a financial hardship. In June, she added detail to the order, designating 34 neighborhoods west of the refinery as potential water recipients.
Limetree Bay Terminals — now rebranded as Ocean Point Terminals — appealed the order, arguing it “should not be required to pay millions of dollars in establishing, running, and maintaining a water distribution program to potentially thousands of households when there has been no evidence of a water or health crisis warranting such a program.”
It also said that now that the company no longer owns the refinery and has changed its name, distributing water would harm Ocean Point’s reputation.
Lewis denied that appeal on Aug. 14, and on Thursday Limetree Bay Terminals filed notice that it will appeal the decision to the Third Circuit Court of Appeals.
