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February 15, 1991, the District Court in the Jarvis Christian
litigation issued an order determining in part that the royalty
interest owners were liable to Exxon under Federal common law for
restitution of overcharges received by them with respect to the
misclassified oil. The District Court then referred the
calculation of damages to a special master for determination. On
February 10, 1992, Exxon and the Allen parties entered into a
settlement agreement pursuant to which petitioner agreed to pay
Exxon $681,839.60 in settlement of the litigation.
Prior to the District Court's order on February 15, 1991, it
was uncertain whether the royalty interest owners had any
liability to Exxon.10 Prior to the settlement agreement on
February 10, 1992, the amount, if any, of petitioner's liability
pursuant to the District Court's order was also uncertain.11
Prior to the settlement, petitioner did not accept or acknowledge
any liability to Exxon under any of Exxon's theories, and
petitioner strenuously resisted Exxon's claims in maintaining
10Even then, the District Court's determination was subject
to appeal.
11Indeed, we note that a substantial portion of the amount
claimed by Exxon during its settlement conference with the
decedent's attorneys in April 1991 represented interest. Exxon
was seeking prejudgment interest beginning in February 1975 and
postjudgment interest beginning in June 1983 with respect to the
amounts it had paid to the Treasury in satisfaction of the
judgment in Exxon I. However, in its Feb. 15, 1991, order, the
District Court in the Jarvis Christian litigation had determined
that Exxon was only entitled to prejudgment interest beginning on
Feb. 27, 1986, and ending on the date of judgment in the Jarvis
Christian litigation, and thereafter for postjudgment interest.
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