Meunier Carlin & Curfman, LLC v. Scidera, Inc.
Filing
79
ORDER: Meuniers Motion for Summary Judgment 65 is GRANTED, in part and DENIED, in part. It is granted as to its breach of contract claim (Count I), except for any invoiced time for travel. At a minimum, this means Meunier cannot recover, at this st age, for the two travel time entries cited by Scidera, which amount to $1,316.00. In addition, Scidera has alluded to the existence of other such charges. The Court will, therefore, afford Scidera an opportunity to object to any other entries fo r travel time in the invoices. Scidera is ORDERED to file any such objections within 14 days of the entry of this Order, and Meunier may file a response thereto within 14 days thereafter. Meuniers Motion for Summary Judgment is DENIED as to its open account claim (Count II), indemnity and contribution claim (Count III), and claim for attorneys fees and litigation costs (Count IV). Scideras Partial Motion for Summary Judgment 66 is also GRANTED, in part and DENIED, in part. Meuniers claim for attorneys fees and litigation costs (Count IV) is DISMISSED insofar as it is premised on stubborn litigiousness, but the claim may proceed on the issue of bad faith. The Parties shall file a proposed consolidated pretrial order on any remaining claims within 30 days of the entry of this Order. Signed by Judge Richard W. Story on 06/22/2018. (dgr)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
MEUNIER CARLIN &
CURFMAN, LLC,
Plaintiff,
v.
SCIDERA, INC.,
Defendant.
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CIVIL ACTION NO.
1:15-CV-1665-RWS
ORDER
At its core, this case presents the following question: when a client
retains an attorney but later becomes dissatisfied with the quality or cost of the
attorney’s work, is the client, nevertheless, obligated to pay the attorney’s fees
and costs?
In this case, Plaintiff Meunier Carlin & Curfman, LLC (“Meunier”), a
law firm, seeks to recover unpaid costs and fees, as well as other damages
associated with the legal services it provided to a former client, Defendant
Scidera, Inc. (“Scidera”). The case comes before the Court, now, on Meunier’s
Motion for Summary Judgment [65] and Scidera’s Motion for Partial Summary
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Judgment [66]. After reviewing the record, the Court enters the following
Order.
Background
Some time in the fall of 2011, Scidera retained Meunier to manage its
patent portfolios and the patent portfolios of its related entities. (Pl.’s
Statement of Undisputed Material Facts (“Pl.’s SOF”), Dkt. [65-2] ¶ 4.) To
memorialize their relationship, Meunier sent an engagement letter to Scidera,
and the two exchanged drafts. (Id. ¶ 5.) Under the terms of the engagement
letter, Meunier would bill Scidera for work performed at specified hourly rates.
(Ex. E, Pl.’s SOF (“Engagement Letter”), Dkt. [65-8] at 5.) Scidera would also
reimburse Meunier for costs associated with the representation. (Id.) Meunier
would not, however, bill for travel time unless the attorney was actively
working on something else for Scidera. (Id.)
Scidera remained Meunier’s client until at least 2015, and during that
time Meunier represented Scidera and its related entities in various intellectual
property matters. (Pl.’s SOF, Dkt. [65-2] ¶¶ 9, 11.) This included two federal
lawsuits. (Id. ¶ 10.) Those suits arose from accusations of patent infringement
by a competing company called Mars. (Id. ¶ 12.) The Parties learned of
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Mars’s allegations in the fall of 2011, and on October 13, 2011, Meunier sent
Scidera a memorandum laying out a litigation strategy and estimating its cost to
be between $1,182,00 and $2,042,00.17. (Id. ¶¶ 12, 14; Ex. G, Pl.’s SOF
(“2011 Memo”), Dkt. [65-10].)
Mars filed the first lawsuit in the Eastern District of Virginia, then
Meunier filed the second in California. (Pl.’s SOF, Dkt. [65-2] ¶¶ 15–16.)
Meunier performed work for Scidera in both matters, taking direction from
several Scidera executives, including its CEO, Chris Paxos, CFO, Myron
Cybyk, and Scidera’s intellectual property manager, Dan Smith. (Id. ¶¶
16–23.) Eventually–and despite Scidera’s opposition–the California case was
transferred to Virginia. (Id. ¶ 17.)
During discovery in the Virginia case, the judge ordered Scidera to
produce a sizeable number of documents within a short period of time. (Id.
¶ 25.) Complying with that order called for additional help, so Meunier began
looking for a litigation services company. (Id. ¶ 26; Dep. of Myron Cybyk
(“Scidera Dep.”), Dkt. [33] at 57–58.)1 Scidera told Meunier that its budget
1
Because Mr. Cybyk’s deposition was taken pursuant to Federal Rule of Civil
Procedure 30(b)(6), the Court attributes his statements to Scidera.
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was $20,000, (Def.’s Statement of Additional Material Facts that Present a
Genuine Issue for Trial (“Def.’s Suppl. SOF”), Dkt. [75-5] ¶ 4; Scidera Dep.,
Dkt. [33] at 59–62, 64), but Meunier was unable to find a vendor willing to do
the work for that price, (Ex. I, Pl.’s SOF, Dkt. [65-12]). Meunier, therefore,
retained the most affordable option, Document Technologies, LLC (“DTI”).
(Id.; Pl.’s SOF, Dkt. [65-1] ¶ 26.)2 DTI performed the work and sent its bill to
Meunier. Scidera, however, refused to pay for DTI’s services. (Pl.’s SOF, Dkt.
[65-1] ¶ 29; Def.’s Suppl. SOF, Dkt. [75-5] ¶¶ 3–6.)
While the Virginia case was ongoing, Meunier sent invoices to Scidera
for the work performed and expenses paid. (Pl.’s SOF, Dkt. [65-1] ¶ 30.) On
April 24, 2012, after receiving the invoices, Scidera raised concerns over the
growing cost of the litigation and the efficiency with which Meunier was
2
It is undisputed that Meunier, not Scidera, executed the agreement with DTI
entitled “Statement of Work,” and that Meunier, not Scidera is listed as the client in
that agreement. (Ex. B, Decl. of Myron B. Cbyk, Dkt. [75-4].) Interestingly however,
in support of its Reply, Meunier has produced a signed copy of the agreement in
which Meunier’s name is crossed out and replaced with Scidera’s. (Decl. of Adam S.
Rubenfield, Dkt. [77-2] at 4.) The Court recognizes that this document is likely
inadmissible given that the accompanying affidavit is insufficient to lay a proper
foundation under the business record exception to the hearsay rule. See Fed. R. Evid.
803(6). But either way, this issue is immaterial because the salient question is not
necessarily what Meunier wrote on the agreement, but rather what Scidera authorized
Meunier to do in the first place. See infra Part II.B.4.
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handling it. (Id. ¶ 34; Def.’s Suppl. SOF, Dkt. [75-5] ¶ 17.) Just over a week
later, Meunier responded with a lengthy email explaining the various
complexities that had arisen in the case, which Meunier had not anticipated in
its initial estimate. (Pl.’s SOF, Dkt. [65-1] ¶ 36.)
In 2012, the Virginia case settled when Mars agreed to purchase the
portfolio at issue from Scidera. (Scidera Dep., Dkt. [33] at 54–56; Aff. of
Stephen M. Schaetzel (“Schaetzel Aff.”), Dkt. [65-4] ¶ 14.) After that, Scidera
paid some of Meunier’s invoices, but by October 2013, many were still
outstanding. (Pl.’s SOF, Dkt. [65-1] ¶ 41.) So Meunier sent Scidera a formal
demand letter; Scidera, however, did not respond. ( Id. ¶¶ 41–42.) Yet,
Scidera remained Meunier’s client and continued to make payments until 2015,
when the Parties’ relationship ended. (Def.’s Statement of Undisputed Material
Facts (“Def.’s SOF”), Dkt. [66-2] ¶ 18.) To date, the outstanding fees amount
to $876,871.07.3 (Pl.’s SOF, Dkt. [65-1] ¶ 41.) Meunier filed this action to
recover those fees on a breach of contract and open account theory.
3
In the Amended Complaint [27], Meunier states that the amount owed is
$882, 502.61. The outstanding principal is actually less, however, “because Meunier
applied Scidera’s retainer and trust funds to some of the outstanding receivables
during the lawsuit.” (Pl.’s SOF, Dkt. [65-1] ¶ 44.)
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Additionally, DTI brought lawsuit against Meunier to collect on its
unpaid invoices, which Scidera settled for $95,000.00. (Id. ¶ 46.) Meunier
seeks to recover that amount from Scidera as well, along with the costs
Meunier incurred defending that lawsuit, under a theory of contribution and
indemnity.
Meunier has filed a Motion for Summary Judgment on each of the claims
asserted in the Amended Complaint, with the exception of its claim for unjust
enrichment and quantum meruit (Count III), which was pled in the alternative.
Scidera, too, moves for summary judgment on Meunier’s claim for attorney’s
fees and costs.
Discussion
I.
Legal Standard
Federal Rule of Civil Procedure 56 requires that summary judgment be
granted “if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” “The moving
party bears ‘the initial responsibility of informing the . . . court of the basis for
its motion, and identifying those portions of the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits,
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if any, which it believes demonstrate the absence of a genuine issue of material
fact.’” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir.
2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Where the
moving party makes such a showing, the burden shifts to the non-movant, who
must go beyond the pleadings and present affirmative evidence to show that a
genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 257 (1986).
The applicable substantive law identifies which facts are material. Id. at
248. A fact is not material if a dispute over that fact will not affect the outcome
of the suit under the governing law. Id. An issue is genuine when the evidence
is such that a reasonable jury could return a verdict for the non-moving party.
Id. at 249-50.
Finally, in resolving a motion for summary judgment, the court must
view all evidence and draw all reasonable inferences in the light most favorable
to the non-moving party. Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296
(11th Cir. 2002). But, the court is bound only to draw those inferences that are
reasonable. “Where the record taken as a whole could not lead a rational trier
of fact to find for the non-moving party, there is no genuine issue for trial.”
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Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
“If the evidence is merely colorable, or is not significantly probative, summary
judgment may be granted.” Anderson v. Liberty Lobby, Inc., 477 U.S. at 24950 (internal citations omitted); see also Matsushita, 475 U.S. at 586 (once the
moving party has met its burden under Rule 56(a), the nonmoving party “must
do more than simply show there is some metaphysical doubt as to the material
facts”).
II.
Analysis
A.
Admissibility of Contested Evidence
Before reaching the merits of the pending motions, the Court must first
determine which evidence may be considered in its analysis. That is because
Scidera challenges the admissibility of several documents relied on by Meunier
in support of its Motion for Summary Judgment. Specifically, Scidera argues
that the invoices and accounting records reflecting Meunier’s costs and fees are
inadmissible hearsay, as are several emails exchanged between the parties;
thus, Scidera argues, the Court should discount them in ruling on Meunier’s
Motion.
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“The general rule is that inadmissible hearsay cannot be considered on a
motion for summary judgment.” Macuba v. Deboer, 193 F.3d 1316, 1323 (11th
Cir. 1999). There is an exception, however, if the statement can be “reduced
to admissible evidence at trial” or “reduced to admissible form.” Id. Hearsay
might be reduced to an admissible form if, for example, “it falls within an
exception to the hearsay rule, or does not constitute hearsay at all . . . , or is
used solely for impeachment purposes (and not as substantive evidence).” Id.
at 1323–24.
1.
Invoices and Accounting Records
The Court finds the invoices and accounting records are “reducible to
admissible form” because they fall within an exception to the hearsay rule,
specifically Rule 803(6), the business records exception. See Macuba, 193
F.3d at 1323–24. Those records are supported by Schaeztel’s affidavit. As a
principal of the firm, Schaeztel is a “custodian or []other qualified witness,”
competent to lay the foundation for the business records. Fed. R. Evid. 803(6);
Rosenberg v. Collins, 624 F.2d 659, 665 (5th Cir.1980)4 (“Any person in a
4
In Bonner v. City of Prichard, the Eleventh Circuit Court of Appeals adopted
as binding precedent all decisions of the former Fifth Circuit decided before October
1, 1981. 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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position to attest to the authenticity of certain records is competent to lay the
foundation for the admissibility of the records.”). And although Schaeztel’s
affidavit does not elaborate on his own experience representing Scidera or how
specifically the financial records were maintained, “[t]he absence or extent of
personal knowledge regarding preparation of a business record affects the
weight rather than the admissibility of the evidence.” Chadwick v. Bank of
Am., N.A., 616 F. App’x 944, 948 (11th Cir. 2015) (quoting United States v.
Page, 544 F.2d 982, 987 (8th Cir.1976)). Schaeztel’s affidavit is, therefore,
sufficient to lay foundation for the records, so the Court may consider them on
summary judgment.5
2.
Emails
The Court likewise finds that the emails produced by Meunier are
properly considered at this stage of the litigation. Scidera takes particular issue
with an email sent from Schaetzel about the cost of retaining DTI. While it is
5
Specifically to the invoices, the Court further notes that even if Schaeztel was
not a competent witness under Rule 803(6), there is no indication in the record that the
attorneys and staff who billed Scidera for their time would be unable to testify at trial.
See Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1015–16 (11th Cir.
1987) (exclusion of letter at summary judgment improper because it was based on the
writer’s personal knowledge and indicated that there was no impediment to the writer
testifying at trial as to the facts described in the letter).
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true that this email, in its current form, would be inadmissible hearsay, it could
easily be “reduced to admissible evidence at trial or reduced to an admissible
form,” say, by “hav[ing] the hearsay declarant testify directly to the matter at
trial.” Jones v. UPS Ground Freight, 683 F.3d 1283, 1293 (11th Cir. 2012).
The Court sees no reason why Schaetzel would be unable to testify directly
about his discussions with DTI and the price estimate that he relayed to
Scidera. In fact, Schaetzel has already submitted a sworn statement in this
case. Consequently, the Court may consider the email in ruling on Meunier’s
Motion for Summary Judgment.
B.
Motions for Summary Judgment
Meunier moves for summary judgment on four of its claims: (1) breach
of contract; (2) open account; (3) indemnity; and (4) attorney’s fees and costs.
Scidera filed a separate motion, seeking summary judgment on Meunier’s claim
for attorney’s fees and costs. The Court will discuss each of the four claims at
issue, in turn, to assess whether summary judgment is appropriate for either
party.
1.
Breach of Contract
Under Georgia law, the elements of breach of contract are: “(1)
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breach and the (2) resultant damages (3) to the party who has the right to
complain about the contract being broken.” Norton v. Budget Rent A Car Sys.,
Inc., 705 S.E.2d 305, 306 (Ga Ct. App. 2010). Of course, this also requires, as
a threshold matter, the existence of a valid contract. And here, Scidera contests
the existence of such an agreement.
“To constitute a valid [written or oral] contract, there must be parties
able to contract, a consideration moving to the contract, the assent of the parties
to the terms of the contract, and a subject matter upon which the contract can
operate.” O.C.G.A. § 13-3-1. Scidera does not dispute that the ability to
contract, consideration, and subject matter requirements are satisfied. Scidera,
instead, focuses on mutual assent, arguing that there was no “meeting of the
minds” between the parties.
A contract is complete and enforceable when “there is a meeting of the
minds as to all essential terms.” Georgia Dep’t of Cmty. Health v. Data
Inquiry, LLC, 722 S.E.2d 403, 406 (Ga. Ct. App. 2012) (internal quotations
and citation omitted). Meunier, in support of its Motion for Summary
Judgment, argues that the parties entered into an agreement for Meunier to
perform legal services on behalf of Scidera and relies on the draft engagement
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letter sent to Scidera in 2011 for this position. According to Meunier, that
letter lays out the material terms of the Parties’ agreement: that Meunier would
bill Scidera for the work it performed at hourly rates, which Scidera would pay
along with additional expenses. The Court agrees.
The undisputed evidence shows that Meunier entered into a valid and
enforceable contract with Scidera. In the engagement letter, Meunier agreed to
provide legal services in exchange for payment at specified, hourly rates.
(Engagement Letter, Dkt. [65-8] at 5.) Scidera paid Meunier a retainer and
paid its legal fees for years. (Def.’s Resp. to Pl.’s SOF, Dkt. [76] ¶¶ 7, 9, 32.)
When Meunier assumed representation of Scidera in the California and
Virginia cases, Meunier sent Scidera a memo estimating the costs of litigating
those cases–a practice consistent with and required by the terms of the
engagement letter.6 (2011 Memo, Dkt. [65-10]; Engagement Letter, Dkt. [658] at 4.) It is also undisputed that Scidera paid for some of Meunier’s services
in the California and Virginia cases and that Scidera directed many of the
6
Indeed, this estimate further evidences the existence of a valid agreement
between the Parties. The 2011 engagement letter requires that Meunier provide a
written estimate to Scidera for any matter “likely to exceed $5,000 in total
billings . . . .” (Engagement Letter, Dkt. [65-8] at 4.) For the litigation matters,
Meunier did just that. (See 2011 Memo, Dkt. [65-10].)
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actions Meunier took. (Def.’s Resp. to Pl.’s SOF, Dkt. [76] ¶¶ 10, 16–23, 32.)
By 2012, both of the cases were resolved. (Id. ¶ 38.) And Scidera remained
Meunier’s client until at least 2015. (Id. ¶ 11.) Mutual assent is, therefore,
apparent from the face of the engagement letter and Scidera’s payment of fees
under its terms, along with Scidera’s active role in the California and Virginia
cases and continued relationship with Meunier thereafter. See Turner Broad.
Sys., Inc. v. McDavid, 693 S.E.2d 873, 878 (Ga. Ct. App. 2010) (determining
whether there was mutual assent by applying “an objective theory of intent
whereby one party’s intention is deemed to be that meaning a reasonable
[person] . . . would ascribe to the [] party’s manifestations of assent”).7
Nevertheless, Scidera insists that the engagement letter itself, as well as
the Parties’ attenuating actions create questions of material fact as to whether
the Parties ever agreed to such terms. But in doing so, Scidera inappropriately
7
Although Scidera never signed the engagement letter, “[u]nder Georgia law,
a party’s conduct may bind him to the terms of a contract, even if he does not sign the
agreement.” Hemispherx Biopharma, Inc. v. Mid-S. Capital, Inc., 690 F.3d 1216,
1225 (11th Cir. 2012) (citing Comvest, L.L.C. v. Corporate Secs. Grp. Inc., 507
S.E.2d 21, 24–25 (Ga. Ct. App. 1998). As Meunier correctly points out, in this case,
Scidera evidenced assent to the letter’s terms through its behavior–in particular,
having Meunier perform a range of legal services and paying some of the bills for that
work.
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relies on subjective, after-the-fact assessments of the Parties dealings and
Meunier’s handling of the litigation matters. For example, Scidera argues that
although it expected to pay for Meunier’s services, it did not specifically agree
to give Meunier the unfettered ability to rack up legal fees that Scidera was
required to pay “no matter how inadequately, ineffectively, and inefficiently
[Meunier] performed.” (Def.’s Resp. to Pl.’s MSJ (“Def.’s Resp.”), Dkt. [75] at
6.) Scidera goes on to say that Scidera “performed work that was never
budgeted or authorized, and which in any event was not performed adequately
effectively, and efficiently.” (Id. at 7.) Thus, Scidera concludes, the Parties
must not have reached a “meeting of the minds” on essential terms such as
price and the scope of work to be performed.
A contract, however, is not invalidated merely because the parties start to
disagree about the interpretation of contract language. Cf. Cox Broad. Corp. v.
Nat’l Collegiate Athletic Ass’n, 297 S.E.2d 733, 737–38 (Ga. 1982)
(distinguishing a breach of contract case “from the many cases in which the
parties begin to disagree about the interpretation of contract language after the
contract has been executed”). Yet that is precisely what Scidera seeks to do
here. As described above, the Parties’ conduct makes clear that an agreement
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was reached for Meunier to perform legal services on behalf of Scidera.
Although Scidera may–and, indeed, does–take issue with some of the fees that
Meunier charged, that does not render the agreement invalid. See Weinberg,
Wheeler, Hudgins, Gunn & Dial, LLC v. Teledyne Techs., Inc., No.
1:12-CV-0686-JEC, 2013 WL 4806894, at *8–10 (N.D. Ga. Sept. 9, 2013)
(rejecting various arguments by a defendant who sought to invalidate an
agreement with his former counsel because those arguments were based on
unsupported assertions that the former counsel’s work was inadequate and
flawed), aff’d, 606 F. App’x 567 (11th Cir. 2015).8
Furthermore, Scidera’s arguments challenging the efficacy and efficiency
of Meunier’s work are legally deficient: “The law presumes that lawyers
perform legal services in an ordinarily skillful manner. This presumption
remains with the attorney until the presumption is rebutted by expert legal
testimony; otherwise, the grant of a summary judgment in favor of the attorney
8
The Court further notes that the Judge in this case found that an enforceable
agreement existed between the law firm and its former client under starkly similar
circumstances to those at hand, including the fact that an engagement letter setting out
material terms of the representation was never signed by the former client. The Judge
went on to grant summary judgment for the plaintiff law firm on, among other things,
its breach of contract claim.
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is proper.” Schluter v. Perrie, Buker, Stagg & Jones, P.C., 498 S.E.2d 543, 545
(Ga. Ct. App. 1998) (internal quotations and citations omitted).9 Here, Scidera
has not provided any opinion from an expert in the legal field, and so the
presumption that Meunier’s work was performed in a reasonably skillful
manner goes unrebutted.
Nevertheless, the Court acknowledges that expert testimony may not, in
every instance, be required to create an issue of material fact as to attorney
billing records. In Schluter, for example, the defendant testified that three
meetings appearing in the invoices did not take place and, in fact, for two of
them, he was out of town. Id. at 546. The defendant also testified that he was
billed for time by someone whom he never authorized to work on the matter,
and so summary judgment was improper as to those charges. Id. But unlike
the defendant in Schulter, Scidera has not presented any evidence, whatsoever,
9
Scidera attempts to distinguish Schluter by pointing out differences between
the agreement at issue there and the one presently under debate. That, however, has
no bearing on the applicability of the above legal presumption, which was not only
relied on by the Schluter court in agreeing with the trial court’s finding in favor of the
attorney, but by other courts as well. See Schluter, 489 S.E.2d at 546 n.5 (citing
Hughes v. Malone, 247 S.E.2d 107 (Ga. Ct. App. 1978); Findley v. Davis, 414 S.E.2d
317 (Ga. Ct. App. 1991), rev’d on other grounds, 422 S.E.2d 859 (Ga. 1992); and
Rose v. Rollins, 306 S.E.2d 724 (Ga. Ct. App. 1983).
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challenging the correctness of Meunier’s invoices. Scidera, instead, attempts to
cast doubt on the invoices by claiming that they lack sufficient detail and that a
number of entries appear to be duplicative or inaccurate. These arguments,
however, are not evidence. Scidera has not provided any testimony or
documentation showing that the work in question was never performed or was
accomplished in less time than Meunier billed. Scidera has also not alleged
that Meunier’s work was wholly without value or undeserving of payment.
Nor could it given that Scidera clearly benefitted from Meunier’s efforts, which
not only contributed to the resolution of the Virginia case, but also helped
Scidera obtain a substantial cash settlement.10
At the same time, the engagement letter is clear that Meunier would not
bill Scidera for travel time. (Engagement Letter, Dkt. [65-8] at 5.) Yet, in at
least one instance cited by Scidera, it appears that Meunier billed for
someone’s time to travel to and from Virginia. (See Def.’s Resp., Dkt. [75] at 7
10
The role that Meunier played in the settlement negotiations, if any, is unclear
from the record. (Compare Scidera Depo, Dkt. [33] at 54–56, and Def.’s Suppl. SOF,
Dkt. [75-5] ¶ 7, with Aff. of Stephen M. Schaetzel (“Schaetzel Aff.”), Dkt. [65-4]
¶ 14.) It is clear, however, that the settlement was favorable to Scidera, that Meunier
represented Scidera in the Virginia case from inception to resolution, and that, while
litigation was ongoing, Meunier performed a significant amount of work on Scidera’s
behalf.
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n.1 (citing Ex. N, Pl.’s SOF, Dkt. [65-17] at 194–95).) Because the contract
does not authorize Meunier to charge Scidera for travel time, Meunier is not
entitled to recover any such charges at summary judgment.
It is important to emphasize, however, that neither these unauthorized
entries nor Scidera’s displeasure with some of the other work means, as Scidera
suggests, that a valid agreement does not exist. There is no evidence that the
Parties ever agreed that acceptance of Meunier’s work would be conditioned
upon Scidera’s satisfaction with its cost and quality. Indeed, although couched
as an argument on mutual assent, it seems that what Scidera is actually
attempting to say is that certain inadequacies and flaws in Meunier’s work and
billing amount to a breach of contract. Even so construed, the evidence falls
well short of this.
The undisputed evidence shows that, on one occasion, Scidera expressed
concern over the efficiency of Meunier’s work in light of growing costs
approaching the initial estimate. (Ex. J, Pl.’s SOF, Dkt. [65-13]; see also Ex.
G, Pl.’s SOF, Dkt. [65-10] at 2–3.) Other than that, the record is devoid of any
complaints by Scidera as to the appropriateness of Meunier’s fees during the
approximately four years that the two maintained a professional relationship. If
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Scidera was unsatisfied with Meunier’s work on the Virginia case it could have
terminated the agreement or instructed Meunier to discontinue its work.
Instead, Scidera acquiesced and continued to work with Meunier until the case
was resolved.
Therefore, the Court finds that, based on the undisputed evidence, the
Parties had a valid and enforceable contract for Meunier to provide legal
services at the rates set forth in the engagement letter. Scidera has failed to
show, through any competent evidence, that those services were unnecessary to
the resolution of the Virginia case or that the hours expended by Meunier were
unreasonable or the rates charged excessive. See Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (“When the moving party has
carried its burden under Rule 56(c), its opponent must do more than simply
show that there is some metaphysical doubt as to the material facts.”). Scidera
is, thus, contractually obligated to pay Meunier’s fees for that work, with the
exception of time billed for travel, which was specifically excluded from the
agreement. Having failed to present any justifiable reason for failing to pay the
amount owed, Scidera’s refusal to do so amounts to a breach of contract.
Accordingly, Meunier’s Motion for Summary Judgment is GRANTED as to its
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breach of contract claim, except for any invoiced time for travel.
2.
Open Account
An action on open account provides a simplified procedure to recover
money owed when the parties do not dispute the amount due or the goods or
services received. Am. Arbitration Ass’n v. Bowen, 743 S.E.2d 612, 614 (Ga.
Ct. App. 2013). Meunier argues it is entitled to summary judgment on its open
account claim because Scidera, in filing its Answer, failed to comply with the
technical pleading requirements set out in O.C.G.A. § 9-10-112. That
provision says, “Whenever an action is brought on an open account . . . , the
answer” must either “deny that the defendant is indebted in any sum or []
specify the amount in which the defendant admits he may be indebted . . . .”
O.C.G.A. § 9-10-112. Admittedly, Scidera’s Answer does neither. But,
Scidera argues, it did not have to. According to Scidera, O.C.G.A. § 9-10112’s heightened pleading requirements do not apply in this case because they
directly conflict with Federal Rule of Civil Procedure 8(b).
“When a situation is covered by one of the Federal Rules, . . . the court
has been instructed to apply the Federal Rule, and can refuse to do so only if” it
is unconstitutional or found to modify, enlarge, or abridge any substantive
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rights under the Rules Enabling Act. Hanna v. Plumer, 380 U.S. 460, 471
(1965). In this case, then, the Court must “determine whether [Rule 8] answers
the question in dispute”–that is, whether Scidera properly denied Meunier’s
open account claim. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins.
Co., 559 U.S. 393, 398 (2010). If Rule 8 does, it governs.11
Rule 8(b) provides, “[i]n responding to a pleading, a party shall: (A) state
in short and plain terms its defenses to each claim asserted against it; and (B)
admit or deny the allegations asserted against it by an opposing party.” Fed. R.
Civ. P. 8(b)(1). The Rule further states that “denials” must “fairly respond to
the substance of the allegation.” Fed. R. Civ. P. 8(b)(2).
Meunier admits that Rule 8 applies in this case but argues that O.C.G.A
§ 9-10-112 does too. The Court disagrees. As is clear from the language of
Rule 8, there is no requirement that a defendant deny a claim on an open
account in its entirety or else specify the amount of debt believed to be owed.
Therefore, O.C.G.A § 9-10-112 demands more from a defendant in filing its
answer than the standard contemplated by the Federal Rules. This Court and
11
The Federal Rules of Civil Procedure are granted presumptive validity and
have never been found to violate the second prong of the Supreme Court’s test, either
collectively or independently. See Hanna, 380 U.S. at 472–74.
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others have held, on numerous occasions, that Georgia’s heightened pleading
standards conflict with the Federal Rules and are, thus, inapplicable to diversity
cases. See, e.g., Adventure Outdoors, Inc. v. Bloomberg, 519 F. Supp. 2d 1258
(N.D. Ga. 2007) (finding Georgia’s anti-SLAPP statute’s verification
requirement to be a heightened pleading requirement in direct conflict with
Federal Rule of Civil Procedure 8(a)), rev’d on other grounds, 552 F.3d 1290
(11th Cir. 2008); 1524948 Alberta Ltd. v. Lee, No. 1:10-CV-02735-RWS, 2011
WL 2899385 (N.D. Ga. July 15, 2011) (same); Stidham v. United States, No.
1:13-CV-1093-TWT, 2014 WL 25584 (N.D. Ga. Jan. 2, 2014) (finding Rule
8(a) inconsistent with O.C.G.A. § 9-11-9.1–Georgia’s requirement that a party
asserting a claim for professional malpractice file an expert affidavit along with
the complaint–because it establishes a more stringent pleading requirement);
see also Swierkiewicz v. Sorema N. A., 534 U.S. 506, 513 (2002) (instructing
that “Rule 8(a)’s simplified pleading standard applies to all civil actions, with
limited exceptions,” such as claims of fraud or mistake, which, according to
Rule 9(b), must be pled with greater particularity); Caster v. Hennessey, 781
F.2d 1569, 1570 (11th Cir. 1986) (“[U]nder Hanna a federal court need not
adhere to a state’s strict pleading requirements but should instead follow Fed.
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R. Civ. P. 8(a)”).
Although each of these cases involved the standard for filing complaints
under Rule 8(a), the Court sees no reason why the same result should not be
reached when a state statute goes beyond Rule 8(b)’s responsive pleading
requirements. Accordingly, the Court finds that O.C.G.A. § 9-10-112 is
covered by–and conflicts with–Rule 8 of the Federal Rules of Civil Procedure.
Because Meunier’s Complaint complies with Rule 8(b), no more was required.
With that settled, the Court now turns to the merits of Meunier’s open
account claim, which hinges on whether there is a genuine dispute “that goes to
either assent to the services, terms of the contract, what work was performed,
the quality of the performance, or cost[.]” Altacare Corp. v. Decker, Hallman,
Barber & Briggs, P.C., 730 S.E.2d 12, 14 (Ga. Ct. App. 2012). If no such
dispute exists, Meunier is entitled to summary judgment; but if one does, “then
suit on account is not the proper procedure . . . because there is a factual issue
other than nonpayment on the account.” Id.
As described above, the undisputed facts in the record demonstrate that
the Parties had a valid, enforceable agreement for Meunier to provide legal
services for Scidera. They also show, however, that the Parties agreed Meunier
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would not bill Scidera for travel time but that on at least one occasion Meunier
did so. This raises a genuine dispute about the total amount owed and, as a
result, “takes the case outside the simplified parameters of an action on open
account.” Schluter, 498 S.E.2d at 545. Accordingly, the Court finds that
Meunier is not entitled to summary judgment on its open account claim; the
Motion is DENIED as to that claim.
3.
Prejudgment Interest
Having concluded that summary judgment is warranted on Meunier’s
breach of contract claim but not its open account claim, the Court must now
assess whether Meunier is entitled to recover prejudgment interest on its unpaid
fees. The Court finds Meunier is not.
Under Georgia law, only “liquidated damages” automatically bear
prejudgment interest. O.C.G.A. § 7-4-15.12 “For damages to be liquidated, the
12
In addition to this legal rate of 7% per year on a breach of contract claim for
liquidated damages, Georgia law also provides for prejudgment interest at a higher
rate of 18% per year on an open account claim meeting certain conditions. O.C.G.A.
§ 7-4-16. Of course, since Meunier cannot recover on its open account claim,
Meunier cannot obtain the 18% rate. But even had Meunier prevailed on its open
account claim, it would not be entitled to the higher rate because “a recovery of
pre-judgment interest pursuant to O.C.G.A. § 7-4-16 requires a pre-trial invocation of
the applicability of that provision,” Gold Kist Peanuts v. Alberson, 342 S.E.2d 694,
697 (Ga. Ct. App. 1986), and here there is no evidence that Meunier made the
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damages must be in a certain and fixed amount, ‘a sum which cannot be
changed by proof; it is so much or nothing.’” Kitchen Int’l, Inc. v. Evans
Cabinet Corp., 714 S.E.2d 139, 143 (Ga. Ct. App. 2011) (quoting GMC Grp.,
Inc. v. Harsco Corp., 695 S.E.2d 702, 703 (Ga. Ct. App. 2010)). A claim for
damages is unliquidated, then, “when there is a bona fide contention as to the
amount owing.” Int’l Indem. Co. v. Terrell, 344 S.E.2d 239, 241 (Ga. Ct. App.
1986).
Once again, the Parties agreed that Meunier would not bill Scidera for
travel time, but Meunier did so anyway. Accordingly, Meunier’s damages are
uncertain and, thus, unliquidated. As a result, Meunier’s Motion for Summary
Judgment is DENIED on its claim for prejudgment interest.
necessary pre-trial demand. While Meunier’s Verified Complaint makes a 10-day
demand for the fees owed, it does so pursuant to O.C.G.A.§ 13-1-11–a provision
concerning attorney’s fees in contract disputes. (Compl., Dkt. [1] ¶ 30.) Under
Georgia law, however, “the request must specify the interest rate sought.” Carrier
Corp. v. Rollins, Inc., 730 S.E.2d 103, 112 (Ga. Ct. App. 2012) (quoting Spears v.
Allied Eng’g Assocs., Inc., 368 S.E.2d 818, 820 (Ga. Ct. App. 1988)). Hence
Meunier was required to inform Scidera that it intended to charge interest at a rate of
1.5% per month (or 18% per year) on any invoices that remained unpaid after 30 days
. Compare Elec. Works CMA, Inc. v. Baldwin Tech. Fabrics, LLC, 703 S.E.2d 124,
125 (2010) (where such notice was properly given), with Carrier Corp., 730 S.E.2d at
112 (where it was not). Because Meunier did not, it is not entitled to O.C.G.A. § 7-416’s 18% prejudgment interest rate.
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4.
Indemnification
Meunier further argues that Scidera must indemnify Meunier for costs
associated with defending the lawsuit brought against it by DTI. According to
Meunier, it retained DTI on Scidera’s behalf and solely for Scidera’s benefit.
Meunier’s theory is rooted in the legal authority an attorney has to bind its
client, and the obligations of the client thereafter.
“An attorney of record is the client’s agent in pursuing a cause of action
and under Georgia law an act of an agent within the scope of his apparent
authority binds the principal.” Hayes v. Nat’l Serv. Indus., 196 F.3d 1252,
1254 (11th Cir. 1999) (internal quotations and citations omitted). The scope of
an attorney’s authority encompasses “all necessary and usual means for
effectually executing it.” Wilen v. Murray, 663 S.E.2d 403, 405 (Ga. Ct. App.
2008) (citations omitted). This includes, for instance, “settling a claim on
behalf of a client” and “hiring an expert witness.” Id. But an attorney’s
authority is not without limits: it “is determined by the terms of his contract of
employment and the instructions given by the client.” Shepherd v. Carlton’s
Nice Cars, Inc., 256 S.E.2d 113, 115 (Ga. Ct. App. 1979).
Here, it is undisputed that Meunier was Scidera’s attorney of record in
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the litigation matters. Hence, Meunier was Scidera’s agent, and thus had
authority to bind Scidera. According to Meunier, this “authority may be
considered plenary unless limited by [Scidera] and that limitation [was]
communicated to [DTI].” (Pl.’s Reply, Dkt. [77] at 14 (quoting Lytle v. King's
Constr. Co., No. 1:14-CV-288-GGB, 2015 WL 12856450, at *4 (N.D. Ga. July
30, 2015)). The Court disagrees. Although Meunier accurately cites the law in
Georgia, this particular legal doctrine is inapplicable to the case at hand. To
the Court’s knowledge, that law has only been applied in lawsuits brought by
third-parties. That is to say, the rule is that absent knowledge of express
restrictions on an attorney’s authority, a third party may deal with the attorney
as if dealing with the client, and if the client fails to perform, the third-party
may sue him directly. See, e.g., Lyte, 2015 WL 12856450; Brumbelow v. N.
Propane Gas Co., 308 S.E.2d 544 (Ga. 1983). This case, by contrast, was
brought by an agent (Meunier) to recover for an action taken on behalf of its
principal (Scidera). As a result, the requirement that any limitation on
Meunier’s authority must have been communicated to DTI is inapplicable.
Instead, the decisive question is whether Scidera told Meunier that its authority
was limited in some way.
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Concerning the retention of DTI, there is a genuine question as to
whether that happened. Specifically, Scidera acknowledges that the court in
the Virginia case ordered Scidera to produce a large amount of documents,
which necessitated the hiring of a litigation services company. (Scidera Dep.,
Dkt. [33] at 57–58.) Scidera has also offered testimony that it told Meunier its
budget was $20,000–in other words, that Meunier was only authorized to retain
a litigation services company at a cost of $20,000 or less. (See id. at 59– 62,
64; Cybyk Decl., Dkt. [75-2] ¶ 10; Def.’s Resp. to Pl.’s SOF, Dkt. [76] ¶ 27). It
is undisputed, however, that DTI demanded a price of $43,515; yet Meunier
retained DTI anyway. (Ex. 10, Cybyk Dep., Dkt. [33-11].)
Thus, there is a question of fact as to whether Meunier was acting within
its authority when it hired DTI. Accordingly, Meunier’s Motion for Summary
Judgment must be DENIED on the issue of indemnity. See Mori Lee, LLC v.
Just Scott Designs, Inc., 754 S.E.2d 616, 620 (Ga. Ct. App. 2014) (“As a
general rule, the question of authority to do an act, when it is to be determined
from disputed facts or undisputed facts from which conflicting inferences may
be drawn, must be decided by the jury as a question of fact or as a question of
mixed fact and law.” (quoting Atlanta Limousine Airport Servs., Inc. v. Rinker,
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287 S.E.2d 395, 397 (Ga. Ct. App. 1981))).
5.
Attorney’s Fees and Costs
In addition to its claims for unpaid legal fees and prejudgment interest,
Meunier also seeks to recover attorney’s fees and costs under O.C.G.A. §§ 131-11 and 13-6-11. (Am. Compl., Dkt. [27] Count IV.) Scidera argues it is
entitled to summary judgment on that claim, and originally, Meunier too.
However, Meunier has since withdrawn its claim for fees under § 13-1-11 and
taken the position that a jury, rather than the Court, should decide whether
Scidera’s conduct warrants a fee award under § 13-6-11.
Under O.C.G.A. § 13-6-11, a plaintiff may recover the expenses of
litigation “where the defendant has acted in bad faith, has been stubbornly
litigious, or has caused the plaintiff unnecessary trouble and expense . . . .”
“The existence of bad faith or stubborn litigiousness usually is a jury question,
and only in the rare case where there was absolutely no evidence to support the
award of expenses of litigation would the trial court be authorized to grant
summary adjudication on such issues.” Brito v. Gomez Law Grp., LLC, 658
S.E.2d 178, 182 (Ga. Ct. App. 2008) (internal quotations and citations
omitted).
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a.
Stubborn Litigiousness
An award of litigation expenses for being stubbornly litigious or for
causing unnecessary trouble and expense is predicated on the absence of a bona
fide controversy. Read v. Benedict, 406 S.E.2d 488, 490 (Ga. Ct. App. 1991).
If “the evidence shows the existence of a genuine factual dispute or legal
dispute as to liability, the amount of damages, or any comparable issue, then
attorney fees are not authorized.” Brito, 658 S.E.2d at 182 (quoting Wilkinson
Homes, Inc. v. Stewart Title Guar. Co., 610 S.E.2d 187, 194 (Ga. Ct. App.
2005)).
In this case, there is a genuine dispute as to whether Meunier can recover
on its indemnity claim. Therefore, there is a bona fide controversy in this
matter. And although Scidera did not prevail on its defenses to Meunier’s
other claims, Scidera’s legal arguments were not wholly without merit, nor is
there evidence of Scidera’s conduct causing unnecessary trouble and expense.
Accordingly, Meunier is not entitled to attorney’s fees on the grounds of
stubborn litigiousness. Scidera’s Motion for Summary Judgment is
GRANTED on this issue and Meunier’s is DENIED.
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b.
Bad Faith
The “bad faith” permitting an award of attorney fees under O.C.G.A.
§ 13-6-11 must “relate[] to the defendant’s conduct during the subject
transaction prior to litigation, not to conduct in defending the litigation.” Id.
In a breach of contract action, conduct rises to the level of bad faith only if it
was motivated by some “interested or sinister motive.” Lexmark Carpet Mills,
Inc. v. Color Concepts, Inc., 583 S.E.2d 458, 461 (Ga. Ct. App. 2003). Bad
faith does not exist where a breach of contract merely results from “an honest
mistake as to one’s rights or duties.” Id. Finally, whether some conduct
amounts to bad faith under O.C.G.A. § 13-6-11 is generally for the jury to
decide. Mariner Health Care Mgmt. Co. v. Sovereign Healthcare, LLC, 703
S.E.2d 687, 691 (Ga. Ct. App. 2010).
Meunier argues that Scidera’s avoidance of the legal fees sought is the
“epitome of bad faith.” (Resp. to Def.’s MSJ, Dkt. [73] at 3.) Generally
speaking, under Georgia law, bad faith in a breach of contract requires
something more “than mere refusal to pay a just debt . . . .” Lexmark Carpet
Mills, Inc., 583 S.E.2d at 461 (quoting Jordan Bridge Co. v. I.S. Bailey, Jr.,
Inc., 296 S.E.2d 107, 109 (Ga. Ct. App. 1982)). But at the same time, it has
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been held that denying someone compensation due under a contract and forcing
him to sue to recover it can constitute bad faith sufficient to authorize an award
of attorney’s fees. Tattersall Club Corp. v. White, 501 S.E.2d 851, 855–56
(Ga. Ct. App. 1998) (finding bad faith where employer refused to pay employee
compensation due under a contract, despite lack of any bona fide controversy
as to whether employee was entitled to compensation, and despite fact that
employer was admittedly satisfied with employee’s performance).
Because it is undisputed that Meunier performed a significant amount of
work in the litigation matters for which Scidera has refused to pay, the Court
finds a genuine issue of material fact as to whether Scidera acted in bad faith.
Both Motions for Summary Judgment are, therefore, DENIED on the issue of
attorney’s fees and costs for acting in bad faith.
Conclusion
As described above, Meunier’s Motion for Summary Judgment [65] is
GRANTED, in part and DENIED, in part. It is granted as to its breach of
contract claim (Count I), except for any invoiced time for travel. At a
minimum, this means Meunier cannot recover, at this stage, for the two travel
time entries cited by Scidera, which amount to $1,316.00. In addition, Scidera
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has alluded to the existence of other such charges. The Court will, therefore,
afford Scidera an opportunity to object to any other entries for travel time in the
invoices.13 Scidera is ORDERED to file any such objections within 14 days of
the entry of this Order, and Meunier may file a response thereto within 14 days
thereafter. Meunier’s Motion for Summary Judgment is DENIED as to its
open account claim (Count II), indemnity and contribution claim (Count III),
and claim for attorney’s fees and litigation costs (Count IV).
Scidera’s Partial Motion for Summary Judgment [66] is also
GRANTED, in part and DENIED, in part. Meunier’s claim for attorney’s
fees and litigation costs (Count IV) is DISMISSED insofar as it is premised on
stubborn litigiousness, but the claim may proceed on the issue of bad faith.
The Parties shall file a proposed consolidated pretrial order on any
remaining claims within 30 days of the entry of this Order.
SO ORDERED, this 22nd day of June, 2018.
________________________________
RICHARD W. STORY
United States District Judge
13
The Court emphasizes that such objections should only be made for travel
time–i.e., attorneys billing merely for the time it takes them to go from one place to
another. This is distinct from travel expenses, such as airfare, lodging, and meals,
which are specifically contemplated by the engagement letter.
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