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Bode & Grenier, LLP v. Knight

United States Court of Appeals, District of Columbia Circuit

October 23, 2015

BODE & GRENIER, LLP, APPELLEE
v.
CARROLL L. KNIGHT, ET AL., APPELLANTS

Argued September 8, 2015

Page 853

[Copyrighted Material Omitted]

Page 854

Appeal from the United States District Court for the District of Columbia. (No. 1:08-cv-01323).

Joseph Andrew Ahern argued the cause for appellants. With him on the briefs was Ben M. Gonek.

Randell C. Ogg argued the cause and filed the brief for appellee.

Before: ROGERS, BROWN and SRINIVASAN, Circuit Judges.

OPINION

Page 855

Brown, Circuit Judge

" Hell hath no fury like a lawyer scorned." Tom Gordon, Hell Hath No Fury Like a Lawyer Scorned, Wall St. J., (Jan. 28, 2015), http://www.wsj.com/articles/tom-gordon-hell-hath-no-fury-like-a-lawyer-scorned-1422489433 . The problem with scorning a lawyer is that lawyers tend to sue. So it is here. A law firm based in the District of Columbia, Bode & Grenier, LLP, provided legal services to three Michigan-based companies owned and managed by Carroll Knight (" appellants" ). More than ten years into the relationship, appellants stopped paying the bill. The predictable result? Litigation. The law firm prevailed in the district court, winning a judgment for $70,000 in overdue legal fees--plus $269,585.19 in legal fees for having to litigate over $70,000 in legal fees. We affirm the district court.

Page 856

I

Appellants offer petroleum fueling products and services, ranging from service stations to large-scale petroleum storage. Based in Michigan, the appellant companies operate in multiple Midwestern states. Bode & Grenier represented appellants between 1994 and 2008, advising on taxation, gasoline contracts, petroleum futures and various regulatory enforcement and litigation matters. Throughout most of the relationship, no written agreement governed the terms of legal representation or manner of payment. Appellants paid the law firm monthly based on oral agreements.

On November 25, 2005, catastrophe struck. Approximately 100,000 gallons of petroleum spilled out of holding tanks owned by appellants in Toledo, Ohio. Appellants stopped the leak, but were powerless to stop the flood of regulatory actions that followed in its wake. A month after the spill, Knight called Bode & Grenier's managing partner, William Bode, to request the firm's services. The firm soon tackled regulatory enforcement proceedings in Ohio, a lawsuit in federal court in Ohio, and counseled the company on other regulatory issues. As before, the firm billed appellants monthly.

According to the complaint, appellants began paying their legal fees sporadically between December 2005 and January 2007. At some point, they stopped paying. Bode issued an ultimatum: unless Knight and his companies agreed to pay overdue legal fees, and signed a document setting out the terms of prospective relations, the firm would immediately withdraw from all pending cases. Knight capitulated. On August 7, 2007, the parties executed three agreements: a Retention Letter setting out the terms of future relations; a Promissory Note (" Note" ) obligating appellants to pay $300,000 in past-due legal fees; and a Confession of Judgment (" Confession" ) authorizing the firm to instantly secure judgment if appellants failed to satisfy the Note by May 1, 2008.

The first of May came and went without appellants satisfying the Note. Wasting no time, the firm entered the Confession of Judgment in Michigan state court the next day, May 2, 2008. Judgment issued that very day, without a hearing or adversarial process, for $302,500 ($300,000 due under the Note, plus $2,500 in attorney's fees).

Three months later, in July 2008, Bode & Grenier filed the instant federal case in the United States District Court for the District of Columbia seeking $75,105.97 in unpaid legal fees owed under the Retention Letter. The complaint brought claims for breach of contract, unjust enrichment, guaranty, and a petition to pierce the corporate veil. Appellants counterclaimed, seeking disgorgement of all legal fees to compensate for alleged disclosures of client confidences in the complaint. Discovery closed in February 2009.

In March 2009, both parties moved for summary judgment. Appellants argued the Confession of Judgment filed in Michigan barred the federal suit under res judicata principles. Bode & Grenier opposed the counterclaim as baseless. In September 2011, the district court granted Bode & Grenier's motion for summary judgment on the counterclaim, and denied appellants' motion for summary judgment based on res judicata. Bode & Grenier, LLP v. Knight, 821 F.Supp.2d 57, 59 (D.D.C. 2011).

In November 2011, Bode & Grenier amended its complaint, adding a claim for attorney's fees. Appellants filed an amended answer in January 2012. That answer, like their original answer, admitted Bode & Grenier's basic allegation that the law firm " provided legal services to Defendants pursuant to the agreement" between the parties. First Amended

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Complaint ¶ 33; Defendant's Answer to First Amended Complaint ¶ 33. Only one part of the answer was new: an affirmative defense attacking the law firm's fees as unreasonable. With a new defense came further discovery, opened in March 2012.

Trial was set for November 13, 2012. In September 2012, appellants filed a pretrial statement that raised multiple defenses not included in their answer, including duress, failure of consideration and failure to comply with a condition precedent. The latter defense argued the law firm could not recover because its legal services were not approved by the " Litigation Committee" referred to in the Retention Letter.[1] The court struck the added defenses but permitted appellants to file a motion requesting leave to amend, which they filed on October 11, 2012, barely four weeks before trial. In their motion, appellants dropped the defense of duress, but stood by the other two. The court denied the motion. Allowing leave to amend, the court found, would unduly delay trial, requiring a third round of discovery. It would also prejudice the plaintiff, forcing them to face newly christened defenses not raised over the course of four years of litigation.

Trial went forward as scheduled on November 13, 2012. Bode & Grenier voluntarily dismissed all but the breach of contract and attorney's fee claims, the latter of which the parties agreed to handle in post-trial proceedings. Following a one-day bench trial, the court found in favor of Bode & Grenier on the breach of contract claim, entering judgment for $70,000, the amount of unpaid legal fees stipulated by the parties. In subsequent proceedings, the court granted the law firm's claim for attorney's fees, rejecting the contention that the fees were either precluded by Michigan Law or limited by the Promissory Note. Bode & Grenier, LLP v. Knight, 31 F.Supp.3d 111, 113-20 (D.D.C. 2014). Appellants timely appealed. We have jurisdiction to hear this appeal under 28 U.S.C. § 1291.

II

We must first consider whether the Confession of Judgment filed in Michigan state court precluded the current suit under res judicata principles. The trial court rejected appellants' summary judgment motion seeking preclusion. We review that decision de novo. See, e.g., Aka v. Wash. Hosp. Ctr., 156 F.3d 1284, 1288, 332 U.S.App.D.C. 256 (D.C. Cir. 1998). " [A] party is only entitled to summary judgment if the record, viewed in the light most favorable to the nonmoving party, ...


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