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Special Learning, Inc. v. Step By Step Academy, Inc.

United States District Court, S.D. Ohio, Eastern Division

October 18, 2017

Special Learning, Inc., Plaintiff,
v.
Step by Step Academy, Inc., Defendant. Step by Step Academy, Inc., Counter Claimant,
v.
Karen Chung, et al., Counter Defendants.

          OPINION AND ORDER

          MICHAEL H. WATSON, JUDGE UNITED STATES DISTRICT COURT.

         Special Learning, Inc. ("Plaintiff') objects to the report and recommendation ("R&R") issued by now-retired Magistrate Judge Kemp, which recommended denying Plaintiff's motion for attorneys' fees. Obj., ECF No. 116.

         I. BACKGROUND

         After a jury trial on the various claims and counterclaims in this case, the jury rendered verdicts awarding $36, 825.16 to Plaintiff and $130, 141.77 to Step by Step Academy, Inc. ("Defendant") for a net award of $93, 316.61 to Defendant. Relevant to the instant motion, the jury answered "yes" to an interrogatory asking whether Defendant breached the Custom Software Development Agreement ("SDA") at issue in this case but awarded $0 in damages to Plaintiff for the breach. Verdict form 2-3, ECF No. 98.

         Plaintiff thereafter moved for $81, 067.90 in attorneys' fees and $22, 964.92 in costs based on the jury's conclusion that Defendant breached the SDA. Mot. Atty. Fees, ECF No. 103. Defendant opposed the motion, Resp., ECF No. 106, and Plaintiff replied, Reply, ECF No. 108.

         Magistrate Judge Kemp, to whom the case was assigned, issued an R&R that recommended denying Plaintiffs motion. R&R, ECF No. 115. The R&R explained that the SDA states in pertinent part, "[i]f any legal action is necessary to enforce this Agreement, the prevailing party will be entitled to reasonable attorney fees, costs and expenses." SDA 6, ECF No. 1-3, PAGEID # 70. The R&R then concluded that the SDA did not define the phrase "prevailing party, " but that Plaintiff was not a prevailing party under applicable case law because Plaintiff did not win any damages on its breach of contract claim nor did the legal relationship of the parties change. R&R 6, ECF No. 115.

         II. STANDARD OF REVIEW

         Magistrate Judge Kemp issued the R&R pursuant to Federal Rule of Civil Procedure 72(b). Under that rule, the Undersigned must determine de novo any part of the Magistrate Judge's disposition that has been properly objected to. Fed.R.Civ.P. 72(b)(3). The undersigned may accept, reject, or modify the R&R, receive further evidence, or return the matter to the Magistrate Judge with instructions. Id.

         III. ANALYSIS

         Plaintiff objects that the R&R misstates the facts and either misapplies the applicable law or applies the wrong law with respect to the R&R's primary conclusion that Plaintiff is not a "prevailing party" because it won neither damages nor a change in the relationship of the parties.

         Notably, however, Plaintiff does not object to the R&R's second, separate conclusion that Plaintiff is not a prevailing party under Ohio law on its breach of contract claim because it did not achieve success on the final element of its claim-damages. R&R 7, ECF No. 115. The R&R agreed with Defendant on this "additional argument" that a breach of contract claim under Ohio law contains four elements: a contract, performance by the plaintiff, breach by the defendant, and damages to the plaintiff. Id. The R&R further agreed that although interrogatories may separate these elements into distinct questions for a jury to answer, each element is still essential to a claim for breach of contract such that a failure by the jury to find any element means the plaintiff failed on its claim. Id. Because the jury found that Defendant breached the SDA but did not award damages, the R&R agreed with Defendant that Plaintiff was not a prevailing party on its breach of contract claim. Id.

         The R&R notified the parties of the right to object to "specific proposed findings or recommendations to which objection is made" and specifically warned the parties that a failure to object would result in a waiver of the right to de novo review by the Undersigned as well as a waiver of the right to appeal the Undersigned's decision adopting the R&R. R&R 8, ECF No. 115. Plaintiff failed to object to this conclusion, and the Court therefore ADOPTS the R&R on this basis without conducting a de novo review. The Court, accordingly, DENIES Plaintiff's motion for attorneys' fees and costs, ECF No. 103.

         Even if the Court were to consider Plaintiff's objections to the primary portion of the R&R, it would overrule the same.

         With respect to their factual objections, Plaintiff first argues that the R&R incorrectly states that there were only two claims relating to the software development project (cross claims for breach of contract) ...


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