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Weckel v. Architects

Court of Appeals of Ohio, First District, Hamilton

July 31, 2019

FREDERIC C. WECKEL, Plaintiff-Appellee,

          Civil Appeal From: Hamilton County Court of Common Pleas TRIAL NO. A-0407805

          Tobias, Torchia & Simon and David Torchia, for Plaintiff-Appellee,

          Keating Muething & Klekamp PLL and Kasey L. Bond, for Defendant-Appellant.



         {¶1} Litigation often stirs emotions, hardens principles, and drains the rationality from perfectly rational people. Cost-benefit analyses can be tossed out the window, and positions might be pursued regardless of the odds. At the end of the day, after the court or jury declares a winner and a loser, however, for many the bitterest pill of all to swallow is their lawyer's bill. But absent certain recognized exceptions, the "American rule" dictates that parties must pay their own way in litigation. Seeing no reason to depart from that principle in this case, we affirm the judgment below denying an award of attorney's fees.

         {¶2} The underlying lawsuit here stretches back more than a decade, concerning plaintiff-appellee Frederic C. Weckel's termination from defendant-appellant Cole Russell Architects ("C") in 2004. Mr. Weckel helped C grow and expand, and he wore multiple hats at the firm-serving as a managing principal in the firm, a member of the board of directors, and a shareholder. The parties tried to negotiate a severance package, but those efforts fell through, and the matter ultimately proceeded to litigation for wrongful discharge and breach of fiduciary duty.

         {¶3} After more than three years of litigation, the parties reached a settlement agreement, set forth in a 2008 "Letter Agreement," which contemplated Mr. Weckel selling his firm stock to the firm's employee stock ownership plan. But the Letter Agreement was, as the title suggests, a letter that sketched out key principles of the deal, and that anticipated a formal "Settlement Agreement." The entire deal was also contingent because C needed an independent advisor to provide a professional opinion blessing the sale of the stock. Unfortunately for everyone involved, that contingency did not come to pass, as the independent advisor concluded that the sale could not proceed as formulated (for various reasons not germane to this appeal). In the wake of that determination, C proclaimed the Letter Agreement "null and void," and the litigation that the parties hoped to put to bed by the settlement roared back to life. Mr. Weckel responded to this volley by seeking to enforce the Letter Agreement, but the trial court declined, pointing to the failure of the condition precedent. In the midst of all of this, perhaps needless to say, the parties never executed the Settlement Agreement contemplated by the Letter Agreement.

         {¶4} On appeal from the trial court's denial of the motion to enforce, we held that the trial court abused its discretion in extinguishing discovery (thereby cutting off Mr. Weckel's efforts to undermine the independence of the independent advisor's conclusions), and that as a result, it had prematurely denied the motion to enforce. Weckel v. Cole Russell Architects, 2013-Ohio-2718, 994 N.E.2d 885 (1st Dist.) ("Weckel I "). We reversed the trial court's denial of the motion to reopen discovery, vacated the portion of the trial court's order denying the motion to enforce, and remanded for discovery.

         {¶5} The matter then proceeded below with discovery and an evidentiary hearing, but ultimately arrived at the same destination, as the trial court again overruled the motion to enforce the settlement. On an encore appeal here, we affirmed the trial court's judgment, and the Ohio Supreme Court declined review. Weckel v. Cole Russell Architects, 1st Dist. Hamilton No. C-160591, 2017-Ohio-7491, appeal not allowed, 152 Ohio St.3d 1422, 2018-Ohio-923, 93 N.E.3d 1003 ("Weckel II ").

         {¶6} During the course of that convoluted procedural history, C racked up over $400, 000 in attorney fees and expert witness fees. Evidently frustrated with those costs for litigation that it had prevailed upon, it moved the trial court to have Mr. Weckel foot the bill, clinging to a provision in the Letter Agreement that referenced a to-be-included fee-shifting provision in the (never executed) Settlement Agreement. The trial court denied the motion. C now appeals the trial court's decision with a single assignment of error contesting that determination. We review the decision below, a question of contract law, de novo for "whether the trial court erred as a matter of law." Continental W. Condominium Unit Owners Assn. v. Howard E. Ferguson, Inc., 74 Ohio St.3d 501, 502, 660 N.E.2d 431 (1996).

         {¶7} Ohio follows the "American rule" with regard to attorney fees: "a prevailing party in a civil action may not recover attorney fees as a part of the costs of litigation." (Citations omitted.) Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, 906 N.E.2d 396, ¶ 7. This rule is not without exception, but such exceptions are generally limited to the presence of a specific provision for an award of attorney fees in a statute or contract. Id. Otherwise, a prevailing party must "demonstrate[] bad faith on the part of the unsuccessful litigant" to circumvent the American rule. (Citation omitted.) Id.

         {¶8} C pursues the contract path, relying on the following Letter Agreement provision in its effort to fit into one of these exceptions:

5. The Settlement Agreement and a Mutual Release will also contain a provision stating that in any lawsuit between the parties relating to the Settlement Agreement, the prevailing party (1) will be entitled to an award of his/its attorneys fees and costs in prosecuting/defending the suit, and (2) in the event the court finds that an award of additional damages, including punitive damages, is allowed by the law, the court may award such additional damages to the prevailing party.

         {¶9} C's reliance on this language, however, suffers from several flaws. First, C's success in the prior appeals was largely predicated on its argument that the Letter Agreement, upon the failure of the independent-advisor condition precedent, became null and void. Indeed, that is exactly what the trial court held, a result that we affirmed on appeal. Weckel II, 1st Dist. Hamilton No. C-160591, 2017-Ohio-7491, at ΒΆ 21. We explained that if "a condition precedent is not fulfilled, the parties are excused from performing under the contract[, ]" and ...

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