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    Civil Procedure

    Attorney's Fees as Damages for Breach of Covenant Not to Sue

    Posted by Paul A. Ferrer on August 20, 2021 at 9:10 AM

    Paul Ferrer—Senior Attorney, National Legal Research Group

                The familiar "American rule" holds that a prevailing party generally cannot recover its attorney's fees from the losing party in the absence of a statute or contract provision specifically authorizing an award of such fees. Jurisdictions are divided on the issue of whether a party can recover its attorney's fees as damages, rather than costs, for the breach of a covenant not to sue the other party. In those jurisdictions that have not permitted attorney's fees to be awarded as damages, courts have reasoned that the contract containing the covenant not to sue can itself provide for attorney's fees in the event of its breach if that is the parties' intention. See Artvale, Inc. v. Rugby Fabrics Corp., 363 F.2d 1002, 1008 (2d Cir. 1966) ("Certainly it is not beyond the powers of a lawyer to draw a covenant not to sue in such terms as to make clear that any breach will entail liability for damages, including the most certain of all—defendant's litigation expense."). By contrast, other courts have determined that the American rule does not apply in "those cases in which the attorney fees are not awarded to the successful litigant in the case at hand, but rather are the subject of the law suit itself." Zuniga v. United Can Co., 812 F.2d 443, 455 (9th Cir. 1987). Virginia recently adopted the latter view.

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    Topics: Paul A. Ferrer, civil procedure, attorneys fees, breach of covenant, damages vs. costs, covenant not to sue

    Responding Competently to Incompetently Drafted Pleadings

    Posted by Lee P. Dunham on May 6, 2021 at 12:21 PM

    Lee Dunham—Senior Attorney, National Legal Research Group

                As most seasoned practitioners are all too aware, it is often more time- consuming and frustrating to litigate a case against an incompetent pro se party or opposing counsel than it is to oppose a good lawyer. A litigant who is sloppy, mentally unwell, or who has very little understanding of the law can simply invent fictions faster than a competent and ethical attorney can refute them. Luckily, such a litigant often reveals his or her incompetence immediately through his or her pleadings. The best way to limit wasted time is usually to attempt to dispose of as much of the case as possible “on the papers.” Dismissal is, of course, the ideal result, but even if dismissal is not possible, it is still better to force the opponent to proceed on “cleaned up” and comprehensible pleadings without irrelevant statements or unsupportable claims.

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    Topics: civil procedure, Lee Dunham, drafting pleadings, Federal Rules of Civil Procedure, incompetence

    What Happens to a Derivative Action When the Company Settles a Parallel Lawsuit?

    Posted by Charlene J. Hicks on March 16, 2021 at 10:20 AM

    Charlene Hicks—Senior Attorney, National Legal Research Group

                Corporate shareholders, individual members of a limited liability company, or residents of a homeowners' association often file derivative complaints on behalf of the entity to assert rights that the entity itself has failed to raise against third parties. Sometimes these derivative actions prompt the entity to file its own lawsuit against the same third parties, resulting in parallel proceedings.

                In Star v. TI Oldfield Development, LLC, 962 F.3d 117, 131 (4th Cir. 2020), the Fourth Circuit considered for the first time the issue of "whether a plaintiff's derivative action on behalf of an entity is rendered moot by the entity's settlement of the same or similar claims in another action." As a matter of first impression, the court held that it may.

                The evidence showed that the Board of Directors of Oldfield, a residential community in South Carolina, filed lawsuits related to Oldfield's development. Rob Star, an Oldfield resident, later filed a derivative action on Oldfield's behalf, alleging similar claims against the same defendants. After the Board settled the lawsuits that it brought, the defendants moved to dismiss Star's derivative action on the ground that the settlements rendered the derivative lawsuit moot, and, therefore, the court lacked jurisdiction. In opposition, Star alleged that the settlement agreement was invalid due to a conflict of interest by certain board members and that the derivative action alleged claims not included in the Board's lawsuits.

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    Topics: civil procedure, Charlene J. Hicks, derivative action, parallel lawsuit, settlement of similar claim, release provision

    COVID-19 Venue Issues and Relevant Practical Problems

    Posted by Anne B. Hemenway on March 16, 2021 at 10:09 AM

    Anne B. Hemenway—Senior Attorney, National Legal Research Group

                The COVID-19 pandemic has caused many state courts around the country to either have closed down during parts of 2020 and 2021 or dramatically curtailed operations. In many jurisdictions, jury trials have been canceled or postponed for months. The pandemic has resulted in a plethora of federal court cases regarding requests by federal inmates to be released from federal custody and other court-related issues. See Fern L. Kletter, COVID-19 Related Litigation: Effect of Pandemic on Release from Federal Custody, 54 A.L.R. Fed. 3d art. 1 (2020 & Westlaw updated weekly).

                In a case of first impression in the Commonwealth of Virginia, Clarke v. Medical Facilities of America, Inc. , No. CL20-4379, 2020 Va. Cir. LEXIS 493 (Va. Cir. Ct. City of Norfolk Dec. 30, 2020), the court reviewed whether pandemic-related issues were material to a venue dispute. In that case, defendants in a wrongful death action sought to transfer venue from the circuit court in the City of Norfolk, one of the largest cities in Virginia, to a small rural circuit court closer to the rehabilitation center where the plaintiff decedent had been treated.

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    Topics: Anne B. Hemenway, COVID-19, court venue issues, too speculative, pandemic's disparate impact, relevant practical problems

    Maritime Law—Could COVID-19 Cruise Ship Passenger Litigation Sink the Cruise Line Industry?

    Posted by Charlene J. Hicks on February 17, 2021 at 10:51 AM

    Charlene Hicks—Senior Attorney, National Legal Research Group

                The COVID-19 pandemic has proven disastrous for cruise lines and passengers alike, with multiple coronavirus outbreaks and lengthy quarantine periods imposed. The resulting lawsuits have met with mixed results.

                In Weissberger v. Princess Cruise Lines, Ltd., No. 2:20-CV-02328-RGK-SK, 2020 WL 3977938 (C.D. Cal. July 14, 2020), plaintiffs claimed that Princess Cruise Lines was negligent and/or grossly negligent because it had knowledge that a disembarking passenger had symptoms of COVID-19 but it made the conscious decision to continue sailing with 3,000 passengers aboard. The Weissbergers claimed emotional distress damages arising from the ship's quarantine and the associated trauma from fear of developing the virus.

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    Topics: Charlene Hicks, emotional distress, recovery for emotional distress, maritime law, COVID-19, liability of cruise line

    Bid to Recover Picasso Painting Foiled in Rare Case Where Laches Defense Overcomes Express Statute of Limitations

    Posted by Paul A. Ferrer on December 21, 2020 at 10:23 AM

    Paul FerrerSenior Attorney, National Legal Research Group

                Laches is "a defense developed by courts of equity to protect defendants against unreasonable, prejudicial delay in commencing suit." SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S. Ct. 954, 960 (2017) (internal quotation marks omitted). It is frequently said, however, that laches cannot be invoked to bar legal relief in the face of an express statute of limitations enacted by Congress. Id. at 959. But that is exactly what happened in Zuckerman v. Metropolitan Museum of Art, 928 F.3d 186 (2d Cir. 2019), cert. denied, 140 S. Ct. 1269 (2020).

                In Zuckerman, the plaintiff, Laurel Zuckerman, brought suit to recover a painting—"The Actor" by Pablo Picasso—that had been owned by her great-granduncle and aunt, the Leffmanns. The Leffmanns were German Jews who were forced to flee the country in 1937. They arranged for the painting to be held by a Swiss acquaintance, who sold the painting in 1938 to raise funds for the Leffmanns to relocate to Brazil. The painting was eventually donated to the Metropolitan Museum of Art (the "Met") in New York in 1952, where it still resides.

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    Topics: Paul A. Ferrer, statute of limitations, laches defense, Picasso painting, Zuckerman v. Metropolitan Museum of Art

    Effect of COVID-19 Pandemic on Discovery Deadlines

    Posted by Paul A. Ferrer on May 12, 2020 at 12:20 PM

    Paul Ferrer—Senior Attorney, National Legal Research Group

         Based on the exceptional circumstances presented by the COVID-19 pandemic, many state and federal courts have entered general orders altering deadlines for a wide variety of matters, including deadlines for filing appeals, the most notable example being the U.S. Supreme Court's extending the period to seek review of a lower court decision by writ of certiorari from 90 to 150 days. Counsel should be aware, however, that in the absence of an order of general applicability, deadlines will not be extended without a specific order from the court in a particular case. To the contrary, judges are loath to allow "all litigation to grind to a halt in many cases," as "allowing that to happen will only exacerbate, in many cases, the detrimental effects of this crisis." Horning v. Resolve Marine Group, No. 19-60899-CIV, 2020 WL 1540326, at *1 (S.D. Fla. Mar. 30, 2020) (Scola, J.).

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    Topics: Paul A. Ferrer, discovery deadlines, specific order requirement, extension of time, COVID-19

    Is Virginia Inching Toward The Federal Twiqbal Pleading Standards?

    Posted by Paul A. Ferrer on February 21, 2020 at 12:11 PM

    Paul Ferrer—Senior Attorney, National Legal Research Group

                Practitioners in federal court are by now aware of the revolution in federal pleading fashioned by the U.S. Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), which are often referred to jointly using the portmanteau "Twiqbal." Under the Twiqbal analysis, a district court considering the legal sufficiency of a complaint on a motion to dismiss for failure to state a claim initially separates factual allegations, which are still entitled to the presumption of truth, from legal conclusions (such as "[t]hreadbare recitals of the elements of a cause of action"), which are not. Iqbal, 556 U.S. at 678. The court then examines just the factual allegations to determine whether they state a claim to relief that is plausible on its face. Id. Determining whether a claim is plausible is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

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    Topics: majority follows Twombly/Iqbal standard, sufficient factual allegations, civil procedure, federal pleading standard, legal sufficiency of complaint

    CIVIL PROCEDURE: Contractual Waivers of Statute of Limitations Held Unenforceable in Virginia

    Posted by Paul A. Ferrer on December 20, 2019 at 9:30 AM

    Paul Ferrer—Senior Attorney, National Legal Research Group

                In a decision with far-reaching implications in the commercial world, the Virginia Supreme Court has decided that contractual waivers of the right to plead the statute of limitations that do not meet specified statutory criteria are unenforceable under Virginia law. See Radiance Capital Receivables Fourteen, LLC v. Foster,  ___ Va. ___, 833 S.E.2d 867 (2019), available at http://www.courts.state.va.us/opinions/opnscvwp/1180678.pdf. The statute in question provides that unless the failure to enforce a promise not to plead the statute of limitations would operate as a fraud on the promisee, a written promise not to plead the statute of limitations is valid and enforceable only "when (i) it is made to avoid or defer litigation pending settlement of any case, (ii) it is not made contemporaneously with any other contract, and (iii) it is made for an additional term not longer than the applicable limitations period." Va. Code Ann. § 8.01-232(A).

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    Topics: contracts, Paul A. Ferrer, civil procedure, waiver of statute of limitations, waiver unenforceable

    APPELLATE PRACTICE:  Sanctions Including Dismissal and Fines Imposed over Noncompliant Briefs

    Posted by Nicole Prysby on December 20, 2019 at 9:19 AM

    Nicole Prysby—Senior Attorney, National Legal Research Group

                The appellate process is already an expensive and difficult process. Why sink your chances of a win by presenting the court with a brief that is not compelling or, even worse, is noncompliant with court rules?

                In very egregious cases, a noncompliant brief may result in the denial of the appeal. In 2019, a North Carolina court concluded that dismissal was an appropriate sanction. In Ramsey v. Ramsey, 826 S.E.2d 459 (N.C. Ct. App. 2019), the appellant failed to file the record on appeal within 15 days of the date the record was settled and included a discussion of relevant facts in the argument section, instead of in a separate fact statement. He included the standard of review in only one of his three argument sections and had a litany of minor errors, such as a failure to identify the specific names of persons served in the Certificate of Service. And although the brief met word limits, the Certificate of Compliance stated the word count, rather than the required statement that the brief contains no more than the permitted number of words. The court declined to make its own "voyage of discovery through the record" in order to glean the relevant circumstances for the appeal and dismissed the appeal. Id. at 464.

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    Topics: noncompliance consequences, Nicole Prysby, appeal, noncompliant brief, rules violations

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