Gardner Tanenbaum, LLC v. Benham Cos.
| Citation | 514 P.3d 68 |
| Decision Date | 19 May 2022 |
| Docket Number | Case No. 119,396 |
| Parties | GARDNER TANENBAUM, LLC and Lincoln Road Apartments II, LLC, Plaintiffs/Appellants/Counter-Appellees, v. The BENHAM COMPANIES, LLC ; SAIC Energy Environment & Infrastructure, LLC, a Delaware limited liability company; and SAIC Constructors, LLC, an Oklahoma limited liability company, Defendants/Appellees/Counter-Appellants. |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Robert L. Magrini, Alan W. Bardell, HAYES MAGRINI & GATEWOOD, Oklahoma City, Oklahoma, for Plaintiffs/Appellants
W. Brett Willis, Linda G. Kaufmann, JENNINGS TEAGUE, P.C., Oklahoma City, Oklahoma, for Defendants/Appellees
OPINION BY GREGORY C. BLACKWELL, JUDGE:
¶1 The plaintiffs, Gardner Tanenbaum, LLC, and Lincoln Road Apartments II, LLC (collectively, "Tanenbaum"), appeal a summary judgment granted to defendants, The Benham Companies, LLC, SAIC Energy Environment & Infrastructure, LLC, and SAIC Constructors, LLC (collectively, "Benham").1 Tanenbaum argues that the district court erred in finding that Tanenbaum had no recoverable damages. We find that Tanenbaum's claims for lawsuit and settlement damages are indeed recoverable, though disgorgement is unavailable. Accordingly, the trial court's judgment against Tanenbaum is vacated and the matter is remanded for further proceedings. Benham's counter-appeal, which argues that the trial court should have granted a separately filed motion for summary judgment in which Benham urges judgment on a separate theory, is dismissed.
BACKGROUND
¶2 This case has a long and involved history, which we summarize as follows. Tanenbaum contracted with an architectural firm to design a multi-phase apartment complex in Oklahoma City. Tanenbaum terminated its contract with this firm after the company had completed plans for just the first phase of the project. Tanenbaum then hired Benham, another architectural firm, to provide the plans for phase two and other architectural and engineering services for the remainder of the project. Tanenbaum supplied Benham with the first architectural firm's drawings for phase one of the project.
¶3 After learning that Benham had its plans, the first architectural firm filed a federal lawsuit in 2008 against both Tanenbaum and Benham for conversion, breach of contract, tortious interference, and copyright infringement. Benham settled, and as part of the settlement agreement, two Benham employees gave affidavits pertaining to Benham's performance of the second phase of construction and their use of the first architect's plans. According to Tanenbaum, these affidavits contained false information that exposed Tanenbaum to considerable liability. Tanenbaum then settled with the first architectural firm.
¶4 Tanenbaum then brought the present action against Benham for breach of contract, contractual and implied indemnity, contribution, fraud, and negligence. Tanenbaum sought "lawsuit damages" (being the $257,939.86 it spent in defense of the federal suit), "settlement damages" (being the $325,000 it paid to settle that same suit), and "complete disgorgement" (being a return of the nearly $1 million paid to Benham over the course of their troubled relationship). The trial court granted partial summary judgment in favor of Benham in October 2016 on Tanenbaum's breach of contract claims related to a contractual confidentiality provision, as well as contribution, and contractual and implied indemnity. In July 2017, the trial court issued an order granting summary judgment in favor of Benham on Tanenbaum's lawsuit damages and disgorgement. Tanenbaum appealed this order in Case No. 119,326, but the Supreme Court dismissed the appeal as the order was not final. In July 2020, Tanenbaum filed a motion to reconsider and vacate the July 2017 order. The district court denied the motion to reconsider and vacate in February 2021. However, in that same order the trial court granted summary judgment in favor of Benham, stating "Benham is entitled to judgment on Tanenbaum's remaining claims because there is no evidence of recoverable damages." Tanenbaum appeals. Benham filed a counter-appeal in which they argue, in the alternative, that the trial court erred in denying summary judgment because Tanenbaum's claims are barred by the doctrine of litigation privilege.
STANDARD OF REVIEW
¶5 "The appellate standard of review of a summary judgment is de novo ." Wing v. Lorton , 2011 OK 42, ¶ 9, 261 P.3d 1122.
ANALYSIS
¶6 Tanenbaum's appeal presents two questions. The first is whether Tanenbaum's costs related to the first lawsuit, including both its defense costs and the amount it paid to settle the case, are unavailable as damages a matter of law. Second, we must determine whether disgorgement of profits is an appropriate remedy. Because we vacate the trial court's judgment, we must also address Benham's counter-appeal, in which they argue that the trial court erred in failing to grant a separate motion for summary judgment it filed on the issue of litigation privilege.
Lawsuit Damages
¶7 To support its contention that its attorney's fees and costs paid in defense of the federal suit are recoverable in this case, Tanenbaum points us to Security State Bank of Comanche v. W.R. Johnston & Co., Inc. There, the Oklahoma Supreme Court held:
The general rule is that costs and expenses of litigation, other than the usual and ordinary court costs, are not recoverable in an action for damages, and such costs are not recoverable in a subsequent action; but, where the wrongful acts of defendant have involved plaintiff in litigation with others, or placed him in such relations with others as make it necessary to incur expense to protect his interest, such costs and expense should be treated as legal consequences of the original act.
Security State Bank of Comanche v. W.R. Johnston & Co., Inc. , 1951 OK 40, ¶ 0, 204 Okla. 160, 228 P.2d. 169 (syllabus of the Court). See also Griffin v. Bredouw , 1966 OK 226, 420 P.2d 546 ; Safway Rental & Sales Co. v. Albina Engine & Mach. Works, Inc. , 343 F.2d 129, 133 (10th Cir. 1965).
¶8 Benham objects to Tanenbaum's reliance on Security State Bank , arguing that Tanenbaum's lawsuit damages are "consequential damages" and thus precluded by the contract between the parties. Paragraph 6.3 reads:
¶9 Benham reads paragraph 6.3(c) to mean that Benham is contractually relieved of liability because the first architect's plans were "information," or "other documents" contemplated by the provision. However, the meaning and purpose of 6.3(c) was to absolve Benham from liability caused by false, inaccurate, or misleading information or other documents provided by Tanenbaum or third parties. Paragraph 6.3(c) covers reliance , but not misuse, as Tanenbaum claims. Tanenbaum's accusations are not that Benham's reliance on the first architect's plans caused Tanenbaum to become embroiled in litigation, but rather that Benham's malfeasance caused Tanenbaum's damages. Thus, by its own language, 6.3(c) is inapplicable.
¶10 Next, Benham reads 6.3(d) to mean that Tanenbaum's damages are precluded by the contract because they are properly categorized as "consequential damages." However, we join other Oklahoma courts, which have read similar contractual language as limiting a party's liability of breach of contract, not tort liability. "[A]s other courts have recognized, the phrase ‘consequential damages’ ordinarily refers to contract damages, not tort damages." Abercrombie & Fitch Stores, Inc. v. Penn Square Mall Ltd. P'ship , 2018 OK CIV APP 56, ¶ 14, 425 P.3d 757, 764 (quoting Kaste v. Land O'Lakes Purina Feed, LLC , 284 Or.App. 233, 392 P.3d 805, 811 (2017) ). However broad the language of subsection (d) might be here, we cannot read it to exculpate Benham from damages directly related to the type of tortious conduct they are alleged to have engaged in here. Rather, as in Abercrombie , the contract language was effective to relieve Benham only from consequential damages that might flow from its breach of the contract.
¶11 To support its claim that the losses in question are consequential damages, Benham directs us to cases from other jurisdictions where courts held that attorney's fees were characterized as consequential damages. See Montana Owners' Ass'n v. La Noue Development, LLC , 357 Or. 333, 353 P.3d 563, 578-99 (2015) ; Armstrong Construct. Co. v. Thomson , 64 Wash.2d 191, 390 P.2d 976 (1964) ; Madden v. Antonov , 966 F. Supp.2d 851, 860-61 (D. Neb. 2013). In fact, the listed cases occurred in states with substantially similar rules as Oklahoma as to the recoverability of attorney's fees...
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