DLA Piper almost cost a client dearly by introducing a “scrivener’s error” into a contract. But in the litigation that followed, the firm managed not only to reform the contract, but to put its opponents on the hook for its legal bill.
In a 20-page ruling issued on Monday, Vice Chancellor J. Travis Laster of Delaware Chancery Court ordered The Scion Group, LLC to pay DLA Piper’s client, ASB Capital Management, $3.2 million in attorney’s fees and costs. The fee award caps almost two years of litigation over three contracts governing joint ventures between the two real estate companies.
The trouble began when a team of real estate lawyers in DLA’s Boston office accidentally reversed the order of two paragraphs in a “sales proceeds waterfall” clause of a joint venture agreement, which was then used as template for two later agreements. The mistake had the effect of substantially increasing Scion’s share of the real estate venture’s profits. ASB brought suit in Delaware, where the joint ventures are registered, seeking reformation of the contracts. Scion brought three different related lawsuits in federal court in Wisconsin, Illinois, and Florida, where the property is located, seeking to enforce the agreements as written.
A different set of lawyers at DLA, led by Bruce Falby in Boston and John Reed in Delaware, won ASB’s reformation case in May, after a four-day bench trial before Vice Chancellor Laster. (Scion dropped the federal cases after Laster ruled.) The judge gave the DLA lawyers who worked on the deal credit for testifying “candidly and credibly. . .despite obvious personal and professional embarrassment.” The Scion executives that took the stand, on the other hand, were “at best self-serving,” he wrote.
On Monday, in granting ASB’s bid for attorney fees and costs under a fee-shifting agreement, Laster didn’t conceal his low opinion of Scion’s approach to the litigation. “Contrary to its protestations, Scion filed multiple lawsuits to make the litigation as difficult and expensive as possible for ASB,” he wrote. “Scion’s tactics caused four courts and the parties to engage in overlapping, redundant, and otherwise unnecessary activities. . .at least two emergency applications were made to this Court for an expedited decision to help avoid a multi-jurisdictional train wreck.”
Laster rejected Scion’s argument that DLA’s fees were unreasonable, and took a shot at Scion’s lawyers at Honigman Miller Schwartz and Cohn.
“That Scion’s lawyers incurred fewer hours working on the case. . .does not undercut the reasonableness of ASB’s request,” the judge wrote. “Competent counsel may deem it prudent and appropriate to devote more or less hours to a task. For example, to prepare for the expert depositions, ASB’s lead attorney devoted 67 hours; Scion’s counsel devoted 31 hours. At trial, the DLA Piper destroyed the credibility of Scion’s expert. ASB’s expert, by contrast, was unshaken on cross-examination.”
“Preparation matters,” Laster wrote.
We left messages with DLA’s Reed, and with Kenneth Brooks of Honigman Miller and Scion co-counsel Gregory Williams of Richards, Layton & Finger. None immediately returned our calls.
