|Opinion:||Gardner Tanenbaum v. The Benham Companies, 2022 OK CIV APP 23|
|Date Decided:||May 19, 2022|
|Trial Court:||District Court of Oklahoma County|
|Route to this Court:||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”).|
|Facts:||Plaintiff contracted with Defendant to provide plans for phase two and other architectural and engineering services for the remainder of the apartment complex construction. After the first architectural firm learned that Defendant had received the phase one plans, it brought a lawsuit against Defendant for conversion, breach of contract, tortious interference, and copyright infringement. Defendant settled, and part of that settlement agreement contained two Defendant employee affidavits that, according to Plaintiff, contained false information that exposed Plaintiff to considerable liability. It settled with the first architectural firm.|
Plaintiff then brought this action against Defendant for breach of contract, contractual and implied indemnity, contribution, fraud, and negligence. Plaintiff also sought lawsuit damages ($257,939.86 defending the federal suit), settlement damages ($325,0000 it paid to settle the same lawsuit), and disgorgement for $1 million over the course of its troubled relationship with Defendant. The trial court granted partial summary judgment to Defendant on the breach of contract claims, contribution, and contractual and implied indemnity. The trial court also granted summary judgment to Defendant on the lawsuit damages and disgorgement claims. Defendant appealed these judgments.
|Standard of Review:||“The appellate standard of review of a summary judgment is de novo.” Wing v. Lorton, 2011 OK 42, ¶ 9.|
|Analysis:||The two questions before the Court in this case were whether Plaintiff’s costs related to the defense of the first litigation and the cost of settling the case were unavailable as damages as a matter of law and whether disgorgement of profits was an appropriate remedy.|
In regard to the lawsuit damages, Plaintiff relied on Security State Bank of Comanche v. W.R. Johnston & Co., Inc., 1951 OK 40, ¶ 0. which stated that “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.” Defendant objected to that reliance, and argued that the damages were “consequential damages” as outlined in their contract.
The Court rejected Defendant’s interpretation of contract provision 6.3(c) because its meaning and purpose was to absolve Defendant from liability caused by false, inaccurate, or misleading information provided by Plaintiff, and not for information like the third party’s plans. Plaintiff’s accusations are that Defendant’s tortious acts caused Plaintiff’s damages. Thus, the provision was inapplicable because of its own language.
In response to Defendant’s argument that the damages Plaintiff incurred in the defense and settlement of the first litigation as being “consequential damages,” the Court denied this interpretation of the parties’ contract because those damages that Plaintiff incurred were from Defendant’s tortious acts, and not a breach of contract. The Court upheld Oklahoma case law, which has deemed consequential damages as relating to breach of contract, not tortious acts. Thus the contract did not bar Plaintiff’s recovery.
Plaintiff argued that the settlement damages was directly attributable to Defendant’s tortious conduct, thus, money paid in settlement is recoverable. In response to this, the Court found that there was no discernable distinction between allowing attorney’s fee damages in a tort action and allowing a reasonable amount paid in settlement. The Court held that the question of whether the damages caused by the alleged tortious conduct is to be decided by a jury. Jones v. Mercy Health Ctr. Inc., 2006 OK 83, ¶ 24. Therefore, the Court ruled that the grant of summary judgment on this matter was inappropriate.
|Outcome:||Vacated and Remanded; Counter-Appeal Dismissed.|
|Vote:||3-0. Wiseman, P.J., Rapp, J., and Blackwell, J. (author) concur.|