UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2010
ZEE COMPANY, INC.; R. C. CONRAD; ROBERT DODD; BENJAMIN
LUKOWSKI; BARRY OWINGS,
Plaintiffs - Appellants,
v.
WILLIAMS, MULLEN, CLARK & DOBBINS, P.C.,
Defendant – Appellee,
and
GE BETZ, INC.,
Defendant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Anthony J. Trenga,
District Judge. (1:11-cv-00458-AJT-IDD)
Argued: September 18, 2013 Decided: October 18, 2013
Before NIEMEYER, KING, and AGEE, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Mark Andrew Dombroff, MCKENNA LONG & ALDRIDGE, LLP,
McLean, Virginia, for Appellants. William Delaney Bayliss,
WILLIAMS MULLEN, Richmond, Virginia, for Appellee. ON BRIEF:
Thomas Barton Almy, Donald Weinberg, DOMBROFF, GILMORE, JAQUES &
FRENCH, McLean, Virginia, for Appellants. Brendan D. O'Toole,
Joseph E. Blackburn, III, WILLIAMS MULLEN, Richmond, Virginia,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Williams, Mullen, Clark, & Dobbins, P.C. (“Williams Mullen”
or “the firm”) represented Zee Company, Inc. (“Zee Company”) in
a North Carolina state court action. After that representation
ended, Zee Company 1 filed a complaint against Williams Mullen
alleging claims of legal malpractice and constructive fraud
arising from Williams Mullen’s failure to communicate to Zee
Company a pre-discovery settlement offer purportedly made by the
opposing party in the state court action. Williams Mullen filed
a counter-claim for breach of contract in light of Zee Company’s
failure to pay all of the attorney’s fees and expenses for work
the firm performed during the state court action. Zee Company
now appeals from the district court’s grant of summary judgment
to Williams Mullen on Zee Company’s claims, and from the
judgment entered on a jury verdict in favor of Williams Mullen
for the full amount of its counter-claim. For the reasons set
forth below, we affirm the judgment of the district court.
1
The plaintiffs-appellants in this case are Zee Company and
four individual plaintiffs affiliated with Zee Company: R.C.
Conrad, Robert Dodd, Benjamin Lukowski, and Barry Owings. The
four individual plaintiffs were each named party defendants in
the North Carolina state court action and are the former GE
Betz, Inc. employees described in section I of this opinion.
For simplicity, the opinion refers to all the plaintiffs-
appellants collectively as “Zee Company.”
3
I.
Williams Mullen defended Zee Company in a state court
action brought by a business competitor, GE Betz, Inc. (“GE
Betz”), alleging that Zee Company and former GE Betz employees
violated certain terms of their employment agreements through
their subsequent employment with Zee Company. As this
litigation extended into its third year, rumors began to
circulate that early in the proceedings, GE Betz had made a
“walk-away settlement offer” through its attorney that Williams
Mullen failed to communicate to Zee Company. This rumor
contributed to a break down in the relationship between Zee
Company and Williams Mullen, and eventually led Zee Company to
terminate Williams Mullen’s representation. 2
Thereafter, Zee Company filed a complaint, later amended,
in the United States District Court for the Eastern District of
Virginia asserting that Williams Mullen’s failure to communicate
GE Betz’s “walk-away settlement offer” constituted both legal
malpractice and constructive fraud. The amended complaint
alleged that if such an offer had been timely communicated to
Zee Company, it would have accepted the offer and consequently
2
Zee Company obtained new counsel in the state court
action. That litigation resulted in a judgment against Zee
Company for both damages and significant attorney’s fees. An
appeal from that judgment is pending with the North Carolina
Court of Appeals. Its disposition does not affect the analysis
of this case.
4
would not have incurred damages in the form of lengthy
litigation resulting in unnecessary litigation-related expenses,
costs, and attorney’s fees. 3
Williams Mullen denied the allegations and filed a counter-
claim alleging that Zee Company breached the parties’ contract
for legal representation by failing to pay for some of the work
that Williams Mullen performed in the state court action.
After extensive discovery, Williams Mullen moved for
summary judgment on Zee Company’s claims. For reasons discussed
below, the district court granted that motion. Zee Co. v.
Williams, Mullen, Clark & Dobbins, P.C., 871 F. Supp. 2d 498
(E.D. Va. 2012).
3
The amended complaint also pled, in the alternative,
separate claims against GE Betz for fraud and intentional
interference with contractual relations. Those claims were
based on the polar opposite theory from the cause of action pled
against Williams Mullen: that a settlement offer was never
actually made, but had been later falsely represented by GE Betz
to Zee Company in order to poison the attorney-client
relationship between Zee Company and Williams Mullen. Those
claims were later dismissed and are not at issue in this appeal.
To the extent Williams Mullen contends on appeal that Zee
Company is bound by allegations made as part of its alternative
pleading against GE Betz, we do not agree. Zee Company was
permitted to set out conflicting alternative theories in its
complaint without one constituting an admission against the
other. See Fed. R. Civ. P. 8(d)(2) (“A party may set out two or
more statements of a claim . . . alternatively or
hypothetically[.]”); Molsbergen v. United States, 757 F.2d 1016,
1019 (9th Cir. 1985) (“[A] policy which permits one claim to be
invoked as an admission against an alternative or inconsistent
claim would significantly restrict, if not eliminate, the
freedom to plead inconsistent claims provided by” Rule 8(d)(2).)
(citing prior version of rule).
5
The district court also granted partial summary judgment on
Williams Mullen’s counter-claim, finding that Zee Company was
liable for breach of contract but concluding that, under North
Carolina law, questions of fact existed as to the reasonableness
of Williams Mullen’s attorney’s fees. The matter proceeded to
trial, and the jury awarded Williams Mullen the entire amount
sought as attorney’s fees, $1,078,413.39. 4
The district court then entered final judgment in favor of
Williams Mullen. Zee Company noted a timely appeal, and we have
jurisdiction pursuant to 28 U.S.C. § 1291.
II.
Zee Company raises three issues on appeal: (1) whether the
district court erred in granting Williams Mullen summary
judgment on the malpractice and constructive fraud claims; and,
(2) in the reasonable attorney’s fees trial, (a) whether the
district court abused its discretion in excluding Zee Company’s
expert witnesses, and (b) whether the district court abused its
discretion in giving and denying several jury instructions.
4
Zee Company conceded that it owed $119,905.79 in costs,
and that portion of the judgment is not at issue in this appeal.
6
A.
Zee Company first contends the district court erred in
granting Williams Mullen summary judgment on the legal
malpractice and constructive fraud claims. We review an award
of summary judgment de novo. Adams v. Trs. of the Univ. of
N.C.-Wilmington, 640 F.3d 550, 556 (4th Cir. 2011). Summary
judgment is appropriate if “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). In considering the
matter, we construe the evidence in the light most favorable to
the non-moving party, being Zee Company in this case, and draw
all reasonable inferences in its favor. See Adams, 640 F.3d at
556.
Applying that standard, the relevant facts are as follows.
The day after “the state court entered a temporary restraining
order enjoining Zee Company from certain conduct with respect to
GE Betz’s customers,” GE Betz’s lead counsel Victoria Cundiff
spoke with Williams Mullen attorney William Barrett by
telephone. Zee Co., 871 F. Supp. 2d at 501. The attorneys
discussed the anticipated lengthy discovery process to come, and
at one point Cundiff told Barrett that they
could continue the discussions that [Barrett] and [GE
Betz’s local counsel] have started. If [Zee Company]
were prepared to cease switching of accounts, [were]
prepared to withdraw the DAK proposal, [were] prepared
to agree on the customers subject to the agreements,
7
and [were] prepared to agree to a restart of the time
period of the restrictive covenant, [they] might be
able to wrap things up.
Id. The parties do not dispute that Barrett did not relay this
statement (the “Cundiff Statement”) to Zee Company.
Zee Company contends that summary judgment was
inappropriate because there is a disputed question of material
fact as to whether Williams Mullen’s failure to communicate the
Cundiff Statement proximately caused Zee Company injury. It
contends the district court usurped the role of factfinder
because whether a statement is an “offer” is a question of fact
under North Carolina law. And Zee Company asserts that a
question of fact exists as to “[w]hether GE Betz intended [the
Cundiff Statement] to be an offer or preliminary negotiations.”
(Reply Br. 11.) Zee Company further contends that the district
court ignored evidence that it would have settled the state
court action had Williams Mullen communicated the Cundiff
Statement in a timely manner.
In North Carolina, legal malpractice and constructive fraud
claims follow traditional tort principles, requiring proof of
causation between the alleged wrongful act and the plaintiff’s
injury. See Royster v. McNamara, 723 S.E.2d 122, 126 (N.C. Ct.
App. 2012) (legal malpractice); Governor’s Club, Inc. v.
Governors Club Ltd. P’ship, 567 S.E.2d 781, 788 (N.C. Ct. App.
2002) (constructive fraud). Applied here, Zee Company had to
8
show that it suffered some loss that would not have occurred
“but for” Williams Mullen’s failure to communicate the Cundiff
Statement to it in a timely manner.
We have reviewed the record in light of Zee Company’s
assertions challenging the district court’s consideration of
that issue and conclude that the district court did not err in
concluding no injury was shown as a matter of law. This is so
for two reasons: GE Betz made no cognizable offer under North
Carolina and Zee Company failed to adduce sufficient evidence of
any other injury.
Contrary to Zee Company’s contention, no reasonable jury
could conclude that the Cundiff Statement was an “offer” under
North Carolina law. While Zee Company is correct that whether
an offer has been made is a question of fact, nothing in North
Carolina law precludes the grant of summary judgment where no
question of fact exists. See Jackson v. Stancil, 116 S.E.2d
817, 824 (N.C. 1960) (“Where the facts are in conflict, it is a
question for the jury. But where the facts are uncontradicted,
. . . whether the evidence is sufficient to [decide the case] is
a question of law for the court.” (citation omitted)). Here,
the district court was capable of reviewing the Cundiff
Statement to determine whether a jury could find for Zee Company
in light of Williams Mullen’s failure to communicate that
statement to Zee Company.
9
North Carolina law requires that an offer that is relied
upon to create a binding agreement “be one that is intended to
create a legal relationship upon acceptance. It cannot be an
offer to open negotiations that eventually may result in a
contract.” Braun v. Glade Valley Sch., Inc., 334 S.E.2d 404,
408 (N.C. Ct. App. 1985). And while a contract will “not fail
because minor details are left for future determination,” Pee
Dee Oil Co. v. Quality Oil Co., 341 S.E.2d 113, 115-16 (N.C. Ct.
App. 1986), “an offer to enter into a contract in the future
must specify all the essential terms and leave nothing to be
agreed upon as a result of future negotiations,” Braun, 334
S.E.2d at 408.
The Cundiff Statement is not, as a matter of law, an
“offer” under these principles such that the failure to
communicate it to Zee Company deprived Zee Company of the
opportunity to “accept.” Read as a whole, the Cundiff Statement
suggests that the parties could “continue the discussions” about
a settlement in lieu of litigation, and that if Zee Company
agreed to four things (none of which were detailed), the parties
“might be able to wrap things up.” Zee Co., 871 F. Supp. 2d at
501 (emphasis added). On its plain terms, the Cundiff Statement
does not constitute an offer capable of being accepted by Zee
10
Company. 5 The district court’s determination on this point was
not erroneous.
Nor did the district court err in holding that Zee Company
failed to adduce sufficient evidence of injury arising from
Williams Mullen’s failure to communicate the Cundiff Statement
as an opportunity to engage in further settlement negotiations
at that stage in the state court action. Our review of the
record shows that the district court properly observed that
communicating the Cundiff Statement to Zee Company “would merely
have given Zee [Company] information it already had.” Zee Co.,
871 F. Supp. 2d at 511. The Cundiff Statement provided no new
information regarding the nature of the dispute between the
5
Indeed, Cundiff stated in her deposition testimony that
she did not consider her statement to be an offer of settlement.
While Zee Company contends that other witnesses could have
impeached Cundiff’s own interpretation of her statement, the
district court excluded that testimony as “exactly the sort of
rumor-mill evidence that the hearsay rule is intended to
exclude,” and Zee Company does not challenge that ruling. Zee
Co., 871 F. Supp. 2d at 507. Even assuming, arguendo, that such
evidence would be admissible impeachment, a review of the
testimony shows that these other witnesses simply state—in
relevant harmony—that years later they heard second- or third-
hand that a settlement offer had been made shortly after the
issuance of the temporary restraining order. Their testimony
does not contain first-hand knowledge of what Cundiff stated,
they do not question the actual content of the Cundiff
Statement, nor do they (or Zee Company) point to any other
statement as constituting the purported walk-away settlement
offer. Simply put, the fact that these witnesses subsequently
“learned” that GE Betz had made a settlement offer does not make
it so, nor does it create a question of fact as to whether the
Cundiff Statement was an offer under North Carolina law.
11
parties or what issues would need to be resolved to settle the
litigation. As the district court noted, this fact “casts
substantial doubt on Zee[] [Company’s] contention that the
Cundiff [S]tatement was necessary for Zee [Company] to make an
informed decision with respect to settlement.” Id.
Moreover, even assuming that learning of the Cundiff
Statement “would have informed Zee[] [Company’s] judgment on
settlement, the record contains insufficient evidence that
settlement would have actually resulted.” Id. Such a
conclusion would require the jury to speculate as to each
party’s subsequent conduct both in reaching a settlement at that
time and as to material terms of any such hypothetical
settlement agreement. This is not a sufficient basis for a jury
to find in favor of Zee Company. See Cox v. Cnty. of Prince
William, 249 F.3d 295, 300 (4th Cir. 2001) (stating an
“[a]ppellant cannot create a genuine issue of material fact
through mere speculation or the building of one inference upon
another” (internal quotation marks omitted)).
For these reasons, Zee Company cannot prove that it
suffered any injury resulting from Williams Mullen’s failure to
communicate the Cundiff Statement to it in a timely manner.
Accordingly, the district court did not err in awarding Williams
12
Mullen summary judgment on Zee Company’s legal malpractice and
constructive fraud claims. 6
B.
Zee Company next challenges the district court’s exclusion
of two expert witnesses during the jury trial on the
reasonableness of Williams Mullen’s claim for attorney’s fees.
The district court has considerable discretion with respect to
such evidentiary rulings, and we will reverse only if the court
applies erroneous legal principles or bases its decision on
clearly erroneous factual findings. In sum, we will reverse
only if we are left with “a definite and firm conviction that
the court below committed a clear error of judgment in the
conclusion it reached upon a weighing of the relevant factors.”
Belk, Inc. v. Meyer Corp., U.S., 679 F.3d 146, 161 (4th Cir.
2012) (internal quotation marks omitted).
As noted, the district court granted partial summary
judgment on the issue of liability, but concluded that a
question of material fact existed as to the amount of attorney’s
fees Zee Company owed Williams Mullen. Under North Carolina
law,
6
In light of our holding, it is not necessary to consider
Zee Company’s additional arguments challenging the district
court’s remaining reasons for granting Williams Mullen summary
judgment.
13
[w]hen an attorney enters into a contract for a fixed
fee [(either a set hourly rate or a set total fee)]
after the attorney’s representation of the client has
commenced, the attorney bears the burden of proving,
in an action to recover fees under the contract, that
the fees were “fair and reasonable.” This is so
because there is a presumption of undue influence when
an attorney enters into a fee contract with a client
during representation.
Tew v. Brown, 522 S.E.2d 127, 128-29 (N.C. Ct. App. 1999)
(internal quotation marks, footnotes, citations omitted).
Zee Company sought to introduce the expert testimony of
Bernard A. Burk, who opined that Williams Mullen’s work in the
state court action fell below the standards of professional
conduct. In forming that opinion, Burke relied on the factual
assumption that Williams Mullen failed to communicate a
“walkaway settlement offer” to Zee Company in the state court
proceedings. Zee Company contends that the district court
abused its discretion in excluding Burk’s testimony because the
“reasonable value” of legal services depends, in part, on the
quality of the legal services. It asserts that Burk’s testimony
was essential to showing how deficient Williams Mullen’s
representation had been so that the jury could understand why it
should decrease the value of the work Williams Mullen performed.
We find no reversible error in the district court’s
exclusion of Burk’s testimony. As the district court noted, the
court had “previously dismissed the malpractice claim” because
it found, in relevant part, that the Cundiff Statement “was
14
neither a ‘walk-away offer’ nor a binding offer to settle
capable of being accepted.” (J.A. 3477.) Burk’s opinion was
thus based on what the district court had already concluded was
a faulty factual premise. In addition, Burk’s witness report
contained no opinion as to the reasonableness of the fees in
dispute. See Fed. R. Civ. P. 26(a)(2)(B) (stating that an
expert witness’s written report must contain, inter alia, “a
complete statement of all opinions the witness will express and
the basis and reasons for them” as well as “the facts or data
considered by the witness in forming them.”). Therefore, Burk
did not tie his opinion about the quality of Williams Mullens’
representation to the issue before the jury: whether the fees
the firm sought were “fair and reasonable.”
In light of these considerations, the district court did
not abuse its discretion in concluding that Burk’s testimony
presented a substantial risk of confusing the issues, misleading
the jury, and causing Williams Mullen unfair prejudice. See
Fed. R. Evid. 403 (providing that a district court “may exclude
relevant evidence if its probative value is substantially
outweighed by a danger of one or more of the following: unfair
prejudice, confusing the issues, misleading the jury, undue
delay, wasting time, or needlessly presenting cumulative
evidence”); see also United States v. Love, 134 F.3d 595, 603
(4th Cir. 1998) (“Rule 403 judgments are preeminently the
15
province of the trial courts. . . . We will not upset such a
decision except under the most extraordinary of circumstances,
where a trial court’s discretion has been plainly abused.”
(internal quotation marks and alterations omitted)).
Zee Company also sought to introduce testimony from David
Paige criticizing Williams Mullen’s billing methods, which Paige
opined were not in a format that permitted fair assessment of
“whether the legal bills reflected [the] true value” of Williams
Mullen’s legal services. (J.A. 3232.) Paige opined that as a
result of what he considered to be deficient billing practices,
Williams Mullen should receive only 25% of the amount it sought
in attorney’s fees. Zee Company contends the district court
abused its discretion in excluding Paige’s testimony because
Paige would have assisted the jury in determining whether
Williams Mullen satisfied its burden of showing the value of its
services.
We disagree. As the district court noted, Paige’s analysis
centered on his belief that Williams Mullen was obligated to
submit bills in a particular manner, a position that was
ultimately “irrelevant to the point of whether the fees
themselves [that] were charged were reasonable.” (J.A. 4114.)
See Tew, 522 S.E.2d at 129 n.2 (reiterating the opinion of the
Supreme Court of North Carolina that it is not a prerequisite to
a reasonableness finding “that the attorney introduce into
16
evidence a detailed, itemized statement of the time spent by him
in rendering the service” (internal quotation marks omitted)).
Moreover, Paige admitted that in forming his opinion that a
reasonable fee would be 25% of what Williams Mullen sought, he
made a “judgment call based upon the way that . . . [he]
believe[d] that a court would rule if they were going through
[Williams Mullen’s] bills” using the billing principles that he
believed were proper. (J.A. 3223-24.) In sum, the district
court did not abuse its discretion in excluding Paige’s
testimony because it focused on matters that were not relevant
to the question before the jury and provided a speculative
opinion as to the ultimate issue before them.
C.
Lastly, Zee Company contends the district court erred in
failing to give two instructions it proffered regarding factors
the jury should consider in assessing the “reasonableness” of
attorney’s fees and in giving an instruction regarding the
outcome of Zee Company’s legal malpractice claim against
Williams Mullen. We review a district court’s decision to give
or not to give a jury instruction for abuse of discretion.
United States v. Mouzone, 687 F.3d 207, 217 (4th Cir. 2012).
Reversal is appropriate “only when we can conclude that a
particular jury instruction must necessarily have caused the
17
jury to act in complete ignorance of, or to have misapplied,
fundamentally controlling legal principles to the inevitable
prejudice of an aggrieved party.” Spell v. McDaniel, 824 F.2d
1380, 1399 (4th Cir. 1987). Furthermore, we review particular
instructions “in light of the whole record,” and will reverse a
decision “only if the error is determined to have been
prejudicial, based on a review of the record as a whole.”
Abraham v. Cnty. of Greenville, S.C., 237 F.3d 386, 393 (4th
Cir. 2001) (internal quotation marks omitted).
The district court instructed the jury that Williams Mullen
was entitled to a “reasonable fee” for its services; that the
jury was to review all the evidence before it to determine
whether the amount Williams Mullen sought in its claim was
“reasonable”; that the jury should decide whether that amount or
some other amount was reasonable; and that North Carolina law
set forth eight non-exhaustive factors that were appropriate to
consider in making this determination. The court then listed
those exemplars.
Zee Company’s proffered “reasonableness” instruction
included statements that the value of legal services diminished
to the extent the services provided were “less than competent,
prompt and diligent,” and that certain specified billing
techniques did not allow for proper determination of a
“reasonable” fee. (J.A. 3566.) Zee Company contends that its
18
instruction would have highlighted that the delineated factors
are not exhaustive and would have provided the jury with the
specific contested factors in this case.
Zee Company’s argument is unpersuasive in light of the
applicable standard of review. The district court’s
instructions accurately stated the governing legal principles
for the issue before the jury. The court’s refusal to give the
proffered instruction did not “seriously impair[]” Zee Company’s
ability to make its case. See United States v. Lewis, 53 F.3d
29, 32 (4th Cir. 1995). Zee Company was able to refer to the
instruction’s general principles in making its specific
arguments for a reduced attorney’s fee award to the jury.
Moreover, the “instructions construed as a whole, and in light
of the whole record, adequately informed the jury of the
controlling legal principles without misleading or confusing the
jury to the prejudice of the objecting party.” Spell, 824 F.2d
at 1395; see also Smith v. Univ. of N.C., 632 F.2d 316, 332 (4th
Cir. 1980) (“[A]n appellate court, when assessing the adequacy
of jury instructions, is guided by the rule that the
instructions should be viewed as a whole. If the judge’s
instructions properly present the issues and the law as
applicable, it is no ground for complaint that certain portions,
taken by themselves and isolated, may appear to be ambiguous,
19
incomplete, or otherwise subject to criticism.” (internal
quotation marks omitted)).
Similarly unpersuasive is Zee Company’s assertion that the
district court committed reversible error by instructing the
jury as to the outcome of the legal malpractice claim. Contrary
to Zee Company’s contention, the district court did not
contradict itself by refusing to give a preliminary instruction
on this point and then giving the instruction prior to
deliberations. The district court’s initial ruling plainly
contemplated reassessing the appropriateness of this instruction
after evaluating the evidence presented at trial. It then
determined that the instruction was appropriate in light of Zee
Company’s argument at trial putting at issue whether Williams
Mullen provided competent legal services that were worth the
value billed. The record supports the basis for the court’s
decision, and we conclude the district court did not abuse its
discretion in giving this instruction.
III.
For the reasons set forth above, the judgments of the
district court in favor of Williams Mullen are
AFFIRMED.
20