McLane, Graf, Raulerson & Middleton, P.A. v. Rechberger

United States Court of Appeals
For the First Circuit

Nos. 00-1756, 00-1757, 00-1758

MCLANE, GRAF, RAULERSON & MIDDLETON, P.A.

Plaintiff, Appellee/Cross-Appellant,

v.

ALFRED RECHBERGER; ARC PARTNERS, LTD.,

Defendants, Third-Party Plaintiffs, Appellants/Cross-
Appellees,

v.

EDWARD L. HAHN; JON MEYER
Third-Party Defendants, Appellees.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Joseph DiClerico, Jr., U.S. District Judge

Before

Selya and Lipez, Circuit Judges,
and Doumar,* Senior District Judge.

Valeriano Diviacchi on brief for appellant Alfred
Rechberger.
Douglas L. Ingersoll and Ingersoll & Sullivan, P.A. on brief
for appellant ARC Partners, Ltd.
Peter G. Beeson and Devine, Milliment & Branch, P.A. on
brief for appellee Jon Meyer.
James C. Wheat, Jennifer L. Murphy, Todd J. Hathaway, and
Wadleigh, Starr & Peters, P.L.L.C. on brief for appellees
McLane, Graf, Raulerson, & Middleton and Edward A. Hahn.
_______________
*Of the Eastern District of Virginia, sitting by
designation.
 LIPEZ, Circuit Judge. These appeals arise from protracted

litigation over attorney's fees allegedly owed by Alfred Rechberger

("Rechberger") and ARC Partners, Ltd. ("ARC") to the New Hampshire law

firm McLane, Graf, Raulerson, & Middleton, P.A. ("McLane"). Rechberger

focuses on three rulings against him. First, he challenges the

district court's partial summary judgment award of $135,157.77 to

McLane on its contract claim because he believes that an attorney's

allegedly erroneous initial valuation of the damages exposure from the

case for which the attorney was retained should relieve him from

liability for all fees generated by the matter. Second, he challenges

the jury award to McLane of $39,567.50 in fees, claiming that he lost

because the district court construed the surviving count of his third-

party complaint and counterclaim too narrowly. Finally, he challenges

the district court's summary judgment ruling against him on his third-

party complaint against an attorney, Jon Meyer ("Meyer"), who handled

the litigation at issue before McLane did. In its appeal, ARC

challenges the district court's refusal to amend, alter, vacate or

clarify the judgment entered jointly against it and Rechberger for

attorney's fees.

In a cross-appeal, McLane seeks reversal of the district court's

decision not to sanction Rechberger with an additional award of

attorney's fees and expenses for allegedly frivolous and vexatious

litigation. McLane also challenges the district court's decision to

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grant ARC judgment as a matter of law with respect to the $39,527.03 of

fees still in dispute at the time of trial.

On this last point raised in the McLane cross-appeal, we must

vacate the judgment for ARC. In all other respects, we affirm.

I. Background

McLane sued Rechberger and ARC for unpaid attorney's fees in the

New Hampshire Superior Court on July 7, 1997.1 On July 11, 1997, a

Superior Court justice granted McLane's petition for an attachment of

$300,000 held by Rechberger and ARC.2 Rechberger removed the case from

state to federal court on August 13, 1997, and filed an answer on

1 ARC is a limited partnership; its general partner is Alfred
Rechberger, and its limited partner is ARC Trust. Beneficiaries of the
trust include Mr. Rechberger's children. Despite the voluminous record
generated by this litigation, it contains little information on the
exact status and nature of ARC. At trial, an attorney at McLane
(Wilbur Glahn) described ARC as a "Colorado limited partnership with a
general partner formed on the Isle of Man off the coast of
England . . . [designed to] bulletproof Mr. Rechberger's assets." In
an attachment proceeding, a New Hampshire Superior Court justice
declared Rechberger and ARC indistinguishable for purposes of the
litigation underlying this fee dispute. To simplify the discussion, we
refer to both Rechberger and ARC as "Rechberger" below, unless
otherwise noted. ARC adopts by reference many of the arguments made by
Rechberger on appeal.
2 Rechberger, ARC, and McLane dispute the ownership of the
$300,000, which was placed in an escrow account by a company (Bio-San)
sued by Rechberger and ARC during the pendency of that litigation. The
$300,000 became available as a result of a settlement of the Bio-San
lawsuit--one of the legal disputes in which McLane represented
Rechberger. Rechberger and ARC now say the money belongs to ARC;
McLane asserts it is the joint possession of Rechberger and ARC.
Neither party briefed this question on appeal and we do not address it.

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September 2, 1997. Rechberger also countersued McLane and filed a

third-party complaint against attorneys Jon Meyer and Edward L. Hahn

for 1) malpractice, 2) infliction of emotional distress, and 3) breach

of an implied covenant to charge fair and reasonable fees. In order to

understand this bitter dispute over attorney's fees, we must

regrettably review the litigation which generated the fees and the

tortuous course of this case to its present state.

A. The Underlying Litigation

In late 1994, Marion Jacobi, the daughter of Alfred Rechberger,

filed suit against her father, alleging that he had sexually assaulted

her on several occasions from 1979 to 1985. See Jacobi v. Rechberger,

et al., No. 94-C-82 (N.H. Super. Ct. filed 1994) ("Jacobi"). Jacobi

sued both her father and ARC, which she alleged was merely the alter

ego of Rechberger. She also sued Bio-San Laboratories, Inc. ("Bio-

San"), a company at which she had worked when it was owned by

Rechberger, alleging that he sexually assaulted her there, and that the

company was liable for assaults on its premises. Although Rechberger

sold the company in 1990, he was still receiving payments from it

pursuant to a stock purchase agreement.

Rechberger retained attorney Edward L. Hahn in March 1995 to

handle the defense of the Jacobi lawsuit. Hahn allegedly advised

Rechberger that his daughter's suit was a "$50,000 case" and that

litigation costs for his defense would be "around $200,000." Attorney

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Hahn worked on the matter, first alone as a member of Hahn &

Associates, later with Jon Meyer when he joined Meyer's law firm,

Backus, Meyer, Solomon, Rood & Branch, P.A. ("Backus"), in June 1995,

and finally with attorneys at McLane, which he joined in March, 1996.

The Jacobi litigation spawned another legal dispute. In June,

1995, Hahn filed suit on behalf of Rechberger and ARC against Bio-San.

Rechberger et al. v. Bio-San Laboratories, Inc., No. 96-44-JD (D.N.H.

filed 1996). Rechberger had owned several vitamin pill businesses

purchased by Bio-San in 1990. The stock-purchase agreement provided

for Bio-San to pay Rechberger certain moneys, but Bio-San stopped these

payments in 1995. Bio-San gave several reasons for stopping the

payments, including Marion Jacobi's suit against Bio-San. Bio-San

averred that Rechberger's failure to disclose the alleged abuse in

connection with the sale of the business amounted to a violation of the

stock purchase agreement, which required the seller to disclose all

significant liabilities of the purchased entity.

Hahn worked on the Bio-San and Jacobi litigation, and more general

corporate matters for Rechberger at his own firm, at Backus, and at

McLane. Both Backus and McLane assigned other attorneys to work with

Hahn. Rechberger paid nearly all of the fees billed by Hahn, Backus,

and McLane before January 1997.

Jacobi's suit against Rechberger settled in May 1997 when he

agreed to pay her $1.35 million. Rechberger's suit against Bio-San was

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settled in arbitration in July 1997 when Bio-San agreed to pay

Rechberger $1.85 million. At the conclusion of this litigation,

Rechberger had incurred approximately $849,000 in legal fees, and had

paid approximately $625,000. About $191,000 of McLane's unpaid bills

stemmed from the Jacobi litigation (which Hahn, Wilbur Glahn, and other

McLane attorneys had worked on), and about $28,000 stemmed from general

corporate work which Hahn did for Rechberger. The Backus firm claimed

$4,000 from the Jacobi litigation.

B. The McLane-Rechberger Litigation

When Rechberger stopped paying fees to McLane in January 1997,

McLane attorneys repeatedly requested payment. Rechberger initially

gave no reason for not paying. At the subsequent trial, one partner

testified that Rechberger first claimed that he was not paying simply

because of a "cash flow problem." Losing all patience, McLane filed

suit against Rechberger in the summer of 1997 in the New Hampshire

Superior Court. After removing the case to the United States District

Court for the District of New Hampshire on the basis of diversity of

citizenship, Rechberger filed an answer to McLane's suit, a

counterclaim, and a third-party complaint against attorneys Meyer and

Hahn. In his counterclaim and third-party complaint, he alleged

malpractice, infliction of emotional distress, and breach of an implied

covenant to charge fair and reasonable fees. Subsequently, the

district court granted the motions of McLane, Meyer, and Hahn for

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summary judgment on the malpractice and emotional distress counts when

Rechberger failed to oppose these motions.

In the surviving count of his counterclaim, Rechberger asserted

that McLane charged unfair and unreasonable fees for the services it

provided. McLane filed a motion for partial summary judgment on this

remaining count and on its own claim for fees, noting that Rechberger

admitted in his answer that McLane did legal work for him and ARC and

that he agreed to pay reasonable fees for those services. McLane

averred that Rechberger provided no factual basis for disputing the

validity of a number of his debts to the firm. McLane also argued that

Rechberger's own expert witness (Finis Williams) did not find the fees

charged by McLane attorney Wilbur Glahn unreasonable, and did not

evaluate the fees of McLane associate Mark Whitney. Williams's report

also did not challenge expenses incurred by the McLane firm.

In response, Rechberger claimed that there was no written fee

agreement. He asserted that Hahn's allegedly erroneous valuation of

his exposure in the Jacobi case made Rechberger immune from liability

for all subsequent fees and expenses. Finding this and other arguments

unconvincing, the district court granted McLane partial summary

judgment on its contract claim and Rechberger's counterclaim, thereby

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awarding McLane nearly all the fees and expenses it requested on

partial summary judgment. These fees and expenses included:3

1. Bio-San fees: $316.97
2. Corporate expenses: $1,254.21
3. Corporate fees: $27,303.00
4. Jacobi expenses: $27,185.09
5. Jacobi fees generated by Wilbur Glahn and Mark Whitney:
$79,050.084

At this point in the case (late April of 1999), a substantial

portion of the fees and expenses claimed by McLane had been adjudged

proper and due to McLane. McLane asked the district court to sanction

Rechberger's counsel, Valeriano Diviacchi, for disputing these fees

despite his alleged awareness that he had no grounds for doing so.

Crediting a brief submitted by Diviacchi which explained his litigation

tactics, the district court declined to impose any sanctions.

As the trial approached on the remaining $83,755.03 of fees in

dispute, the parties sought to clarify the types of evidence which

Rechberger could present on his third-party complaint against Hahn and

his counterclaim against McLane. Seeking to prove that Hahn and McLane

had breached an implied covenant to charge fair and reasonable fees,

3For a complete list of all the monetary judgments entered in the
case, see the appendix to this opinion.
4The district court directed the parties to agree on the amount
due for this Jacobi work because the court could not make that
determination on the basis of the documents before it. McLane
submitted a statement assessing Glahn's and Whitney's outstanding fees
at $79,098.50, and Rechberger did not file any response with the court.
The district court adopted McLane's estimate.

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Rechberger disclosed his plan to introduce evidence of Hahn's

negligence in handling the Jacobi case. After the district court

expressed some doubts about the propriety of this strategy, Rechberger

asked the district court to construe the surviving count of his

counterclaim against McLane and his third-party complaint against Hahn,

which challenged the fairness and reasonableness of their fees, to

include a claim that the attorneys had failed to provide representation

with the skill and knowledge of an average attorney.

The district court denied this request. In its view, such an

interpretation of the surviving count would be tantamount to a

reinstatement of the first count of Rechberger's original complaint

alleging legal malpractice. Moreover, such reinstatement would

severely prejudice "the third-party defendants in light of the history

of this case and Rechberger's previous acquiescence in the dismissal of

his attorney malpractice claim." Therefore, the court did not allow

Rechberger to allege at trial "claims for negligent performance of

legal services . . . [or] challenges to the fees based on the lawyers'

alleged failure to properly assess the Jacobi case, to settle at an

earlier time, or to keep Rechberger informed about the case." Rather,

the district court only allowed Rechberger to challenge "the nature

(but not the quality) of the work performed;" for example, to challenge

"an hourly rate as unreasonably high based on the level of skill of the

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lawyer who did the work or the nature (but not the quality) of the work

performed."

In another pre-trial development, Rechberger dismissed his

previous expert, Finis Williams, and retained a new expert, Richard

Foley, to assess the reasonableness of the attorney's fees still at

issue. Foley submitted a report to the district court and was deposed

by McLane. McLane then asked the court to exclude Foley's testimony on

the grounds that it did not meet the standards for expert testimony

prescribed by the Supreme Court in Daubert v. Merrell Dow

Pharmaceuticals, Inc., 509 U.S. 579 (1993). After conducting a

hearing, the district court permitted Foley to testify. However, the

court did grant McLane's motion in limine to exclude evidence

regarding certain fees left uncontested by Foley. In this motion,

McLane showed that Foley only challenged the reasonableness of

$39,527.00 in fees incurred for the time of Attorney Hahn and

$23,562.00 in fees incurred by McLane between February 7 and February

28, 1997. Subtracting the $63,089.00 in fees disputed by Foley from

the $83,755.00 still in dispute, McLane demonstrated that $20,666.00 in

fees were left undisputed. The district court's final pre-trial order

directed "counsel [for Rechberger] to file a stipulation with respect

to" those fees. Rechberger complied.

The trial began on February 2, 2000 and lasted two days. At the

completion of the presentation of evidence, the district court granted

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McLane judgment as a matter of law with respect to $23,562.00 of fees

incurred from February 2 to February 28, 1997. Although Foley's report

had challenged these fees, that aspect of his report was discredited at

trial. Foley had opined that since Rechberger had instructed Glahn, a

McLane attorney, to settle the Jacobi case in early February 1997, fees

incurred in that month were unreasonable. At trial, however, Foley

admitted that he had never discussed this settlement issue with

Rechberger. Rechberger himself failed to appear at trial, and Glahn

testified that Rechberger did not instruct him to settle the case in

early February. Finding that Rechberger and ARC had offered no

evidence to dispute that $23,562.00 in fees, the court entered a

judgment for this amount in favor of McLane against both Rechberger and

ARC. Finding that McLane had offered no evidence to

demonstrate the liability of ARC for the remaining $39,527.03 in

dispute, the court also entered judgment as a matter of law for ARC

with respect to this claim. The court did permit the jury to determine

whether Rechberger owed that money to McLane. The jury ruled that he

did, thus deciding in favor of McLane on the balance of its contract

claim and in favor of Hahn on Rechberger's third-party complaint.

After trial, McLane attempted to recover the legal fees it spent

suing Rechberger and defending against his counterclaim by filing a

"Claim for a Judgment with Respect to Count III of its Writ for Bad

Faith." At the outset of the litigation, McLane had sued Rechberger

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not only for the debts he owed (Counts I and II), but also for "bad

faith refusal to pay a valid debt" (Count III). McLane alleged that

Rechberger and his counsel acted in bad faith throughout the

litigation. Its pre-trial motion for attorney's fees and expenses

incurred preparing its summary judgment motion had been based on a

federal statute (28 U.S.C. § 1927); its post-trial motion was

predicated on New Hampshire law and the district court's inherent

powers to sanction litigants. Although the district court found the

conduct of Rechberger's case troubling, it did not sanction Rechberger

or his counsel.

C. Rechberger's Litigation with Jon Meyer

Rechberger hired Hahn in April 1995, and continued to use him when

he moved to the Backus firm, where he was supervised by Meyer. Suing

Meyer for breach of an implied covenant to charge fair and reasonable

fees, Rechberger alleged that Meyer was personally responsible for

Backus's alleged overbilling from June 1995 to March 1996 because

Meyer, the supervising attorney, had Hahn do work which a less senior

(and thus less well-paid) attorney could have done. In response to

Rechberger's third-party complaint against him, Meyer filed a motion

for summary judgment, arguing that Rechberger should be suing Meyer's

firm (Backus), not Meyer himself. The district court agreed, granting

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summary judgment for Meyer on Rechberger's third-party complaint.5

Perhaps anticipating this result, Rechberger had sought leave of the

court to amend his third-party complaint to support his allegations of

Meyer's vicarious liability. The district court denied this motion on

the ground of timeliness.

D. The Issues on Appeal and Cross-Appeal

As a result of these proceedings and the subsequent appeals and

cross-appeals, we must address the following: Rechberger's appeal of

the partial summary judgment entered for McLane prior to the trial

(Part II); Rechberger's appeal of the judgment as a matter of law

awarded to McLane at trial and the jury verdict for McLane at trial

(Part III); Rechberger's appeal of the summary judgment granted to Jon

Meyer (Part IV); ARC's appeal relating to the liability of ARC for the

judgments entered against it and Rechberger, and McLane's cross-appeal

of the district court's entry of judgment as a matter of law for ARC

with respect to the fees awarded by the jury to McLane (Part V); and

McLane's cross-appeal from the denial of its claims for attorney's fees

as a sanction (Part VI). We turn to these tasks.

5 After Rechberger sued him, Meyer filed a third-party
counterclaim against Rechberger for $5,000 in unpaid bills and for
legal fees generated in order to defend against Rechberger's allegedly
frivolous breach of contract claim. A May 27, 1999 order granted a
motion for partial summary judgment in favor of Meyer on the
counterclaim against ARC and Rechberger in the amount of $3,396.40. On
January 6, 2000, all parties stipulated to cease litigating the
"remaining disputed portion of Third Party Defendant Meyer's
counterclaim."

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II. The Partial Summary Judgment for McLane

Focusing on what it termed the "undisputed fees," McLane moved for

partial summary judgment on two counts of its complaint against

Rechberger: breach of contract and quantum meruit. In order to rule

for McLane on its contract claim (a ruling that would make the quantum

meruit claim superfluous), the district court first had to find, beyond

any genuine issue of material fact, that there was a contract between

McLane and Rechberger, and that McLane had performed according to its

terms. The district court did so. Although there was no written fee

agreement, "[a]n agreement that is not reduced to writing may be based

on the parties' oral agreement or on their conduct." McLane, Graf,

Raulerson & Middleton, P.A. v. Rechberger, No. CIV. 97-398-JD, 1999 WL

813952, at *6 (D.N.H. Apr. 29, 1999) (citing Goodwin R.R., Inc. v. New

Hampshire, 517 A.2d 823, 829-830 (N.H. 1986)).6 Given that Rechberger

had paid McLane's bills through December of 1996, the district court

ruled that "an unwritten agreement existed through which [Rechberger]

received legal services from the McLane firm and agreed to pay for

those services, to the extent the fees were reasonable." Id. It then

6 The district court did not consider the statute of frauds issues
raised by the unwritten contract, reasoning as follows: "Although the
defendants (Rechberger and ARC) raised the statute of frauds as an
affirmative defense in their answer, they have not pursued a statute of
frauds defense in opposition to McLane's motion for summary judgment.
For that reason, the court will not consider, sua sponte, whether the
statute of frauds . . . would apply in the circumstances of this case."
McLane, 1999 WL 813952, at *6, n.3 (citation omitted). Rechberger does
not challenge this conclusion on appeal.

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entered partial summary judgment for McLane in the amount of

$135,157.77, having concluded that Rechberger presented no evidence

challenging the reasonableness of these fees.

On appeal, Rechberger contends that the district court ignored his

main argument: that Hahn's initial representation of the cost of the

case, which Rechberger characterized as a misrepresentation, should cap

his liability for fees. Rechberger claimed that in May, 1995, Hahn

said to him that "'the Jacobi litigation was a $50,000 case, there are

no witnesses, allegations are ten years old, no attorney in his right

mind would touch this case with a ten foot pole, litigation costs

including trial will probably be around $200,000.'" In his affidavit,

Rechberger stated that if Hahn had not made that statement, he "never

would have authorized the years of litigation and legal work that was

done in that case . . . and would have authorized settling the case for

$1.8 million in December of 1995 instead of letting the case proceed to

a point just before trial where my attorneys after spending over

$600,000 in legal fees tell me that I am looking at a possibility of a

four to ten million dollar verdict." Rechberger claims further that

Hahn's initial representation on Rechberger's exposure to legal fees

applied to any work performed for him on the Jacobi litigation by the

two firms that Hahn subsequently joined, Backus and McLane.

Contrary to Rechberger's assertion, the district court addressed

this argument in its carefully reasoned summary judgment ruling. The

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district court noted that, before Rechberger even hired McLane, he had

already been billed by the Backus firm for $167,507.76 for its work on

the Jacobi case. McLane, 1999 WL 813952, at *6. Since "Rechberger

received monthly statements from the McLane firm and apparently paid

bills without protest that amounted to nearly $200,000 more in fees and

expenses for representation in the Jacobi case," he can scarcely claim

that he only accepted legal services on condition that they cost no

more than $200,000. Id. (finding that "the applicable facts

contradict [Rechberger's proffered] interpretations" of Hahn's

statement). In other words, Rechberger's conduct refuted his

contention that the unwritten agreement with the McLane firm for the

provision of legal services was limited by a cap on the Jacobi fees

that derived from an earlier representation by Hahn. Moreover, any

such alleged cap relating to the Jacobi litigation obviously would not

have applied to work performed by the McLane firm for Rechberger on

other matters. We find no error in the rulings of the district court

in favor of McLane on its motion for partial summary judgment.7

III. The Construction of Count Three of Rechberger's Counterclaim and
Third-Party Complaint

7The district court found that McLane proved the reasonableness
of the fees awarded on partial summary judgment. That ruling also
disposed of Rechberger's counterclaim with respect to those fees since
the counterclaim alleged that McLane charged unreasonable fees.

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 Rechberger's counterclaim and third-party complaint set forth

three counts:

Count I: Attorney Malpractice
. . . .
13. The above acts by the Third-Party Defendants [Edward Hahn, Jon
Meyer, and the McLane firm] constitute attorney malpractice that
has directly and proximately caused the Plaintiff damages.
. . . .
Count II: Infliction of Emotional Distress
. . . .
15. The above intentional or negligent acts by the
Defendants-in-Counterclaim constitute extreme and outrageous
conduct that has caused the Plaintiff severe emotional distress
and resulting physical harm.

Count III: Breach of the Implied Contract to charge reasonable and
fair attorney's fees
. . . .
17. Defendants-in-Counterclaim [Hahn, McLane, and Meyer]8 in
providing legal services to a client have a legal duty to do work
and charge for work that is fair and reasonable.
Defendants-in-Counterclaim's actions are a breach of the this
[sic] implied covenant to charge reasonable and fair attorneys
fees.

After McLane, Hahn, and Meyer prevailed on their motions for partial

summary judgment on Counts I and II of Rechberger's counterclaim and

third-party complaint, only Count III of Rechberger's counterclaim and

third-party complaint remained to be adjudicated.

As the trial approached, all parties sought to clarify the type

of evidence Rechberger could present. Rechberger hoped to demonstrate

8 Strictly speaking, only Hahn and Meyer are "third-party
defendants," and only McLane is a "defendant-in-counterclaim." Since
both Rechberger and the district court used the terms interchangeably
on some occasions, we will construe each to include Hahn, Meyer, and
McLane.

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at trial that Hahn and McLane had handled his case negligently. He

submitted a memorandum of law arguing that the court should construe

Count III broadly to permit the jury to consider evidence of negligence

when it assessed the reasonableness of McLane's fees.

McLane responded that Count III could not be construed so broadly.

McLane also argued that Rechberger mischaracterized his request to the

court: instead of trying to construe Count III in a certain way, he was

trying to amend his complaint by reinstating Count I. McLane argued

that it would be severely prejudiced by this amendment, having prepared

its case on the assumption that the question of negligence had already

been decided in its favor.

The district court responded to these contentions by construing

Count III to "state a claim for breach of an implied covenant to charge

reasonable and fair fees and not to include a negligence claim." The

court elaborated as follows:

Count three states a claim for breach of the third-party
defendants' implied covenant to charge reasonable and fair fees
for appropriate services. Count three will allow Rechberger to
challenge the rates charged for work and the fees charged for any
duplicative or unnecessary work done on his case . . . . For
example, Rechberger will be able to challenge an hourly rate as
unreasonably high based on the level of skill of the lawyer who
did the work or the nature (but not the quality) of the work
performed. Rechberger may also challenge fees charged for an
excessive number of lawyers working on a single project, such as
attendance at a deposition. Count three, however, does not
include claims for negligent performance of legal services, and
therefore, challenges to the fees based on the lawyers' alleged
failure to properly assess the Jacobi case, to settle at an
earlier time, or to keep Rechberger informed about the case are
not pled in count three and will not be allowed. In summary,

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 count three challenges the reasonableness of the fees charged for
the services provided, but does not include claims for substandard
representation.

In addition, and importantly, the court considered the history of the

litigation and the possibility of prejudice:

To the extent Rechberger seeks to amend count three by
implication, his request is denied. Any amendment at this point
in time to include the negligence claim Rechberger proposes would
be highly prejudicial to the third-party defendants in light of
the history of this case and Rechberger's previous acquiescence
in the dismissal of his attorney malpractice claim. See, e.g.,
Acosta-Mestre v. Hilton Int'l, 156 F.3d 49, 51 (1st Cir. 1998)
(undue delay and undue prejudice to opposing party are grounds to
deny amendment).

In the abstract, evidence of "substandard representation" might

be an appropriate part of the inquiry into the reasonableness of

attorney's fees. Here, however, the specifics of the case must guide

our analysis of Rechberger's challenge to the court's ruling.

Rechberger's complaint challenged the quality of the legal

representation in Count I and the reasonableness of the fees charged

for that representation in Count III. Facing a motion for summary

judgment on the negligence count, he did nothing to oppose it, and the

court granted partial summary judgment. Under these circumstances, the

district court acted well within its discretion in refusing to permit

Rechberger to advance anew the negligence claims he failed to support

at the summary judgment stage in the guise of the reasonableness

challenge that remained for trial.

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IV. The Summary Judgment Ruling for Meyer

Just as he sued McLane and Hahn, Rechberger also sued Jon Meyer

for breach of an implied covenant to charge reasonable fees. Meyer

responded with a motion for summary judgment. In his motion, Meyer

emphasized that an expert witness hired by Rechberger (attorney Finis

Williams) had found Meyer's bills for Meyer's own work "reasonable."

Rechberger responded that Williams's report also found that Meyer's

firm (Backus) billed in amounts that were excessive "by one-quarter to

one-third of the amount billed" because of overbilling by Hahn.

Although Rechberger conceded that Backus was Hahn's employer at the

relevant time, not Meyer himself, Rechberger asserted that Meyer was

responsible for the overbilling because he supervised Hahn's work at

Backus. Unimpressed by this improvised respondeat superior claim, the

district court granted summary judgment for Meyer on three grounds: (1)

Rechberger did not allege vicarious liability in his complaint; (2)

Rechberger provided no facts or argument that Meyer, rather than the

firm, was Hahn's employer; and (3) Rechberger presented no facts or

legal arguments supporting any other agency relationship between Meyer

and Hahn.

On appeal, Rechberger lamely invokes liberal interpretations of

Rule 8 pleading requirements, ignoring our holding that "[a]lthough the

liberal pleading policy embodied in Rule 8 does not require a party to

specify its legal theory of recovery, the pleadings must at least

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implicate the relevant legal issues." Schott Motorcycle Supply Co. v.

Am. Honda Motor Co., 976 F.2d 58, 62 (1st Cir. 1992) (citing 5 Charles

Alan Wright & Arthur R. Miller, Federal Practice and Procedure, § 1286,

at 558 (2d ed. 1990) ("the liberal construction accorded a pleading

under Rule 8(f) does not require the courts to fabricate a claim that

a plaintiff has not spelled out in his pleadings")). Rechberger did

not implicate the relevant legal issues in his complaint. Moreover,

the court's dispositive ruling on the claims against Meyer came at

summary judgment, when the nonmoving party must muster some facts in

the summary judgment record to preserve a claim. We agree with the

district court that Rechberger provided no facts to preserve a

respondeat superior claim against Meyer.

V. ARC's Liability

ARC is a limited partnership, with Rechberger as its general

partner and ARC Trust as its limited partner. The district court

granted McLane partial summary judgment against both Rechberger and ARC

for $135,157.77, and granted judgment as a matter of law at trial

against both Rechberger and ARC for $23,562.00. Rechberger and ARC

jointly stipulated to pay $20,666.00 to McLane. However, the district

court also granted judgment as a matter of law for ARC at the trial,

holding only Rechberger liable for the $39,527.03 awarded to McLane by

the jury.

-22-
 Both ARC and McLane appeal these liability determinations. In its

cross-appeal, McLane avers that ARC should be liable for all of the

judgments awarded to McLane. In its appeal, ARC claims that the

district court erred in holding it liable to pay amounts in excess of

the $29,266.21 which McLane attorney Wilbur Glahn claimed was due

directly from ARC in the affidavit he submitted in support of McLane's

motion for partial summary judgment.

A. The Judgment as a Matter of Law for ARC (McLane's Cross-Appeal)

McLane's complaint against Rechberger and ARC alleged three

counts, all of which began by asserting that "defendant Rechberger,

individually and as agent for defendant, ARC, requested the plaintiff

to perform legal services . . . ." The joint answer of ARC and

Rechberger admitted that the defendants Rechberger and ARC retained

McLane "in the matters listed" in the complaint, which included the

Jacobi case, the Bio-San case, and general corporate services.

Both before summary judgment and before trial, ARC did not attempt

to distinguish its own liability from that of Rechberger. These two

defendants filed a joint answer, a joint counterclaim, and joint

objections to partial summary judgment. They also filed a joint "Pre-

Trial Statement" on December 22, 1999. ARC did not raise the issue of

separateness in any pleading, and (with Rechberger) stipulated to

judgments dismissing third-party defendant Jon Meyer (on January 6,

-23-
2000) and ordering payment of $20,666.00 in fees to McLane (on February

2, 2000).

Nevertheless, at the close of evidence in the trial on February

3, 2000, ARC moved for judgment as a matter of law with respect to the

remaining fees in dispute ($39,527.00 of Hahn's time as a McLane

attorney). The district court granted the motion, explaining its

reasons in a colloquy with the attorneys:

There's nothing about ARC. Now, [plaintiff's counsel] mentioned
earlier that ARC and Mr. Rechberger are one and the same, but no
certified copy of any court order making that finding has been
filed in this case, and ARC appears to be a party floating around
here without a place . . . . [M]y recollection of the evidence [is
that] Mr. Hahn was advising Rechberger on ARC-related matters but
ARC had its own attorneys, and that the attorney-client
relationship here was not ARC and Mr. Hahn or ARC and McLane, it
was Rechberger and the firm and the individual . . . . I don't see
any evidence from which a jury could find that there's an
attorney-client relationship between ARC and these individuals.

In light of this ruling, the jury only had to consider whether

Rechberger was liable for the remaining $39,527.03 of fees in dispute.

We review the grant of a motion for judgment as a matter of law

de novo. St. Paul Fire & Marine Ins. Co. v. Ellis & Ellis, 262 F.3d

53, 61 (1st Cir. 2001); Brennan v. GTE Gov't Sys. Corp., 150 F.3d 21,

25 (1st Cir. 1998). In so doing, we must take the facts in the light

most favorable to McLane. Brennan, 150 F.3d at 25. We can only allow

the judgment as a matter of law to stand if "the evidence does not

permit a finding in favor of [McLane]." Id.

-24-
 On appeal, McLane challenges the judgment as a matter of law on

two grounds. First, McLane contends that since ARC had never asserted

before trial that its responsibility for attorney's fees had to be

established separately from Rechberger's responsibility, the district

court should not have allowed ARC to submit this defense for the first

time at the close of evidence at trial. McLane argues that ARC "must

be held to the position [it] freely adopted prior to trial. . . . The

spirit of flexibility behind the Rules is not intended to permit one of

the parties to be booby-trapped." Reyes v. Marine Enters., Inc., 494

F.2d 866, 868 (1st Cir. 1974). Although there is force in this

argument, we cannot consider it on appeal because McLane did not

present it to the court in opposing ARC's motion for judgment as a

matter of law. See United States v. Taylor, 54 F.3d 967, 972 (1st Cir.

1995) ("[A] litigant who deems himself aggrieved by what he considers

to be an improper occurrence in the course of trial or an erroneous

ruling by the trial judge ordinarily must object then and there, or

forfeit any right to complain at a later time.").

However, we do credit the argument that McLane made to the court:

namely, that there was enough evidence of ARC's liability presented at

trial to require the submission of McLane's claim against ARC to the

jury. Hahn, a McLane lawyer, testified that he represented both ARC

and Rechberger in the Jacobi and Bio-San litigation. When asked about

his role in the litigation while working at Backus, Hahn testified that

-25-
he "had primary responsibility for . . . [e]verything that had to do

with ARC and everything that had to do with Bio-San." He said that his

role "remained pretty much the same" when he worked at McLane. He also

testified to working on a matter benefitting both Rechberger and ARC:

arranging payment of the Jacobi settlement to Marion Jacobi from the

ARC Trust (the limited partner of ARC) while he was at McLane.

Rechberger and ARC were both defendants in the Jacobi litigation.

Wilbur Glahn offered similar testimony about the ARC Trust's payment of

the $1.35 million settlement of Jacobi.

Although there was testimony at trial suggesting that ARC had been

represented by a firm other than McLane, as noted by the court, that

testimony did not preclude a finding by the jury that McLane also did

legal work for ARC. A verdict may be directed only if the evidence,

considered in the light most favorable to the non-movant, "'would not

permit a reasonable jury to find in favor of the plaintiff[] on any

permissible claim or theory.'" Andrade v. Jamestown Hous. Auth., 82

F.3d 1179, 1186 (1st Cir. 1996) (quoting Murray v. Ross-Dove Co., 5

F.3d 573, 576 (1st Cir. 1993)). The court's entry of judgment as a

matter of law for ARC was not consistent with this standard.

Of course, if the jury had been permitted to consider McLane's

claim against ARC, found for McLane, and the district court then

entered a judgment notwithstanding the verdict, we would have the

-26-
option of reinstating the jury's verdict. It would have been

preferable, therefore, for the district court to have

reserve[d] decision on [the motion for judgment as a matter of
law], passing on the legal question only after submitting the case
to the jury. . . . [R]efraining from granting a judgment as a
matter of law until the jury has had a chance to deal with the
merits is frequently a "wise and time-saving precaution."

Gibson v. City of Cranston, 37 F.3d 731, 735 n.4 (1st Cir. 1994)

(quoting Talbot-Windsor Corp. v. Miller, 309 F.2d 68, 69 (1st Cir.

1962)). Under the present circumstances, we must vacate the court's

judgment as a matter of law for ARC at trial, and remand for a possible

retrial of ARC's liability for legal fees still in dispute when the

court ruled. Given the course and duration of this litigation, we do

not relish that prospect. We hope the parties feel the same way.9

B. ARC's Post-Trial Motions

After the trial ended, ARC tried to distinguish its own liability

from that of Rechberger in two motions. ARC first moved to vacate an

attachment of funds that McLane had obtained at the outset of the

case.10 After this motion was denied, ARC moved to "alter, amend,

9 The court's error in entering judgment as a matter of law for
ARC might have been harmless if the district court had, like the state
court in the Jacobi litigation, declared that ARC and Rechberger were
indistinguishable. However, the district court concluded that the
parties had provided it with an insufficient factual and legal basis
"to permit any definitive resolution of the relationship between ARC
and Rechberger."
10 See footnote 2 above.

-27-
vacate or clarify" the judgment pursuant to Rule 52(b) of the Federal

Rules of Civil Procedure (which allows a trial court to "amend its

findings--or make additional findings--and [to] amend the judgment

accordingly"), Rule 59(e) (which permits motions to alter or amend a

judgment), and Rule 60(b) (which permits motions for relief from a

judgment). The district court denied that motion as well.

In essence, with these two motions, ARC wanted the district court

to limit its liability to the $29,266.21 which Wilbur Glahn's

affidavit, presented in support of McLane's partial summary judgment

motion, directly attributed to work performed for ARC. These fees were

due for general corporate work and an escrow matter. According to ARC,

it hired McLane solely for these purposes; all of the other fees were

incurred by Rechberger.

Whatever the merits of this argument, the district court never

reached it on grounds of timeliness. It ruled that "ARC cannot now

challenge its liability for the fees and expenses arising from

Rechberger's representation when that defense was not raised until ARC

moved for judgment in its favor at trial as to the claims then

remaining against it." As the district court patiently observed, ARC

had never before attempted to distinguish itself from Rechberger:

C ARC and Rechberger answered the complaint jointly without
distinguishing between themselves.

C ARC and Rechberger objected jointly to McLane's motion for
partial summary judgment, again without distinguishing
between them, and the court referred to them jointly in the

-28-
 order of April 29, 1999, granting partial summary judgment
in favor of McLane [for the bulk of the contested fees].

C [When further amounts were awarded in November, 1999,] ARC
did not contest its liability on the theory that it was a
separate entity. . . .

C Counsel, on behalf of ARC and Rechberger jointly, stipulated
before trial to certain amounts that were not disputed.

C The court granted McLane's motion in limine against both ARC
and Rechberger as to other amounts [on February 3, 2000].
ARC still did not raise its new theory.

These timeliness considerations are dispositive. The district court

did not abuse its discretion in denying ARC's post-trial motions to

vacate the attachment and to grant ARC relief from the judgment.

VI. The Denial of Attorney's Fees and Expenses Sought by McLane as a
Sanction

McLane twice asked the district court to award it additional

attorney's fees as a sanction for the allegedly egregious conduct of

Rechberger and his counsel during the litigation over attorney's fees.

The district court twice refused to do so. McLane appeals. In

considering that appeal, "[w]e tread very carefully. . . .for the

district court is entitled not only to the ordinary deference due the

trial judge, and additional deference in the entire area of sanctions,

but extraordinary deference in denying sanctions." Anderson v. Boston

Sch. Comm., 105 F.3d 762, 768 (1st Cir. 1997).

A. The Post-Trial Decision on Sanctions

The district court only considered its inherent authority as a

federal court in denying McLane's post-trial motion for sanctions.

-29-
McLane argues that New Hampshire state law grants litigants a

"substantive equity-based right" to attorney's fees, and that the

district court erred by refusing to apply this state law.

The U.S. Supreme Court has observed that "'[i]n an ordinary

diversity case where the state law does not run counter to a valid

federal statute or rule of court. . . .state law denying the right to

attorney's fees or giving a right thereto, which reflects a substantial

policy of the state, should be followed.'" Alyeska Pipeline Serv. Co.

vs. The Wilderness Soc'y, 421 U.S. 240, 260 n.31 (1974) (internal

quotation marks omitted). Therefore, a state's judicially created rule

for an award of attorney's fees, other than as a sanction for the

conduct of litigation, may provide a basis for a fee award. See id.

(noting that "a state statute requiring an award of attorney's fees

should be applied in a case removed from the state courts to the

federal courts," and that "[t]he same would clearly hold for a

juridically created rule" (citing People of Sioux County v. Nat'l

Surety Co., 276 U.S. 238, 243 (1928)).

The district court found that New Hampshire law "permitting an

award of attorney's fees under state law" concerns "sanction[s] derived

from the state court's inherent powers." This is not entirely

accurate. New Hampshire permits "[a]n award of attorney's fees to the

prevailing party where the action conferred a substantial benefit on

not only the plaintiffs who initiated the action, but on the public as

-30-
well." Claremont Sch. Dist. v. Governor, 761 A.2d 389, 392-93 (N.H.

1999) (citing Silva v. Botsch, 437 A.2d 313, 314 (N.H. 1981); Irwin

Marine, Inc. v. Blizzard, Inc., 490 A.2d 786, 791 (N.H. 1985)). The

New Hampshire courts have reserved such awards for litigation affecting

the fundamental rights and interests of groups or the public at large.

See id. at 392-94 (awarding fees to towns that sought to assure

equitable school funding); Irwin Marine, 490 A.2d at 790-91 (awarding

fees to litigant whose case led to greater fairness in a city's public

bidding procedures). Given the absence of any cognizable public

benefit from this litigation, this substantive equity-based right to

attorney's fees has no application to this case.

Apart from this public benefit exception, New Hampshire courts

seem to treat the award of attorney's fees for the conduct of

litigation as a sanction premised on their inherent authority. See

Nash Family Inv. Props. v. Hudson, 660 A.2d 1102, 1109 (N.H. 1995). As

the district court correctly observed, it "does not have inherent

powers under state law." It has them under federal law. Under the

federal standard, a district court may "award attorney's fees to a

prevailing party pursuant to its inherent powers when the losing party

has 'acted in bad faith, vexatiously, wantonly, or for oppressive

reasons.'" Dubois v. United States Dep't of Agric., 270 F.3d 77, 80

(1st Cir. 2001) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45-46

(1991)). McLane challenges the district court's application of this

-31-
standard. We review a district court's imposition or denial of

sanctions under its inherent power for an abuse of discretion.

Chambers, 501 U.S. at 55.

In its post-trial motion for sanctions, McLane argued that

Rechberger litigated in bad faith, particularly when he failed to

appear at trial. Although expressing some disapproval of the conduct

of Rechberger's case, the district court ruled that McLane did not

provide "sufficient factual support from the record" to demonstrate

that sanctions should be imposed. Specifically, the district court

found that:

C [D]espite his lack of success, Rechberger's counterclaims and
defenses were not so patently unreasonable or meritless to be
deemed frivolous.

C [Given] that he did not have time to take action against McLane
before suit was brought, [Rechberger's] counterclaims challenging
[McLane's] fees cannot be found to have been indisputably
retaliatory.

C [Rechberger may not have testified at trial because] he believed
. . . criminal proceedings [could be] brought against him (arising
from his daughter's allegations) if he came to New Hampshire.

Searching for an error of law in the court's rulings, McLane

argues that the district court erroneously focused on Rechberger's

conduct and ignored its grievances against his counsel. To support

this claim, McLane points to the district court's statement that "the

record presented here does not show that Rechberger, rather than his

-32-
counsel, was the strategist who was responsible for the pleadings,

decisions, and method of prosecuting this case."

McLane assumes correctly that if an attorney, rather than a

client, is responsible for sanctionable litigation tactics, the court

may sanction the attorney. See M.E.N. Co. v. Control Fluidics, Inc.,

834 F.2d 869, 873 (10th Cir. 1987) ("Where sanctions are concerned

. . . we have cautioned that '[i]f the fault lies with the attorneys,

that is where the impact of the sanction should be lodged.'" (quoting

In re Sanction of Baker, 744 F.2d 1438, 1442 (10th Cir. 1984)). In

other words, if the court here concluded that counsel was the

strategist responsible for pleadings and litigation decisions that

merited a sanction, the court could not deny sanctions because the

party represented by counsel was otherwise blameless.

In our view, however, the district court considered both

Rechberger's and attorney Diviacchi's conduct in applying the federal

standards for awarding fees as a sanction. Its reference to Rechberger

not being "the strategist" was only one factor in its decision not to

sanction him. Indeed, the court specifically stated that "[i]n

addition, despite his lack of success, Rechberger's counterclaims and

defenses were not so patently unreasonable or meritless as to be deemed

frivolous." We view this finding as a comment both on the substance of

Rechberger's story and Diviacchi's advocacy. Moreover, as the

discussion below indicates, the court had already addressed much of

-33-
Diviacchi's conduct in a post-summary judgment ruling denying McLane's

motion for sanctions against him. Since the district court's analysis

addressed nearly all of the wrongs alleged by McLane against both

Rechberger and Diviacchi, we find no error of law or abuse of

discretion in its post-trial decision not to award attorney's fees as

a sanction.

B. McLane's Claim for Fees Under 28 U.S.C. § 1927

Aside from its post-trial motion based on state law and federal

inherent powers, McLane also advanced a narrower claim for fees pre-

trial based on a federal statute permitting the sanctioning of

attorneys for abuse of the judicial process. This filing followed its

successful motion for partial summary judgment, when McLane moved the

court to order sanctions against Rechberger's attorney, Valeriano

Diviacchi, pursuant to 28 U.S.C. § 1927. Section 1927 provides: "Any

attorney . . . who so multiplies the proceedings in any case

unreasonably and vexatiously may be required by the court to satisfy

personally the excess costs, expenses, and attorney's fees reasonably

incurred because of such conduct."

McLane alleged that Rechberger refused to pay his bills in bad

faith, and that Diviacchi knew that this refusal was in bad faith.

Moreover, McLane alleged that Diviacchi deployed dilatory and deceptive

litigation tactics in order to frustrate its efforts to recover a valid

debt. McLane focused on Diviacchi's repeated refusal to admit that any

-34-
of the fees and expenses sought were undisputed, when he only had

evidence to challenge a portion of them. McLane alleged that

Diviacchi's aggressive litigation posture was adopted only for the

purpose of "'burdening [McLane] with unnecessary expenditures of time

and effort'" and thus warranted sanctions. Odbert v. United States, 576

F. Supp. 825, 829 (E.D. Cal. 1983) (quoting Lipsig v. Nat'l Student

Marketing Corp., 663 F.2d 178, 181 (D.C. Cir. 1980)).

In an order entered on April 29, 1999 in response to McLane's

motion, the district court noted the applicable standard of conduct:

The First Circuit does not require a showing of an attorney's
subjective bad faith to meet the section 1927 standard. Instead,
sanctions may be appropriate under section 1927 if an attorney's
conduct is "unreasonable and harassing or annoying" judged from an
objective standard, whether or not the attorney intends to harass
or annoy. To be vexatious under section 1927, however, the
attorney's conduct must "be more severe than mere negligence,
inadvertence, or incompetence."

McLane, 1999 WL 813952, at *8 (quoting Cruz v. Savage, 896 F.2d 626, 632

(1st Cir. 1990)). The district court then reviewed McLane's grounds for

alleging that sanctions should be imposed:

Counsel for the McLane firm . . . communicated with Rechberger's
counsel before filing the motion for partial summary judgment
attempting to resolve payment of the undisputed fees based in part
on the opinion of Rechberger's expert witness. Rechberger's
counsel's response was unhelpful, first claiming that he did not
understand the letter, and then debating whether partial judgment
can be entered on an undisputed amount.

Id. The district court found that "[c]ounsel's conduct seems to have

been sufficiently unreasonable and vexatious to justify the imposition

-35-
of sanctions," but permitted Diviacchi to show cause why sanctions

should not be imposed. Id. In response, Diviacchi submitted a brief

explaining the litigation tactics challenged by McLane in its motion for

sanctions. On February 7, 2000, the district court decided against

imposing sanctions without explanation, other than noting its reliance

on "the standards set forth in section 1927." McLane challenges that

ruling on appeal.

As noted, we accord "'extraordinary deference'" to a district

court's decision to deny sanctions. Dubois v. United States Dep't of

Agric., 270 F.3d at 80 (1st Cir. 2001) (quoting Lichtenstein v.

Consolidated Servs. Group, Inc., 173 F.3d 17, 22 (1st Cir. 1999)).

"[T]he responsibility for imposing sanctions properly rests with the

judicial actor closest to the litigation--the district court judge--who

is in the best position to evaluate the circumstances surrounding an

alleged violation and render an informed judgment." Cruz, 896 F.2d at

632.

McLane argues that the district court's Order of February 7, 2000,

to deny the motion for sanctions pursuant to § 1927 does not deserve

deference because it was not explained. However, the district court

carefully analyzed McLane's claims and set forth the standards for the

imposition of sanctions pursuant to 28 U.S.C. § 1927 in its April 29,

1999 Order requiring Diviacchi to explain his conduct. See McLane, 1999

WL 813952, at *8. Furthermore, while we have encouraged district courts

-36-
to give reasons for denying sanctions, we have not required them to do

so: "although the rationale for a denial of a motion for fees or

sanctions under Rule 11, § 1927, or § 1988 should be unambiguously

communicated, the lack of explicit findings is not fatal where the

record itself, evidence or colloquy, clearly indicates one or more

sufficient supporting reasons." Anderson, 105 F.3d at 769.

In response to the district court's order to show cause why it

should not impose sanctions, Diviacchi filed a memorandum outlining his

rationale for defending Rechberger's refusal to concede the validity of

any of his debts to McLane. Diviacchi explained that he believed that

the fees requested in McLane's motions "would be more than cancelled

out" by Rechberger's counterclaim. The district court apparently

credited this explanation, finding later in its ruling on the post-trial

motion for sanctions that "Rechberger's counterclaims and defenses were

not so patently unreasonable or meritless to be deemed frivolous."

There was no abuse of discretion in the court's denial of § 1927

sanctions.

VII. Conclusion

Although we must vacate the judgment as a matter of law for ARC,

we commend the district court for handling an exceptionally complex and

frustrating case with great skill and patience. The judge issued at

least six lengthy memoranda of decision in support of his orders, all

of which were most helpful in reviewing the plethora of issues before

-37-
us. In addition, the court incorporated the numerous orders it entered

during the course of this litigation in a useful final judgment it

entered on May 12, 2000 (summarized in part in the appendix attached

hereto). We affirm all aspects of that final judgment except for the

judgment as a matter of law for ARC.

So Ordered. Each party shall bear his or its own costs.

-38-
Appendix: Monetary Judgments in the Litigation

The following monetary judgments were entered during the litigation:

1. Order dated April 29, 1999 granting Motion for Partial Summary

Judgment on Count I of McLane's complaint in favor of McLane for the

following:

a. Bio-San fees: $316.97
b. Corporate expenses: $1,254.21
c. Corporate fees: $27,303.00
d. Jacobi expenses: $27,185.09

2. Order dated November 9, 1999 finding $79,098.50 as the amount owed

by Rechberger and ARC for the services of Glahn and Whitney on the

Jacobi case, pursuant to the partial summary judgment granted on April

29, 1999.

3. Order dated May 27, 1999, granting Motion for Partial Summary

Judgment in favor of Jon Meyer on the counterclaim against ARC and

Rechberger in the amount of $3,396.40.

4. Pre-trial Order dated February 3, 2000, ordering Rechberger's counsel

to stipulate to paying $20,666 in fees left undisputed by Rechberger's

expert at trial, Richard Foley.

-39-
5. Oral Order granting McLane's motion for judgment as a matter of law

for 23,562.00 in fees (McLane's fees from February 7 to February 28,

2000.)

6. Oral Order granting ARC's motion for judgment as a matter of law with

respect to the fees remaining in dispute ($39,527.03 of fees billed by

Hahn).

7. Jury verdict in McLane v. Rechberger, for McLane in the amount of

$39,527.03 (the remaining fees in dispute).

-40-