Updated at 4:03 p.m.
The District of Columbia Court of Appeals heard oral arguments yesterday in a contract dispute between Unocal Corp., now a part of Chevron Corp., and eLawForum Corp., now known as DryStone Capital Corp., which does corporate litigation outsourcing.
A three-judge panel will decide whether a District of Columbia Superior Court judge properly granted eLawForum summary judgment, awarding the company $6.9 million in unpaid fees, plus interest. Unocal, on appeal, is arguing that there were too many facts in dispute about their contract and the circumstances surrounding the end of that contract for the judge to make such a decision.
According to court briefs, Unocal signed a contract in 2004 for eLawForum to facilitate bidding for outside counsel to handle environmental lawsuits involving Unocal. As part of that contract, Unocal agreed to pay eLawForum a fee based on the money saved by going through eLawForum's bidding process.
Through eLawForum, Unocal hired now-defunct law firm Howrey. According to Unocal’s brief, the company agreed to pay Howrey a fixed fee of $15 million over five years for handling up to 200 cases, although there were opportunities for additional fees. In 2005, after Chevron Corp. acquired Unocal, Unocal ended the contract with Howrey.
According to court filings, eLawForum claimed that Unocal owed $6.9 million in fees once it ended its contract with Howrey, based on a fixed fee it claims Unocal agreed to pay. Unocal maintained that, based on the work Howrey did, it only owed eLawForum $3.1 million. Since Unocal had already paid two invoices totaling $4.6 million, they claimed eLawForum actually owed $1.4 million in overpaid fees. They sued each other in Superior Court, and Judge Alfred Irving granted eLawForum summary judgment in June, denying Unocal’s claims.
On appeal, Unocal, represented by DLA Piper’s Charles Wayne, is arguing that Irving improperly acted as a fact-finder at the summary judgment stage, instead of sending the case to trial when it was clear that there were facts in dispute. The contract between eLawForum and Unocal was ambiguous, Unocal claimed, and the court’s interpretation depended on disputed evidence. Unocal claimed that they agreed to pay 25 percent of the cost savings, but that they didn’t agree that would be a fixed fee. Instead, once Unocal terminated the agreement with Howrey, they contended that they should only pay eLawForum a fee based on the work that Howrey did.
According to eLawForum, represented by L. Palmer Foret of Ashcraft & Gerel in Rockville, Md., the contract unambiguously based the fee on 25 percent of the difference between the amount Unocal would have paid to hire Howrey directly and the amount they were paying by going through eLawForum. In the brief, eLawForum claimed the two agreed that the fee would be $11 million – 25 percent of the difference between $61 million, the amount Unocal would have paid, and $15 million, the amount they agreed to pay Howrey.
eLawForum is arguing that because the contract’s terms were clear, Irving had authority to based his summary judgment ruling on what the contract said. eLawForum, in its brief, also argued that the fact that Chevron rehired Howrey after the contract with eLawForum was terminated “underscores the injustice of" Unocal's position. “Unocal agreed to establish eLawForum’s fee as a percentage of the total projected savings it would realize in its deal with Howrey; if those savings did not materialize because Unocal chose to terminate Howrey, that changed circumstance was to be a burden for Unocal to bear,” eLawForum argued.
Associate Judges Anna Blackburne-Rigsby and Corinne Beckwith and Senior Judge Warren King heard the case.
An earlier version of this article misstated the judges that heard the case.