H & G Ortho, Inc. v. Neodontics International, Inc.

823 N.E.2d 734, 2005 Ind. App. LEXIS 389, 2005 WL 545574
CourtIndiana Court of Appeals
DecidedMarch 9, 2005
Docket41A05-0406-CV-336
StatusPublished
Cited by8 cases

This text of 823 N.E.2d 734 (H & G Ortho, Inc. v. Neodontics International, Inc.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
H & G Ortho, Inc. v. Neodontics International, Inc., 823 N.E.2d 734, 2005 Ind. App. LEXIS 389, 2005 WL 545574 (Ind. Ct. App. 2005).

Opinion

OPINION

BAKER, Judge.

This is the second appeal that we decide today involving the same parties and related issues that arose from the same cause of action. In the first appeal-H & G Ortho, Inc., et al. v. Neodontics Int'l, Inc., et al., 823 N.E.2d 718, No. 41A05-0401-CV-59 (Ind.Ct.App. Mar. 9, 2005) (hereinafter referred to as H & G I)-we were called upon to resolve, among other things, whether the trial court's award of damages for breach of contract and the issuance of an injunction were proper with regard to a party's alleged breach of a covenant not to compete.

*736 In this appeal, the appellants-defendants H & G Ortho, Inc., and Harold and Gladys Canada (collectively, the Canadas), and G & H Wire Company, Inc., challenge the trial court's award of $572,689.73 in attorney's fees and litigation costs to the appel-leeg-plaintiffis Neodontics International, Inc., d/b/a G & H Wire Company (Neodon-tics) and Michael Jahns, individually (collectively referred to as Neodontics), claiming that the award of attorney's fees was excessive, unreasonable and disproportionate to the judgment. 1

FACTS

The specific facts of this case are set forth in H & G I. Briefly, however, Neo-dontics was involved in the manufacture, promotion and sale of various orthodontic products. The Canadas own H & G Ortho, Inc., the successor in interest to G & H Wire Company, Inc. (G & H). They were involved in the orthodontics industry for over twenty years and, in 1995, the Cana-das sold their company assets to Neodon-tics and Jahns, and the sale was memorialized in an asset purchase agreement (Agreement). On August 8, 1996, the parties executed an addendum to the Agreement that contained the following components: (a) a non-compete provision; and (b) a provision for consultation services. The Canadas were personally bound by the addendum.

Neodontics eventually filed an action against the Canadas, alleging that they had violated the non-competition provision of the addendum, and the Canadas counterclaimed, alleging that Neodontics had failed to make a required payment under the Agreement. The addendum to the Agreement included the following attorney's fees provision:

In any action brought by the Buyer or the Corporation to enforce the rights arising thereunder, the Buyer and the Corporation shall be entitled to recover from the party violating the covenants their reasonable attorney's fees and costs of this action.

Appellant's App. p. 202. The trial court determined that the Canadas' multiple violations of the non-compete clause of the addendum involving their sale of-orthodontic products-namely 120,630 standard edgewise brackets and some welders resulted in damages of $67,885.10 pursuant to the liquidated damages clause under the Agreement. It was also determined that the Canadas' promotion of their "Focus" bracket, another orthodontics product, constituted either a breach or threatened breach of the addendum, thereby justifying the issuance of a temporary restraining order without notice. The trial court found that the Canadas' breach, which started on February 13, 1997, justified reimbursement to Neodontics of all post-breach installment payments that were made to the Canadas in the amount of $400,000, together with pre-judgment interest. The Canadas took nothing by way of their counterclaim with respect to their contention that an injunction had been wrongfully issued against them. We affirmed the trial court's judgment in all respects in H & G I.

Following the judgment on the merits, Neodontics requested attorney's fees and litigation costs from the Canadas in the amount of $762,272.53. At a hearing that was conducted on April 12, 2004, it was established that attorney Edward Schrager had represented Neodontics for nearly ten years, and he represented the compa *737 ny during the entire litigation in this case. Tr. p. 20. Arthur Baxter and Stephen Huddleston also were attorneys of record for Neodontics during the litigation. Ir. p. 15-16. Other counsel had been retained for the purposes of performing legal research and rendering advice in their areas of expertise. Inasmuch as Neodonties was a preferred client of Schrager's, the company was charged an hourly rate lower than what Schrager typically charged other clients. Schrager testified that the ree-ords used to charge Neodontics reflected the minimum number of hours, and not every minute spent in thought or preparation for the litigation had been billed. It was then established that the legal team for Neodontics devoted 2,842.57 hours in the litigation at various hourly rates prior to the commencement of the hearing on attorney's fees. The total attorney's fees incurred by Neodontics during the litigation just prior to the fee hearing amounted to $506,582.96. Because the work performed in defending Jahns on the Cana-das' counterclaim was quite limited and interwoven with legal work that was com-pensable under the addendum to the Agreement, Neodontics estimated that one percent of its total attorney's fees and costs reflected the work and costs that were related to the representation of Jahns in defending the counterclaim. Hence, the trial court adopted that one percent figure, and reduced the amount of the award accordingly.

Having decided in H & @ I that the trial court's judgment with respect to the merits was correct, we now address the Cana-das' arguments that the attorney fees award to Neodontics was erroneous.

DISCUSSION AND DECISION

In resolving the issue, we first note that Indiana follows the "American rule," under which each party is ordinarily responsible for paying his or her own legal fees in the absence of a fee-shifting statutory or contractual provision. Barrington Mgmt. Co. v. Paul E. Draper Family Ltd. P'ship, 695 N.E.2d 135, 142 (Ind.Ct.App.1998). Where, as here, an award of fees is premised on a contractual provision, the agreement will be enforceable only in accordance with its terms and only if it does not violate public policy. Steiner v. Bank One Indiana, N.A., 805 N.E.2d 421, 428 (Ind.Ct.App.2004). Also, on appeal from an award of attorney's fees, we apply the clearly erroneous standard to factual determinations, review legal conclusions de novo, and determine whether the decision to award fees and the amount of the award constituted an abuse of the trial court's discretion. Inlow v. Henderson, Daily, Withrow & Devoe, 804 N.E.2d 833, 839 (Ind.Ct.App.2004), trans denied. An abuse of discretion occurs when the trial court's decision is clearly against the logic and effect of the facts and cireumstances before it. Dempsey v. Carter, 797 N.E.2d 268, 275 (Ind.Ct.App.2004), trans. denied.

We further note that a trial court has wide discretion in awarding attorney's fees.

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823 N.E.2d 734, 2005 Ind. App. LEXIS 389, 2005 WL 545574, Counsel Stack Legal Research, https://law.counselstack.com/opinion/h-g-ortho-inc-v-neodontics-international-inc-indctapp-2005.