Peiffer Wolf Carr Kane Conway & Wise, APLC v. Washington
This text of 2025 Ohio 4839 (Peiffer Wolf Carr Kane Conway & Wise, APLC v. Washington) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
[Cite as Peiffer Wolf Carr Kane Conway & Wise, APLC v. Washington, 2025-Ohio-4839.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
PEIFFER WOLF CARR KANE CONWAY & WISE, APLC, :
Plaintiff-Appellee, : No. 114319 v. :
HERBERT WASHINGTON, ET AL., :
Defendants-Appellants. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED IN PART, REVERSED IN PART, AND REMANDED RELEASED AND JOURNALIZED: October 23, 2025
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-22-965514
Appearances:
Flowers & Grube, Paul W. Flowers, and Kendra N. Davitt; Haber LLP, Richard C. Haber, Lindsey K. Self, and Natalie D. Davis, for appellee.
Warren Terzian LLP and Thomas D. Warren; McDonald Hopkins LLC and Sanford E. Watson, for appellants.
WILLIAM A. KLATT, J.:
Defendants-appellants Herbert Washington (“Washington”), HLW
Fast Track, Inc., HLW Fast Track PA, LLC, and Air Arch, Inc. (“corporate defendants” or, collectively with Washington, “defendants”) appeal following a jury
verdict and argue (1) the trial court erred when it granted a directed verdict in favor
of plaintiff-appellee Peiffer Wolf Carr Kane Conway & Wise, APLC (“Peiffer Wolf”)
finding the corporate defendants liable under quantum meruit and (2) the jury’s
quantum meruit awards were against the manifest weight of the evidence. For the
following reasons, we affirm in part, reverse in part, and remand for proceedings
consistent with this opinion.
I. Factual and Procedural History
A. Underlying Lawsuit
This lawsuit arises from a dispute over the attorney fees owed by
defendants to Peiffer Wolf for its representation of defendants in an underlying
discrimination lawsuit against McDonald’s.
Washington — a sophisticated businessman who at one time owned 27
McDonald’s franchises and was a former chairman of the Buffalo, New York Federal
Reserve — retained the law firm of Peiffer Wolf to pursue a racial discrimination
lawsuit against McDonald’s; Washington is Black. Washington’s purpose for the
lawsuit was twofold: to allege discrimination and to maximize his leverage in
negotiating the sale of his 14 McDonald’s restaurants (“franchises”) to McDonald’s.1
The valuation and potential sale of Washington’s franchises influenced the terms of
Peiffer Wolf’s contingency fee agreement with Washington.
1 Washington originally purchased the McDonald’s franchises in his name and later
assigned the franchises to one or all of the corporate defendants. Peiffer Wolf and Washington agreed the contingency fee would be
based only on funds received in settlement of the discrimination claim and the
contingency fee would not apply to any monies received for the sale of Washington’s
franchises. To implement that term in the contingency agreement, the parties
agreed to deduct the franchises’ fair market value from the settlement amount
before calculating the contingency fee. Therefore, determining the fair market value
of the franchises was an important element of the contingency fee agreement.
Because McDonald’s is a “closed system” that “keeps tight hold on the valuation of
franchises,” Peiffer Wolf relied upon information provided by Washington and his
associates to establish a formula to calculate the franchises’ fair market value. Tr.
816.
In December 2020, Peiffer Wolf and Washington — but not the
corporate defendants — executed a contingency fee agreement (“December 2020
agreement”). The December 2020 agreement expressly identifies the parties as
Peiffer Wolf and Washington. In addition, the signature line indicates that
Washington signed the agreement in his individual capacity. The December 2020
agreement, which listed a contingency fee of 33 percent rather than Peiffer Wolf’s
typical 40 percent, reads, in part, as follows:
Legal Fees 4. Generally: Client agrees to pay Lawyers the reasonable fee set forth below:
4.1 In the event that a recovery is made in this Matter, Lawyers will be paid for handling Client’s case by a contingency fee of 33% of the Value Received. 4.2 “Value Received” is defined to include the gross amount of money recovered by Lawyers less any costs and expenses. The contingency fee percentage will be applied to the net recovery (i.e., after subtracting costs advanced from the gross recovery).
Value Received covers any and all money recovered by Lawyers — whether through arbitration, litigation, mediation, settlement, restitution, recovery ordered by the regulatory authorities or any governmental agencies, or any other method. If settlement or any other resolution of the litigation involves a termination or buyout of Client’s interests and/or rights in his McDonald’s franchise locations at the time of the settlement or other resolution, Value Received shall exclude the fair market value of the Client’s McDonald’s franchise locations at the time of the settlement or other resolution as agreed by the parties or (absent agreement) determined by multiplying the pre-debt cashflow from the trailing twelve months of operations at the time of the settlement or other resolution by seven (e.g., a location with a trailing twelve months predebt cashflow of $200,000 would be valued at $1,400,000 [7 x $200,000]).
Plaintiff’s exhibit No. 23. The fair market calculation included in the December
2020 agreement — multiplying the pre-debt cashflow from the trailing 12 months of
operations at the time of the settlement by seven — was represented by Washington
and his associates as the standard formula to value a McDonald’s franchise (“2020
fair market value formula”). Because Peiffer Wolf received its contingency fee only
on a recovery that exceeded the fair market value of the franchises, a higher fair
market valuation would result in a lower contingency fee.
On February 16, 2021, Peiffer Wolf filed a racial discrimination
complaint in federal court on behalf of Washington against McDonald’s. At the first mediation on April 16, 2021, McDonald’s offered
Washington $21,710,000 for his franchises, plus $2,000,000 to resolve the racial
discrimination lawsuit. Washington rejected the offer and discovery continued.
As Peiffer Wolf worked with the defendants to respond to McDonald’s
discovery requests, it allegedly learned that the defendants had engaged in certain
business practices that it feared would be detrimental to defendant’s discrimination
claims and to defendant’s rights under the franchise agreements with McDonald’s.
Washington disagreed with Peiffer Wolf’s assessment of these business practices
and their impact on his claims. Peiffer Wolf further discovered that the franchises
were not owned by Washington individually, but by the corporate defendants.
Therefore, on May 26, 2021, Peiffer Wolf filed an amended complaint adding the
corporate defendants as plaintiffs in the federal discrimination suit. Lastly, Peiffer
Wolf learned that the standard multiplier represented in the 2020 fair market value
formula was not seven, as represented by Washington and incorporated into the
December 2020 contingency fee agreement, but likely between four and five.
On September 8, 2021, the federal district court granted Washington
and the corporate defendants access to 40 years of documents related to McDonald’s
treatment of Black employees and operators. To take advantage of the positive
ruling in the defendants’ favor and avoid revealing the defendants’ business
Free access — add to your briefcase to read the full text and ask questions with AI
[Cite as Peiffer Wolf Carr Kane Conway & Wise, APLC v. Washington, 2025-Ohio-4839.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
PEIFFER WOLF CARR KANE CONWAY & WISE, APLC, :
Plaintiff-Appellee, : No. 114319 v. :
HERBERT WASHINGTON, ET AL., :
Defendants-Appellants. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED IN PART, REVERSED IN PART, AND REMANDED RELEASED AND JOURNALIZED: October 23, 2025
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-22-965514
Appearances:
Flowers & Grube, Paul W. Flowers, and Kendra N. Davitt; Haber LLP, Richard C. Haber, Lindsey K. Self, and Natalie D. Davis, for appellee.
Warren Terzian LLP and Thomas D. Warren; McDonald Hopkins LLC and Sanford E. Watson, for appellants.
WILLIAM A. KLATT, J.:
Defendants-appellants Herbert Washington (“Washington”), HLW
Fast Track, Inc., HLW Fast Track PA, LLC, and Air Arch, Inc. (“corporate defendants” or, collectively with Washington, “defendants”) appeal following a jury
verdict and argue (1) the trial court erred when it granted a directed verdict in favor
of plaintiff-appellee Peiffer Wolf Carr Kane Conway & Wise, APLC (“Peiffer Wolf”)
finding the corporate defendants liable under quantum meruit and (2) the jury’s
quantum meruit awards were against the manifest weight of the evidence. For the
following reasons, we affirm in part, reverse in part, and remand for proceedings
consistent with this opinion.
I. Factual and Procedural History
A. Underlying Lawsuit
This lawsuit arises from a dispute over the attorney fees owed by
defendants to Peiffer Wolf for its representation of defendants in an underlying
discrimination lawsuit against McDonald’s.
Washington — a sophisticated businessman who at one time owned 27
McDonald’s franchises and was a former chairman of the Buffalo, New York Federal
Reserve — retained the law firm of Peiffer Wolf to pursue a racial discrimination
lawsuit against McDonald’s; Washington is Black. Washington’s purpose for the
lawsuit was twofold: to allege discrimination and to maximize his leverage in
negotiating the sale of his 14 McDonald’s restaurants (“franchises”) to McDonald’s.1
The valuation and potential sale of Washington’s franchises influenced the terms of
Peiffer Wolf’s contingency fee agreement with Washington.
1 Washington originally purchased the McDonald’s franchises in his name and later
assigned the franchises to one or all of the corporate defendants. Peiffer Wolf and Washington agreed the contingency fee would be
based only on funds received in settlement of the discrimination claim and the
contingency fee would not apply to any monies received for the sale of Washington’s
franchises. To implement that term in the contingency agreement, the parties
agreed to deduct the franchises’ fair market value from the settlement amount
before calculating the contingency fee. Therefore, determining the fair market value
of the franchises was an important element of the contingency fee agreement.
Because McDonald’s is a “closed system” that “keeps tight hold on the valuation of
franchises,” Peiffer Wolf relied upon information provided by Washington and his
associates to establish a formula to calculate the franchises’ fair market value. Tr.
816.
In December 2020, Peiffer Wolf and Washington — but not the
corporate defendants — executed a contingency fee agreement (“December 2020
agreement”). The December 2020 agreement expressly identifies the parties as
Peiffer Wolf and Washington. In addition, the signature line indicates that
Washington signed the agreement in his individual capacity. The December 2020
agreement, which listed a contingency fee of 33 percent rather than Peiffer Wolf’s
typical 40 percent, reads, in part, as follows:
Legal Fees 4. Generally: Client agrees to pay Lawyers the reasonable fee set forth below:
4.1 In the event that a recovery is made in this Matter, Lawyers will be paid for handling Client’s case by a contingency fee of 33% of the Value Received. 4.2 “Value Received” is defined to include the gross amount of money recovered by Lawyers less any costs and expenses. The contingency fee percentage will be applied to the net recovery (i.e., after subtracting costs advanced from the gross recovery).
Value Received covers any and all money recovered by Lawyers — whether through arbitration, litigation, mediation, settlement, restitution, recovery ordered by the regulatory authorities or any governmental agencies, or any other method. If settlement or any other resolution of the litigation involves a termination or buyout of Client’s interests and/or rights in his McDonald’s franchise locations at the time of the settlement or other resolution, Value Received shall exclude the fair market value of the Client’s McDonald’s franchise locations at the time of the settlement or other resolution as agreed by the parties or (absent agreement) determined by multiplying the pre-debt cashflow from the trailing twelve months of operations at the time of the settlement or other resolution by seven (e.g., a location with a trailing twelve months predebt cashflow of $200,000 would be valued at $1,400,000 [7 x $200,000]).
Plaintiff’s exhibit No. 23. The fair market calculation included in the December
2020 agreement — multiplying the pre-debt cashflow from the trailing 12 months of
operations at the time of the settlement by seven — was represented by Washington
and his associates as the standard formula to value a McDonald’s franchise (“2020
fair market value formula”). Because Peiffer Wolf received its contingency fee only
on a recovery that exceeded the fair market value of the franchises, a higher fair
market valuation would result in a lower contingency fee.
On February 16, 2021, Peiffer Wolf filed a racial discrimination
complaint in federal court on behalf of Washington against McDonald’s. At the first mediation on April 16, 2021, McDonald’s offered
Washington $21,710,000 for his franchises, plus $2,000,000 to resolve the racial
discrimination lawsuit. Washington rejected the offer and discovery continued.
As Peiffer Wolf worked with the defendants to respond to McDonald’s
discovery requests, it allegedly learned that the defendants had engaged in certain
business practices that it feared would be detrimental to defendant’s discrimination
claims and to defendant’s rights under the franchise agreements with McDonald’s.
Washington disagreed with Peiffer Wolf’s assessment of these business practices
and their impact on his claims. Peiffer Wolf further discovered that the franchises
were not owned by Washington individually, but by the corporate defendants.
Therefore, on May 26, 2021, Peiffer Wolf filed an amended complaint adding the
corporate defendants as plaintiffs in the federal discrimination suit. Lastly, Peiffer
Wolf learned that the standard multiplier represented in the 2020 fair market value
formula was not seven, as represented by Washington and incorporated into the
December 2020 contingency fee agreement, but likely between four and five.
On September 8, 2021, the federal district court granted Washington
and the corporate defendants access to 40 years of documents related to McDonald’s
treatment of Black employees and operators. To take advantage of the positive
ruling in the defendants’ favor and avoid revealing the defendants’ business
practices that arguably could have negatively impacted the pending lawsuit, Peiffer
Wolf requested and McDonald’s agreed to stay discovery and participate in a second
mediation on September 17, 2021. Prior to the second mediation, Kevin Conway (“Conway”), the
managing partner of Peiffer Wolf, proposed using $23,710,000 as the fair market
value of the franchises rather than using the formula set forth in the December 2020
agreement. He also proposed calculating the contingency fee based on 10 percent
of the gross recovery as a second option. Conway and Wasington presented
conflicting testimony as to whether they agreed to modify the December 2020
agreement prior to the second mediation.
B. Second Mediation
On September 17, 2021, the parties participated in a 17-hour
mediation. According to Conway, the mediator clearly communicated that any offer
above $23,700,000 was in resolution of the defendants’ racial discrimination
lawsuit.2 Conway stated that during the mediation, Washington asked Conway to
calculate attorney fees under the two calculations proposed by Conway and, when
Washington and Joe Peiffer (“Peiffer”) — a founding attorney of the firm — were
alone, Washington requested the same information from Peiffer. Conway testified
that he and Peiffer, separately, presented Washington with the same calculations
that showed a contingency fee of 33 percent on the portion of the settlement greater
than $23,710,000 was the more advantageous fee option for the defendants.
Conway denied that Washington ever asked him during the second mediation to
2 The mediator’s suggested fair market value for the franchises — $23,700,000 —
varied slightly from Conway’s proposal to Washington of $23,710,000. calculate attorney fees pursuant to the terms of the December 2020 agreement
utilizing the 2020 fair market value formula and seven as a multiplier.
C. Settlement
On September 21, 2021, the parties reached a settlement in the
amount of $33,500,000. Less than 20 minutes after Washington executed the
settlement documents, Tom Micco — Washington’s controller — emailed a letter
from Washington to Conway in regard to the December 2020 agreement, the 2020
fair market value formula, and Peiffer Wolf’s new contingency fee proposal.
Specifically, the letter reads, in pertinent part:
After considerable thought, my position is that I want to enforce the current signed agreement [(the December 2020 agreement)]. That being said I would be open to consider something outside of the current agreement once the lawsuit is settled. At that time, I will have my counsel work with you to resolve any concerns you may have.
Plaintiff’s exhibit No. 44. In other words, Washington’s letter stated his preference
to use the 2020 fair market value formula and related contingency fee calculation
listed in the December 2020 agreement. Under the December 2020 agreement,
applying the 2020 fair market value formula with a multiplier of seven, the
contingency fees totaled approximately $400,000. If the parties had applied the
terms of Peiffer Wolf’s recent contingency fee proposal that resulted in the lesser fee
— a fair market value of the franchises at $23,710,000 and a contingency fee of 33
percent applied to the difference between $33,500,000 (the full settlement) and
$23,710,000 (the agreed-upon fair market value of the franchises) — the
contingency fee would have totaled $3,230,700. Despite the dispute over what contingency fee was due, Peiffer Wolf continued with its representation of the
defendants.
On October 11, 2021, Conway sent, via email, a settlement statement
to Washington. The settlement statement reads, in pertinent part:
SETTLEMENT SUM RECEIVED INTO IOLTA $ 33,500,000.00 Less litigation expenses . . . $ 21,543.32 Adjusted settlement $ 33,478,456.68 Less attorneys’ fees* $ 11,047,890.70 Discount applied** $ 7,817,190.70 Total attorneys’ fees to be collected $ 3,230,700.00
NET TO CLIENTS $ 30,247,756.70
*. . . .
** Per December 15, 2020 engagement agreement, attorneys’ fees calculated at 33% of the “value received.” This calculation reflects Clients’ material breaches of the Franchise Agreements discovered during collection of production response (undisclosed diversion of complaints to third-party vendor not approved by McDonald’s, unauthorized use of McDonald’s trademarks by unauthorized vendor, and misrepresentation to Rewrite Committee regarding customer- recovery procedures), which gave McDonald’s the right to terminate the franchises and reduced the actual value of the stores to zero.
*** Attorneys’ fees discounted as discussed to reflect fee for attorneys’ services in light of unanticipated decrease in value of stores due to material breach.
Defendants’ exhibit B. The record reflects no evidence that McDonald’s ever became
aware that the defendants may have violated the terms of the franchise agreements,
thereby potentially reducing the value of the franchises to zero, as Peiffer Wolf
contends in the settlement statement. Peiffer Wolf finalized the settlement on December 16, 2021, when
McDonald’s issued payment to Washington’s company, HLW Fast Track, Inc. The
defendants had not paid any attorney fees to Peiffer Wolf at that time. As part of the
settlement with McDonald’s, and at Peiffer Wolf’s request, Washington placed
$3,230,700 in escrow, pending resolution of Peiffer Wolf’s disputed attorney fees.
D. Peiffer Wolf’s Lawsuit
On June 29, 2022, Peiffer Wolf filed the underlying complaint against
Washington and the corporate defendants seeking unpaid attorney fees under three
causes of action: quantum meruit, fraud, and alternatively, breach of contract.
Peiffer Wolf’s fraud and alternative breach-of-contract claims were based solely on
the December 2020 agreement. The defendants filed an answer on August 29, 2022.
Peiffer Wolf filed an amended complaint on August 30, 2022, and the defendants
filed an answer on September 16, 2022. Discovery was conducted, and Peiffer Wolf
retained attorney Richard S. Koblentz (“Koblentz”) as an expert witness.
1. Plaintiff’s Expert Report
Prior to trial, Koblentz provided a detailed 26-page expert report in
which Koblentz reserved the right to revise his opinion upon the receipt of additional
evidence or testimony. Koblentz rendered the report, at Peiffer Wolf’s request, to
opine on the amount of attorney fees, if any, the firm earned through its
representation of Washington and the corporate defendants. The report specifically
stated that the December 2020 agreement was between Peiffer Wolf and
Washington, individually, but because Washington owned and operated his franchises through the corporate defendants, Peiffer Wolf represented all of the
defendants in the discrimination lawsuit.
Koblentz’s report acknowledged the terms of the December 2020
agreement and Peiffer Wolf’s later proposal to use $23,710,000 as the fair market
value of the franchises.
According to the report, the case proceeded to mediation on
September 17, 2021, where “the mediator made it clear to Mr. Washington and
Peiffer Wolf that any amount that would be paid by McDonald’s over $23,710,000
was added value to resolve the litigation and not value rendered for the restaurants.”
Koblentz report, p. 14. Koblentz’s report reflected an agreed settlement on
September 21, 2021, in the amount of $33,500,000.
In his report, Koblentz stated that if fraud induced Peiffer Wolf to
execute the December 2020 agreement, the agreement was not valid and Peiffer
Wolf could recover attorney fees pursuant to quantum meruit. The alleged fraud
was the defendants’ representation that seven was the standard multiplier applied
in the formula to determine the franchises’ fair market value when Washington had
never previously sold a franchise using such a high multiplier. Koblentz’s report
included these statements about determining the reasonable value of attorney fees
under the theory of quantum meruit:
In determining the reasonable value of a discharged attorney’s legal services rendered pursuant to a contingency fee agreement, the totality of the circumstances surrounding the situation are to be considered, including: “[t]he number of hours worked by the attorney before the discharge[,] . . . the recovery sought, the skill demanded, the results obtained, and the attorney-client relationship itself.” Oliver, 2023-Ohio-275 at ¶ 63 citing Pipino v. Norman, 7th Dist. Mahoning No. 16 MA 0153, 2017- Ohio-9048, p. 30, quoting Reid, at 576-577. Courts may also consider the factors for determining the reasonableness of fees used by the rules governing attorney conduct. Id. at 576-577, 629 N.E.2d 431. “Quantum meruit can be used whether there is an express contract for fees (written or oral) or where there is no express contract for fees (i.e., there is an implied contract).” Id.
Moreover, the attorney fee provided in a contingency fee agreement may be utilized as a guide for awarding attorney fees to a discharged contingent-fee attorney. Oliver, 2023-Ohio-275 at ¶ 68 citing Law offices of Russell A. Kelm v. Selby, 10th Dist. Franklin No. 15AP-1135, 2017-Ohio-8239, ¶ 30 (no abuse of discretion by trial court in valuing attorney fee award under quantum meruit on earlier contingency agreement). While a discharged contingent-fee attorney cannot recover attorney fees pursuant to the contingency fee agreement, courts may use that agreement to help value the legal services rendered by the attorney. As to determining attorney fees in such circumstances, the Court held in Fox that, “. . . the maximum reach of its right to fees, with regard to the client, is the reasonable value of the legal services actually rendered to the date of discharge.” quoting [sic] Fox & Associates Co. L.P.A. v. Purdon, 44 Ohio St.3d at 72, 541 N.E.2d at 450.
Koblentz report, p. 20.
Koblentz applied a 33 percent contingency fee and a range of factually
and historically utilized multiples — 4.5, 4.69, and 5 rather than 7 — to calculate
attorney fees under a quantum meruit theory of recovery; the calculations resulted
in attorney fees in the range of $3,321,567 to $4,094,910. The proposed attorney
fees did not charge a contingency fee on the fair market value of Washington’s
franchises.
Koblentz’s report also provided an opinion as to the amount of
attorney fees due under a breach-of-contract theory. For recovery under breach of contract, Koblentz’s report assumed an oral modification of the December 2020
agreement occurred that adopted new terms including the corporate entities as
parties to the agreement, an agreed-upon fair market value of the franchises at
$23,710,000, and a 33 percent contingency fee. Applying those terms, Peiffer Wolf
could recover reasonable attorney fees in the amount of $3,230,700 from the
defendants under a breach of contract.
2. Koblentz’s Trial Testimony
Koblentz testified that at Peiffer Wolf’s request, he assessed the
amount of reasonable attorney fees, if any, earned by the law firm during their
representation of Washington and the corporate defendants. Koblentz testified to
ranges of reasonable attorney fees earned by Peiffer Wolf for providing legal services
to Washington and the corporate defendants, depending upon whether the jury
determined the law firm recovered legal fees under quantum meruit or breach of
contract. In rendering his opinion, Koblentz did not provide an opinion on the fair
market valuation of Washington’s franchises or whether Peiffer Wolf was
fraudulently induced to enter the December 2020 agreement.3
According to Koblentz, if Washington fraudulently induced Peiffer
Wolf to execute the December 2020 agreement, the agreement was not enforceable,
3 Because the trial court ultimately granted a directed verdict on Peiffer Wolf’s claim
that it was entitled to a quantum meruit award from the corporate defendants (leaving the determination of the amount of the award to the jury), and because the jury did not reach Peiffer Wolf’s alternative claim for breach of contract in respect to Washington (resulting in damages being calculated under quantum meruit), we need only address Koblentz’s testimony as it relates to determining the value of Peiffer Wolf’s representation under quantum meruit. and absent an enforceable agreement, the attorney fees would be calculated under
quantum meruit. Quantum meruit required calculation based on the value that
lawyers would normally charge for the legal services. Koblentz also stated that in
determining the value of the legal services under quantum meruit, it was
appropriate to look at the agreed-upon terms in the December 2020 agreement to
interpret the parties’ intentions even though the contract was unenforceable. Per
Koblentz, the parties agreed that if McDonald’s purchased the franchises as part of
the settlement, they would exclude from the contingency calculation the fair market
value of the franchises. Koblentz also testified that Peiffer Wolf was “exceedingly
fair” because it offered to set the contingency fee at 33 percent rather than the firm’s
standard 40 percent. Tr. 1347.
As to the quantum meruit value of the attorney fees for legal services
rendered to the corporate defendants, Koblentz initially testified as follows:
PLAINTIFF’S COUNSEL: And so we know because you have testified and the jury has seen it that 19 minutes after agreeing to 33 and a half million dollars in settlement of this case, Mr. Washington sent a lawyer — a letter to these lawyers indicating that he didn’t — that he wanted to go back and be bound by the original agreement that did not include the three corporate entities?
KOBLENTZ: Right.
PLAINTIFF’S COUNSEL: As a result of that decision by Mr. Washington, was there a written fee agreement with those three corporate entities?
KOBLENTZ: There was not.
PLAINTIFF’S COUNSEL: And if there was not a written fee agreement with those corporate entities, what would be the method for calculating the quantum meruit for the — the quantum meruit for the lawyers’ services in representing those entities and achieving the contingency of 33 and a half million that happened in this case?
KOBLENTZ: Normally in a discrimination case it would be 40 percent; however, here, the lawyers agreed to one-third, so I think that would be appropriate.
PLAINTIFF’S COUNSEL: Or 33 percent, not quite one-third?
KOBLENTZ: Okay, 33 percent.
PLAINTIFF’S COUNSEL: So under normal quantum meruit in light of the decision that Mr. Washington made to disavow putting his corporate entities on the contract, would that make it 33 percent of the gross recovery of 33 and a half million dollars?
KOBLENTZ: Yes, it would. Because I went to law school because there was no math, let me — if you folks would indulge me for a moment. Okay, ballpark that would be 12 million —
PLAINTIFF’S COUNSEL: Let me help you. I did the math over here. It’s $11,055,000?
KOBLENTZ: Okay $11,055,000.
PLAINTIFF’S COUNSEL: 33 percent?
KOBLENTZ: It’s nice to have a person do these things for you. Thank you.
PLAINTIFF’S COUNSEL: 33 percent of 33.5 million is just over $11 million?
KOBLENTZ: Correct.
PLAINTIFF’S COUNSEL: And so having chosen not to put his corporate entities on that agreement, he’s potentially subjecting himself to fees of $11 million in this case?
KOBLENTZ: That would be the quantum meruit that we valued services provided to those— to those organizations and to him based upon the work the lawyers did, yes. PLAINTIFF’S COUNSEL: But I asked you to look at it from a different perspective, didn’t I?
KOBLENTZ: Yes, you did.
Tr. 1320-1322. Koblentz’s opinion that Peiffer Wolf was entitled to attorney fees in
the amount of $11,055,000 was not included in his report and was first introduced
at trial.
Koblentz then testified to the quantum meruit analysis detailed in his
report. Koblentz testified that he calculated 33 percent contingency fees using three
different multipliers — 4.5, 4.69, and 5 — that resulted in a range of attorney fees
earned by Peiffer Wolf for the work they completed for Washington and the
corporate defendants. Koblentz testified that the 33 percent contingency fees
associated with the 4.69 and 5.0 multipliers were $3,767,372 and $3,250,491,
respectively. In contrast, Koblentz’s report listed the range of contingency fees for
the three multipliers as $3,321,567, $3,801,039.99, and $4,094,910. No testimony
explained the difference in ranges provided at trial versus those contained in
Koblentz’s report. Koblentz also testified about considering the Rules of
Professional Responsibility when determining if an attorney fee is excessive.
Later in his direct questioning, Koblentz again alluded to potential
attorney fees in the amount of $11 million:
PLAINTIFF’S COUNSEL: And finally, the opinions rendered in this report pertain to the amount of reasonable attorney fees, if any, earned by Peiffer Wolf for their representation of Mr. Washington. So that is the focus of your expert report? KOBLENTZ: Right. We put [“]if any[”] in just to cover everything. That would be a standard line we put in a report. Again, we have no desire — and not only are we not allowed to, we have no desire to invade the province of this jury. It’s all up to them to make this decision. They work from zero to over $11 million.
Tr. 1335. And on redirect, Koblentz agreed with counsel that “if Mr. Washington is
to have his way, then his corporate entities owe $11,055,000.” Tr. 1395. Lastly,
Koblentz stated that McDonald’s paid the $33,500,000 settlement to HLW Fast
Track, who was not a party to the December 2020 agreement, and, therefore, the
corporate defendants owed Peiffer Wolf $11,055,000 in attorney fees under
quantum meruit:
PLAINTIFF’S COUNSEL: The money was paid to HLW Fast Track, correct?
KOBLENTZ: That is correct.
PLAINTIFF’S COUNSEL: Who, based upon Mr. Washington’s disavowing of the agreement in September, wasn’t a party to a fee agreement?
KOBLENTZ: That is correct also.
PLAINTIFF’S COUNSEL: And under Ohio law that means that HLW Fast Track owes the Peiffer Wolf firm under quantum meruit?
KOBLENTZ: Under quantum meruit calculation, that would be correct, sir.
PLAINTIFF’S COUNSEL: And under Ohio law, the quantum meruit is 33 percent, which is the fee agreement — the fee contingency percentage they were willing to charge, of the gross recovery, correct?
KOBLENTZ: That would be the standard quantum meruit calculation that would be utilized in the legal industry relative to matters like this. PLAINTIFF’S COUNSEL: And so if Mr. Washington is to have his way, then his corporate entities owe $11,055,000?
KOBLENTZ: That would also be correct.
Tr. 1394-1395.
In addition to his trial testimony, Koblentz’s expert report was
introduced as an exhibit.
3. Motions for Directed Verdict
At the close of Peiffer Wolf’s case, the defendants moved for a directed
verdict that the trial court denied. And at the close of the defendants’ case, Peiffer
Wolf moved for a directed verdict on the issue of quantum meruit against the three
corporate defendants. Peiffer Wolf sought a directed verdict on liability only,
arguing that the unrebutted testimony demonstrated there was no signed fee
agreement between the corporate defendants and Peiffer Wolf. Counsel for Peiffer
Wolf stated that
Mr. Washington disavowed the effort to amend and add them to the fee agreement. As a result, Ohio law is clear that where there is an active representation by the law firm under the terms, under a belief that they are doing so on a contingency fee basis and where the client permits the representation and allows it to conclude, in this case with a 33 and a half million dollars settlement, Peiffer Wolf is entitled to quantum meruit from these three entities.
Moreover, the entire settlement proceeds was paid to the corporate entity, HLW Fast Track, and as a result the jury should be instructed that they are simply to determine the amount of quantum meruit as to HLW Fast Track, HLW Fast Track PA, and Air Arch, but there is no determination that they need to make at this time as to liability for quantum meruit.
Tr. 1942. Defense counsel opposed Peiffer Wolf’s motion for directed verdict
and argued Washington did not object to adding the corporate defendants to the
case, but questions of fact remained as to the agreed-upon contingency fee and
whether Washington, rather than the corporate defendants, was responsible for any
potential attorney fees. During discussions with the trial judge, defense counsel
conceded the corporate defendants and Peiffer Wolf never executed a fee agreement:
COURT: Thank you. [Counselor], would you agree that there is no or hasn’t been any testimony that there was, in fact, a fee agreement with those other entities that have been discussed so extensively both today and yesterday?
DEFENSE COUNSEL: Yes. And part and parcel to that, with those fee agreements there is also no agreement as to what they would be entitled to or what those entities would have to pay. So I am not sure how you could have a directed verdict saying that they’re entitled to a certain amount when — . . . .
Tr. 1944-1945.
The trial court granted Peiffer Wolf’s motion for directed verdict, over
defense counsel’s objections. Defense counsel then moved for a directed verdict on
the issue of fraud, and the trial court denied the motion.
4. Jury Instructions
Following closing statements, the trial judge charged the jury on
various issues, including damages for fraud and quantum meruit:
Jury instruction number 14. Damages for fraud. If you find for the plaintiffs, you will decide from the greater weight of the evidence what amount of money will reasonably compensate them for the actual damage directly caused by the fraud. Jury instruction number 15. Quantum meruit. Plaintiff may recover the reasonable value of the work provided to defendants if you find by the greater weight of the evidence that, one, valuable services were rendered; two, for the person sought to be charged; three, which services were accepted by the person sought to be charged, used, and enjoyed by him; four, under such circumstances as reasonably notified the person sought to be charged, that the plaintiff in performing such services was expecting to be paid by the person sought to be charged.
If you find that defendant, Herbert Washington, is liable to plaintiff for fraud, you will determine the amount of damages in quantum meruit to award, if any. If you do not find that defendant, Herbert Washington, is liable to plaintiff for fraud, you will not award damages in quantum meruit in respect to defendant, Herbert Washington.
Regardless, the Court instructs you that the Court has found as a matter of law that HLW Fast Track, Inc., HLW Fast Track PA, LLC, and Air Arch, Inc. are liable for quantum meruit to plaintiff in an amount for you to determine. As such, you need only determine the amount of damages in quantum meruit to award, if any.
The total award of quantum meruit, whether applied to the liability of defendant Washington and the corporate entities or just the corporate entities, the total award amount should equal the amount you determine to be the reasonable value of the work provided to the defendants and no more.
Tr. 2030-2031. The trial court also provided the jurors with interrogatories and
verdict forms.
5. Jury Verdict
The jury found in favor of Peiffer Wolf on its fraud claim, thereby
invalidating the December 2020 agreement. The jury returned a verdict finding, as
a matter of law, in favor of Peiffer Wolf and against the corporate defendants in the
amount of $6,500,000 on Peiffer Wolf’s claim for quantum meruit. The jury found
in favor of Peiffer Wolf and against Washington in the amount of $2,000,000, on the quantum meruit claim. No verdict was rendered on the alternative claim of
breach of contract.
The jury interrogatory answers demonstrated the jury found, by a
preponderance of the evidence, that (1) the defendants made false representations
of fact to Peiffer Wolf regarding the fair market value of Washington’s franchises
that was included in the December 2020 agreement, (2) the representations were
material to the December 2020 agreement, (3) the representations were false or
made with utter disregard and recklessness as to the truth or falsity of the fact, (4)
Peiffer Wolf relied upon the facts presented by the defendants, and (5) an award
would compensate Peiffer Wolf for the reasonable value of their services in quantum
meruit. In other words, the jury found the defendants’ statements about the formula
used to calculate the fair market value of the franchises and the application of a
multiplier of seven fraudulently induced Peiffer Wolf to agree to the December 2020
agreement, Peiffer Wolf was damaged when it relied upon those representations,
and the damages under quantum meruit totaled $8,500,000.
6. Punitive Damages Phase of Trial
The trial court then advised the jury that they would proceed to the
second phase of the trial to address punitive damages. Upon receiving this
information, comments by jury members indicated confusion as to whether the
initial verdict addressed punitive damages:
JUROR NO. 4: Will there be clarification about why this is happening instead of just settling? JUROR NO. 5: We thought we were done.
THE COURT: There is a second phase as to punitive damages.
JUROR NO. 5: We thought we ruled on that.
THE COURT: Not as to punitive damages, no.
JUROR NO. 1: So we were under the impression that was the way that was broken up.
THE COURT: The Court has what’s called bifurcated the punitive damages phase. We can explain that to you after the lunch break, what that means. Again, it’s not a whole new trial. Please don’t think for a minute that’s what it is. It’s not. You all have heard all of the evidence on this case already for two weeks. . . .
Tr. 2064-2065.
During the punitive-damages phase, Peiffer Wolf sought an award of
$24,462.27, plus Peiffer Wolf’s attorney fees incurred for prosecuting the lawsuit
against the defendants. The jury was provided with jury instructions,
interrogatories, and general verdict forms.
All jurors found, by clear and convincing evidence, that Washington’s
actions demonstrated actual malice, aggravated fraud, or egregious fraud and
punitive damages should be assessed against Washington. The jury assessed
Washington $1 in punitive damages, and the jury found Washington was not liable
for Peiffer Wolf’s attorney fees.
The trial court issued a May 14, 2024 judgment entry and a May 20,
2024 nunc pro tunc entry to reflect the jury’s verdict. On June 17, 2024, the trial
court granted Peiffer Wolf’s motion for prejudgment and postjudgment interest and issued a corresponding nunc pro tunc judgment entry. On the same date, the trial
court granted the defendants’ motion to stay execution of the judgment.
7. Appeal
The defendants filed a timely notice of appeal on August 30, 2024,
presenting two assignments of error:
Assignment of Error I: The trial court erred in granting a directed verdict on liability in quantum meruit against the three corporate defendants.
Assignment of Error II: The jury’s quantum meruit awards are against the manifest weight of the evidence.
The defendants filed a motion to unseal the jury instructions, and this court granted
that motion on December 6, 2024. On December 16, 2024, the defendants filed a
motion to dismiss the appeal, arguing the jury verdict and related judgment entry
did not resolve Count 3, breach of contract, and, therefore, the case lacked a final
appealable order. After the parties fully briefed the issue, this court granted the
motion to dismiss on January 9, 2025. Following this court’s dismissal order, the
parties filed on January 23, 2025, a joint motion to amend the trial court’s June 17,
2024 nunc pro tunc judgment entry. The trial court granted the joint motion on
January 27, 2025, and issued a final appealable order on the same date that
incorporated this language: “[Peiffer Wolf’s] alternative claim of breach of contract
is dismissed with prejudice based upon the jury’s verdict.” On February 11, 2025,
the defendants filed a motion to reinstate the appeal that this court granted and, simultaneously, vacated its January 9, 2025 dismissal entry. The parties submitted
briefs and presented oral arguments, and the case is properly before this court.
II. Legal Analysis
A. Directed Verdict
In their first assignment of error, the defendants argue that the trial
court erred when it granted a directed verdict finding the corporate defendants liable
under quantum meruit because there was a factual dispute over whether the parties
agreed to modify the December 2020 agreement to add the corporate defendants to
the fee agreement. They also allege there was a factual dispute as to whether the
parties agreed to a different valuation for the franchises. The defendants further
argue that because there was an issue of fact regarding the existence of a modified
agreement, a jury might have found the defendants liable for breach of the modified
contract, thereby excluding recovery under quantum meruit. According to the
defendants, the amount of the contingency fee owed by the corporate defendants
would have been less under Peiffer Wolf’s breach-of-contract claim than under its
quantum meruit claim.
Under Civ.R. 50(A)(4), a court may properly grant a motion for
directed verdict when, after construing the evidence most strongly in favor of the
party against whom the motion is directed, it finds that reasonable minds could
come to but one conclusion on a determinative issue, and the conclusion is adverse
to the nonmoving party. A motion for directed verdict under Civ.R. 50 tests the
sufficiency of the evidence, not the weight of the evidence or the credibility of witnesses. Wagner v. Roche Laboratories, 1996-Ohio-85, ¶ 17-18. Because a
motion for directed verdict tests the legal sufficiency of the evidence, we review the
lower court’s decision de novo, with no deference to the court’s decision. Goodyear
Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 2002-Ohio-2842, ¶ 4.
“Faced with the question of sufficiency through a directed verdict
motion, the court must determine whether any evidence exists on every element of
each claim or defense for which the party has the burden to go forward.” Eastley v.
Volkman, 2012-Ohio-2179, ¶ 25. The reasonable-minds test requires the court to
determine whether there is any evidence of substantive probative value that favors
the nonmoving party. Rieger v. Giant Eagle, Inc., 2019-Ohio-3745, ¶ 9. When
deciding a motion for a directed verdict the court must “‘“review and consider the
evidence.”’” Id., quoting Ruta v. Breckenridge-Remy Co., 69 Ohio St.2d 66, 68
(1982), quoting O’Day v. Webb, 29 Ohio St.2d 215 (1972), paragraph three of the
syllabus.
The defendants’ sole argument supporting their first assignment of
error is based on a false premise. The defendants contend that there was a factual
dispute over whether the parties modified the December 2020 agreement and, if
there was a modification, the jury could have found the defendants liable for breach
of the modified contract. However, Peiffer Wolf’s alternative breach-of-contract
claim was based solely on the December 2020 agreement — not on any purported
modification thereof. Therefore, the defendants’ contention that there was an issue of fact with respect to whether the parties subsequently agreed to modify the
December 2020 agreement is irrelevant.
Moreover, Peiffer Wolf’s claim that the defendants breached the
December 2020 agreement was pled in the alternative to its claim that the
defendants fraudulently induced it to enter into that agreement. The jury found in
Peiffer Wolf’s favor on its fraud claim and thereby invalidated the December 2020
agreement. Because Peiffer Wolf’s alternative breach-of-contract claim was
premised on the December 2020 agreement, there was no reason for Peiffer Wolf to
pursue, or for the jury to address, that claim once the agreement was found invalid
because of fraud. This point is underscored by the fact that after this court
remanded the case to the trial court for lack of a final appealable order, the parties
jointly filed a motion requesting the trial court amend its judgment and nunc pro
tunc entries to dismiss Peiffer Wolf’s alternative breach-of-contract claim. The trial
court granted that motion and amended its judgments to expressly state that “the
alternative claim of breach of contract is dismissed with prejudice based upon the
jury’s verdict.”
We fail to see any basis for finding that the trial court erred in granting
a directed verdict on Peiffer Wolf’s quantum meruit claim.
Quantum meruit is
a doctrine derived from the natural law of equity, the basic concept of which is that no one should be unjustly enriched who benefits from the services of another. In order to prevent such an unjust enrichment, the law implie[s] a promise to pay a reasonable amount for the services rendered and even for materials furnished, in the absence of a specific contract.
Sonkin & Melena Co., L.P.A. v. Zaransky, 83 Ohio App.3d 169, 175 (8th Dist. 1992).
“[I]n the absence of an express contract, an attorney can recover the reasonable
value of services rendered on the basis of quantum meruit.” Shearer v. Creekview
Broadview Hts. Homeowners’ Assn., 2010-Ohio-5786, ¶ 14 (8th Dist.), citing Baer
v. Woodruff, 111 Ohio App.3d 617 (10th Dist. 1996).
At trial, Peiffer Wolf’s counsel verbally moved for a directed verdict on
liability only against the corporate defendants. Peiffer Wolf’s counsel argued that
absent a contract with the corporate defendants, the law firm was entitled under
quantum meruit to a directed verdict against those defendants, with damages to be
determined by the jury. Specifically, plaintiff’s counsel argued the following:
The testimony is unrebutted that there was no signed fee agreement memorializing the engagement between HLW Fast Track, HLW Fast Track PA, and Air Arch with the Peiffer Wolf law firm.
...
Construing the evidence in a light most favorable to [defense counsel’s] client, there is no dispute. There was not a fee agreement. And under the law, this representation occurred and concluded and they are entitled to quantum meruit as to these three parties.
Tr. 1941-1944.
Defense counsel agreed that no testimony had been introduced that
established the corporate defendants entered into a fee agreement with Peiffer Wolf,
but argued that Washington’s own testimony created a question of fact on quantum
meruit without clearly identifying that issue of fact or explaining how it impacted the corporate defendants’ liability under the quantum meruit claim. Although
unclear, it appears that defense counsel may have been suggesting that there was an
issue of fact as to whether the corporate defendants were parties to the December
2020 agreement based on Washington’s testimony that he believed he had signed
that agreement on their behalf. However, it is undisputed that the December 2020
agreement expressly identified Peiffer Wolf and Washington as the only parties to
the agreement. Moreover, it is clear that Washington signed that agreement in his
individual capacity — not as a representative of the corporate defendants.
Washington’s testimony does not create a legitimate issue of fact as to whether the
corporate defendants were parties to the December 2020 agreement. The corporate
defendants were not parties to that agreement.
In reviewing the trial court’s grant of a directed verdict, we look to
determine if evidence existed on each element of the cause of action. The essential
elements of recovery under quantum meruit are (1) valuable services were rendered
or materials furnished, (2) for the person sought to be charged, (3) which services
and materials were accepted by the person sought to be charged, used and enjoyed
by him or her, (4) under such circumstances as reasonably notified the person
sought to be charged that the plaintiff, in performing such services was expecting to
be paid by the person sought to be charged. Sonkin.
At trial, Peiffer Wolf presented undisputed evidence establishing the
elements of its quantum meruit claim to recover its reasonable fees from the
corporate defendants. There was no dispute that Peiffer Wolf provided legal services on behalf of the corporate defendants, it expected to be paid for those services,
Washington was aware that Peiffer Wolf expected to be paid for those services, and
the corporate defendants accepted and benefited from those services. We find no
error in the trial court’s conclusion that, construing the evidence in favor of the
nonmoving parties, reasonable minds could only conclude that Peiffer Wolf was
entitled to recover from the corporate defendants the reasonable value of its
attorney fees under quantum meruit.
For these reasons, we overrule the defendants’ first assignment of
error.
B. Manifest Weight of the Evidence
In their second assignment of error, the defendants argue the jury
award of $8.5 million was against the manifest weight of the evidence.
1. Standard of Review
We will not reverse a jury’s verdict as against the manifest weight of
the evidence if the “‘verdict is supported by some credible, competent evidence that
goes to all the essential elements of the case.’” Mohammadpour v. Haghighi, 2023-
Ohio-4211, ¶ 20 (8th Dist.), quoting Abrams v. Siegel, 2006-Ohio-1728, ¶ 46 (8th
Dist.), citing C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279, 280 (1978). In
civil and criminal cases alike, the standard of review of a manifest-weight challenge
requires that an appellate court review the entire record, weigh the evidence and all
reasonable inferences, consider the credibility of witnesses, and determine whether,
in resolving conflicts in the evidence, the jury clearly lost its way and created such a manifest miscarriage of justice that the judgment must be reversed and a new trial
ordered. Alami v. Khalid, 2024-Ohio-2456, ¶ 32-33 (8th Dist.), citing ABV Corp. v.
Cantor, 2023-Ohio-3363, ¶ 8 (8th Dist.), citing Eastley, 2012-Ohio-2179 at ¶ 20.
As a plaintiff’s burden of proof in a civil case is a preponderance of the
evidence, our review is therefore to determine whether the jury “clearly lost its way”
in finding Peiffer Wolf proved by a preponderance of the evidence that the
defendants owed attorney fees in the amount of $8,500,000. “‘Preponderance of
the evidence’ means the greater weight of the evidence, or evidence that leads the
trier of fact to find that the existence of a contested fact is more probable than its
nonexistence.” Croone v. Arif, 2014-Ohio-5546, ¶ 18 (8th Dist.), citing State v.
Stumpf, 32 Ohio St.3d 95, 102 (1987). This court has found that the
“‘[w]eight of the evidence concerns ‘the inclination of the greater amount of credible evidence,’ in support of one side of the issue rather than the other. It indicates clearly to the jury that the party having the burden of proof will be entitled to their verdict, if, on weighing the evidence in their minds, they shall find the greater amount of credible evidence sustains the issue which is to be established before them. Weight is not a question of mathematics, but depends on its effect in inducing belief.’”
Falkenberg v. Kucharczyk, 2022-Ohio-2361, ¶ 21 (8th Dist.), quoting Eastley at ¶
12, quoting State v. Thompkins, 1997-Ohio-52, ¶ 24, quoting Black’s Law
Dictionary 1594 (6th Ed. 1990).
In determining whether the judgment is against the manifest weight
of the evidence, a reviewing court should make “every reasonable presumption in
favor of the judgment and the finding of facts.” Eastley at ¶ 20. If the evidence is prone to more than one construction, we must give it the interpretation that is
consistent with the verdict and judgment and most favorable to sustaining the trial
court’s verdict and judgment. Calabrese Law Firm v. Christie, 2024-Ohio-579, ¶ 41
(8th Dist.), citing Seasons Coal v. Cleveland, 10 Ohio St.3d 77 (1984).
2. Quantum Meruit
The jury found Washington fraudulently induced Peiffer Wolf to enter
the December 2020 agreement. Without an enforceable agreement and based upon
the evidence, the jury also found the elements of quantum meruit were met and,
thus, Peiffer Wolf could recover its reasonable attorney fees from Washington under
quantum meruit. The jury valued those attorney fees at $2,000,000. The trial court
determined, when it granted Peiffer Wolf’s motion for directed verdict against the
corporate defendants, that Peiffer Wolf could recover its reasonable attorney fees
from the corporate defendants under quantum meruit. The jury’s role as to the
corporate defendants was to determine the reasonable value of attorney fees owed
to Peiffer Wolf for its representation of them; the jury valued those attorney fees at
$6,500,000. The defendants argue the combined jury awards of $8,500,000 were
against the manifest weight of the evidence.
This court previously described a quantum meruit action and the
related damages:
An action in quantum meruit is in the nature of an action at law for the value of services rendered, and literally translated means “as much as he deserves.” Quantum meruit rests upon the equitable principle that one shall not be permitted to unjustly enrich himself at the expense of another without making compensation therefor. Obligations imposed under a theory of quantum meruit are imposed by law without regard to the intent or assent of the parties to be bound, and as a consequence are not truly contractual in nature.
Because obligations imposed under a theory of quantum meruit are imposed for reasons of justice and the avoidance of inequity, in order to demonstrate a prima facie case a claimant must show that he conferred a benefit upon another and that the circumstances render it unjust and inequitable to permit the other to retain the benefit without making payment therefor. Moreover, a claimant must demonstrate the reasonable value of the benefit conferred. An action in quantum meruit involves the application of equitable principles to the facts and circumstances.
Natl. City Bank v. Fleming, 2 Ohio App.3d 50, 57-58 (8th Dist.). Thus, in the
absence of a contract, an entity may recover a reasonable amount for services
rendered. Novomont Corp. v. Lincoln Elec. Co., 2001 Ohio App. LEXIS 4885, *15
(8th Dist. Nov. 1, 2001), citing Sonkin, 83 Ohio App.3d 169 at 175 (8th Dist. 1992).
One seeking to recover the value of its services in quantum meruit
must prove the reasonable value of those services by competent, credible evidence.
Thomas & Boles v. Burns, 1994 Ohio App. LEXIS 1390, *20 (8th Dist. Mar. 31,
1994), citing Gioffre v. Simakis, 72 Ohio App.3d 424 (10th Dist. 1991).
The defendants contend that the jury award did not represent a
reasonable amount for the legal services provided by Peiffer Wolf. The defendants
contend that Koblentz’s expert report presented the reasonable value of Peiffer
Wolf’s services under quantum meruit as between $3,321,627 and $4,094,910. The
defendants further contend it was appropriate to use the December 2020 agreement
as a guidepost — as Koblentz did in his report — in evaluating the quantum meruit
award. In contrast, Peiffer Wolf argues that because the jury found fraud
induced the law firm to execute the December 2020 agreement, (1) the agreement
was void and no fee agreement existed between the parties and (2) absent the
December 2020 agreement, no set-off for the franchises’ fair market value applied
to the contingency fee. Further, a reasonable 33 percent contingency fee calculated
on the gross settlement could have been as high as $11,055,000 — as Koblentz
testified — and, accordingly, the $8,500,000 quantum meruit award of attorney
fees is reasonable.
We summarize and analyze the relevant evidence submitted at trial
to determine if the jury clearly lost its way and created such a manifest miscarriage
of justice that the judgment must be reversed and a new trial ordered.
a. Koblentz’s Report
Koblentz’s report, which was introduced as a trial exhibit, was
premised on the understanding that there would be no contingency fee charged on
the franchises’ fair market value. Koblentz’s report stated that under the quantum
meruit theory of recovery, the attorney fees earned by Peiffer Wolf and due from
Washington and the corporate defendants, collectively, ranged between $3,321,567
and $4,094,910, based upon a 33 percent contingency fee.
Koblentz’s report also stated that if the December 2020 agreement
was unenforceable because of fraud, the matter is analogous to cases where an
attorney entered a contingency fee agreement with his client, was subsequently
discharged, and was permitted to recover attorney fees under quantum meruit. Per the report, such discharged attorneys determined the reasonable value of their
attorney fees rendered under a contingency fee agreement by considering the
totality of the circumstances surrounding the attorney-client relationship and using
the contingency agreement as a guide. Accordingly, Koblentz used the December
2020 agreement as a guide for establishing the fees owing to Peiffer Wolf:
Therefore, applying a range of factually and historically utilized multiples to the 12 months pre-debt cash flow of Mr. Washington’s stores in September, 2021 and the 33% contingent fee of the Fee Agreement as a guide, the amount of attorney fees earned by Peiffer Wolf and due from Mr. Washington under a quantum meruit theory of recovery range in amount of between $4,094,910 to $3,321,567.
Koblentz’s report, p. 22. We note Koblentz’s report referenced the corporate
defendants and Washington, collectively, as “Mr. Washington” and, at times, the
corporate defendants individually as “Washington’s Entities.”
Koblentz’s report further opined that the reasonable attorney fees due
to Peiffer Wolf from the defendants, collectively, ranged from $3,230,700 under a
breach-of-contract theory and from $3,321,567 to $4,094,910 under quantum
meruit:
In light of all the above, and upon review of the materials and information listed above, together with my knowledge of applicable legal authority and my own professional experience, reputation, and skill, it is my professional opinion and that of this law firm, to a degree of reasonable professional legal certainty, that the amount of reasonable attorney fees earned by Peiffer Wolf in its representation of Mr. Washington and the Washington Entities in the Underlying Matter range in amount from $4,094,910 to $3,230,700, whether that amount of attorney fees is owed to Peiffer Wolf pursuant to the terms of the Fee Agreement or, alternatively, as determined under the theory of equitable relief of quantum meruit. Koblentz report, p. 26.
Koblentz’s report also stated the value of Washington’s franchises
“was directly at issue as a matter of damages in Mr. Washington’s discrimination
claims . . . .” Koblentz report, p. 21.
b. Trial Testimony of Washington and Conway
1. Washington
Washington testified that he agreed to a contingency fee that excluded
the fair market value of the franchises. Washington stated it was “imperative” to
exclude the franchises’ fair market value from the contingency fee in order “to
protect the sale of [his] restaurants” and to ensure payment for the franchises
exclusively benefitted Washington. Tr. 1870. Washington stated he made it clear to
Peiffer Wolf that he would not pay a contingency fee on any amount below the fair
market value. Additionally, the December 2020 agreement executed by Washington
excluded the fair market value of the franchises from the contingency fee calculation.
Washington’s testimony demonstrated his understanding that the contingency fee
would be limited to the portion of the recovery that related to the alleged
discrimination claims.
2. Conway
Conway, the managing partner of Peiffer Wolf, informed the jury that
his firm earned a contingency fee on the value it added to a case:
So we are contingency fee lawyers, so I think some of you had familiarity with that, but basically what that means is we only earn fees if we add value and achieve, you know, some sort of resolution or success for our clients. So, you know, again, that value system thing I am talking about, this is who I am. It brings access to fight corporate giants and creates immediate alignment with me and my clients. So that — I mean, earning our income is contingent on winning for our clients.
Tr. 519. The value added in the discrimination case would have been any settlement
above the fair market value of the franchises.
Conway’s testimony showed Peiffer Wolf and Washington’s intentions
— from the early stages of their negotiations on the contingency fee agreement —
were to calculate the contingency fee on any recovery excluding the franchises’ fair
market value. Conway testified about an email he sent to Washington following an
October 29, 2020 phone call that reiterated the firm’s intention to exclude the fair
market value from the contingency fee: “So I typically shoot an email after a call.
And this [email] is now starting to flush out carving fair market value out of how we
will calculate our contingency fee.” Tr. 526-527. When discussing Peiffer Wolf’s
proposed second draft of the contingency fee agreement, Conway again emphasized
exclusion of the franchises’ fair market value from the fee:
PLAINTIFF’S COUNSEL: And if we could look at 4.1 and 4.2, let’s talk about what was different in this agreement?
CONWAY: Sure. I think the main thing really to focus on is the sentence [“]value received shall not include any payment or value received by client for the sale of any McDonald’s store.[”]
PLAINTIFF’S COUNSEL: So this was your first effort to try and embrace what had previously been discussed?
CONWAY: Yeah. This is trying to like get the conversation going to carve out fair market value of his stores, yes. Tr. 527. Likewise, a November 17, 2020 email from Conway to Washington
discussed the exclusion of the franchises’ fair market value: “We are all on the same
page, and we are definitely not interested in trying to make money off of the
potential/likely transfer of your McDonald’s locations throughout and at the end of
this lawsuit.” Plaintiff’s exhibit No. 18.
Conway also testified extensively about his efforts to ascertain the
proper formula to calculate the fair market value of the franchises. The fair market
value was an essential term since the parties intended to exclude that amount from
the contingency fee. Conway stated the December 2020 agreement reflected the
parties’ intent to determine the contingency fee excluding the franchises’ fair market
values.
Further, Conway conceded at trial that he believed the fair market
value of the franchises should not be subject to the contingency fee:
PLAINTIFF’S COUNSEL: Tell me about this conversation.
CONWAY: This part of the conversation is where we are starting — so I want to make it clear, like earning a contingency is based off of the value you create. And so getting into figuring out how to carve something out of that just so there’s not confusion, it’s just for adding clarity because we make money on the value we create. And when [Washington] said I have, you know, X stores worth X dollars, you should [not] make money off of that. I agree. I agreed then, I agree now.
PLAINTIFF’S COUNSEL: Do you recall what’s in the middle of this first page, what Mr. Washington discussed with you about the fee structure?
CONWAY: Yes. Basically it covers what I just said. You know, if my stores are worth $10, I can get that today, tomorrow, later. You should earn 33 percent above the $10. I said totally agree. Looking to not include fair market value.
Tr. 520-521.
Both Washington and Conway testified that the contingency fee would
be calculated only on any recovery that exceeded the fair market value of the
c. Koblentz’s Trial Testimony
During his trial testimony, Koblentz’s reference to a possible
contingency fee based on the settlement figure that included the fair market value
of the franchises disregarded the parties’ expressed intentions as well as the
assumptions he used in his own written expert report. Koblentz testified that “under
normal quantum meruit in light of the decision that Mr. Washington made to
disavow putting his corporate entities on the contract,” the 33 percent contingency
fees owing to Peiffer Wolf totaled $11,055,000. Tr. 1321. Koblentz further testified
in response to essentially a hypothetical question that application of quantum
meruit could result in an attorney fee payment of $11,055,000:
PLAINTIFF’S COUNSEL: The money was paid to HLW Fast Track, correct?
PLAINTIFF’S COUNSEL: Who, based upon Mr. Washington’s disavowing of the agreement in September, wasn’t a party to a fee agreement?
KOBLENTZ: That is correct also. PLAINTIFF’S COUNSEL: And under Ohio law that means that HLW Fast Track owes the Peiffer Wolf firm under quantum meruit?
KOBLENTZ: Under quantum meruit calculation, that would be correct, sir.
PLAINTIFF’S COUNSEL: And under Ohio law, the quantum meruit is 33 percent, which is the fee agreement — the fee contingency percentage they were willing to charge, of the gross recovery, correct?
KOBLENTZ: That would be the standard quantum meruit calculation that would be utilized in the legal industry relative to matters like this.
PLAINTIFF’S COUNSEL: And so if Mr. Washington is to have his way, then his corporate entities owe $11,055,000?
Koblentz also testified that his expert report stated, under the theory
of quantum meruit, that the defendants owed Peiffer Wolf attorney fees ranging
from $3,250,491 to $3,767,372.
d. Analysis
Washington and Peiffer Wolf understood that the contingency fee
would be limited to the portion of the recovery that related to McDonald’s alleged
discrimination and the parties never agreed otherwise. Washington and Conway
testified that the parties agreed Peiffer Wolf should not recover attorney fees on any
settlement related to the fair market value of the franchises since that portion of the
settlement was unrelated to Peiffer Wolf’s management of the discrimination
lawsuit. And the basis for this reasoning was fairness — Washington could negotiate
the sale of his franchises without Peiffer Wolf’s assistance and, therefore, Peiffer Wolf should not earn a contingency fee on that portion of the settlement. Similarly,
Koblentz’s expert report estimated the reasonable range of attorney fees to be
recovered under quantum meruit as between $3,321,567 and $4,094,910, dollar
amounts that excluded the fair market value of the franchises.
Koblentz’s broad statements at trial that “under normal quantum
meruit analysis” or under the “standard quantum meruit calculation in the legal
industry,” a reasonable value of the attorney fees for the corporate defendants would
be $11,055,000 were not consistent with his report or how the parties valued the
legal services. The hypothetical question that elicited Koblentz’s testimony about
attorney fees in the amount of $11,055,000 was not tethered to the evidence in the
case. In contrast, Koblentz’s expert report was based on the premise that the fair
market value of the franchises would be excluded from the contingent fee
calculation, and the testimony of Washington and Conway supported this position.
Additionally, the December 2020 agreement was not representative of a “normal”
or “standard” agreement. Unlike a standard fee agreement, the parties intended to
exclude the fair market value of the franchises from the contingency agreement, and
the parties agreed to a 33 percent contingency fee rather than the standard 40
percent fee.
The evidence is undisputed that Peiffer Wolf never intended to charge
a contingency fee on the fair market value of the franchises. Therefore, Peiffer Wolf’s
contention that the jury award is supported by Koblentz’s trial testimony is
overwhelmed by the weight of the other evidence — principally Koblentz’s written report that reflects the parties’ shared understanding that was confirmed through
Washington and Conway’s trial testimony — that Peiffer Wolf would not include the
fair market value of the franchises in calculating its contingency fee, even though
they disagreed on how the fair market value should be determined. Without the
portion of Koblentz’s trial testimony that references attorney fees in the amount of
$11,055,000, there is simply no other evidence to support the magnitude of the
jury’s quantum meruit determination.4
Our review of the evidence submitted at trial demonstrates the jury
clearly lost its way when it entered a judgment against the corporate defendants in
the amount of $6,500,000 and against Washington in the amount of $2,000,000,
and created such a manifest miscarriage of justice that the judgment must be
reversed and a new trial ordered to determine the reasonable value of Peiffer Wolf’s
legal services rendered to the defendants. For the foregoing reasons, we find that
the jury’s award of attorney fees, pursuant to quantum meruit, was against the
manifest weight of the evidence and, the second assignment of error is sustained.
4 Peiffer Wolf contends that if the jury found the franchises had no value — because
the stores violated their franchise agreements with McDonald’s — then the full $33,500,000 settlement was paid in satisfaction of the discrimination claim. Peiffer Wolf further contends that a 33 percent contingency fee on $33,500,000 totals $11,055,000, and therefore, the jury’s verdict of $8,500,000 was a reasonable award permissible under quantum meruit. However, Peiffer Wolf sought to stay discovery and schedule the second mediation so that McDonald’s would not learn about the alleged material breaches. Absent such information, McDonald’s had no basis to believe the franchises were worthless and offer a settlement only on the discrimination claim. Further, the parties and mediator understood any mediation offer over $21,700,000 was in payment of the discrimination claim — demonstrating McDonald’s assumed fair market value of the franchises at $21,700,000. Thus, we find this argument without merit. We reverse the jury’s award of compensatory damages and remand for a new trial
solely on this issue.
Judgment affirmed in part, reversed in part, and remanded to the
lower court for further proceedings consistent with this opinion.
It is ordered that appellants and appellee share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the
common pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
_____________________ WILLIAM A. KLATT, JUDGE*
LISA B. FORBES, P.J., and MICHAEL JOHN RYAN, J., CONCUR
(*Sitting by assignment: William A. Klatt, J., retired, of the Tenth District Court of Appeals.)
Related
Cite This Page — Counsel Stack
2025 Ohio 4839, Counsel Stack Legal Research, https://law.counselstack.com/opinion/peiffer-wolf-carr-kane-conway-wise-aplc-v-washington-ohioctapp-2025.