Rust Consulting, Inc. v. Schneider Wallace Cottrell Konecky Wotkyns LLP

Background

Rust Consulting, Inc. sued Schneider Wallace Cottrell Konecky Wotkyns, LLP over a mass-tort litigation project the parties worked on from 2011 through 2014. Rust alleged that Schneider Wallace failed to pay for services, and Schneider Wallace alleged that Rust failed to provide adequate services. Rust asserted claims for breach of contract, account stated, quantum meruit, and an accounting. Schneider Wallace asserted counterclaims for negligent misrepresentation, tortious interference with business expectancy, implied-in-fact contract, and breach of the covenant of good faith and fair dealing.

Rust sought $323,746.22 for unpaid invoices, an accounting of the claims Schneider Wallace had resolved, and interest. Schneider Wallace sought $1,198,313 in damages, asserting that it had to hire an attorney to complete Rust’s work and correct its mistakes. Schneider Wallace moved for partial summary judgment, which asks the court to decide claims or issues without a trial when there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law.

Contract Claim

Schneider Wallace argued that the Master Services Agreement and Statement of Work were unenforceable because Rust had not signed them. The court rejected that argument. Under the law discussed by the court, a party that did not sign a written agreement may still enforce it if the party agreed to it and acted consistently with it.

The court found that Rust acted under the agreement while performing work for the project. It also found that the parties treated the agreement as effective. Even if Rust’s signature was a required condition, the court concluded that Rust waived that condition by performing under the contract. The court therefore held that the Master Services Agreement was valid and enforceable and denied summary judgment on Rust’s contract claim. The court reserved for a jury the question whether Rust performed adequately and therefore breached the agreement.

Account-Stated and Quantum-Meruit Claims

The court concluded that the valid express contract made Rust’s quantum-meruit claim no longer viable. Quantum meruit is a claim seeking payment for the reasonable value of services when recovery is not governed by an express contract. The court also reached the same conclusion for Rust’s account-stated claim, which the court described as an alternative way to establish liability for a debt. The court stated that both claims must be dismissed because the written contract governed the disputed account.

Accounting Claim

Rust sought an accounting of the number of claims Schneider Wallace had resolved and the amount Rust was owed in resolved-claim fees. An accounting is an equitable remedy requiring disclosure of money or property held or obtained by one party but belonging to another.

The court rejected Schneider Wallace’s argument that Rust could not establish an agreed resolved-claim fee. Because the contract included such a fee, the court held that a jury must decide whether the fee had been changed, waived, or was unearned. The court denied summary judgment on Rust’s accounting claim.

Damages and Counterclaims

The court held that genuine disputes over material facts prevented summary judgment on Rust’s damages. The court also denied the motion to the extent Schneider Wallace sought summary judgment on certain aspects of its counterclaims. The order does not identify those counterclaim aspects in greater detail.

Disposition

Judge David S. Doty ordered that Schneider Wallace’s motion for summary judgment be granted in part as described in the order. The court denied summary judgment on Rust’s contract claim, accounting claim, and damages, and denied the motion to the extent it addressed certain counterclaims. The court concluded that Rust’s quantum-meruit and account-stated claims were no longer viable and must be dismissed.