John Stivarius and John Bennett ()
Atlanta’s Taylor English Duma and one of its partners are facing a legal-malpractice action claiming damages of nearly $1 million.
A purportedly misdrafted contract whose terms cost a company more than $200,000 spiraled into litigation costing hundreds of thousands of dollars more to resolve, according to a suit filed last week in Fulton County Superior Court. It said firm partner Jeff Woodward’s refusal to acknowledge his error and subsequent “disastrous” advice to litigate the matter threatened to drive his then-client, Alpharetta-based OpSolve LLC, into bankruptcy before it settled the dispute confidentially.
Following that settlement, the complaint said Woodward had offered to “help with the costs,” but Ellerbee, Thompson, Sapp & Wilson partner John Stivarius Jr., who filed the complaint with colleague John Bennett, said the firm had since neither offered any such assistance nor responded to his efforts to discuss the case. “They in essence forced this issue,” said Stivarius, who declined to discuss the suit in detail. “They never offered anything. They never responded to the demand letter.”
Taylor English’s general counsel, John Gross, defended the firm’s work.
“As with any client matter, we take these allegations very seriously,” said Goss via email. “We are confident that the legal work we provided to OpSolve far surpassed what it has alleged, and we intend to defend this baseless claim vigorously on behalf of our firm and our lawyers.”
According to the suit, OpSolve, which provides support services to energy companies, arranged to purchase all the stock of an East Point software company, Enercom, in 2013. According to the deal terms, the purchase price was to be Enercom’s 2013 revenue minus a guaranteed $275,000, with the total payment capped at $730,000. But the agreement drafted by Woodward reflected a purchase price of Enercom’s 2013 revenue plus the $275,000 guaranteed payment, again capped at $730,000, the complaint said.
Enercom’s 2013 revenue was about $513,000. Thus, under the agreed-upon formula, the purchase price should have been about $238,000 plus the guaranteed payment. But because of the formula reflected in the purchase agreement, Enercom’s shareholders demanded $455,000 plus the guaranteed payment—a difference of $217,000.
“Woodward, rather than admitting his negligence and mistake, instead chose to influence his client OpSolve in a manner which required OpSolve to pursue litigation,” the complaint said.
“Predictably, however, the litigation strategy was disastrous,” it said, and cost OpSolve “substantial and completely unnecessary legal fees on top of the additional amounts it already owed to Enercom under the clear and unambiguous terms” of the agreement.
According to the complaint, two other Taylor English partners, John “Jay” Patton and Amy Weber, reviewed the agreement and Enercom’s demand letter at Woodward’s request; he then advised OpSolve to reject it.
In May 2014 Enercom sued OpSolve in Fulton Superior Court.
OpSolve’s defense strategies included raising claims of a “mutual mistake” by both parties in drafting the agreement, or that it contained “ambiguities” that should allow it to be reformed under Georgia law.
Three months later, Weber sent an internal memo to Patton warning that Enercom’s filings provided “ample support for their legal argument” that the purchase agreement was “unambiguous on its face.”
She also asked whether Enercom had “raised the issue” of Georgia’s frivolous litigation statute. “I think we need to be cautious of how we proceed given the arguments we are attempting to raise potentially lack both legal and actual authority.”
A few days later, Patton emailed OpSolve’s managing partner advising that, “absent clear evidence” that Enercom “understood the deal the same way we did, we will not win” on the issue.
Patton also advised Woodward in a private email that, “At this point, my opinion is that we are throwing good money after bad” defending the case, and “allowing opposing counsel to run up their legal fees.”
Even so, the complaint said, “Woodward persisted in the position that his work was correct and that OpSolve could prevail in the litigation, contrary to the advice” his colleagues had given him. Woodward never told OpSolve that Patton had recommended that the company honor the agreement as written and get out of the suit, the complaint said.
In October 2014, Enercom issued a settlement demand for $600,000, representing the $455,000 owed under the contract and $150,000 in attorney fees and expenses.
Acting on the advice of its counsel, OpSolve rejected the demand.
In September 2015, Superior Court Judge Wendy Shoob granted Enercom summary judgment on all its claims. OpSolve reached a confidential settlement during mediation.
Afterward, Woodward emailed OpSolve managing partner Jeremie Carr offering to “touch base tomorrow on how [Taylor English] can help with the costs.” OpSolve “communicated with [Taylor English] in an attempt to recoup their damages.”
“However, despite Woodward’s tacit admission to committing malpractice and causing harm to OpSolve,” the firm did not respond to a demand Stivarius sent in December 2015.
OpSolve’s Jan. 18 complaint includes claims for legal malpractice, breach of fiduciary duty, breach of contract and punitive damages, as well as a claim under Georgia’s statute allowing for the recovery of fees from a party that has been “stubbornly litigious” and acted in bad faith.
It seeks damages of more than $600,000 on each of three counts, litigation expenses of at least $150,000, the disgorgement of more than $182,000 in fees OpSolve paid the firm and punitive damages of more than $500,000.