Judge Miriam Goldman Cedarbaum
Global Emerging Markets North America engaged Ecuadorian law firm Asesores to conduct due diligence on a company it sought to buy on its investors’ behalf. Asesores’ engagement letter advised Global of its billing rates and practices. Global did not object to the report. However, due to inability to obtain financing, Global’s purchase of the Ecuadorian firm was never completed. Global persistently refused to pay Asesores. After trial, Asesores was awarded $176,834 in damages for contract breach. District court granted it $263,014 in trial counsel fees from Global. Citing the Second Circuit’s ruling in Lewis v. S.L. & E., the court concluded Global took frivolous legal positions and maintained unsupported actual assertions. At most Global informed Asesores that its customary practice was to pay attorneys only upon success of the deal. That statement was insufficient to maintain a contractual right of nonpayment based on its inability to obtain financing. Global’s unjustified failure to pay Asesores needlessly forced the Ecuadorian law firm to retain a U.S. lawyer to bring suit in New York. Thus, Global’s trial conduct met all three definitions of “frivolous” under New York law.