Chambliss, Bahner & Crawford v. Luther

Luther and other stockholders (defendants) of Lutex, Inc. hired Chambliss, Bahner & Crawford (plaintiff) to represent them in a lawsuit against Detrex Corporation. Detrex had acquired Lutex, and the defendants alleged that Detrex had violated securities regulations with its carrying out of the transaction. Chambliss obtained a settlement offer from Detrex of $860,000. The defendants declined the offer, and the matter went to trial. Chambliss’s litigation contract with the defendants stated that he would be paid 15 percent of any recovery over the settlement offer. About one year after the defendants filed suit, they decided to bring on additional representation. Chambliss, the defendants, and the new attorney agreed that of the 15-percent contingency fee, Chambliss would receive 70 percent and the new attorney would receive 30 percent. Soon thereafter, the defendants made the new attorney lead counsel, causing Chambliss to withdraw from the representation. The defendants eventually received a settlement from Detrex of $965,150. Chambliss sued the defendants for breach of contract. The trial court ruled that the defendants breached their contract with Chambliss and awarded Chambliss $15,772.50, or 15 percent of the settlement amount above the original $860,000 settlement offer. The trial court thus limited Chambliss’s damages to those on the contract. Chambliss appealed, seeking quantum meruit damages based on the amount of time he spent on the lawsuit.