McKoy v. Lankford

1

PETER BRICE MCKOY, JR., as Administrator of the Estate of John Carl West, Jr., et al., Plaintiffs, v. THOMAS LANKFORD, et al., Defendants.

No. 1:22-cv-604 (LMB/JFA)

United States District Court, E.D. Virginia, Alexandria Division

August 23, 2023

MEMORANDUM OPINION

Leonie M. Brinkeina, United States District Judge

On March 28,2023, after a two-day trial, the jury returned a verdict in favor of plaintiffs Peter Brice McKoy Jr. Administrator of the Estate of John Carl West, Jr., and John C. West, Jr. LLC (collectively, “plaintiffs”) on their breach of contract claim against defendants Thomas Lankford (“Lankford”) and Lankford & Reed PLLC (collectively, “defendants”), awarding $566,157.01 in damages. Before the Court is plaintiffs' Motion for Attorneys' Fees and Costs, which seeks recovery of $220,801.23 in attorneys' fees and $17,993.32 in costs, as well as an ongoing award of attorneys' fees representing 39% of future disbursements to plaintiffs under the operative contract. [Dkt. No. 97]. For the reasons that follow, plaintiffs' Motion for Attorneys' Fees and Costs will be granted in part and denied in part, and plaintiffs will be awarded $136,500.00 in attorneys' fees, no ongoing attorneys' fees, and $11,215.00 in costs.

I. BACKGROUND

A. Factual Background

This civil action originated from an arrangement between two lawyers, Lankford and John C. West, Jr. (“West”), who worked together for over fifteen years on securing compensation for a group of Americans who were taken hostage in 1979 at the United States Embassy in Tehran, Iran (the Iran hostages). Their efforts eventually resulted in the enactment of the Justice for United States Victims of State Sponsored Terrorism Act (“the Act”), Pub L. No. 114-113,129 Stat. 3007 (2015) (codified as amended at 34 U.S.C. § 20144), which established a fund to provide compensation to the Iran hostages and other eligible claimants (“the Fund”). Under the Act, the former Iran hostages, as well as their spouses and then-minor children, were eligible to receive up to $270 million from the Fund, with payments distributed to them in installments on a pro rata basis out of available funds. Since the Fund was established, the timing and amount of funds available for distribution have been contingent on several factors outside of the claimants' control.^[1] As of the date of the jury trial, the former hostages and their family members remained eligible to receive future payouts from the Fund. The Act also authorized the lawyers working on behalf of the claimants to receive up to 25% of the payments distributed to the claimants as legal fees. 34 U.S.C. § 20144(f)(1).

In 2017, Lankford and his firm Lankford & Reed, PLLC received the first payment from the Fund for distribution to the claimants. Thereafter, on December 28, 2017, Lankford and his firm entered into a Settlement and Release Agreement (“Settlement Agreement”) with West and his firm, John C. West, Jr. LLC, to resolve how West would be compensated for his work on behalf of the Iran hostages.

Under the Settlement Agreement, Lankford agreed to pay West “[i]n consideration of services in connection with the Iran Hostage Matter and subject to the covenants, agreements and condition set forth in this Agreement,” (1) a payment of $300,000 “[s]imultaneously with the execution of this Agreement,” and (2) within 60 days after each distribution, 8¹/₃ percent of the legal fees owed to Lankford & Reed by the claimants from distributions from the Fund, not to exceed $2,700,000. [Pl. Ex. 1] § 3(A). The Settlement Agreement provided for a potential increase in West's compensation “to an amount not to exceed Five Million Dollars,” in the event the former hostages received a lump-sum disbursement of “the balance of the ‘eligible claims' owed to” them under the Act within two years of the date of the Settlement Agreement. Id. § 3(E). The parties agreed to release each other from “any and all [c]laims ... includ[ing], without limitation, any claims relating to the Iran Hostage Matter,” except obligations arising under the Agreement. Id. § 4(B). The Settlement Agreement indicated that it was “an integration of any and all prior agreements or understandings, oral or written, with respect to such subject matter,” Id. § 9(F), and prohibited modification or waiver of the agreement “except by an instrument in writing signed by the Party against whom enforcement of such change, modification, waiver, discharge or termination is sought,” id. § 9(H).

Lankford paid West the initial sum of $300,000 pursuant to the Settlement Agreement. From January 2,2019 through February 16, 2021, nine distributions were made to the former hostages from the Fund, for which Lankford and his firm received a total of $6,793,886.67 in legal fees. Lankford never paid West his 8¹/₄ percent share of the legal fees received from those nine distributions. In the interim, West passed away in March 2020.

B. Procedural History

On December 23,2021, the Estate of John C. West, Jr. (“the Estate”) filed a seven-count complaint against defendants alleging that Lankford breached the Settlement Agreement by failing to pay West his share of the legal fees and fraudulently induced West to enter into the Settlement Agreement, among other claims. See Estate of John C. West, Jr. v. Lankford, et al., No. 1:21-cv-1438-TSE-IDD (E.D. Va. Dec. 23,2021). On February 10, 2022, defendants filed a motion to dismiss which pointed out that West's estate lacked legal authority to file the lawsuit. Id. [Dkt. No. 16]. In response, the Estate filed a notice of voluntary dismissal, which was entered on March 7, 2022. Id. [Dkt. Nos. 22,23].

On May 25, 2022, plaintiffs filed a new civil action against defendants. [Dkt. No. 1]. The six-count Complaint alleged fraudulent inducement (Count I), breach of fiduciary duty (Count II), quantum meruit (Count III), and unjust enrichment (Count IV) (collectively, the “fraud claims”), and sought rescission of the Settlement Agreement. In the alternative to the fraud claims, the Complaint alleged breach of the Settlement Agreement (Count V) and sought recovery of West's 8¹/₃ percent share of the legal fees. The Complaint also requested equitable accounting (Count VI). Id.

On July 25, 2022, defendants filed a Motion to Dismiss the fraud and equitable accounting claims under Fed.R.Civ.P. 12(b)(6), [Dkt. No. 9].^[2] On August 26,2022, the Court granted defendants' Motion to Dismiss and dismissed the fraud and equitable accounting claims for failure to state a plausible claim for relief. [Dkt. No. 18].

On September 23, 2022, defendants filed an Answer, in which they raised one affirmative defense-verbal modification or waiver of the Settlement Agreement. [Dkt. No. 22]. Specifically, defendants asserted that, before his death, West orally modified or waived his right to further payments under the Settlement Agreement, including all nine disbursements made since January 2, 2019, because he had not succeeded in his efforts to obtain a lump-sum payment for the former hostages. On September 30, 2022, plaintiffs moved to strike the affirmative defense on the ground that it was invalid as a matter of law in light of the Settlement Agreement's clause prohibiting oral waivers or modification. [Dkt. No. 23]. The Court denied the Motion to Strike on October 28,2022. [Dkt. No. 35].

Ten days before the close of discovery, plaintiffs attempted to revive the fraud claims and filed a motion to amend the Complaint and extend the discovery period. [Dkt. No. 53]. Plaintiffs argued that they had obtained evidence in discovery to support their claim for fraudulent inducement, asserting that the evidence showed that Lankford lacked a present intent to perform the Settlement Agreement beyond the first payment, misrepresented his intent to perform, and thereby fraudulently induced West to enter into the Settlement Agreement. Plaintiffs also sought to add a claim for civil conspiracy against two new defendants, Ed Wilson (“Wilson”), an attorney who knew West and Lankford and had assisted with their efforts to obtain compensation for the former hostages, and Wilson's law firm, Venable LLP. After reviewing the evidence proffered by plaintiffs and the proposed amended complaint, the Court found that the proposed claims would be futile and denied the motion to amend. [Dkt. No. 63].

On March 10,2023, the Court heard pretrial motions and granted plaintiffs' and defendants' motions in limine, as well as plaintiffs' motion for leave to file a revised exhibit list. [Dkt. No. 81]. This civil action proceeded to a jury trial, which began on March 27, 2023.

The central issue at trial was defendants' affirmative defense, that is, whether West had orally waived both the Settlement Agreement's requirement that any waiver must be in writing and his claim to 8¹/₃ % of legal fee payments. The parties did not dispute that Lankford and West had entered into the Settlement Agreement, under which West was entitled to receive 8¹/₃ % of legal fees paid out from the Fund within 60 days of defendants' receipt of the disbursements; that nine disbursements were made between January 2,2019 and February 16,2021; and that West did not receive any share of the legal fees received by Lankford from those nine disbursements.

At trial, plaintiffs presented the testimony of one witness Lankford, to establish breach of the Settlement Agreement. Defendants presented the testimony of Lankford and Wilson in support of their waiver defense. Including voir dire, the trial lasted six-and-a-half hours before being submitted to the jury, which returned a verdict in favor of plaintiffs, finding that defendants had not proven waiver by clear and convincing evidence. [Dkt. No. 93]. The jury awarded plaintiffs $566,157.01 in total...