Opinion ID: 2974252
Heading Depth: 2
Heading Rank: 3

Heading: Attorney’s fees litigation

Text: By the time that the district court issued its order regarding indemnification, Dana and Condumex had already reached a settlement whereby Condumex returned the Promec shares to Dana in return for the $15 million it had paid with interest. Additionally, Condumex assigned to Dana its damages claims against SPX, including its claim for attorney’s fees. In January 2004, Dana moved for summary judgment on the claim for attorney’s fees. Dana argued that, as Condumex’s assignee, it was entitled to Condumex’s fees under the “collateral litigation exception” to the American rule that each party bears its own attorney’s fees. The collateral litigation exception generally entitles the nonbreaching party in a contract dispute (here, Condumex) to recover its expenses from the breaching party (here, SPX) incurred as a result of litigating against a third-party (here, Dana). Although Dana acknowledged that Delaware, whose law apparently governed the fees issue, had never decided whether to adopt the exception, it argued that the district court should apply the exception because “the exception has been adopted in the majority of jurisdictions which have considered it, including Ohio.” The district court, however, refused to apply the exception, finding that the Delaware Superior Court’s decision in Casson v. Nationwide Insurance Company demonstrated Delaware’s adherence to the American rule. Grupo Condumex, S.A. DE C.V. v. SPX Corp., 331 F. Supp. 2d 623, -8- No. 05-4094 Grupo Condumex v. SPX Corp. 628 (N.D. Ohio). In any event, the district court ruled, it was doubtful that the exception would apply even if recognized in Delaware because this case involved one lawsuit against separate parties rather than any “collateral” litigation. Id. Therefore, the court ruled that Dana was precluded from recovering attorney’s fees as a matter of law. Dana now appeals, arguing that (1) Dana should not have had to show that SPX knew the right-of-first refusal warranty regarding Promec was inaccurate; (2) in any event, SPX knew of the inaccuracy; (3) SPX breached its warranty regarding SP NV because SP NV owned an interest in Promec; and (4) Dana was entitled under Delaware law to Condumex’s attorney’s fees under the collateral litigation exception to the American rule.