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LEXECON, INC. v. HAFT

January 31, 1996

LEXECON, INC., Plaintiff,
v.
HERBERT H. HAFT, AND SHERMAN, MEEHAN & CURTIN, P.C., Defendant.



The opinion of the court was delivered by: SPORKIN

 This matter comes before the Court on cross motions for summary judgment filed by plaintiff Lexecon, Inc. ("Lexecon") and by defendant Sherman, Meehan & Curtin ("SMC"). Defendant SMC hired Lexecon to provide economic consulting services in Herbert Raft's divorce case. Lexecon now seeks payment for those services from SMC and Raft. SMC has moved for summary judgment. Lexecon opposes SMC's motion, and has cross-moved for this Court to enter summary judgment against SMC. At this time, there are no dispositive motions filed by or against defendant Raft.

 SMC contends that it acted merely as Raft's agent in hiring Lexecon and that SMC cannot be held personally liable for the services Lexecon performed because SMC disclosed its client's identity to Lexecon. SMC further claims that Lexecon's complaint against SMC is actually a claim that SMC was a surety for Raft, and that such a claim, in the absence of an appropriate written contract, is unenforceable under the Statute of Frauds. Lexecon responds that SMC is liable for its fees as a matter of law because SMC did not expressly inform Lexecon at the outset that it would not be responsible for payment of Lexecon's fees. Lexecon asks this Court to enter summary judgment in its favor and to order SMC to pay its fees and expenses in the amount of $ 344,877.77.

 FACTUAL BACKGROUND

 SMC represented Herbert Raft in his divorce action in the Superior Court for the District of Columbia. Pursuant to an express authorization by Raft to retain experts to assist in his divorce case, SMC hired Lexecon on behalf of Raft to provide economic consulting services. Specifically, Lexecon agreed to value certain interests of Raft in the Dart Corporation. SMC first contacted Lexecon regarding such services in January 1994, with Lexecon agreeing to provide the services shortly after February 14, 1994. These initial contacts were by telephone, with SMC representatives located in the District of Columbia and Lexecon representatives in Illinois. There was no written contract.

 Lexecon provided economic consulting services until it was told in mid-May 1994 that there had been a settlement in the Raft divorce case and that it should stop work. Lexecon sent a series of invoices to SMC seeking payment for its services. SMC accepted Lexecon's February 1994 invoice of $ 1,704, and paid the bill in early April, 1994, seeking reimbursement from Raft. SMC also accepted without comment Lexecon's March and April/May invoices. However, such invoices were not paid. On September 19, 1994, an attorney for SMC informed Lexecon that it had forwarded the March and April/May invoices to Raft's representatives.

 SUMMARY JUDGMENT STANDARDS

 Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." If any material facts remain in dispute, then summary judgment must be denied.

 ANALYSIS AND DECISION

 Choice of Law Issues. A threshold issue the Court must address is what law to apply in this contract dispute. Under Illinois law, an agent is not personally liable on a contract it executes on behalf of its principal if the agent discloses the identity of its principal. Strzelecki v. Schwarz Paper Co., 824 F. Supp. 821, 829 (N.D. Ill. 1993). This common law rule has been applied to law firms that retain experts on behalf of a client for litigation purposes. See, e.g., Clark v. Maddux, 118 Ill. App. 3d 546, 454 N.E.2d 1179, 73 Ill. Dec. 930 (1983). In contrast, the District of Columbia rule holds an attorney personally liable for expert fees "in the absence of his express declaration to the contrary." McNeill v. Appel, 197 A.2d 152, 153 (D.C. 1964).

 In this diversity action, the Court must apply the choice of law rules of the District of Columbia. In contract cases, the District of Columbia applies the law of the state that has the most significant relationship to the parties and the transaction. Koro Co. V. Bristol-Myers Co., 568 F. Supp. 280, 286 (D.D.C. 1983). Five factors are relevant to determining which jurisdiction has the most significant relationship:

 
(1) the place of contracting;
 
(2) the place of negotiation of the contract;
 
(3) the place of performance of the ...

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