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Monday, January 27, 2020

Virginia high court affirms ruling that former Community Management Corp. CEO is barred from seeking attorneys fees

By David Hutton | Nov 1, 2017

Law money 06

RICHMOND, Va. (Legal Newsline) – The Virginia Supreme Court has upheld a lower court’s ruling dismissing a woman’s efforts to recoup legal fees incurred in defending a prior action against Community Management Corp.

The Oct. 12 opinion was written by Justice Stephen R. McCullough. The Fairfax County Circuit Court had ruled that Rule 3:24 prevented Heather Graham from seeking attorneys fees because she had failed to seek payment of legal fees in her initial complaint. The Supreme Court agreed.

Graham is the former CEO of Community Management Corp. (CMC), the opinion states. As part of her employment contract, she was required to keep some pieces of information confidential. In a separate confidentiality agreement, it was noted that the party that prevailed in any dispute would be entitled to legal fees, the opinion states.

Graham got another job, and CMC filed a complaint alleging that she breached her confidentiality agreement regarding the company’s proprietary information.

During the course of the litigation, which included a number of filings by Graham, the opinion states that she never sought to recoup legal fees.

After receiving a defense verdict, Graham filed a separate action against CMC seeking legal fees incurred in defending the prior action.

According to court records, CMC demurred, arguing that Graham was required by Rule 3:25 to seek legal fees in her first complaint. Because she didn’t do that, they maintained that amounted to a waiver.

The circuit court agreed with CMC’s position and dismissed the case.

In the opinion, McCullough noted that the rule mandated that Graham request legal fees in “a counterclaim, cross-claim or a responsive pleading.”

Moreover, the rule further indicates that not making that demand “constitutes a waiver by the party of the claim for attorney’s fees.”

McCullough noted that the court had made a similar ruling in Online Res. Corp. v. Lawlor in 2013. He also noted that Graham failed to make a solid argument.

“Her basic contention is that she could not have pled a claim for recovery of attorneys fees until a defense verdict was rendered in the prior action,” he wrote. “This thesis is mistaken in fundamental respects.”

The opinion also noted that Graham’s position that a claim to recover legal fees would have to wait until the first case was resolved was wrong.

“Graham’s posture is no different from that of Virginia plaintiffs, who have long been required to plead a claim for attorney’s fees (prior to the end of the primary action in which they hope to prevail) on pain of having that claim barred,” McCullough wrote.

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