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Employee’s lawyer must pay employer

The Gambler got it right: you got to know when to fold ’em.

A Vienna employment lawyer unfortunately got it wrong when he pursued a worthless contract case past the point of patience for the defendant former employer. A federal court has ordered the lawyer to pay $26,057 to the company he sued for “unreasonably and vexatiously” multiplying legal proceedings.

Ruby Salvin had sold insurance policies on a commission basis as an independent contractor for American National Insurance Company. Her written contract stated either party could terminate the relationship with 30 days’ written notice.

When ANICO terminated Salvin, she sued for breach of contract, tortious interference and fraud, claiming the company altered her sales records to decrease the money it still owed her. A Norfolk federal judge dismissed the tort claims outright.

According to the unpublished June 10 opinion in Salvin v. American Nat’l Ins. Co., ANICO’s deposition of Salvin “made clear her remaining breach of contract claim lacked merit.” When ANICO’s lawyer approached Salvin’s lawyer, Thomas Hennessy, Hennessy refused to voluntarily dismiss the contract claim.

Hennessy then filed an opposition to ANICO’s motion for summary judgment that raised an alternative theory based on allegations not included in Salvin’s original complaint, complete with a new affidavit from Salvin that contradicted her deposition testimony.

After it won summary judgment, ANICO sought attorney’s fees against Hennessy under 28 U.S.C. § 1927, which penalizes any lawyer “who so multiplies the proceedings in any case unreasonably and vexatiously …”

U.S. District Judge Jerome B. Friedman said Hennessy should have taken the advice and dismissed the suit. But Friedman said Hennessy only had to pay for ANICO’s fees after Salvin’s deposition made it clear she had no case.

In upholding the fee award in its per curiam opinion, the 4th Circuit said the record supported a finding Hennessy acted in bad faith, even assuming the more stringent subjective standard applied.

By Deborah Elkins

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