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Logan Knitting Mills, Inc. v. Matrix Group Limited

June 1, 2007

LOGAN KNITTING MILLS, INC. AND MICHAEL S. FELDMAN, PLAINTIFFS,
v.
MATRIX GROUP LIMITED, INC., DEFENDANT.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Following trial, a jury returned a verdict in favor of Matrix Group Limited, Inc. (hereinafter, "Matrix") and against Logan Knitting Mills, Inc. and Michael S. Feldman (hereinafter, collectively, "Logan") for $90,000.

Before the Court is Matrix's Motion for Attorney's Fees and Non-Taxable Expenses. This motion is granted in part and denied in part.

I. BACKGROUND

This suit arose out of the breach of a contract (hereinafter, "the contract") governing the sale of Logan's mail order Wrestling Express merchandise division to Matrix. The parties each performed some of their contractual duties: Matrix made an initial payment of $182,000 and Logan gave Matrix its customer mailing list and business records. Logan then brought suit for $180,000 alleging that Matrix breached the agreement by failing to make the remaining payments prior to the closing date. Matrix counterclaimed for $182,000, alleging that Logan had breached the agreement by failing to ship the physical inventory by the contract deadline. In essence, this case presented the following question: was Matrix required to pay before Logan shipped the inventory, or vice versa. The jury determined that Logan was to have shipped the inventory first, and awarded Matrix $90,000 in damages.

Now, Matrix seeks attorneys' fees and costs as provided by the contract. The parties agree that Illinois law controls.

II. DISCUSSION

Matrix seeks $281,383.39 in attorneys' and paralegal fees, $20,035.96 in non-taxable costs, and $6,489.91 in taxable costs. The contract contained the following provision:

In the event any party shall be required to commence any action or proceeding against the other party by reason of any breach or claimed breach of any provision of this Agreement, to commence any action or proceeding in any way connected with this Agreement, or to seek a judicial declaration of rights under this Agreement, the party prevailing in such action or proceeding shall be entitled to recover from the other party, or to be reimbursed, the prevailing party's actual attorney's fees and costs including, but not limited to, expert witness fees, witness fees, and any and all other fees and costs, whether or not the proceeding or action proceeds to judgment. Agreement, ¶ 9.3

A. Is Matrix Entitled to Attorney's Fees and Costs?

1. Interpretation of the Term "Required"

Logan argues that this Court cannot grant any attorney's fees or costs on the basis of Paragraph 9.3 because Logan was not "required" to bring suit. This argument does not pass the so-called "laugh test." A court must interpret a fee provision according to its plain meaning. Bowles v. Quantum Chemical Co., 266 F.3d 622, 636 (7th Cir. 1999). Logan suggests that this Court interpret "required" to mean "mandated" or "directed" based on a Wisconsin case involving an interpretation of a tax statute. Lincoln Sav. Bank, S.A. v. Wisconsin Dept. of Revenue, 573 N.W.2d 522, 529 (Wisc. 1998). Because both parties agree that the contract specified that Illinois law applies and Lincoln Savings involves the interpretation of a tax statute rather than a fee provision, Lincoln Savings is irrelevant. Interpreting the clause in the manner urged would render the fees provision meaningless, as this Court cannot envision a scenario in which a party to a contract could be "mandated" or "directed" to file a lawsuit. It is an established cannon of contract interpretation that a Court should not interpret a contract clause in a manner that would render it meaningless. Computer Sales Corp. v. Rousonelos Farms, Inc., 546 N.E.2d 761, 766 (Ill. App. Ct. 1989); see generally Atwood v. St. Paul Fire and Marine Ins. Co., 845 N.E.2d 68, 72 (Ill. App. Ct. 2006). Instead, this Court interprets "require" to mean "compel" or "need." Black's Law Dictionary, 1990 Ed. Under this interpretation, the clause applies.

2. The Prevailing Party

Logan next argues that Matrix is not the prevailing party, and is therefore not entitled to attorneys' fees or costs. A prevailing party under Illinois law is a party that "is successful on any significant issue in the action and achieves some benefit in bringing suit, when it receives a judgment in its favor, or when it achieves an affirmative recovery." Tax Track Systems Corp. v. New Investor World, Inc., 478 F.3d 783, 789 (7th Cir. 2007) (quoting Med Plus Neck and Back Pain Center, S.C. v. Noffsinger, 726 N.E.2d 687, 694 (Ill. App. ...


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