E-Alert Case Updates

United States District Court finds that Plaintiff Attorney did not Sign Release of Claims Provision in Employment Contract under Duress

Weitzman v. DrugLogic, Inc.
No. 12-01961 (D. Md. Oct. 25, 2012)
by Wayne Heavener, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

In Weitzman v. DrugLogic, Inc., the United States District Court for the District of Maryland granted defendants’ motion for summary judgment with respect to claims by Stephen Weitzman (Plaintiff) for breach of contract and duress. Plaintiff had sued the defendants, DrugLogic, Inc. (DrugLogic) and Victor Grogolak, alleging that the defendants had failed to pay Plaintiff for legal services rendered in the course of DrugLogic’s patent litigation. Writing the Court’s opinion, Judge Richard D. Bennett found that Plaintiff had released DrugLogic and Mr. Grogolak of any claims arising out of Plaintiff’s alleged legal services under a valid and enforceable release of claims provision to Plaintiff’s employment contract. Moreover, the Court found that Plaintiff was not forced to waive his claims under duress, and that Plaintiff had failed to offer evidence that a contract for legal services had ever existed as a matter of law.

Some time prior to 2010, Plaintiff served as an advisory board member to DrugLogic’s corporate predecessor. Later in 2010, DrugLogic’s chairman and CEO, Mr. Grogolak, began discussions with Plaintiff regarding a position as a consultant. In a letter dated September 29, 2010, Plaintiff agreed to provide full-time services to DrugLogic as an independent consultant. Under this agreement (2010 Agreement), Plaintiff’s duties included indentifying data sources, aiding in grant applications, public relations activities, and identifying potential partners.

In March 2011, Plaintiff and Mr. Grogolak discussed the possibility of Plaintiff entering DrugLogic’s on-going patent litigation in the Northern District of California. Plaintiff is a licensed attorney and a resident of Maryland. According to Plaintiff, Mr. Grogolak initiated an exchange of emails that aimed to enlist Plaintiff’s help in the case because DrugLogic’s current firm was charging prohibitively high legal fees. Plaintiff alleges that the arrangement for his legal services was separate from his work under the 2010 Agreement.

Though the 2010 Agreement expired in September 2011, Plaintiff continued to render consulting services to DrugLogic. In return, DrugLogic paid plaintiff on a regular monthly basis. At the end of November 2011, Plaintiff ceased to receive his payments, and DrugLogic demanded that Plaintiff sign another consultant agreement. According to Plaintiff, Mr. Grogolak was aware that Plaintiff was in dire financial straits. Plaintiff alleges that Mr. Grogolak knew that Plaintiff was manic depressive, and subject to extreme stress. Plaintiff claims that that he was forced to enter into a new consulting agreement with DrugLogic (2011 Agreement), which provided that Plaintiff would “provide professional services as a consultant (not as a lawyer) to DrugLogic.” Weitzman v. DrugLogic, Inc., No. 12-01961, slip op. at 5–6 (D. Md. Oct. 25, 2012). The 2011 Agreement also contained a “Release of Claims” provision, providing that the Plaintiff “release and forever discharge DrugLogic . . . from any and all claims . . . of any nature whatsoever . . . .” Id. at 6.

In March 2012, Plaintiff met with Mr. Grogolak to discuss money owed to Plaintiff in return for the legal services he rendered in the California patent litigation. According to Plaintiff, he was owed substantial money for his role in the litigation, and that the money was now due in full. When another of DrugLogic’s attorneys asked Plaintiff to voluntarily withdraw as counsel from the patent litigation, Plaintiff sent a letter rescinding the 2011 Agreement.

Plaintiff appeared pro se in the Circuit Court for Howard County, Maryland. Plaintiff sought both compensatory and punitive damages, alleging that DrugLogic and Mr. Grogolak breached the contract for Plaintiff’s legal services. Plaintiff sought attorneys’ fees as well, and pursued theories of quantum meruit, unjust enrichment, and conversion. Finally, he sought to rescind the 2011 Agreement on the basis of mistake, fraud, and lack of consent. The action was removed to the District Court on diversity grounds. Defendant moved for dismiss the action, or in the alternative, for summary judgment. Defendant argued that its Release of Claims provision in the 2011 Agreement barred Plaintiff’s claim as to legal services; Plaintiff countered that the 2011 Agreement explicitly did not cover legal services.

Drawing all reasonable inferences in the light most favorable to Plaintiff, the District Court found that Plaintiff had released his claims against the defendants, DrugLogic and Mr. Grogolak. Under the terms of the contract, the Court found that Virginia law governed. Interpreting Virginia law, the Court held that an individual with capacity is bound by the terms of his or her contract, especially where parties are sophisticated business persons involved in an arms’ length transaction. Though the preface of the contract was limited to consulting services, the Release of Claims was not similarly limited. Therefore, as a licensed attorney and businessperson, Plaintiff could not maintain that he was the "victim of the language of a release.” Id. at 13. DrugLogic and Mr. Grogolak were entitled to summary judgment.

The Court also upheld the validity of the 2011Agreement. Plaintiff contended that even if he did release his claim for legal services under the 2011 Agreement, the contract was signed under duress. Specifically, Plaintiff alleged that Defendant withheld prepayment in order to take advantage of his difficult economic circumstances and fragile economic state; the defendants countered that Plaintiff’s difficulties do not constitute duress as a matter of law. The Court held that Plaintiff failed to show any objective evidence of duress. Furthermore, Plaintiff’s failure to file suit for months after the signing of the agreement suggested to the Court that there was no true economic exigency that forced Plaintiff into signing the agreement. Because Plaintiff failed to produce any admissible evidence that suggested he suffered from any mental incapacity, his “purported fragile mental state cannot protect him from the contract’s terms.” Id. at 16.

Assuming that Plaintiff could demonstrate that he did not release all claims for his legal services, the Court found that Plaintiff failed to demonstrate that the parties ever formed an agreement to provide legal services. The Court noted that Plaintiff failed to ever attach the allegedly binding emails as an exhibit; therefore, Plaintiff failed to comply with the original writing rule. However, assuming that the e-mails were admissible in court, the Court found that Mr. Grogolak did not assent to the formation of a contract as a matter of law.