Bret Broaddus v. Kevin Shields
665 F.3d 846
7th Cir.2011Background
- Will Partners LLC was formed to acquire and improve property in Illinois; Shields was managing member and WKI rented space from Will Partners.
- Broaddus acquired about 10% in Will Partners in 2000, yielding roughly 45% of Will Partners' net cash flow.
- In 2002-2003, discussions and actions led to Shields purchasing Broaddus's Will Partners interest for $600,000, with disclosures and representations made in March 2003 assignments.
- Broaddus alleges Shields misrepresented WKI’s rent status; evidence shows WKI paid rent, though Broaddus claims delayed discovery due to injury.
- Broaddus sued in 2008 for breach of fiduciary duty; the district court granted summary judgment for Shields on the fiduciary claim, Shields on indemnification, and awarded attorney’s fees to Shields.
- The Seventh Circuit affirmed in full, addressing statute of limitations, discovery rule, indemnification provisions, fee-shifting provisions, and fee award reasonableness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the fiduciary-duty claim is time-barred by the statute of limitations | Broaddus invokes discovery rule to toll | Claim barred by five-year limit; discovery rule not proven | Grant affirmed; discovery rule not established |
| Whether legal disability tolling applies to revive the claim | Disability tolled filing window | Waived for failure to raise in district court | Waived; not considered on appeal |
| Whether indemnification provisions allow recovery of attorney's fees for breaches between Broaddus and Shields | Indemnity limited to third-party claims | Indemnity broadly covers breach-related losses and fees | Indemnification provisions enforceable; district court correct |
| Whether prevailing-party fee-shifting provisions govern this dispute | Broaddus not bound by agreements he signed; fee shifting improper | Broaddus bound by LLC and 2000 agreements; Shields prevailing party | Fee-shifting provisions enforced; Shields awarded fees |
| Whether the district court reasonably awarded attorney's fees | Fees were inflated; question of payment source and necessity | Court conducted substantial reductions for overstaffing and unrelated work | Maintain fee award after reductions; no post-judgment evidentiary hearing required |
Key Cases Cited
- Cathedral of Joy Baptist Church v. Village of Hazel Crest, 22 F.3d 713 (7th Cir. 1994) (discovery rule and summary judgment standard considerations)
- Dexia Crédit Local v. Rogan, 629 F.3d 612 (7th Cir. 2010) (de novo review of statute of limitations determinations)
- Econ. Folding Box Corp. v. Anchor Frozen Foods Corp., 515 F.3d 718 (7th Cir. 2008) (waiver when arguments first raised on appeal)
- In re marchFIRST Inc., 589 F.3d 603 (7th Cir. 2009) (discovery rule applicability and summary judgment standards)
- LaBella Winnetka, Inc. v. Vill. of Winnetka, 628 F.3d 937 (7th Cir. 2010) (waiver and appellate briefing limitations)
- Mendez v. Perla Dental, 646 F.3d 420 (7th Cir. 2011) (waiver of arguments raised for first time in reply brief)
- Greenlaw v. United States, 554 U.S. 237 (Supreme Court 2008) (litigants frame issues; court respects party choices)
- GRT, Inc. v. Marathon GTF Technology, Ltd., 2011 WL 2682898 (Del. Ch. 2011) (Delaware contract interpretation and freedom to contract)