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Friday, May 20, 2011

Ind. Decisions - 7th Circuit issues one Indiana opinion today

In Digitech Computer v. Trans-Care, Inc. (SD Ind., Hussmann, Magistrate Judge), a 13-page opinion, Judge Wood writes:

Trans-Care, an Indiana company that furnishes ambulance and other medical transportation services, wanted to replace its dispatch and billing software. After looking around, it chose Digitech Computer for the job. The two executed a software licensing agreement, but it was not long before the deal went sour. The software did not work as Trans-Care expected, and so Trans-Care attempted to exercise an option to terminate the agreement. Digitech believed that Trans- Care had no such option and that its attempted termination was a breach of the contract. It sued, and Trans-Care shot back with a counterclaim for fraud. The court, acting through a magistrate judge presiding by the consent of the parties under 28 U.S.C. § 636(c), dismissed Trans-Care’s claim for fraud and found for Digitech on the breach of contract claim. The court then awarded Digitech fees under the contract, including attorneys’ fees for pursuing the contractual damages. It refused, however, to award Digitech any attorneys’ fees for defending the counterclaim. Both parties appeal. Trans-Care challenges the decision on fraud, breach of contract, and the amount of damages awarded. Digitech challenges the limited award of attorneys’ fees. We affirm the decisions on fraud and breach of contract, but we vacate the damages award and remand for further proceedings. * * *

As Digitech drafted the contract, the doctrine of contra proferentem directs a result against Digitech. MPACT Constr. Grp., LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901, 910 (Ind. 2004) (“When there is ambiguity in a contract, it is construed against its drafter.”). Thus, the contractual language should be read to limit attorneys’ fees only to the breach of contract action. And in any event, the fact that Digitech’s award on the breach of contract has been greatly reduced will require a fresh look at its attorneys’ fees award.

Therefore, we AFFIRM the decisions on fraud and breach of contract, but VACATE the damages awarded and REMAND for a new calculation of damages and fees in accordance with this opinion.

Posted by Marcia Oddi on May 20, 2011 12:22 PM
Posted to Ind. (7th Cir.) Decisions