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Court News Ohio

First District: Hustler Founder Larry Flynt Must Pay Brother’s $170,000 Legal Fees

Adult entertainment magnate Larry Flynt found it obscene that lawyers sought $170,000 in fees for preventing Flynt from evicting his brother’s store in downtown Cincinnati, but an appeals court said the amount was reasonable to put an end to a four-year legal battle.

The First District Court of Appeals found that a Hamilton County Common Pleas Court was correct in determining that Jimmy Flynt’s Hustler Cincinnati Inc. (HCI) had an enforceable contract provision providing that the loser of any legal dispute with Larry Flynt’s Elm 411 L.L.C. was enforceable. In its December 24 decision, the court said HCI presented detailed billing records and local expert testimony to demonstrate the attorney expenses were reasonable and in line with local hourly rates.

Writing for the court, Judge Penelope R. Cunningham noted “the family discord between Larry and Jimmy Flynt spread to their commercial relationships” in 2009. Lawsuits stemming from the attempted eviction that year were continued until 2013 as the brothers fought over the larger dispute regarding ownership of the Hustler enterprise in federal court.

HCI opened a Hustler novelty store at 411 Elm Street in 2000 and purchased the property in 2001. In 2004, HCI transferred the building to Elm 411, a limited liability company owned by Larry Flynt. Elm 411 then entered into a 10-year lease of the property to Jimmy Flynt’s HCI. When the family dispute arose, Elm 411 sought to evict HCI, and HCI filed a complaint in Hamilton County Common Pleas Court to prevent the eviction and allow it to operate throughout the term of its lease. Elm 411 filed a separate lawsuit in Hamilton County Municipal Court to enforce its eviction, and the two cases were consolidated. In 2013, the trial court determined that HCI had a valid lease and Elm 411’s eviction attempt was dismissed.

The lease agreement included a clause that provided in any dispute between the parties (whether or not litigated) arising out of the lease, the prevailing party’s reasonable costs and expenses would be paid by the unsuccessful party. At the conclusion of the trial, HCI sought $170,652.75 in attorney fees and expenses.

Larry Flynt did not appeal the merits of the decision, and in February 2014 Jimmy Flynt vacated the 411 Elm St. property. Larry Flynt then announced his Hustler Express would open at 411 Elm. However, he did appeal the fee award arguing that HCI was not the prevailing party because it did not win on all its claims in its lawsuit and was not entitled to the fees.

Judge Cunningham wrote that attorney fees are generally not recoverable in a lawsuit, but there are three recognized exceptions including those in a contract provision. Citing the 1987 Ohio Supreme Court’s Nottingdale Homeowner’s Assn. v. Darby opinion, the court said “contractual fee shifting provisions are enforceable as long as the fees awarded are fair, just, and reasonable as determined by the trial court upon a full consideration of all the circumstances of the case.”

Judge Cunningham also cited the First District’s Keal v. Day (2005) decision that deemed in order to enforce the fee-shifting clause of a commercial lease, the prevailing party only needs to win on some claims and not all claims sought. The court noted that when the trial judge determined the lease was valid, the parties agreed to drop their other claims against each other. Because HCI prevailed on the key issue in the case, the right to stay on the premises, the fee payment clause was triggered.

Elm 411 also argued if HCI was determined the winner, then it was only entitled to fees associated with the work on the successful claim and not for the work performed on the other issues in the litigation. Judge Cunningham wrote the Ohio Supreme Court requires fees to be separated by claims where it can be done, but courts should not reduce fees when it is not possible.

At trial, HCI’s lead counsel Robert W. Hojnoski produced 32 pages of bills with about 500 separate billing entries indicating the work by him and his associates. He testified it was not possible to separate by claims and defenses as they were related issues.

Cincinnati attorney Jack Scott, managing partner of Faulkner & Tepe LLP, was presented by HCI as an expert witness. He said the $250 per hour rate Hojnoski charged and the $175 per hour associate rate were reasonable and customary for a Cincinnati area commercial litigation dispute. Judge Cunningham noted that Elm 411 did not produce its own witnesses to rebut HCI’s, but heavily cross-examined the two attorneys when they testified.

“The trial court’s decision as to the measure of the fees award was supported by a sound reasoning process,” she wrote. “Therefore we will not substitute our judgment for that of the trial court which presided over substantially all of the proceedings.”

Judges Patrick Dinkelacker and Patrick F. Fischer concurred in the decision.

Hustler Cincinnati v. Elm 411 L.L.C., 2014-Ohio-5648
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: December 24, 2014

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