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Keywords

contractlawsuitdamagesattorneycorporationliquidated damages
contractdamagesattorneycorporationliquidated damages

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McQueen, Rains & Tresch, LLP v. Citgo Petroleum Corp., 195 P.3d 35, 2008 OK 66

Facts

CITGO Petroleum Corporation, represented by its Vice President of Legal Affairs, entered into multiple engagement agreements with the law firm McQueen, Rains & Tresch, LLP, which included liquidated damages clauses. After approximately twenty-one months into the four-year term, CITGO terminated the agreements, claiming inferior performance by the attorneys. The law firm filed a lawsuit seeking to enforce the liquidated damages clauses, which stipulated payments in the event of premature termination.

CITGO Petroleum Corporation, represented by its Vice President of Legal Affairs, entered into multiple engagement agreements with the law firm McQueen, Rains & Tresch, LLP, which included liquidated damages clauses.

Issue

Whether liquidated damages provisions in fixed-fee, fixed-term agreements between attorneys and clients are enforceable under Oklahoma law.

Whether liquidated damages provisions in fixed-fee, fixed-term agreements between attorneys and clients are enforceable under Oklahoma law.

Rule

Liquidated damages clauses are enforceable if they are not deemed penalties and if the parties intended to provide for damages rather than a penalty, especially when the injury caused by the breach is difficult to estimate accurately.

Liquidated damages clauses are enforceable if they are not deemed penalties and if the parties intended to provide for damages rather than a penalty, especially when the injury caused by the breach is difficult to estimate accurately.

Analysis

The court applied the established principles of contract law, considering the unique circumstances of the case, including the sophistication of the client and the acknowledgment of the law firm's incurred costs. It determined that the liquidated damages clauses were not per se unenforceable and that the factors from Sun Ridge Investors, Ltd. v. Parker were applicable in assessing their validity.

The court applied the established principles of contract law, considering the unique circumstances of the case, including the sophistication of the client and the acknowledgment of the law firm's incurred costs.

Conclusion

The court concluded that the liquidated damages clauses in the agreements were enforceable under the unique facts presented, and thus, CITGO was required to pay the firm as stipulated in the contracts.

The court concluded that the liquidated damages clauses in the agreements were enforceable under the unique facts presented, and thus, CITGO was required to pay the firm as stipulated in the contracts.

Who won?

The law firm, McQueen, Rains & Tresch, LLP, prevailed in the case as the court upheld the enforceability of the liquidated damages clauses in their agreements with CITGO.

The law firm, McQueen, Rains & Tresch, LLP, prevailed in the case as the court upheld the enforceability of the liquidated damages clauses in their agreements with CITGO.

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