COA: Staffing firm must pay attorney fees in breach of contract dispute

A recruiting and staffing firm did not convince the Indiana Court of Appeals on Friday that it should not have to pay attorneys fees requested by a former contractor in a breach of contract dispute.

In 2005, Christine Wallace began working as an independent contractor for recruiting and staffing firm Staff Source LLC. Two years later, she signed another employment agreement and was provided with a 1099 Form listing her non-employee compensation for the years between 2014 and 2017.

During the end of that period in April 2017, Wallace became the subject of an IRS audit related to 2015 and 2016, and an issue arose regarding her status as an independent contractor at Staff Source. At some point, both Wallace and Staff Source signed a working agreement that listed a handwritten date of 2007.

Then, soon after Wallace submitted her resignation as an independent sales contractor for the company in January 2018, Staff Source informed Wallace she was in violation of her contract and filed a complaint for preliminary and permanent injunction and damages against Wallace, Milan Kesic, Slobodan Kesic and the Resolve Group LLC. It alleged, among other things, breach of contract, violation of the Indiana Uniform Trade Secrets Act and tortious interference with a contract.

The Lake Superior Court ultimately dismissed Staff Source’s claims against the defendants with prejudice and entered an order finding Milan, Slobodan, the Resolve Group and Resolve HR entitled to an award of $51,135 in attorney fees and costs. Similarly, it found Wallace was entitled to $25,128.38 in attorney fees and costs.

Staff Source appealed in Staff Source, LLC. V. Christine A. Wallace, Milan Kesic, Slobodan Kesic, The Resolve Group, LLC, and Resolve HR, LLC, 19A-PL-1569. It argued the trial court abused its discretion in ordering the company to pay the defendants’ attorney fees.

But in upholding the fees award, the appellate court first found the defendants were the prevailing parties in the case, noting the dismissal with prejudice was a judgment on the merits, resolved the dispute generally in favor of the defendants and altered the litigants’ legal relationship in a way favorable to the defendants.

The appellate court further found that the defendant’s petition for attorney fees should not have come as a shock to Staff Source, that the record and court’s findings supported that the employment agreement had expired years prior to Wallace’s termination of her relationship with Staff Source and that it backdated her working agreement.

“We conclude that Staff Source’s claims regarding breach of the Employment Agreement and tortious interference by Milan, Slobodan, and the Resolve Group with Staff Source’s contractual relationship and business relationship with Wallace were frivolous, unreasonable, or groundless,” Judge Elaine Brown wrote for the appellate court, finding no abuse of discretion.

Additionally, the COA found sufficient evidence supported the trial court’s determination of the amount of attorney fees awarded based on the defendants’ request. It noted those requests contained affidavits of two attorneys that included the amounts of billable time and a description of the work, as well as the attorney fee request for Wallace containing the affidavits of two attorneys and billing sheets.

Further, the appellate court determined the defendants were entitled to appellate attorney fees and therefore remanded for the trial court to determine the proper amount.

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