Post-Settlement Regret Won’t Prove Fraud Case

WASHINGTON (CN) - A Defense Department contractor accused of stiffing its attorneys at Venable does not have a fraud case against the firm, a federal judge ruled.

Overseas Lease Group, a company that provided the U.S. military with armored vehicles for its operations in Afghanistan, had lobbed the fraud allegations against Venable after the law firm hit it with a lawsuit to recover legal fees last year.

After a different firm, Wiley Rein, secured summary judgment for the contractor in an earlier lawsuit against the U.S. government, Venable stepped in to resolve the issue of damages.

Venable claims that it is owed fees on the $4 million settlement it negotiated between Overseas and the government, but Overseas countered that it could have gotten $10 million.

Throwing out the contractor's counterclaims Tuesday, U.S. District Judge Richard Leon found that the settlement decision was one that Overseas reached voluntarily.

"In fact, OLG accepted the settlement offer that it now claims was the product of inadequate representation after it had already fired Venable and initiated a suit in New York against Venable pressing the same claims as the counterclaims here," the decision states, abbreviating the name of Overseas Lease Group (emphasis in original).

Leon was not swayed by the contractor's claims that Venable misrepresented itself by virtue of alleged claims by its attorneys, purportedly promising to recover $10 million in damages while keeping legal fees "at a minimum."

"Under D.C. law, 'generalized statements of optimism that are not capable of objective verification' are puffery, not actionable misrepresentations," the decision states.

Overseas had claimed that one Venable attorney spoke about having "control" over the Department of Defense's counsel, according to the ruling.

The court disagreed that Venable's confidence and the size of the subsequent settlement constituted fraud.

"All of the statements at issue are, at least, puffery, i.e., general, optimistic statements incapable of objective verification," Leon wrote. "Similarly, they pertain to future events and OLG has pointed to no facts in its counterclaims that would lead to any interference, plausible or otherwise, that those statements were false when made."

Overseas should not have taken the attorney's claims as fact or guarantees of performance, Leon wrote.

Venable did not respond to request for comment on the story. A representative for Overseas Lease Group declined to comment on the case.

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