DH-1, LLC v. City of Falls City , 305 Neb. 23 ( 2020 )


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  • Nebraska Supreme Court Online Library
    www.nebraska.gov/apps-courts-epub/
    05/08/2020 12:15 AM CDT
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    DH-1, LLC, a Nebraska limited liability
    company, et al., appellants, v. City of
    Falls City, Nebraska, appellee.
    ___ N.W.2d ___
    Filed February 14, 2020.   No. S-19-039.
    1. Summary Judgment: Appeal and Error. An appellate court affirms a
    lower court’s grant of summary judgment if the pleadings and admitted
    evidence show that there is no genuine issue as to any material facts or
    as to the ultimate inferences that may be drawn from the facts and that
    the moving party is entitled to judgment as a matter of law.
    2. ____: ____. In reviewing a summary judgment, an appellate court views
    the evidence in the light most favorable to the party against whom the
    judgment was granted, and gives that party the benefit of all reasonable
    inferences deducible from the evidence.
    3. Contracts. The interpretation of a contract and whether the contract is
    ambiguous are questions of law subject to independent review.
    4. Standing: Jurisdiction. The question whether a party has standing is
    jurisdictional and may be raised at any time.
    5. Contracts: Attorney and Client. The construction of contracts between
    attorneys and their clients as to compensation is to be governed by the
    usual rules relating to the construction of agreements generally.
    6. Contracts. A contract written in clear and unambiguous language is not
    subject to interpretation or construction and must be enforced according
    to its terms.
    7. Contracts: Words and Phrases. A contract is ambiguous when a word,
    phrase, or provision in the contract has, or is susceptible of, at least two
    reasonable but conflicting interpretations or meanings.
    8. Contracts. A determination as to whether an ambiguity exists in a
    contract is to be made on an objective basis, not by the subjective
    contentions of the parties; thus, the fact that the parties have suggested
    opposite meanings of a disputed instrument does not necessarily compel
    the conclusion that the instrument is ambiguous.
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    9. ____. Where a contract is found to be ambiguous, it is construed against
    the drafter.
    10. Contracts: Appeal and Error. An appellate court will not rewrite a
    contract to provide terms contrary to those which are expressed. Nor is
    it the province of a court to rewrite a contract to reflect the court’s view
    of a fair bargain.
    11. Contracts: Unjust Enrichment: Quantum Meruit. A claim that a
    court should imply a promise or obligation to prevent unjust enrichment
    goes by a number of names—“quasi-contract,” “implied-in-law con-
    tract,” or “quantum meruit.”
    12. Contracts. An express contract claim supersedes a quasi-contract claim
    arising out of the same transaction to the extent that the contract covers
    the subject matter underlying the requested relief.
    13. ____. In the situation where both a contract claim and a quasi-contract
    claim are alleged, a court should address the contract claim first.
    Appeal from the District Court for Lancaster County: Susan
    I. Strong, Judge. Affirmed.
    J.L. Spray and Patricia L. Vannoy, of Mattson Ricketts Law
    Firm, for appellants.
    Michael R. Dunn, of Halbert, Dunn & Halbert, L.L.C., for
    appellee.
    Miller-Lerman, Cassel, Stacy, Funke, Papik, and
    Freudenberg, JJ.
    Freudenberg, J.
    INTRODUCTION
    This case presents the interpretation of a contingent fee for
    legal services between the City of Falls City, Nebraska (Falls
    City), and two law firms—Houghton Bradford Whitted, PC,
    LLO, and Weaver & Merz, a partnership. The district court
    concluded that no fees were due under the agreement or on the
    firms’ equitable claim and accordingly dismissed the actions.
    The law firms and DH-1, LLC, the organization to which
    the firms had assigned their rights under the fee agreement,
    appealed. We refer to the law firms and DH-1 collectively as
    “the firms.” We affirm.
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    BACKGROUND
    Underlying Litigation.
    This is the third appearance before this court by Falls City in
    relation to the underlying litigation. We set forth the facts of the
    underlying organizations—the Nebraska Municipal Power Pool
    (NMPP), the Municipal Energy Agency of Nebraska (MEAN),
    the National Public Gas Agency (NPGA), the American Public
    Energy Agency (APEA), and the Central Plains Energy Project
    (CPEP)—and the underlying litigation in our first opinion,
    decided in 2010:
    NMPP was created in 1975 as a nonprofit corporation
    with the purpose of idea generation, research, analysis,
    administration, and the creation of other entities to carry
    out these activities. NMPP has a 16-member board of
    directors made up of representatives from the participat-
    ing municipalities. Falls City is a member of NMPP.
    The first entity created by NMPP in 1981 was [MEAN]
    . . . . NMPP created MEAN in order to obtain effi-
    cient sources of electricity for participating communities.
    [NPGA] was created in 1991 by NMPP in order to secure
    natural gas for the participating municipalities. . . . NPGA
    is governed by a board of directors made up of a repre-
    sentative from each of the NPGA-member municipalities,
    including Falls City. Both MEAN and NPGA require their
    members to also be members of NMPP.
    NMPP provides all the strategic planning and staffing
    services for NPGA and MEAN. Other than an executive
    director, who is employed jointly by NPGA and MEAN,
    neither organization has employees. NMPP’s budgeting
    process is administered through a joint operating com-
    mittee, which consists of representatives from NMPP,
    NPGA, and MEAN. At the beginning of each year, the
    amount of time each NMPP employee will devote to a
    particular organization is estimated and expenses are then
    allocated among the organizations.
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    In 1995, NMPP, NPGA, and MEAN created APEA,
    another interlocal agency. APEA was intended to finance
    bonds through which natural gas was purchased. APEA
    remained separate from the joint operating committee
    and had its own staff, but sometimes utilized NMPP staff
    for various projects.
    APEA issued bonds and purchased gas through a series
    of “prepays.” A prepay involves the purchase of a large
    supply of natural gas to be delivered in the future. The
    goal is to purchase a large amount of natural gas at a
    lower price than index, or market, price. The bonds used
    to pay for the gas are tax exempt as long as municipal
    entities purchase the gas later. As the gas is delivered and
    paid for by the end user, the proceeds are used to repay
    the principal and interest on the bonds.1
    The complaint filed by Falls City against NMPP, CPEP,
    and several individual defendants alleged breach of contract,
    breach of fiduciary duty, and conspiracy to cause injury to
    Falls City and others. As relevant, the district court found
    in favor of Falls City in the amount of $628,267.90. In
    our 2010 opinion, we reversed the district court’s award of
    damages to Falls City on the ground that Falls City lacked
    standing.2 The parties again appeared in 2011, this time with
    respect to the order on costs assessed against Falls City.3
    Upon remand, the district court entered an order assessing 22
    percent of the costs to Falls City, which this court affirmed.
    The appeal now before us deals with a fee dispute between
    Falls City and the attorneys representing Falls City in the
    prior litigation.
    1
    City of Falls City v. Nebraska Mun. Power Pool, 
    279 Neb. 238
    , 240-41,
    
    777 N.W.2d 327
    , 330-31 (2010).
    2
    City of Falls City v. Nebraska Mun. Power Pool, supra note 1.
    3
    City of Falls City v. Nebraska Mun. Power Pool, 
    281 Neb. 230
    , 
    795 N.W.2d 256
    (2011).
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    Fee Agreement.
    On November 20, 2006, Falls City and the firms entered
    into the contingency fee agreement now at issue in this appeal.
    As relevant, that agreement provided that Falls City retained
    the firms
    for the prosecution of any claims that Falls City may
    have and any claims Falls City may pursue on behalf of
    MEAN, NPGA, NMPP or any of their members includ-
    ing those who might join in the prosecution of these
    claims individually or by virtue of a class action or who
    might benefit from any common fund created, discovered,
    increased, preserved or protected or property to which
    they may have a claim, against any person or entity
    thought to be responsible for damages sustained as a
    result of actions by NMPP, its employees or CPEP.
    For this work, the firms were entitled to “$15,000.00 as
    an Initial Fee” and a “contingent fee based upon the follow-
    ing schedule: (a) 40% of all amounts recovered by settlement
    or verdict which is not appealed; or, (b) 50% of all amounts
    recovered in the event of an appeal of a verdict by any party
    involved in the lawsuit.” The agreement indicates that it applied
    to “relief in addition to, or in lieu of, an immediate monetary
    benefit, but which relief has a calculable present value”; “secu-
    rities, or other non-cash assets”; “or[,] if the settlement of this
    case is made by a structured settlement[,] . . . the present value
    of the settlement.”
    While the action filed against NMPP and others proceeded
    in district court, APEA, NPGA, and MEAN entered into an
    agreement on February 26, 2007, which dissolved and restruc-
    tured APEA and equitably distributed its assets. NPGA and
    MEAN withdrew from APEA, with the withdrawal agreement
    dividing the $23.1 million held by APEA between NPGA
    and MEAN. NPGA received $9.8 million. Though Falls City
    was not a party to the withdrawal agreement, as a member of
    NPGA it received $1,567,570.02. Thereafter, Falls City elected
    to become a direct member of APEA.
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    The firms sought payment under the contingency fee agree-
    ment, based upon the funds Falls City received pursuant to
    the withdrawal agreement and improved equity positions in
    the various organizations, but Falls City declined to pay. The
    firms then assigned their claims to DH-1, which filed suit on
    January 14, 2015, for the fee under the contingency agree-
    ment. Eventually, a second amended complaint was filed which
    joined the firms for purposes of their equitable claims. In total,
    the firms sought $1,487,785.60 consisting of (1) a $627,028
    fee from the APEA distribution, (2) $564,197.60 as a fee for
    Falls City’s interest in the APEA, (3) $40,000 for the increase
    in Falls City’s equity interest in NPGA, and (4) $256,560 for
    the value of the “Agreement for Termination of Participation of
    Members, Distribution of Funds to Members, and for Complete
    Settlement, Mutual Releases and Covenants” entered into
    between MEAN, NPGA, and APEA.
    On October 10, 2017, the district court granted Falls City’s
    motion for summary judgment as to the claims under the
    fee agreement, concluding that the contingency under the fee
    agreement was not met and that thus, the firms were not enti-
    tled to a fee under the agreement. The district court also held
    that DH-1’s standing was limited to legal rights under the fee
    agreement and that it had “no equitable rights to assert against
    Falls City.” However, the district court granted DH-1’s motion
    to file a second amended complaint. DH-1 did so, adding the
    firms as parties to the litigation.
    At a hearing on December 21, 2018, ostensibly held with
    regard to Falls City’s motion to compel, Falls City orally
    moved for summary judgment. The firms waived notice, and
    a hearing was held at which evidence was offered. The district
    court granted the motion for summary judgment and dismissed
    the complaint.
    ASSIGNMENTS OF ERROR
    The firms assign that the district court erred in dismissing
    both their contract and equitable claims.
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    STANDARD OF REVIEW
    [1,2] An appellate court affirms a lower court’s grant of
    summary judgment if the pleadings and admitted evidence
    show that there is no genuine issue as to any material facts
    or as to the ultimate inferences that may be drawn from the
    facts and that the moving party is entitled to judgment as a
    matter of law.4 In reviewing a summary judgment, an appel-
    late court views the evidence in the light most favorable to the
    party against whom the judgment was granted, and gives that
    party the benefit of all reasonable inferences deducible from
    the evidence.5
    [3] The interpretation of a contract and whether the con-
    tract is ambiguous are questions of law subject to indepen-
    dent review.6
    ANALYSIS
    Statute of Limitations and Standing.
    Before reaching the substantive issues presented by this
    appeal, we turn to Falls City’s arguments regarding the statute
    of limitations and standing.
    Falls City argues that the district court erred in not rul-
    ing that the statute of limitations had run on all of the firms’
    claims. But Falls City failed to file a cross-appeal on this issue,
    and therefore, such issue is not properly before us, which pre-
    vents us from reaching it.7
    [4] Falls City’s argument regarding standing is different
    in that the question whether a party has standing is jurisdic-
    tional and may be raised at any time.8 Specifically, Falls City
    argues that the firms have assigned, at least, their legal claims
    to DH-1, which Falls City argues is an unlicensed collection
    4
    Williamson v. Bellevue Med. Ctr., 
    304 Neb. 312
    , 
    934 N.W.2d 186
    (2019).
    5
    Id. 6 Wintroub
    v. Nationstar Mortgage, 
    303 Neb. 15
    , 
    927 N.W.2d 19
    (2019).
    7
    See In re Estate of Graham, 
    301 Neb. 594
    , 
    919 N.W.2d 714
    (2018).
    8
    See Hawley v. Skradski, 
    304 Neb. 488
    , 
    935 N.W.2d 212
    (2019).
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    agency and as a result lacks standing. We disagree. The record
    shows that the firms assigned their claims to DH-1. That
    assignment was not challenged below. As the assignee, DH-1
    is the real party in interest and has standing to bring suit in
    this case.9
    We disagree with Falls City’s argument to the contrary.
    Recovery Under Fee Agreement.
    [5-8] We now turn to the firms’ argument that, contrary to
    the district court’s conclusion, they were entitled to a fee under
    the contingency fee agreement. The construction of contracts
    between attorneys and their clients as to compensation is to
    be governed by the usual rules relating to the construction of
    agreements generally.10 A contract written in clear and unam-
    biguous language is not subject to interpretation or construc-
    tion and must be enforced according to its terms.11 A contract
    is ambiguous when a word, phrase, or provision in the contract
    has, or is susceptible of, at least two reasonable but conflicting
    interpretations or meanings.12 A determination as to whether
    an ambiguity exists in a contract is to be made on an objective
    basis, not by the subjective contentions of the parties; thus,
    the fact that the parties have suggested opposite meanings of a
    disputed instrument does not necessarily compel the conclusion
    that the instrument is ambiguous.13
    [9,10] Where a contract is found to be ambiguous, it is con-
    strued against the drafter.14 This court will not rewrite the con-
    tract to provide terms contrary to those which are expressed.
    9
    See Neb. Rev. Stat. §§ 25-301 and 25-302 (Reissue 2016). See, also,
    Hawley v. Skradski, supra note 8.
    10
    7A C.J.S. Attorney & Client § 457 (2019).
    11
    Meyer Natural Foods v. Greater Omaha Packing Co., 
    302 Neb. 509
    , 
    925 N.W.2d 39
    (2019).
    12
    Id. 13 Id.
    14
    See Beveridge v. Savage, 
    285 Neb. 991
    , 
    830 N.W.2d 482
    (2013).
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    Nor is it the province of a court to rewrite a contract to reflect
    the court’s view of a fair bargain.15
    To support their argument that they are entitled to a fee
    under the agreement, the firms note that the fee agreement
    was broad both because it covered the “prosecution of any
    claims that Falls City may have and any claims Falls City
    may pursue” on behalf of a myriad of organizations or mem-
    bers of those organizations and because it included language
    allowing a fee to be recovered on the “receipt of securities, or
    other non-cash assets,” or on the present value of a structured
    settlement.
    The firms further contend that the district court erred in
    limiting the terms “prosecution,” “verdict,” and “settlement”
    to the context of formal litigation and that Falls City received
    benefits because of the underlying litigation even though Falls
    City did not ultimately obtain a verdict or settlement with the
    defendants in that litigation.
    We find no error in the decision of the district court. Our
    analysis begins with the plain language of the opening para-
    graph of the parties’ fee agreement. That agreement, which
    was entered into in November 2006, states that the firms
    were retained to pursue claims “against any person or entity
    thought to be responsible for damages sustained as a result
    of actions by NMPP, its employees or CPEP.” In addition to
    setting forth the 40- to 50-percent contingency fee owed in
    the event of recovery, the agreement also notes that the firms
    are entitled to “$15,000.00 as an Initial Fee . . . for the initial
    investigation . . . and drafting of the Complaint.” It also states
    that the firms were employed to “prosecute such claims and
    assign to them a lien against all amounts recovered by settle-
    ment or otherwise in connection with this litigation” (empha-
    sis supplied).
    When read together, this language plainly envisions the
    agreement’s applying to the litigation as set forth in the
    15
    Meyer Natural Foods v. Greater Omaha Packing Co., supra note 11.
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    complaint filed against NMPP, CPEP, and others alleging
    breach of contract, breach of fiduciary duty, and conspiracy to
    cause injury to Falls City and others. By contrast, the agree-
    ment did not encompass other services the firms might provide
    to Falls City.
    The firms assert that the withdrawal agreement is within
    the consideration of the agreement. However, the firms have
    failed to establish what work they completed with regard to
    the withdrawal agreement and how such work would bring the
    withdrawal agreement within the parameters of the agreement’s
    delineated list of claims. Therefore, since no recoverable ver-
    dict or settlement occurred from the specified claims set forth
    in the agreement, the contingency has not been met requiring
    the payment of a fee.
    There is no merit to the firms’ claim that they were entitled
    to a fee under the agreement.
    Recovery Under Equitable Principles.
    [11] The firms also assign that the district court erred in
    granting summary judgment in favor of Falls City on its equi-
    table claims. A claim that a court should imply a promise or
    obligation to prevent unjust enrichment goes by a number of
    names—“quasi-contract,” “implied-in-law contract,” or “quan-
    tum meruit.”16 Such claims do not arise from an express or
    implied agreement between the parties; rather, they are imposed
    by law “‘when justice and equity require the defendant to dis-
    gorge a benefit that he or she has unjustifiably obtained at the
    plaintiff’s expense.’”17
    [12] Unjust enrichment or quasi-contract claims are viable
    only in limited circumstances. For example, “‘[t]he terms of an
    enforceable agreement normally displace any claim of unjust
    16
    Bloedorn Lumber Co. v. Nielson, 
    300 Neb. 722
    , 
    915 N.W.2d 786
    (2018).
    17
    Id. at 729,
    915 N.W.2d at 792, quoting City of Scottsbluff v. Waste
    Connections of Neb., 
    282 Neb. 848
    , 
    809 N.W.2d 725
    (2011).
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    enrichment within their reach.’”18 Put another way, an express
    contract claim will supersede a quasi-contract claim arising out
    of the same transaction to the extent that the contract covers
    the subject matter underlying the requested relief.19
    [13] Though contract claims supersede unjust enrichment or
    quasi-contract claims, a plaintiff is permitted to allege both.20
    We have said that when a plaintiff does so, a court should
    address the contract claim first.21
    In this case, there was a contract, the contingency fee agree-
    ment, which expressly covered the litigation against NMPP.
    This agreement superseded the equitable claims to the extent of
    that contract. Thus, the issue presented is what work not cov-
    ered by the fee agreement remains unpaid. There is no dispute
    that the firms would be entitled to compensation for work done
    on matters not covered by the fee agreement.
    Additional factual background is helpful to analyzing this
    issue. During the course of this litigation, the parties had
    engaged in discovery. As relevant, Falls City sought infor-
    mation regarding services provided by the firms, including
    “[w]hether the service provided related to the withdrawal
    agreement[, the] membership agreement[,] or some other serv­
    ice the [firms] claim to have provided not covered by the
    contingency fee agreement.” To Falls City’s interrogatory, the
    firms responded as follows:
    The firm[s were] retained by [Falls] City to represent
    [Falls] City and its related entities in efforts to protect
    their interests and those of other community members of
    NMPP, MEAN and NPGA in [APEA,] which at the time
    18
    City of Scottsbluff v. Waste Connections of 
    Neb., 282 Neb. at 860
    , 809
    N.W.2d at 740, quoting Restatement (Third) of Restitution and Unjust
    Enrichment § 2, comment c. (2011).
    19
    Bloedorn Lumber Co. v. Nielson, supra note 16.
    20
    Id. 21 Id.
                                   - 34 -
    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    was holding funds in excess of $20 Million and had valu-
    able, proprietary, and profitable business interests. The
    firm[s were] to file a legal action against individuals and
    entities attempting to take APEA’s assets and business.
    There was no “contingency fee agreement” when the
    firm[s were] initially retained by [Falls] City. After the
    firm[s] filed the action and [were] in the midst of discov-
    ery, [Falls] City . . . requested that the firm[s] proceed on
    a “contingency fee agreement.” At all times, the scope of
    the engagement covered all efforts exerted by the firm[s]
    for a percentage of all benefits derived from the attorney-
    client relationship.
    According to various motions to compel filed by Falls
    City, counsel attempted to clarify or get the firms to supple-
    ment this answer, but the firms stated they had no further
    answer. Following a hearing, Falls City’s motion to compel
    was granted, with the district court’s order noting:
    [Falls City] seek[s] to have [the firms] specify what serv­
    ices were provided or what hours were spent outside the
    contingency fee agreement for which they have not yet
    been compensated (under any other agreement) and for
    which . . . Falls City received a benefit. Whether [the
    firms] can recover under an implied contract or other
    equitable theory of relief depends on whether they can
    show that they performed some services for the benefit of
    [Falls City] such that [Falls City] should be made to pay
    the reasonable value of those services. See Sorenson v.
    Dager, 8 Neb. App. [729], 
    601 N.W.2d 564
    (1999). [The
    firms] have a duty to comply with the discovery requests
    by going through their time records and specifying such
    services. It was not sufficient for [the firms] to simply
    direct [Falls City] to hundreds of time records which have
    already been produced, especially if most of those serv­
    ices were expended in performance of the contingency
    fee agreement.
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    Nebraska Supreme Court Advance Sheets
    305 Nebraska Reports
    DH-1, LLC v. CITY OF FALLS CITY
    Cite as 
    305 Neb. 23
    The firms were given 30 days to supplement their answers.
    No supplementation occurred, and Falls City filed another
    motion to compel. That motion was converted, with the agree-
    ment of all parties, to Falls City’s motion for summary judg-
    ment, which was granted, dismissing the firms’ equitable
    claims.
    For Falls City to obtain such relief as the defendant in this
    litigation, Falls City had to show that if this case proceeded to
    trial, the firms’ equitable claims would not have been success-
    ful, and that Falls City was entitled to judgment.22 Falls City
    did so by first relying on case law that showed that equitable
    claims based on actions which were covered by the contingency
    fee agreement should be determined under legal principles and
    not under equity. Given this, the only claims remaining could
    be those claims not covered by the contingency agreement.
    Because the firms, in their answers to interrogatories, declined
    to set forth any work they completed on behalf of Falls City
    outside of the contingency fee agreement, Falls City met its
    burden and was entitled to summary judgment.
    There is no merit to the firms’ equitable claim.
    CONCLUSION
    The decision of the district court is affirmed.
    Affirmed.
    Heavican, C.J., not participating.
    22
    See Williamson v. Bellevue Med. Ctr., supra note 4.