Much as the economics of a construction project must make sense, the same is true when you are considering litigation. The costs associated with litigation must be considered in light of the potential recovery. A recent decision from the Nebraska Court of Appeals drove this point home.
The case, Scheichinger v Swain Construction, involved the sale of a skid loader and a claim that Swain Construction misrepresented the number of “hours” on the skid loader. The buyer, Mr. Scheichinger, asked Swain employees why an older skid loader had so few hours. The employees told him that it had been sitting in the back lot and no one used it. Mr. Scheichinger purchased the skid loader and took it in for service. He then learned that the skid loader had substantially more hours of use and he demanded a reduced purchase price. Swain refused and Mr. Scheichinger sued Swain in small claims court. The court ruled in Mr. Scheichinger’s favor and awarded him $2,686.
Swain appealed the small claims court’s decision to the county court and lost. Swain appealed again to the district court and lost. Swain appealed a third time to the Court of appeals and lost. So, Swain Construction appeared in four different courts, submitted evidence and briefs in support of its appeal, seeking a reversal of a $2,686 judgment.
That’s not much money and I have no doubt that attorney fees were substantially higher than the judgment that Swain Construction had to pay. Here are some thoughts to consider when you are thinking about bringing a lawsuit:
- What is your likelihood of success?
- How much will that recovery cost you?
- How much time will you spend dealing with the lawsuit, as opposed to your business.
- Can you recover your attorney fees? (Not likely in Nebraska)
- Is the claim really worth your time and money?
Ultimately, you need to assess whether the economics of the dispute make sense. I have not spoken to Swain Construction about this matter, and perhaps there were some very good, non-economic reasons, to challenge the first judgment. But, when litigants see attorney fee exceeding the potential amount of recovery, they should revisit the economics of the situation.
If you are considering a lawsuit, we recommend you visit with experienced litigation counsel before you file to make sure the economics of the situation make sense.
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