SUSAN DANIEL HENRY v. SALAH M. HASSANEIN
Annotate this Case
Download PDF
RENDERED: June 4, 2004; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2003-CA-001034-MR
SUSAN DANIEL HENRY
APPELLANT
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE REBECCA M. OVERSTREET, JUDGE
ACTION NO. 02-CI-02656
v.
SALAH M. HASSANEIN
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE:
EMBERTON, CHIEF JUDGE;1 GUIDUGLI AND KNOPF, JUDGES.
KNOPF, JUDGE:
Susan Henry appeals from a summary judgment of
the Fayette Circuit Court, entered May 2, 2003, ordering her to
pay Salah Hassanein more than $44,000.00 pursuant to a written
contract.
Henry contends that the trial court erred either by
finding the contract enforceable or by failing to submit to a
1
Chief Judge Emberton concurred in this opinion prior to his retirement
effective June 2, 2004.
jury a question as to whether a condition of the contract had
occurred.
We agree with Henry that a material fact is in
dispute, and therefore we must reverse the trial court’s summary
judgment.
As the parties acknowledge, summary judgment is
inappropriate unless the movant demonstrates that on a
dispositive aspect of the case there is no genuine issue of
material fact.2
Both the trial court and this Court assess such
motions, not by weighing the evidence, but by reviewing the
record in the light most favorable to the opposing party.3
The record indicates that some time after 1989 Henry
and her two sons inherited from her father a minority interest
in the Hazard Compensation Agency, Inc., (HCA) a closely held
holding company controlled by L.D. Gorman and his children.
Henry’s cousin, Neva Hassanein, and Neva’s son, Roland
Hassanein, are also minority shareholders of HCA.
Neva is
Salah’s ex-wife and Roland is Salah’s son.
According to Salah, HCA was formed in 1948.
In the
1970’s a dispute arose between the then minority shareholders
and Gorman over the company’s withholding of earnings.
In 1975
the parties reached a settlement according to which a special
2
Steelvest, Inc. v. Scansteel Service Center, Ky., 807 S.W.2d
476 (1991).
3
Id.
2
class of stock (class A) was created with the power to select
one of the company’s three directors.
It was agreed that,
unless all three directors voted otherwise, each year the
company would distribute at least 75% of its after-tax earnings.
During the period pertinent to this case, Neva owned all of the
class-A shares.
Notwithstanding this agreement, by 1978 HCA had again
accumulated excessive retained earnings and a second law suit
arose between the majority and minority shareholders.
Salah was
a party to this suit as the director representing the class-A
shares.
In this suit, attorney Kent Brown represented Salah and
the minority shareholders.
In 1989 the Federal District Court
for the Eastern District of Kentucky entered judgment in favor
of the minority.
Essentially, the judgment upheld the 1975
agreement and enjoined HCA to abide by it.
In 1996 and 1997, however, the minority owners, at
that point Henry, Neva, and their children, among others, again
believed that HCA had retained excessive earnings in violation
of the 1975 settlement and the 1989 judgment.
To address the
situation, Salah recommended that Neva elect Roland to the
class-A directorship and that the minority owners again bring
suit.
In September 1997, Salah, on behalf of Neva and Roland,
retained attorney Brown to write a demand letter to Gorman and
3
HCA.
That December, after Gorman had refused the demand, Salah
made the following proposal to Neva and Henry:
Dear Neva and Susan, I will pay Kent’s
[Brown’s] legal fees and costs, as well as
Roland’s transportation to attend the HCA
board meetings, if you agree to reimburse me
if you are successful. If you are not
successful, you owe me nothing. Your shares
will be in proportion to your money
received. For example: If Susan and her
children receive $1000 and Neva and Roland
receive $500 Susan will reimburse me 2/3 of
the monies I have advanced and Neva will
reimburse me 1/3. If you agree, please sign
a copy of this letter and send it back to
me. To date I have disbursed:Advance to Kent $2500.
Payment per attached $2656.25.
[Total] $5156.25.
Neva and Henry signed copies of the letter, returned
them to Salah, and in February 1998 Brown filed their complaint
against HCA in federal court.
The complaint alleged that HCA
had failed to pay more than $750,000.00 of the dividends it was
required to pay under the 1975 agreement.
It sought dispersal
of the excess retained earnings, an accounting, and numerous
items of injunctive relief.
About a year later, the federal
court dismissed the suit for lack of jurisdiction.
In April
1999, Brown filed an updated version of the complaint in the
Circuit Court of Perry County Circuit Court.
This complaint
added a prayer that HCA be dissolved and its assets distributed.
The case seems promptly to have lapsed into a series
of discovery disputes primarily concerning HCA’s records.
4
Brown
filed some motions to compel, but he had taken no depositions by
March 2001, the last filing in the case until June 2002 when the
court entered its own motion to dismiss for lack of prosecution.
In the meantime, according to Roland’s affidavit, HCA
continued to retain earnings far in excess of the 25% permitted
by the agreement until 2001.
In that year, apparently, the
company began to pay monthly dividends, as opposed to a single
annual dividend, and by year’s end had paid total dividends of
more than $3,000,000.00 (more than $250,000.00 to the Henrys),
which payment seems to have satisfied, or very nearly satisfied,
the company’s obligation under the agreement for the years 1996
through 2001.
There was another significant dividend
distribution in 2002, derived in part from the sale of Citizens
National Bank and Trust Company, shares of which were among
HCA’s principal assets.
Earnings records were not available,
however, from which it could be determined whether the 2002
distribution fully complied with the agreement.
In May 2001, apparently after much of the 2001
dividend had been paid and HCA had approved the distribution of
the proceeds of the Citizens National Bank sale, Salah sent a
letter to Henry in which he declared the litigation a success
and demanded that she reimburse him her share (about
$104,000.00) of Brown’s nearly $142,000.00 fee.
already paid Salah $10,000.00.
Henry had
In June of that year she paid
5
him an additional $50,000.00, but she declined to pay more.
In
June 2002, Salah filed the present action seeking from Henry an
additional $44,203.53 plus interest.
He alleged Brown’s fee and
Henry’s agreement to reimburse him for her share of that fee.
Henry maintained that her duty to reimburse Salah
under their December 1999 agreement had not arisen because the
litigation had not succeeded: it had not resulted in a favorable
judgment or binding settlement, nor was there any evidence that
HCA’s distribution of dividends in 2001 and 2002 was the result
of the litigation as opposed to other, unrelated, circumstances.
Henry submitted Gorman’s affidavit to the effect that those
distributions had had nothing to do with the law suit.
As noted
above, the trial court summarily ruled in favor of Salah.
It is
from that ruling that Henry has appealed.
Henry argues that her December 1999 agreement to
reimburse Salah for successful litigation expenses should be
deemed unenforceable because the key condition of her duty to
perform—that the litigation be successful—is indefinite.
As
Salah correctly notes, Henry did not raise this issue before the
trial court and thus it has not been properly preserved.
The December agreement, furthermore, plainly evidences
Henry’s intention to be bound, and where that is the case courts
generally endeavor to give effect to that intention by examining
the whole writing, if there is one, and, if the writing is
6
ambiguous, by considering the subject matter of the agreement,
the situation of the parties, and the conditions under which the
agreement was made.4
If there are material factual disputes
about these background matters, construction of the ambiguous
contract becomes subject to resolution by the fact-finder.5
We disagree with Henry’s contention that the 1999
agreement is unenforceable.
Although the condition that the
litigation be “successful” before Henry’s duty to reimburse
Salah arises is not as clear as it might be, we agree with the
trial court’s implicit conclusion that “success” can fairly be
understood to include not just a favorable judgment or a binding
settlement but also the accomplishment of a substantial portion
of the desired result because the lawsuit brought about a
voluntary change in the company’s conduct.
We note that the
United States Supreme Court has recently rejected this
“catalyst” theory of prevailing party for the purposes of the
many federal fee-shifting statutes,6 but we are persuaded that
for the purposes of this case, where fee shifting is not the
4
Island Creek Coal Company v. Wells, Ky., 113 S.W.3d 100 (2003);
Louisville & N. R. Company v. David J. Joseph Company, 298 Ky.
711, 183 S.W.2d 953 (1944).
5
Cantrell Supply, Inc. v. Liberty Mutual Insurance Company, Ky.
App., 94 S.W.3d 381 (2002).
6
Buckhannon Board and Care Home, Inc. v. West Virginia
Department of Health and Human Resources, 532 U.S. 598, 149 L.
Ed. 2d 855, 121 S. Ct. 1835 (2001).
7
question, the catalyst theory provides a reasonable guide to the
parties’ expressed intentions.
To be “successful” under the catalyst theory, however,
a party must establish that he has achieved some substantial
element of the relief sought and that the suit was a significant
cause of the defendant’s action providing relief.7
We agree with
Henry that whether the litigation caused the 2001 and 2002
distributions is a question of fact not suitable for summary
judgment.8
Salah bears the burden of proving that the litigation
was successful and thus he must show that the litigation was a
material factor prompting HCA’s dividend distributions in 2001
and 2002.
It is not enough, at least for summary judgment
purposes, that the distributions occurred during the litigation.
As Gorman has averred, the distributions may nevertheless have
had nothing to do with the lawsuit.
Because the suit did not
reach a conclusion, Salah must convince a jury that the
litigation altered the parties’ positions in some way reasonably
likely to have affected HCA’s behavior.
Absent such a showing
of causation, we agree with Henry that she has no duty under the
1999 agreement to reimburse Salah for his expenditures.
7
Id.
8
Steelvest, Inc. v. Scansteel Service Center, Inc., supra.
8
Accordingly, we reverse the May 2, 2003, judgment of
the Fayette Circuit Court and remand for additional proceedings
consistent with this opinion.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
John S. Talbott III
DeCamp & Talbott, P.S.C.
Lexington, Kentucky
Charles C. Mihalek
Steven M. McCauley
Charles C. Mihalek P.S.C.
Lexington, Kentucky
9
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
