General Nutrition Corporation v. Gardere Wynne Sewell, Llp.

2008 WL 3982914 (W.D. Pennsylvania)

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Nature of the Case

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Facts

Acting on Gardere's (D) allegedly faulty advice, GNC (P) terminated contracts with Franklin in the expectation that Franklin's damages, if any, would be limited under the Uniform Commercial Code (UCC) to $1-3 million and that Franklin would be precluded from recovering its lost profits estimated at approximately $34.5 million. Franklin filed suit and D defended the litigation by contending that the contract involved a sale of goods which was governed by the UCC, which did not permit recovery of consequential damages. The Ohio court ruled on summary judgment that the contract predominantly involved the sale of services, such that the UCC did not apply to limit Franklin's damages. After this adverse development, P fired D, hired replacement counsel, and paid a substantial sum to Franklin to settle the case. P asserts claims against D for negligence, breach of contract, and breach of fiduciary duty.