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An Indianapolis personal injury firm has won summary judgment on a former employee’s claim that the firm withheld compensation after she was terminated.
Hensley Legal Group P.C. secured summary judgment earlier this month in the Marion County Commercial Court on the breach of contract, unjust enrichment and quantum meruit claims brought by Katherine Karres, now of Hurst Limontes LLC.
Karres filed the lawsuit in October 2021, about five months after her employment with Hensley Legal Group ended.
Karres worked at the firm from May 2016 to May 2021. She was initially hired under a compensation agreement that set a base salary, plus the ability to earn incentive compensation.
The compensation agreement also provided that upon Karres’ separation from HLG, she “shall not be entitled to any compensation whatsoever under this Agreement other than compensation that is earned, vested, and determinable on ‘fully resolved’ cases according to the terms of this Agreement as of the date of the employment separation.”
Further, the compensation agreement provided that “(i)n order to receive any incentive compensation for any case, (Karres) must be employed by HLG on the date the case is ‘fully resolved’ … .”
Additionally, a separation agreement provided that following employment separation, if an HLG client decided to retain Karres, she would reimburse the firm from the recovery of its former client for “Advanced Costs” paid by the firm.
Finally, the separation agreement provided that upon employment separation, Karres would “pay HLG quantum meruit for any work performed by an HLG employee for fees paid to (Karres) as a result of a recovery by a former HLG Client.”
In April 2019, Karres and Josh Hensley, the firm’s founder, orally agreed to modify Karres’ compensation method to an exclusively incentive-based, fee-sharing model. Under that model — through which Karres received 15% of fees generated by cases assigned to her and 25% of fees from direct referrals — Karres’ compensation increased.
However, her employment was ultimately terminated in May 2021 based on the perception that she had developed a “mediation mindset,” meaning she prioritized settling quickly rather than deriving the full value of a case.
According to Karres’ complaint, at the time of her termination, she had an appearance on file for more than 50 cases in various stages of litigation and had invested more than 1,000 hours of work into those cases. She alleged that HLG did not send a client election letter to those clients giving them the option of staying with HLG, moving with Karres or transferring their cases to another lawyer.
Karres further alleged that she asked HLG to send election letters, but the firm refused. She also said HLG falsely told her clients that it did not have contact information for her when those clients inquired about her.
She raised a claim of breach of contract if her fee-sharing agreement with the firm was valid, unjust enrichment if HLG denied the existence of the agreement or denied that it required payment to her, or quantum meruit if the court determined the agreement was not valid.
But Marion County Commercial Court Judge Heather Welch agreed with HLG that the oral modification to Karres’ initial compensation and separation agreements did not render those agreements entirely void.
“In fact, the Compensation Agreement contemplated Karres’ eligibility to receive the very method of compensation she began to receive after entering into the Oral Modification,” Welch wrote in her order granting summary judgment to the firm. “… The only modification made to the Compensation Agreement was clearly defining the percentages upon which Karres’ incentive compensation would be based, while also removing the provision of a base salary. Contrary to Karres’ assertion, a modification of one term of the Compensation Agreement does not render both it and the Separation Agreement void.
“… Here, there was no subjective intent, outward manifestation, mutual assent, or meeting of the minds of both HLG and Karres to abandon the remaining terms of the Compensation Agreement when entering into the Oral Modification,” Welch continued. “This is evidenced by Karres(’) own testimony in which she admits that, when entering into the Oral Modification, all other terms of the Compensation Agreement were never discussed, and that she had forgotten about the existence of the Compensation Agreement.”
The outcome is the same for the separation agreement, the judge added, noting the oral modification did not modify any terms of that agreement.
Turning to the terms of the compensation agreement, Welch noted the phrase “fully resolved” was never defined. She ultimately accepted Karres’ definition of that term as meaning the point when HLG’s share of funds from a case are placed in the firm’s operating account after all other expenses have been paid.
“‘In order to receive any incentive compensation for any case, [Karres] must be employed by HLG on the date the case is ‘fully resolved,’’” Welch wrote, quoting the compensation agreement. “Pursuant to this provision, Karres is only entitled to incentive compensation for cases to which she was assigned that have been ‘fully resolved’ as of the date of her separation from HLG. In other words, Karres is only entitled to incentive compensation for cases to which she was assigned whose funds have been placed in HLG’s operating account on or before May 14, 2021.”
Likewise, “The Separation Agreement provides that, following Karres’ separation from HLG, if any HLG client decides to retain Karres as counsel, Karres would reimburse HLG from the recovery of the former HLG client for advanced costs and work of HLG employees. No analogous provision in favor of Karres was included in the Separation Agreement, which provides evidence that Karres would not be entitled to incentive compensation from cases to which she was assigned that were ‘fully resolved’ after her employment with HLG ended.”
Finally as to Karres’ claims for unjust enrichment and quantum meruit, Welch ruled that such equitable relief “is unavailable, as it would contradict and counteract the express contract provisions between the parties in the three contracts.”
The case is Katherine G. Karres v. Hensley Legal Group, P.C., 49D01-2110-PL-34865.
In an email to Indiana Lawyer, Scott Starr, counsel for HLG, wrote, “The court agreed with our position that the written employment agreements Ms. Karres signed when she was first hired by HLG were enforceable and precluded the relief she was seeking in her lawsuit. Therefore, as a matter of law, HLG was entitled to a judgment in its favor.”
IL has also reached out to Karres’ counsel for comment.
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