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Md. appellate court orders Under Armour to pay architecture firm losses

Jury ordered sports apparel company to pay total of $288K in dispute over visitor’s center

The visitor’s center at Under Armour’s headquarters in Tide Point. A Maryland appellate court last week affirmed the $62,000 in losses awarded to the architecture firm that designed the visitor’s center as part of a contract dispute with the sports apparel company. (Maximilian Franz/The Daily Record)

The visitor’s center at Under Armour’s headquarters in Tide Point. A Maryland appellate court last week affirmed the $62,000 in losses awarded to the architecture firm that designed the visitor’s center as part of a contract dispute with the sports apparel company. (Maximilian Franz/The Daily Record)

A Baltimore architecture firm hired to design the visitor’s center at Under Armour’s headquarters is allowed to collect money for losses under an expense-shifting clause in the contract between the parties, a Maryland appellate panel has held.

The Court of Special Appeals on Thursday affirmed Under Armour has to pay Ziger/Snead LLP $62,000 in compensatory losses awarded to the architecture firm in July in Baltimore City Circuit Court.

“Ziger/Snead is extremely proud of its work for Under Armour on the design and construction of the Station House Visitor’s Center,” the firm said in a statement Monday. “We never wanted to be engaged in litigation with Under Armour. We are very glad they are based in Baltimore, and only wanted them to honor their contract with us.”

The dispute between the Baltimore sports apparel giant and Ziger/Snead arose when Under Armour withheld about $56,000 allegedly due under the contract, according to the court’s opinion. When Ziger/Snead sued to recover that money, Under Armour responded in part with a counterclaim for losses and damages, citing substandard design work and inadequate management.

The case before the appellate panel turned on the interpretation of an “expense-shifting provision” in the contract that said if Ziger/Snead appointed counsel to enforce the agreement, Under Armour would pay the attorneys’ fees, costs, expenses and losses incurred by Ziger/Snead through the course of any trial, hearing and subsequent proceeding.

While the words weren’t used explicitly in the contract, both parties agreed to treat the language as a “prevailing party” provision and to delay any claim until after the jury verdict. After jury found in Ziger/Snead’s favor in July, the court awarded the architecture firm nearly $288,000 in aggregate. Under Armour paid that amount minus $62,000 awarded for losses, saying that there was no basis for such an award, according to the reported opinion.

The Court of Special Appeals disagreed, saying diverted company time is a compensable loss. Ziger/Snead diverted more than 300 hours of its time at a rate of $100 to $200 per hour to help its counsel prepare a lawsuit to collect withheld fees and defend against Under Armour’s lawsuit, constituting a measure of “injury” or “harm,” Judge Alan M. Wilner wrote for the unanimous three-judge panel.

Under Armour said Ziger/Snead did not offer any evidence that the time its employees spent on the lawsuit would have been spent on other income-producing work. However, Ziger/Snead said in an affidavit quoted by the appellate court that its employees were not able to bill their time on other active projects because of time spent on the suit.

“Each employee’s time billed at the employee’s hourly rate reflects a loss of revenue to Ziger unless Ziger recovers the value of this time,” the firm said, according to the opinion.

Wilner, a senior judge sitting by special assignment, was joined on the reported opinion by Judges Deborah S. Eyler and Kevin F. Arthur.

Under Armour’s attorney, William W. Carrier III of Tydings & Rosenberg LLP, could not be reached for comment.

The case is Under Armour, Inc., v. Ziger/Snead LLP, No. 802, September Term 2016.


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