## Facts

- Edgar S. Cahn and Jean Camper Cahn served as co-deans and faculty members of a university-affiliated law school.
- In 1979, they sued the university seeking declaratory and injunctive relief aimed at limiting university interference in the law school’s fiscal and administrative affairs.
- In 1980, they amended their complaint to add a breach-of-contract claim alleging unlawful termination of their faculty appointments and seeking lost salary.
- The university asserted counterclaims alleging the Cahns breached fiduciary duties owed to the university and sought damages, including attorney’s fees and litigation expenses and reimbursement for funds paid to lawyers from university accounts.
- The trial court denied the Cahns’ lost-salary claim, found the Cahns owed fiduciary duties to the university and also to law school students and clients, denied the university’s request for attorney’s fees and litigation expenses, and declined to award the university $8,000 paid from university funds to attorneys at the Cahns’ direction.
- The Cahns appealed the denial of salary damages; the university cross-appealed on the fiduciary-duty scope, fee-shifting, and the $8,000 reimbursement request.

## Issues

1. Whether the Cahns were entitled to damages for lost faculty salary based on alleged wrongful termination under their employment contracts and related academic practices.
2. Whether the Cahns, as deans and employees, owed fiduciary duties to law school students and clients in addition to the university.
3. Whether the university was entitled to recover $8,000 paid from university funds to attorneys without authorization as damages for breach of fiduciary duty.
4. Whether the university could recover attorney’s fees and litigation expenses under the bad-faith exception to the American rule.

## Decision

- The court affirmed the denial of the Cahns’ lost-salary claim.
- The court reversed the ruling that the Cahns owed fiduciary duties to students and clients, holding their fiduciary duty ran only to the university.
- The court held the university was entitled to recover the $8,000 paid from university funds without authorization and remanded for modification of the judgment to award that amount.
- The court affirmed the denial of attorney’s fees and litigation expenses, declining to apply the bad-faith exception.

## Legal Principles

- An employee’s fiduciary duty, including that of high-level administrators acting as agents, runs to the employing entity for purposes of internal governance and financial-control disputes.
- Unauthorized disbursement of employer funds can constitute a breach of fiduciary duty supporting damages in the amount of the improper payments.
- Under the American rule, parties generally bear their own attorney’s fees; fee-shifting for bad faith requires a strong showing and is not granted merely because litigation was contentious.
- Appellate courts generally defer to supported trial-court determinations rejecting contractual entitlement to continued salary.

## Conclusion

The court largely affirmed the judgment rejecting both the Cahns’ salary claim and the university’s fee-shifting request, but corrected the fiduciary-duty analysis by limiting the Cahns’ fiduciary duty to the university and ordering reimbursement of $8,000 in unauthorized payments from university funds.


Cahn v. Antioch Univ., 482 A.2d 120 (D.C. 1984)