M & H CONST. v. NORTH FULTON DEVELOPMENT, No. A99A0598

• Decision Date: 10 June 1999
• Docket Number: No. A99A0598, No. A99A0599.
• Citation: 238 Ga. App. 713,519 S.E.2d 287
• Court: Georgia Court of Appeals
• Parties: M & H CONSTRUCTION COMPANY, INC. v. NORTH FULTON DEVELOPMENT CORPORATION. North Fulton Development Corporation v. M & H Construction Company, Inc.

519 S.E.2d 287

238 Ga. App. 713

M & H CONSTRUCTION COMPANY, INC. v. NORTH FULTON DEVELOPMENT CORPORATION.

North Fulton Development Corporation v. M & H Construction Company, Inc.

Nos. A99A0598, A99A0599.

Court of Appeals of Georgia.

June 10, 1999.

Reconsideration Denied June 28, 1999.

Peter R. Weisz, Atlanta, for appellant.

Smith, Gambrell & Russell, James H. Bratton, Jr., Bruce D. Cohen, Atlanta, for appellee.

McMURRAY, Presiding Judge.

Plaintiff M & H Construction Company, Inc., a utilities contractor, entered into a contract with defendant North Fulton Development Corporation, the developer of a residential subdivision, for the construction of a pump station. Prior to completion of the project, a controversy developed between the parties with respect to whether the project had been completed in compliance with the contract and with respect to the satisfaction of financial obligations.

Plaintiff filed this action seeking to compel an arbitration proceeding or, in the alternative, seeking damages based on theories of breach of contract, breach of contract based on a trespass action filed against plaintiff, and fraudulent inducement to arbitrate. Plaintiff also sought interest on the funds allegedly owed by defendant, and attorney fees pursuant to OCGA § 13-6-11. Defendant answered and counterclaimed, alleging breach of contract.

In a bifurcated trial, the first phase resulted in a verdict on the breach of contract issues. Plaintiff was awarded $32,507.92, and defendant was awarded $1,200.

In the second phase of the trial, on plaintiff's claim for attorney fees, plaintiff was awarded $46,424.80. The resulting judgment was in favor of plaintiff in the principal amount of $77,732.72.

Defendant filed its motion for judgment notwithstanding the verdict (j.n.o.v.), or in the alternative, for new trial. The trial court granted defendant's motion for j.n.o.v. with respect to the award of attorney fees, but did not address the alternative motion for new trial.

Plaintiff's appeal of the grant of j.n.o.v. was remanded pursuant to Ogletree v. Navistar Intl. Transp. Corp., 221 Ga.App. 363, 471 S.E.2d 287, so that the trial court might enter the conditional ruling on defendant's alternative motion for new trial required by OCGA § 9-11-50(c). On remand, the trial court entered the required order, and plaintiff appealed once more. Plaintiff's appeal in Case No. A99A0598 seeks primarily the reversal of the trial court's grant of defendant's motion for j.n.o.v. Defendant cross-appeals in Case No. A99A0599. Held:

1. In ruling on defendant's motion for j.n.o.v., the trial court relied upon Brown v. Baker, 197 Ga.App. 466, 468(4), 398 S.E.2d 797 for the principle that:

"When bad faith is not an issue and the only asserted basis for a recovery of attorney[ ] fees is either stubborn litigiousness or the causing of unnecessary trouble and expense, there is not `any evidence' to support an award pursuant to OCGA § 13-6-11 if a bona fide controversy clearly exists between the parties. Thus, in a case where bad faith is not an issue, attorney[] fees are not authorized under OCGA § 13-6-11 if the evidence shows that `a genuine dispute exists—whether of law or fact, on liability or amount of damages, or on any comparable issue....'"

(Citations omitted.) In the present case there was clearly a bona fide controversy with respect to the underlying contract action, and the issues on appeal are directed to the question of whether bad faith was at issue in the case sub judice.

The trial court appears to have come to a negative conclusion on this issue at least partially via reference to plaintiff's complaint which omits any reference to bad faith. Plaintiff argues that its complaint was adequate under notice pleading and that the bad faith issue was before the jury since evidence of bad faith was admitted and the jury charged without objection that it was authorized to award attorney fees based on bad faith.

Nonetheless, we find no evidence of bad faith authorizing an award of attorney fees and consequently find no error in the trial court's grant of defendant's motion for j.n.o.v. In this respect, we first note that "[a] prerequisite to any award of attorney fees under OCGA § 13-6-11 is the award of damages or other relief on the underlying claim." United Cos. Lending Corp. v. Peacock, 267 Ga. 145, 147(2), 475 S.E.2d 601. The only underlying claim upon which damages have been awarded to plaintiff is a contract claim. While plaintiff's claim for fraudulent inducement to arbitrate is argued to be a proper foundation for an award of attorney fees, such is not the case since this claim was never submitted to the jury so that no relief has been granted thereon.

The remaining conduct which plaintiff relies upon as proof of bad faith may be discounted for one or more reasons.

"Bad faith warranting an award of attorney fees must have arisen out of the transaction on which the cause of action is predicated. It may be found in defendant's carrying out the provisions of the contract, that is, in how defendant acted in his dealing with the plaintiff. Bad faith other than

...