Fortney & Weygandt, Inc. v. Lewiston Dmep Ix, LLC

• Decision Date: 20 January 2022
• Docket Number: Docket: BCD-21-9
• Citation: 2022 ME 5,267 A.3d 1094
• Parties: FORTNEY & WEYGANDT, INC. v. LEWISTON DMEP IX, LLC, et al.
• Court: Maine Supreme Court

267 A.3d 1094

2022 ME 5

FORTNEY & WEYGANDT, INC.

v.LEWISTON DMEP IX, LLC, et al.

Docket: BCD-21-9

Supreme Judicial Court of Maine.

Argued: September 8, 2021

Decided: January 20, 2022

Michael R. Bosse, Esq. (orally), Conor M. Shankman, Esq., and Benjamin W. Dexter, Esq., Bernstein Shur, Portland, for appellant Lewiston DMEP IX, LLC, et al.

David Very, Esq., Norman, Hanson & DeTroy, LLC, Portland; Gavin G. McCarthy, Esq. (orally), and Joshua D. Dunlap, Esq., Pierce Atwood LLP, Portland; and Michael L. Fortney, Esq., Stark & Knoll, Akron, Ohio, for appellee Fortney & Weygandt, Inc.

Panel: STANFILL, C.J., and MEAD, JABAR, and HUMPHREY, JJ., and HJELM, A.R.J.

STANFILL, C.J.

[¶1] Lewiston DMEP IX, LLC, et al. (collectively, GBT),¹ a group of limited-purpose entities and a commercial real estate developer, appeal from a judgment entered in the Business and Consumer Docket (BCD) (Murphy, J. ) awarding attorney fees and expenses to Fortney & Weygandt, Inc. (F&W), a commercial general contractor, pursuant to Maine's prompt payment statute, 10 M.R.S. §§ 1111 - 1120 (2021).² GBT argues that the court erred in awarding attorney fees and expenses to F&W that were not incurred in direct pursuit of F&W's prompt payment claims, including fees and expenses related to F&W's contract claims, GBT's counterclaims and affirmative defenses, and subcontractor claims brought against F&W. GBT further argues that the court abused its discretion in determining that F&W's requested attorney fees were reasonable.

[¶2] We affirm the judgment in part but vacate the portion of the judgment awarding F&W attorney fees and expenses related to the subcontractor claims, and we remand for reconsideration of those attorney fees and expenses. We also remand for consideration of attorney fees and expenses incurred in this appeal.

I. BACKGROUND

A. 2018 BCD Combined Judgment and Appeal

[¶3] The facts of the dispute underlying this case are fully set forth in Fortney & Weygandt, Inc. v. Lewiston DMEP IX, LLC , 2019 ME 175, 222 A.3d 613, and are summarized here. F&W served as general contractor in the construction of five Dollar General stores in three Maine counties pursuant to contracts with GBT. In 2015, F&W filed three separate complaints against GBT in the Superior Court (Kennebec, Androscoggin, and Oxford Counties), seeking enforcement of mechanic's liens and asserting claims for breach of contract and violations of the prompt payment statute with respect to the parties’ contracts.

[¶4] The lawsuits arose after GBT failed to pay amounts owed to F&W under the construction contracts. GBT counterclaimed for liquidated damages and breaches of contract, alleging that F&W's work was incomplete or defective. Because GBT had stopped payment to F&W, F&W in turn ceased payments to its subcontractors, which resulted in the subcontractors initiating eighteen separate lawsuits to collect the funds owed to them by F&W. F&W's claims against GBT, GBT's counterclaims, and the claims, counterclaims, and crossclaims in the subcontractor suits were transferred and consolidated under three docket numbers in the BCD.

[¶5] During the pendency of the lawsuits, all claims involving the subcontractors were settled. With regard to the claims between F&W and GBT, the court entered partial summary judgment in favor of F&W on its claims for breach of contract and on portions of GBT's counterclaims. Following a nine-day bench trial—where the parties presented "many witnesses and a mountain of documentary exhibits"—and review of post-trial briefs, the court issued a fifty-eight-page combined judgment with detailed findings on August 9, 2018. Id. ¶ 11.

[¶6] In its judgment, the court concluded that F&W was entitled to (1) a judgment in its favor on GBT's counterclaims for liquidated damages based on the affirmative defenses of waiver and equitable estoppel; (2) penalties, interest, and attorney fees under the prompt payment statute;³ and (3) a judgment in its favor on the remainder of GBT's counterclaims alleging incomplete or defective work.⁴ The court later clarified that F&W was entitled to attorney fees not only pursuant to the prompt payment statute but also under the terms of the parties’ contracts.

[¶7] GBT appealed several of the court's rulings, and we largely affirmed the judgment but vacated a portion of the judgment and remanded the matter for a reconsideration of F&W's prompt payment remedies.⁵ Id. ¶¶ 1, 37. On June 18, 2020, the court entered a stipulated final judgment on remand by agreement of the parties. The judgment modified the amount of damages awarded to F&W and stated that "F&W's attorney fees and expenses shall be determined in a post-judgment petition pursuant to, and in accordance with, the Prompt Payment Act, 10 M.R.S.A. § 1118(4)."

B. Award of Attorney Fees and Expenses in Post-Judgment Petition

[¶8] F&W submitted two applications for attorney fees and expenses. In one application, F&W requested $635,522.25 in attorney fees and $8,028.71 in expenses incurred by Fortney & Klingshirn, Fortney Law Group, Stark & Knoll Co., LPA, and Pierce Atwood LLP, as well as expenses of $38,164.34 that F&W directly incurred.⁶ In the other application, F&W requested $306,447.50 in attorney fees and $7,403.33 in expenses incurred by F&W's insurance counsel, Norman, Hanson & DeTroy, LLC (NHD). Both applications contained supporting affidavits with exhibits, including copies of invoices.

[¶9] GBT opposed the applications, objecting to almost three-quarters of the requested amounts, arguing that any award must compensate F&W for attorney fees and expenses incurred solely for legal work performed in prosecuting F&W's prompt payment claims. GBT argued that the following categories of fees were not awardable under the prompt payment statute: (1) work performed addressing GBT's counterclaims and F&W's claims not brought under the prompt payment statute; (2) NHD's work as insurance counsel defending against GBT's counterclaims; (3) work related to litigation with subcontractors; and (4) work opposing GBT's appeal.⁷ Finally, GBT argued that F&W did not meet its burden to prove entitlement to a significant portion of the attorney fees sought and did not exercise billing judgment.⁸

[¶10] On December 18, 2020, the court issued a judgment granting all of F&W's requested attorney fees and expenses. The following facts are taken from the court's judgment and are based on competent evidence in the record. See Sweet v. Breivogel , 2019 ME 18, ¶¶ 2, 23, 201 A.3d 1215. The court examined the record and determined that the claims represented in the applications shared a "common core of facts" and were not easily separable:

The facts generated and arguments asserted by both parties about the requirements of the contract were inextricably interwoven with the allegations made by both parties about the PPA claims. Under the PPA, [F&W was] also required to defeat claims that it or another party was responsible for any "unsatisfactory job progress, defective construction or materials, disputed work or 3rd-party claims." 10 M.R.S. § 1118(1). This meant, as [F&W] points out, that [F&W] had to successfully defend against any counterclaims made by [GBT].

The court thus determined that because F&W was the substantially prevailing party under the prompt payment statute, F&W was entitled to fees for time spent addressing its claims for breach of contract and GBT's counterclaims. Furthermore, the court found that NHD's fees were awardable because prohibiting "an insured litigant from seeking an award of attorney[ ] fees would violate" the prompt payment statute's aim of deterring owners from failing to pay on time. Finally, the court rejected GBT's categorical exclusion of entries relating to subcontractor claims, explaining that the settlement of those claims simplified the issues at trial and decreased GBT's exposure to additional fees and interest.

[¶11] The court, after having reviewed the fee applications and all attachments, and applying the " Johnson factors" as summarized in Sweet , 2019 ME 18, ¶ 25 n.4, 201 A.3d 1215,⁹ determined that F&W's requested fees were reasonable.¹⁰ The court also concluded that the redacted fee entries remained sufficiently detailed to determine the work's subject matter and that those services were provided as claimed. On January 4, 2021, the court also awarded F&W the fees and expenses incurred in litigating the fee applications, based on F&W's two supplemental applications and affidavits.¹¹ GBT timely appeals from the judgment.

II. DISCUSSION

[¶12] Courts in Maine may award attorney fees pursuant to (1) "contractual agreement of the parties," (2) "clear statutory authority," or (3) "the court's inherent authority to sanction egregious conduct in a judicial proceeding." Baker v. Manter , 2001 ME 26, ¶ 17, 765 A.2d 583. Here, GBT does not dispute that F&W is entitled to an award of attorney fees and expenses pursuant to 10 M.R.S. § 1118(4), which makes clear that reasonable attorney fees and expenses "must be awarded" to F&W as the "substantially prevailing party" in its prompt payment claims.¹² Instead, GBT argues on appeal that F&W is entitled to only those fees and expenses incurred while directly pursuing F&W's prompt payment claims. According to GBT, the court erred as a matter of law when it applied the "common core of facts" rule in analyzing the award under the prompt payment statute and when it awarded other amounts to F&W, such as fees and expenses relating to F&W's contract claims, GBT's counterclaims and affirmative defenses, and claims relating to subcontractors. GBT also contends on appeal that the court abused its discretion in finding that F&W's requested fees were reasonable.

[¶13] As discussed below, the court did not err in using the "common core of facts" rule to review F&W's requested attorney fees and expenses under the prompt payment statute. Furthermore, we affirm the court's application of the "common core of facts" rule and the resulting award of attorney...