B & H Const. & Supply Co., Inc. v. District Bd. of Trustees of Tallahassee Community College, Florida

• Citation: 542 So.2d 382,14 Fla. L. Weekly 869
• Decision Date: 06 April 1989
• Docket Number: No. 88-446,88-446
• Parties: 53 Ed. Law Rep. 741, 14 Fla. L. Weekly 869 B & H CONSTRUCTION & SUPPLY CO., INC., a Florida corporation; St. Paul Fire & Marine Insurance Co., a foreign corporation, Appellants/Cross Appellees, v. The DISTRICT BOARD OF TRUSTEES OF TALLAHASSEE COMMUNITY COLLEGE, FLORIDA, a public body corporate, Appellee/Cross Appellant.
• Court: Florida District Court of Appeals

Page 382

542 So.2d 382

53 Ed. Law Rep. 741, 14 Fla. L. Weekly 869

B & H CONSTRUCTION & SUPPLY CO., INC., a Florida corporation; St. Paul Fire & Marine Insurance Co., a foreign corporation, Appellants/Cross Appellees, v. The DISTRICT BOARD OF TRUSTEES OF TALLAHASSEE COMMUNITY COLLEGE, FLORIDA, a public body corporate, Appellee/Cross Appellant.

No. 88-446.

District Court of Appeal of Florida,

First District.

April 6, 1989.

Julie K. Hilton of Hilton, Hilton, Kolk & Laing, P.A., Panama City, for appellants/cross appellees.

J. Robert McClure, Jr. and Donald E. Hemke of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tallahassee, for appellee/cross appellant.

BARFIELD, Judge.

In this case, B & H Construction and Supply Co., Inc., ("B & H"), appeals from a final judgment which awarded The District Board of Trustees of Tallahassee Community College, ("TCC"), attorney's fees under a construction contract. B & H challenges the propriety of the award and reasonableness of the amount of the award. TCC cross appeals, challenging the trial court's denial of attorney's fees incurred prior to the arbitration demand and subsequent to the arbitration award. TCC also challenges the trial court's refusal to modify the arbitration award, and the trial court's refusal to tax certain costs against B & H. We affirm the final judgment awarding contractual attorney's fees to TCC. We reverse and remand the order denying TCC's attorney's fees incurred subsequent to the arbitration for services rendered in litigating entitlement to the award of attorney's fees. We also remand for clarification of the trial court's order denying costs incurred by TCC for services rendered by its expert who testified as to the amount of reasonable attorney's fees.

I.

In May 1982, B & H contracted with TCC to build the "Lifetime Sports Complex" on the TCC campus. After two years of construction, disputes arose concerning the performance and completion of the project. In March 1986, TCC accepted the project as substantially complete and began preparation for final close-out. By written memorandum, TCC president Dr. James Hinson recommended to the Board of Trustees that it approve final item changes, including contract adjustments, time extensions and liquidated damages. Hinson reported that the balance on the contract was $405,655, and that the contract adjustments totalled $394,296.45. ¹ In May 1986, former B & H attorney, J. Michael Huey, responded to Hinson's recommendation with a written offer of settlement for $306,086. TCC counter-offered to settle for $100,000, which B & H rejected.

On July 14, 1986, B & H filed a demand for arbitration under the contract with the American Arbitration Association ("AAA"). B & H had pending other arbitrations with subcontractors on the project and filed a motion to consolidate the TCC arbitrations with the other proceedings. ² On July 30, 1986, TCC filed an action against B & H and its surety, St. Paul Fire and Marine Insurance Co., seeking a declaratory judgment, an order compelling arbitration, and an order enjoining consolidation with the other arbitration proceedings. B & H filed a counterclaim against TCC and a third party claim against subcontractors Birdair and Francis, to compel arbitration and consolidate all the arbitration proceedings. B & H also filed a motion for a temporary injunction seeking to enjoin the Birdair arbitration proceeding pending resolution of its counterclaim and third party complaint against TCC. In August 1986, the circuit court entered a temporary injunction order prohibiting the consolidation of the arbitration proceedings on the basis of the AAA's refusal to consolidate.

In October, 1986, the circuit court entered a consent order wherein TCC and B & H agreed to arbitrate their dispute independently of the AAA and without joinder of the subcontractors. The circuit court retained jurisdiction over the parties, the subject matter and the arbitration proceeding. A tri-partite panel was picked; TCC selected Mr. William M. Bishop, and B & H selected Mr. A.O. White, as arbitrators; both parties selected retired circuit court Judge Ben C. Willis to serve as umpire. In December 1986, the parties filed specific claims with the panel, TCC requesting $1.7 million in damages, and B & H requesting $1.4 million in damages.

The panel entered its award on February 17, 1987. It determined that the unpaid balance on the contract was $405,655 and found that B & H was responsible for 278 days delay in completing the work, which under the contract amounted to $139,000 in liquidated damages, but denied TCC's claim for loss of revenue and for additional architect fees. The panel found that also TCC breached parts of the contract, including various delays and refusals to approve changes due to unforeseen conditions, which resulted in direct job costs to B & H. However, the panel rejected B & H's claim for attorney's fees as having no basis in contract or statute. The panel awarded B & H a net amount of $377,502.42. The panel ordered each party to bear its own costs, and found that TCC's claim for contractual attorney's fees was a matter for the court to decide.

Both parties filed requests for clarification and modification of the award. ³ Various responses and more motions were filed. In May 1987, the umpire entered an order on the post-award motions, finding that he had to resolve differences between the two arbitrators in that Mr. White had voted to deny all motions to modify the award while Mr. Bishop had concluded that there was some merit to TCC's claim that there was a $9,952.68 discrepancy evident in the award. Mr. White had concluded that the discrepancy was not "an evident miscalculation of figures" but rather that the panel had compromised to resolve early differences between B & H's claim for direct job costs and TCC's claim for architect fees. The umpire concurred with Mr. White and denied all post-award motions (except to correct a clerical mistake).

In June 1987, B & H filed a motion for confirmation of the arbitration award with the circuit court. TCC filed an answer and consolidated motions for post-arbitration award relief, seeking assessment of attorney's fees and costs against B & H, renewing its request for declaratory judgment, and requesting a reduction of the arbitration award based on the alleged $9,952.68 discrepancy. At the hearing on the motions, B & H president Gary Bailey testified that TCC rejected B & H's May 1986 settlement offer of $306,000 and instead counter-offered for $100,000 which Bailey declined. ⁴ Bailey testified that a day before the arbitration proceedings began, TCC's attorney, Robert McClure, visited the B & H office and offered to settle for $201,000 but Bailey declined that offer too. Bailey denied ever responding to McClure with an offer to settle for $600,000. ⁵ In regard to specific disputes at the construction site, Bailey testified that in early 1984, B & H officials had advised TCC's architect that there might be a problem with painting the pool at the Sports Complex because of unanticipated moisture build-up. B & H proposed to plaster the pool instead of painting it, and even offered to do it for free, but TCC delayed the decision for two years until January 1986, when the pool was plastered, solving the moisture problem.

In August 1987, the circuit court entered an order confirming the arbitration award. The court found that the following provision of the construction contract authorized attorney's fees:

In the event the architect, contractor, subcontractors, materialmen, or manufacturers breach this contract or the specifications, and the Owner is required to take legal action to resolve the breach, or to recover any monies which may be due hereunder, then, and in those events, the architect, contractor, subcontractors, materialmen, or manufacturer, individually or collectively, shall pay all costs for such legal action or collection, including a reasonable attorney's fee.

The court found that there was no statute or contract provision which authorized attorney's fees for services rendered in the arbitration proceeding, but that both parties requested arbitration; that from the time of B & H's demand for arbitration, TCC had to take legal action to resolve B & H's breach; that TCC was the prevailing party because it had reduced the original claim against it and successfully resisted the consolidation of arbitration originally sought by B & H; that neither TCC nor B & H could be considered the prevailing party in the proceedings subsequent to the award; and, that the hearing was continued for the sole purpose of determining the amount of TCC's entitlement to attorney's fees. The circuit court awarded B & H $377,502.42 with interest from February 17, 1987, (the date of the arbitration award), until paid. The court also ordered that each party bear their own costs incurred after February 17, 1987, and before October 10, 1986, (entry of consent order); and, that the taxing of costs between those dates was controlled by the award. The court found that B & H was liable to TCC for attorney's fees in an undetermined amount and it dissolved the prior temporary injunctions.

At the hearing on the amount of reasonable attorney's fees, TCC expert attorney Davisson Dunlap testified that the hourly rate and hours charged by TCC attorneys were reasonable and that the fees should total, at the minimum, $130-140,000. He also testified that he had considered the results of the litigation and found that TCC had obtained a positive recovery because it had defeated a $1.4 million claim, while B & H had obtained a negative result, i.e., it recovered less than the balance owed it on the contract. However, he did not consider the various settlement offers in rendering this opinion. At the hearing, Dunlap examined the settlement offer made by B & H attorney Huey and found that it was not an offer of judgment as contemplated by Fla.R.Civ.P. 1.442...