Hess Const. Co. v. Board of Educ. of Prince George's County

• Citation: 102 Md.App. 736,651 A.2d 446
• Decision Date: 01 September 1994
• Docket Number: No. 692,692
• Parties: , 96 Ed. Law Rep. 583 HESS CONSTRUCTION COMPANY v. BOARD OF EDUCATION OF PRINCE GEORGE'S COUNTY. ,
• Court: Court of Special Appeals of Maryland

Page 736

102 Md.App. 736

651 A.2d 446, 96 Ed. Law Rep. 583

HESS CONSTRUCTION COMPANY v. BOARD OF EDUCATION OF PRINCE GEORGE'S COUNTY.

No. 692, Sept. Term, 1994.

Court of Special Appeals of Maryland.

Jan. 5, 1995.

Argued Before WILNER, C.J., and CATHELL and HOLLANDER, JJ.

CATHELL, Judge.

Appellant, Hess Construction Company (Hess), appeals from a judgment in favor of appellee, the Board of Education of Prince George's County (the Board). The Circuit Court for Prince George's County (Spellbring, Jr., J. presiding), in granting appellant's petition for a writ of mandamus, ultimately declined to include appellant's attorney's fees as damages. We rephrase the question presented to us as:

Whether the trial court erred in not assessing appellant's attorney's fees against appellee under either (1) the provisions of Md.Rule BE44 or (2) the "collateral litigation" rule.

Facts

The parties, under an Agreed Statement of Facts, agreed below (and on appeal) that Hess was the apparent low bidder for the construction of a new elementary school in Prince George's County, Maryland; that Columbia Construction Co., Inc., the next lowest bidder, complained that Hess's bid was improper for various reasons; that, ultimately, the Board rejected all bids and planned to resolicit new bids; that Hess filed an action under Md.Rule BE40 for a writ of mandamus (as well as for other relief not pertinent to this appeal); that Columbia intervened in that action; that the trial court ruled in Hess's favor and granted its request for a writ of mandamus; that the trial court initially granted Hess its attorney's fees in the amount of $27,231.15; and that, thereafter, upon the Board's objection, the trial court rescinded its previous order granting Hess's attorney's fees.

The Law

The General Rule

The general rule applicable in Maryland with respect to awarding attorney's fees has been restated recently by the Court of Appeals in a case in which a majority of that Court for the first time, permitted a jury to consider attorney's fees in determining a punitive damage award. St. Luke Evangelical Lutheran Church, Inc. v. Smith, 318 Md. 337, 568 A.2d 35 (1990), was a defamation and invasion of privacy suit. The majority initially stated:

Any consideration of a common-law standard for awarding attorney's fees must begin with the prevailing rule in this country. Known as the American Rule, it prohibits the prevailing party in a lawsuit from recovering his attorney's fees as an element of damages. Alyeska [Pipeline Service Co. v. Wilderness Society], 421 U.S. [240,] 247, 95 S.Ct. [1612,] 1616, 44 L.Ed.2d [141,] 147 [ (1975) ]; Empire [Realty Co. v. Fleisher], 269 Md. [278,] 285, 305 A.2d [144,] 148 [ (1973) ]. A brief history of the American Rule reveals that it evolved from the English Rule, which originated some time before the reign of Edward I. At that time, a successful plaintiff could obtain the costs of litigation as an element of damages. See C. McCormick, Handbook on the Law of Damages 234, 235 (1935), relying on 2 F. Pollock & F. Maitland, The History of English Law 597 (2d ed. 1911).

Beginning with the reign of Henry VIII, this benefit was also extended to successful defendants. McCormick at 235. Consequently, the English Rule--which allows the successful party in a lawsuit to recover from the losing party the costs of litigation, including attorney's fees--became firmly established in the English common-law courts. Id. The rule continues in England today. Alyeska, 421 U.S. at 245, 95 S.Ct. at 1616, 44 L.Ed.2d at 147-48 (1975); Goodhart, Costs, 38 Yale L.J. 849, 849 (1929).

The English Rule was popular in America before the Revolution. McCormick at 235. Originally, the pre-colonial statutes which fixed the scale of recoverable court costs satisfied a substantial portion of the attorney's fees incurred by a successful litigant. Id.; Restatement (Second ) of Torts § 914, comment a at 492 (1979). This was so even though local statutes rigidly limited the amount recoverable as attorney's fees. McCormick at 235.

Of course, nowhere in this country have statutorily-fixed attorney's fees been revised to keep pace with the fall in the value of money. Id. at 236. Such legislative reluctance to keep pace suggests that the principle of full compensation for litigation expenses never firmly took hold in this country. Id. at 235-36. This may best be explained by a historic distrust of lawyers prevalent throughout the colonial era, and a then growing preference of the organized bar for fee schedules set by a free market and not hostile legislatures. Leubsdorf, Toward a History of the American Rule on Attorney Fee Recovery, 47 Law & Contemp.Probs. 9, 11, 19 (1984).

Nevertheless, there are exceptions to the American Rule. For example, in Maryland, attorney's fees may be awarded when (1) parties to a contract have an agreement to that effect, Empire, 269 Md. at 286, 305 A.2d at 148, citing Webster v. People's Loan, Savings & Deposit Bank, 160 Md. 57, 152 A. 815 (1931); (2) there is a statute which allows the imposition of such fees, Freedman v. Seidler, 233 Md. 39, 47, 194 A.2d 778, 783 (1963); or (3) the wrongful conduct of a defendant forces a plaintiff into litigation with a third party, McGaw v. Acker, Merrall & C. Co., 111 Md. 153, 160, 73 A. 731, 734 (1909). See also, Empire, 269 Md. at 286, 305 A.2d at 148; Fowler v. Benton, 245 Md. 540, 550, 226 A.2d 556, 563 (1967). Counsel fees may also be awarded when a plaintiff is forced to defend against a malicious prosecution. Tully v. Dasher, 250 Md. 424, 442, 244 A.2d 207, 217 (1968).

318 Md. at 344-46, 568 A.2d 35 (footnotes omitted). The majority of the Court then carved out a new (in Maryland) exception to the American Rule with respect to punitive damages. Judge Rodowsky, dissenting, writing for himself, Chief Judge Murphy and Judge McAuliffe, noted:

Philosophically the Court's new rule, but for the label attributed to the additional recovery, does not involve punitive damages at all. Rather, it is a judicially adopted rule of fee shifting, contrary to this Court's historic position of viewing fee shifting as the exercise of legislative or rulemaking power.

.... Conceptually the question presented here is whether this Court, as a matter of decisional law, should adopt for cases in which punitive damages are awarded an exception to the American rule on counsel fees. For more than 165 years it has been settled in Maryland that fees between attorney and client are not, absent statute, awarded to the prevailing party and are not taxed as costs in the judgment. Nor are counsel fees awarded as damages, absent a contract so providing, or special circumstances. See Taylor v. Wahby, 271 Md. 101, 115-16, 314 A.2d 100, 107-08 (1974); Empire Realty Co. v. Fleisher, 269 Md. 278, 285-86, 305 A.2d 144, 148 (1973); New Carrollton v. Belsinger Signs, Inc., 266 Md. 229, 238, 292 A.2d 648, 652 (1972); Marney v. Stack, 261 Md. 78, 81, 273 A.2d 426, 428 (1971); Freedman v. Seidler, 233 Md. 39, 47, 194 A.2d 778, 783 (1963); Harry's Thrifty Tavern, Inc. v. Pitarra, 224 Md. 56, 63, 166 A.2d 908, 912 (1961); Rice v. Biltmore Apartments Co., 141 Md. 507, 516-17, 119 A. 364, 367 (1922); McGaw v. Acker, Merrall & Condit Co., 111 Md. 153, 160, 73 A. 731, 734 (1909); Hollander v. Central Metal & Supply Co., 109 Md. 131, 154-55, 71 A. 442, 446 (1908); Hamilton v. Trundle, 100 Md. 276, 278-79, 59 A. 719, 719-20 (1905); Singer v. Fidelity & Deposit Co., 96 Md. 221, 224, 54 A. 63 (1903); McGraw v. Canton, 74 Md. 554, 558-59, 22 A. 132 (1891); Wood v. State, Use of White, 66 Md. 61, 69-70, 5 A. 476, 478-79 (1886); Corner v. Mackintosh, 48 Md. 374, 390 (1878); Marshall v. Cooper, 43 Md. 46, 62 (1875); Wallis v. Dilley, 7 Md. 237, 249 (1854); Kiersted v. Rogers, 6 H. & J. 282, 286-87 (1823); Strike's Case, 1 Bland 57, 98-99, aff'd Strike v. McDonald & Son, 2 H. & G. 191 (1826).

....

Historically, in Maryland, creation of exceptions to the American rule has been allocated to legislative or rulemaking action. The majority's prediction of the benefits to be achieved in punitive damage cases by creating an exception to the American rule for those cases is too tenuous a prediction, in my view, to justify departing from the historic pattern. If there is some public support for fee shifting in punitive damage cases, the General Assembly is in a better position than this Court to weigh the probability of the majority's prediction by taking testimony on how the rule has worked in the handful of jurisdictions which have adopted it.

Id. at 355-61, 568 A.2d 35 (footnotes omitted).

The instant case does not involve punitive damages or any of the exceptions to the American Rule except to the extent appellant relies on Maryland Rule BE44 and the "collateral litigation" rule. We next note that the proper interpretation of Md.Rule BE44 and its history in conjunction with the law of false returns does not support reliance on Rule BE44 as a vehicle for the imposition of attorney's fees against the losing party. We shall also hereafter address the "collateral litigation" rule in this regard.

1.

Appellant asserts that the Legislative Intent and History of Rule BE44 supports an award of attorney's fees to the successful litigant.

To the contrary, it does not. Appellant has been misled by its interpretation of language in a previous statute (Chapter 285 of the Laws of 1858) that "such further proceedings shall there upon be had ... as if the petitioner had brought an action on the case for a false return ... such petitioner shall there upon recover his damages and costs as he might have done in such action on the case aforesaid...." Appellant's interpretation of that language and its similarity with language in a later codification in Md.Code Art. 60 of mandamus procedures leads appellant to the position it attempts to assert in the case sub judice. When describing the enactment of the later statute, Article 60 (the predecessor to the...