Michnal v. Palm Coast Development, Inc.

• Decision Date: 12 March 2003
• Docket Number: No. 4D01-3118.,4D01-3118.
• Citation: 842 So.2d 927
• Parties: Robert MICHNAL, Appellant, v. PALM COAST DEVELOPMENT, INC., Appellee.
• Court: Florida District Court of Appeals

842 So.2d 927

Robert MICHNAL, Appellant, v. PALM COAST DEVELOPMENT, INC., Appellee.

No. 4D01-3118.

District Court of Appeal of Florida, Fourth District.

March 12, 2003.

Rehearing Denied May 7, 2003.

Jack J. Aiello and Gregor J. Schwinghammer, Jr., of Gunster, Yoakley & Stewart, P.A., West Palm Beach, for appellant.

Tim B. Wright, William R. Ponsoldt, Jr., of Wright, Ponsoldt & Lozeau, Stuart, and Russell S. Bohn of Caruso, Burlington, Bohn & Compiani, P.A., West Palm Beach, for appellee.

POLEN, C.J.

Appellant Robert Michnal timely appeals a final judgment entered in favor of Palm Coast Development on its action for breach of a construction contract and foreclosure of a lien. Palm Coast was awarded its attorneys' fees below, which Michnal also appeals. We affirm the lien foreclosure, reverse the breach of contract claim in part for a remittitur, and reverse the attorneys' fees award in part.

FACTUAL BACKGROUND

In the spring of 1996, Michnal began to seek bids from several builders for the construction of his "dream home" on a piece of property located in Sailfish Point. Palm Coast, a relatively young construction company, came in as the low bid at $2,865,000. Michnal told them they needed to lower the cost. Palm Coast proceeded to revise the plans for the house and came up with a number of cost-saving ideas, including a suggestion to change the house's support structure from an Epicore-composite system to a wood floor truss system. Michnal and Palm Coast ultimately entered into a written contract on December 4, 1996, whereby Palm Coast would build the house for $2,075,000. Although the actual blueprints for the house had not been revised, the contract included an addendum which provided the home would be built with a wood floor truss system, and not the Epicore system (as provided in the blueprints).

Construction commenced in early 1997. Aside from a temporary halt caused by a disagreement with a neighbor, construction progressed through late spring of 1997. Specifically, Palm Coast had completed the pilings, the laying of the slab, and had completed the structural work for the first floor. Palm Coast was now ready to bid out the truss system; although the bid price had reflected the use of a wood truss system, the original design plans, which contained the Epicore system, had never been altered. Palm Coast contacted Michnal's original architect and engineer and asked if they would design a wood floor truss system to replace the originally designed Epicore system. They refused. Palm Coast then contacted an independent structural engineer to look at the wood truss proposal on a preliminary basis. This engineer opined a wood truss was doable for this structure, and sent a proposal to do the necessary design work for $2,300, provided the original engineer and architect would sign releases. Palm Coast Vice President Bob McNally then forwarded the independent engineer's proposal, and his request for releases, to Michnal in a letter dated June 6, 1997. The original engineer and architect agreed to grant a release to use and adapt their plans provided Michnal would grant them a plenary release from any liability connected with the home. Michnal refused. Then, on June 27, 1997, the original architect sent Palm Coast a letter which provided since Michnal had refused to grant the releases, they would not allow the use of their drawings to redesign the structure. Palm Coast now realized they would not be able to build the home with the wood truss system and they would have to revert to using the originally designed Epicore system. Since the original bid price had reflected usage of the wood truss system, they would have to re-bid all work related to the truss.

Meanwhile, Jack Behrens, Palm Coast's qualifying agent, had parted ways with Palm Coast on June 6, 1997. Palm Coast duly notified Michnal of Behrens's resignation in a letter dated June 9.

July 10, 1997, Bob McNally held a meeting with Michnal. A number of issues regarding the construction of the house were discussed, including the need to switch back to the Epicore support system. At trial, the two men provided conflicting accounts of what had been discussed, and agreed upon, relative to this issue. Michnal testified McNally had represented the cost of the Epicore system should be the same. McNally testified he had quoted Michnal an estimated price increase of $6,000-$7,000 for reverting back to the Epicore system, but that that figure was only an estimate since the final bids were still pending.

Construction was ground to a halt by the outstanding truss issue; the last date Palm Coast performed physical construction work on the premises was July 16, 1997. Then, on July 21, McNally faxed Michnal a letter outlining the Epicore cost breakdown, as a follow-up to their July 10 meeting. This letter stated the extra cost for reverting back to the Epicore system totaled $30,473.74. The letter requested a response as soon as possible, so that Palm Coast would be able to take advantage of the Epicore contractor's schedule. Michnal was not happy. Though he had tendered a check in the amount of $59,304.60 as partial payment, he stopped payment after receiving the July 21 fax. He also orally advised Palm Coast of the termination and sent a letter to McNally on July 22, which provided the July 21 fax ran contrary to assertions made at the July 10 meeting and Palm Coast was to cease all activity on the job. Thereafter, Palm Coast returned to the job site to remove all of its materials and equipment.

Attempts to peacefully resolve the matter failed. Michnal initially offered to settle up any amounts owed for work actually done, yet Palm Coast maintained it was entitled to full profits on the job. Ultimately, on October 17, 1997, Palm Coast filed a construction lien against Michnal in the amount of $59,304.60. The lien provided Palm Coast had first furnished services to Michnal on January 23, 1997, and the final furnishing of services had occurred on July 23, 1997. The lien was not satisfied and litigation ensued.

Palm Coast filed dual causes of action for breach of contract and foreclosure of a construction lien. Michnal counterclaimed that Palm Coast had breached the contract, alleging defective construction. The parties agreed the matter would be bifurcated: a jury would hear the breach of contract cross-claims and the construction lien claim would later be heard in a bench trial. Michnal subsequently moved for summary judgment on Palm Coast's claim, asserting Palm Coast could not recover on either claim since it did not have a qualifying agent when the contract was terminated, since Behrens, Palm Coast's sole qualifier, had left Palm Coast back on June 6, 1997. See § 489.119(3)(a), Fla. Stat. (1997). This motion was denied; the trial court found section 489.128 salvaged the legality and enforceability of the contract between Michnal and Palm Coast up to the date of the termination, regardless of Palm Coast's lack of a qualifying agent.¹

THE TRIALS

The jury trial on the breach of contract claims commenced in July of 2000. The court had previously ruled Palm Coast could not seek lost profits for the entire job, only compensation for the work it had actually done. The jury found Michnal had breached the contract by wrongfully terminating Palm Coast, and awarded Palm Coast damages of $80,654.40. The jury found against Michnal on his cross-claim. Michnal moved for a directed verdict and new trial, alleging, inter alia, the damages awarded by the jury were excessive and contrary to the weight of the evidence. Michnal's motions relating to the excessive damages were denied. Then, the bench trial on the lien claim was held in October of 2000. The majority of the trial focused on whether or not Palm Coast's lien had been timely filed. § 713.08(5), Fla. Stat. (2000)(lien must be filed within 90 days of "final furnishing" of labor, services, or materials). Since Florida's lien law only provides a 90 day window within which to file a lien, for Palm Coast's lien, filed October 17, 1997, to be timely, its "final furnishing" had to have occurred on or after July 19, 1997. Michnal raised two arguments, one legal and one factual, arguing Palm Coast's lien had not been timely filed. Legally, Michnal contended Palm Coast could not furnish labor, services or materials within the 90 day window, since its sole qualifier, Behrens, had undisputedly departed before that date.² Factually, Michnal contended no labor, services, or materials had been furnished within the 90 day window, where the last date physical construction occurred on the property had been July 16, 1997. Consistent with its previous ruling on Michnal's summary judgment, the trial court found the legality of Palm Coast's lien was salvaged by s. 489.128. The court also found the lien was timely filed within the meaning of s. 713.08(5). Since Palm Coast's lien claim was held to be enforceable, Palm Coast was deemed the prevailing party for purposes of attorneys' fees under chapter 713.

Michnal subsequently filed a motion for reconsideration, arguing the testimony established the lien had not been timely filed. A hearing was then held on this motion, where the trial court affirmed its earlier rulings, yet this time with more specificity, finding two specific activities, the July 21 fax and Palm Coast's post-termination retrieval of its equipment, constituted "final furnishings" under s. 713.08(5).

A hearing on attorneys' fees was held in April of 2001. The trial court's determination of the number of hours billed and the rate to be applied has not been challenged on appeal. However, the parties argued below, and continue to do so on appeal, over the applicability of a multiplier. Specifically, Palm Coast sought a multiplier of 2.5, whereas Michnal requested a negative multiplier of .5. The trial court ruled a multiplier was appropriate and applied a multiplier of 1.75 to the lodestar, resulting in a fee award of...