Multiplex, Inc. v. Town of Clay

• Decision Date: 04 October 2013
• Docket Number: No. 12–0418.,12–0418.
• Citation: 749 S.E.2d 621,231 W.Va. 728
• Court: West Virginia Supreme Court
• Parties: MULTIPLEX, INC., a West Virginia Corporation, Art R. Poff and Pamela A. Poff, individually, Petitioners v. TOWN OF CLAY, Respondent.

231 W.Va. 728
749 S.E.2d 621

MULTIPLEX, INC., a West Virginia Corporation, Art R. Poff and Pamela A. Poff, individually, Petitioners
v.
TOWN OF CLAY, Respondent.

No. 12–0418.

Supreme Court of Appeals of
West Virginia.

Submitted Sept. 11, 2013.
Decided Oct. 4, 2013.

[749 S.E.2d 623]

Syllabus by the Court

1. “ ‘In reviewing challenges to the findings and conclusions of the circuit court, we apply a two-prong deferential standard of review. We review the final order and the ultimate disposition under an abuse of discretion standard, and we review the circuit court's underlying factual findings under a clearly erroneous standard. Questions of law are subject to a de novo review.’ Phillips v. Fox, 193 W.Va. 657, 661, 458 S.E.2d 327, 331 (1995) (citation omitted).” Syl. Pt. 2, Walker v. W. Va. Ethics Com'n., 201 W.Va. 108, 492 S.E.2d 167 (1997).

2. “ ‘[T]he trial [court] ... is vested with a wide discretion in determining the amount of ... court costs and counsel fees; and the trial [court's] ... determination of such matters will not be disturbed upon appeal to this Court unless it clearly appears that [it] has abused [its] discretion.’ Syl. Pt. 3, in part, Bond v. Bond, 144 W.Va. 478, 109 S.E.2d 16 (1959).” Syl. Pt. 1, Heldreth v. Rahimian, 219 W.Va. 462, 637 S.E.2d 359 (2006).

3. “ ‘An order of injunction is of no legal effect * * * [Code, 53–5–9], unless the court requires a bond, or recites in the order that no bond is required for good cause, or unless the movant is a personal representative.’ Syl. Pt. 4, Syl., Meyers v. Washington Heights Land Co., 107 W.Va. 632, 149 S.E. 819 (1929).” Syl. Pt. 2, State ex rel. Lloyd's Inc. v. Facemire, 224 W.Va. 558, 687 S.E.2d 341 (2009).

4. “The proposition is generally true that an injunction once granted and perfected brings about a condition or status of persons and things that can only be set at large by a dismissal of the bill, or by formal order of dissolution.” Syl. Pt. 1, Atkinson v. Beckett, 36 W.Va. 438, 15 S.E. 179 (1892).

5. “In an action on an injunction bond, when the injunction is only ancillary to the main object of the suit, counsel fees paid for services in the suit as a whole, are not recoverable.” Syl. Pt. 2, Bush v. Carden, 111 W.Va. 631, 163 S.E. 54 (1932).

6. “When counsel fees and personal expenses are sought to be recovered as damages on an injunction bond, it is incumbent on the plaintiff to show either that injunction was the sole relief to which the suit pertained or that the fees and expenses were paid out solely for the purpose of procuring a dissolution of the injunction, as distinguished from expenditures for the hearing of the principal issues involved in the case.” Syl. Pt. 2, State ex rel. Meadow River Lbr. Co. v. Marguerite Coal Co., 104 W.Va. 324, 140 S.E. 49 (1927).

7. “ ‘Where attorney's fees are sought against a third party, the test of what should be considered a reasonable fee is determined not solely by the fee arrangement between the attorney and his client. The reasonableness of attorney's fees is generally based on broader factors such as: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained;

[749 S.E.2d 624]

(9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.’ Syl. Pt. 4, Aetna Cas. & Sur. Co. v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986).” Syl. Pt. 12, Horkulic v. Galloway, 222 W.Va. 450, 665 S.E.2d 284 (2008).

Harley E. Stollings, Esq., Summersville, WV, for Petitioners.

Carl J. Roncaglione, Jr, Esq., Charleston, WV, for Respondent.

PER CURIAM:

After the petitioners, Multiplex, Inc., Art R. Poff and Pamela A. Poff, voluntarily dismissed their suit for injunctive relief, the Circuit Court of Clay County, West Virginia, ordered that the petitioners' $25,000.00 injunction bond be forfeited and paid over to the respondent, Town of Clay, to compensate respondent for its attorney fees and costs. On appeal, the petitioners argue that the bond was not subject to forfeiture in the absence of a finding that the underlying suit was filed in bad faith; that attorney fees and expenses are not recoverable “costs” within the meaning of West Virginia Code § 53–5–9 (2008); that the petitioners were not given a fair opportunity to contest whether the attorney fees and costs were incurred by the respondent in attempting to secure a dissolution of the bond; that the petitioners were not given a fair opportunity to contest whether the fees and costs met the standards set forth in Aetna Casualty & Surety Co. v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986); and that the circuit court neither held a Pitrolo hearing nor performed a Pitrolo analysis.

Upon careful consideration of the parties' briefs, the appendix record, ¹ the oral arguments, and this Court's precedents, we affirm, in part, reverse, in part, and remand for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL HISTORY

On or about October 16, 2009, the petitioners, Multiplex, Inc. and its principals, Art R. Poff and Pamela Poff (hereinafter collectively referred to as “the petitioners”), entered into a construction contract with the respondent, Town of Clay, for various improvements to the town's water treatment plant. According to the contract, the project was designed by Boyles & Hildreth, which was to act as the project engineer and the Town of Clay's representative. The petitioners executed a Performance Bond ² and an Agreement of Indemnity with United States Surety Company.

On or about October 22, 2010, a dispute arose between the parties to the contract. The petitioners claimed that they were unable to proceed with the work until the project engineer answered certain questions and provided certain information; and further that the engineer's failure to issue change orders was causing unwarranted delay in compensation. The respondent claimed, in contrast, that the petitioners had walked away from the job without cause. Correspondence and discussions between the parties did not resolve the issues, and on November 16, 2010, the respondent notified the

[749 S.E.2d 625]

petitioners that it was considering declaring Multiplex to be in default. A conference was held on November 18, 2010, which again did not resolve the issues.

Thereafter, on December 3, 2010, the petitioners filed a Complaint for Preliminary Injunctive Relief in the Circuit Court of Clay County, against the Town of Clay, Boyles & Hildreth, and United States Surety,³ alleging that

[p]reliminary injunction to prevent the Town from declaring default is necessary to avoid immediate, permanent and irreparable harm to Multiplex, Inc. in regards to the Contract. Without responses to the pending inquiries, Multiplex has been unable to proceed with this critical schedule items and such has caused an additional delay in the schedule. Since that time, delays continue to occur and losses continue to accrue.

Following the taking of some evidence at a hearing held on December 7, 2010, the circuit court ruled that:

I'll tell you what I'll do, I can see now that this hearing is going to take quite a long and lengthy time. Pursuant to Rule 65(a) of the Rules, I'm going to consolidate the hearing with this preliminary hearing in the matter. And I'm going to, at this point, issue a temporary injunction in the matter, finding that there is immediate and irreparable injury and loss or damage that could occur to Multiplex; they would be forced into bankruptcy and there could be a potential of the assets of Art Poff and Pamela Poff being at dire circumstances. And I'm going to continue this hearing and I'm consolidating, the rules allow me to do that. I'm going to temporarily order, pending a full hearing, both the preliminary and the entire hearing in the matter, that the Town of Clay shall not declare Multiplex in default of the contract. I'm going to prohibit U.S. Surety from collecting any money from Multiplex or Art Poff or Pamela Poff. I'm not going to address the issue of whether to order the town to issue a change order or to answer Multiplex['s] questions; that's an issue that I will address at the hearing in the matter.

The court set a hearing for January 27, 2011, and took under advisement the petitioners' request for mediation. Shortly after the hearing had concluded, the following exchange took place in chambers:

THE COURT: Let the record reflect that counsel is back in Chambers with the Court. I failed to set a bond, and I believe the rule requires that I set a bond. I'm setting it for $25,000 in the matter. Okay. I'll note and preserve all parties' objections. The injunctive relief would not take affect [sic] until the bond is posted.

MR. MORRIS: Your Honor, we would be happy to post a bond. We can do that forthwith. Although, quite frankly, we had estimated that the only likely harm, there was little or no monetary harm associated to the defense with our request of a, simply, status quo TRO. We had hoped for something—we could, we could post cash to the Court in roughly the ten percent amount immediately, or very close to it, would be my guess.

THE COURT: Court will permit the ten percent to be posted, cash or surety.

MR. MORRIS: In cash, which would be the—that would be great and we can post that.

THE COURT: Ten percent or surety.

On December 21, 2010, the Town of Clay filed a motion to dismiss the Complaint, or in the alternative, to dissolve the temporary restraining order and preliminary injunction. No response to this motion was filed by the petitioners,⁴ and the circuit court never...