Multitech Corp. v. St. Johns Bluff Inv. Corp.

• Decision Date: 12 January 1988
• Docket Number: Nos. BP-166,BQ-369,s. BP-166
• Citation: 13 Fla. L. Weekly 174,518 So.2d 427
• Parties: 13 Fla. L. Weekly 174 MULTITECH CORPORATION, a Florida corporation, Appellant, v. ST. JOHNS BLUFF INVESTMENT CORPORATION, etc., Appellee.
• Court: Florida District Court of Appeals

Page 427

518 So.2d 427

13 Fla. L. Weekly 174

MULTITECH CORPORATION, a Florida corporation, Appellant, v. ST. JOHNS BLUFF INVESTMENT CORPORATION, etc., Appellee.

Nos. BP-166, BQ-369.

District Court of Appeal of Florida First District.

Jan. 12, 1988.

Michael G. Tanner and Mark G. Pennington of Gallagher, Baumer, Mikals, Bradford, Cannon & Walters, P.A., Jacksonville, for appellant.

Tyrie A. Boyer of Boyer, Tanzler & Boyer, P.A., Jacksonville, for appellee.

JOANOS, Judge.

Multitech Corporation (Multitech), appellant/defendant, appeals a summary final judgment entered in favor of St. Johns Bluff Investment Corporation (St. Johns), appellee/plaintiff. Multitech presents seven issues for our review. Briefly stated, these issues concern (1) St. Johns' standing to claim rights under the contract, (2) construction of ambiguities in the contract, (3) construction of the damages provision in the contract, (4) unconscionability of the damages provision in the contract, (5) presence of genuine fact issue vis-a-vis actual damages, (6) contradictions in the summary judgment order, and (7) the attorney's fee award. Since our resolution of the case turns upon two issues, the liquidated damages provision and the attorney's fee award, our discussion is directed primarily to these two points. We affirm in part, and reverse in part.

On July 17, 1985, St. Johns sued Multitech for breach of contract, claiming damages in the amount of $120,000. St. Johns alleged that under the terms of the agreement between the parties, Multitech agreed to construct a road on land owned by St. Johns and that construction would be completed prior to June 30, 1985; that Multitech agreed to liquidated damages in the amount of $120,000 in the event it failed to complete the road within the agreed-upon time period; and that Multitech failed to complete the road as agreed, and was in default. On September 24, 1985, before Multitech answered the complaint, St. Johns filed its first motion for summary judgment.

On September 27, 1985, Multitech filed an answer, and as affirmative defenses maintained that (1) the alleged liquidated damages clause was unconscionable and unenforceable because it provided for a penalty rather than for liquidated damages; (2) if deemed enforceable, the liquidated damages clause would be effective only if the subject road were not "properly built" and would have no effect if the road was not built within the time period agreed; and (3) that St. Johns had no standing to bring the action.

The original agreement which is the subject of the complaint was entered into on January 10, 1984, with St. Johns as seller and Multitech as buyer. The agreement provided that Multitech would purchase two contiguous parcels, at $17,000 per acre. St. Johns owned properties on both the east and west sides of the tract purchased by Multitech. As part of the original agreement, St. Johns granted Multitech an Access Easement over its west property to the tract of land purchased by Multitech. Multitech agreed to construct a road over the Access Easement, and St. Johns agreed to provide a credit of $120,000 against the purchase price in return for the road construction. The agreement contained a provision for prevailing party attorney's fees and costs in connection with any litigation arising out of the contract.

On March 22, 1984, and on April 25, 1984, the parties entered into the First and Second Amendments to the agreement.

On September 10, 1984, the parties entered into the Third Amendment to the agreement. Paragraph six of the Third Amendment provided that by October 20, 1984, Multitech would contract for construction of a road "over the Access Easement and the Other Access Easement." The Other Access Easement traversed the property purchased by Multitech, and served as connector between St. Johns' West Property and East Property. Multitech warranted to St. Johns that construction over the Access Easement would begin no later than October 30, 1984, and would be completed by January 31, 1985, and that construction of the required road over the Other Access Easement would begin by January 30, 1985, and be completed by May 31, 1985. The default provision of the Third Amendment stated, in part:

If the Buyer defaults by failing to construct the road over the Access Easement and/or the road over the Other Access Easement, the Seller shall be entitled to actual damages, but in any event, not less than $120,000.00, the amount of credit given by the Seller to the Buyer against the purchase price of Parcels A and B, as consideration for Buyer agreeing to construct the road on the Access Easement.

On January 31, 1986, the parties entered into the Fourth (and final) Amendment to the agreement. This amendment recited that Multitech had requested that St. Johns extend the closing date and the completion date for construction and completion of the road over the Access Easement and the Other Access Easement. Paragraph seven of the amendment required Multitech to complete construction of the road over the Access Easement by March 1, 1985, and to begin construction of the road over the Other Access Easement by March 15, 1985, with completion date no later than May 31, 1985.

On March 28, 1985, St. Johns sold its property that was to be served by the Other Access Road to Soforenko First Homes, Inc. (Soforenko). Prior to June 30, 1985, William Driscoll, president of Multitech, contacted Soforenko and obtained its consent to complete the Other Access Road after June 30, 1985.

On October 8, 1985, Multitech filed a motion for summary judgment, raising as grounds that: (1) St. Johns was not entitled to summary judgment because the liquidated damages clause was unenforceable as a matter of law, and (2) St. Johns was without standing to bring the action because it sold or contracted to sell the parcel of property to which the subject road leads, prior to June 30, 1985.

On May 29, 1986, St. Johns filed a renewed motion for summary judgment, supported by an affidavit of its president, John Trekell. The affidavit reflects that, in Trekell's opinion, St. Johns' land would have had an approximate value of $250,000 if the road had been completed, but had a value of approximately $120,000 without the road having been completed. Trekell's affidavit also states that St. Johns was deprived of the increased profits it would have enjoyed had the road been completed timely, and lost the interest it would have derived from investment of the profits.

On July 10, 1986, Multitech filed the affidavits of its president, Driscoll; of Max Gilbert, vice-president of Soforenko; and of Paul Scull, real estate expert. Driscoll's affidavit reflects that the $120,000 credit was the estimated cost for constructing the Access Road, and that in the Fourth Amendment it was agreed that Multitech would construct the Other Access Road. The Other Access Road was intended to provide St. Johns with Access to the property it sold to Soforenko on March 28, 1985. The Access Road was completed before the June 30, 1985, completion date, but the Other Access Road was not. The Gilbert affidavit reflects that Soforenko took into consideration the proposed construction of the Other Access Road in making its decision to purchase the property from St. Johns. The Gilbert affidavit also establishes that Soforenko granted Multitech permission to complete the Other Access Road after June 30, 1985, because it had no immediate plans to develop the property. The Scull affidavit reflects that in Scull's opinion, the existence or nonexistence of the Other Access Road had little or no effect on the value of lots owned by St. Johns which were served by the Access Road.

At the hearing conducted on St. Johns' renewed motion for summary judgment, Multitech's counsel argued that St. Johns was not damaged, because it had sold the Soforenko property on March 28, 1985, before the road completion date of June 30, 1985. In addition, counsel argued that Mr. Gilbert of Soforenko stated that Soforenko's decision to purchase the property was based in part on representations that the road would be built. Counsel also referred to the public works records which reflect that it cost Multitech over $140,000 to contract the first road, and over $300,000 to construct the second road.

On August 26, 1986, the trial court entered final summary judgment for St. Johns, awarding St. Johns $120,000 as liquidated damages, prejudgment interest, and reserving jurisdiction to award attorney's fees. On September 10, 1986, Multitech filed notice of appeal. On November 7, 1986, a hearing was held on St. Johns' motion to fix attorney's fees. St. Johns' counsel testified with regard to the matters set forth in his affidavit, that is, the time expended on the case, including the time anticipated for the hearing, discussions with Trekell regarding a reasonable fee, the eight factors set forth in the Code of Professional Responsibility, the novelty and difficulty of the questions, and fees charged in the area. Counsel stated his arrangement with his client contemplated $150 an hour as the minimum compensation. In addition, counsel stated that while this was not a contingency fee contract in the usual sense, there was an element of contingency because he agreed with his client that he would receive a reasonable fee in light of results obtained.

The trial court was presented with three expert opinions which established that a reasonable attorney's fee for St. Johns' attorney would be either $8,000 to $9,500; $24,000; or $30,000 to $35,000, respectively. The experts' opinions took into account the factors set forth in the Code of Professional Responsibility, and the possible applicability of the Rowe multiplier factor. See Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985). The trial court found that a reasonable attorney's fee would be the same under either the Rowe formula or the eight factors listed in the Florida Bar Code of...