Strand Hunt Construction v. White River School District and Bayley Construction
| Decision Date | 12 August 2003 |
| Docket Number | No. 28475-8-II.,28475-8-II. |
| Court | Washington Court of Appeals |
| Parties | STRAND HUNT CONSTRUCTION, Appellant, v. WHITE RIVER SCHOOL DISTRICT AND BAYLEY CONSTRUCTION, Respondent. |
Appeal from Superior Court of Pierce County, Docket No: 01-2-13946-6, Judgment or order under review, Date filed: 02/01/2002.
Jami K Elison, Offices of Marston & Heffernan, Redmond, WA, Counsel for Appellant(s).
Terry Ray II Marston, Marston & Heffernan PLLC, Redmond, WA, Counsel for Appellant(s).
Jesse Owen Iv Franklin, Preston Gates & Ellis LLP, Seattle, WA, Counsel for Defendant(s).
Athan Emmanuel Tramountanas, Preston Gates & Ellis LLP, Seattle, WA, Counsel for Defendant(s).
Leigh Sellari Kilcline, Perkins Coie LLP Seattle, WA, Counsel for Respondent Intervenor(s).
Richard W. Oehler, Attorney at Law, Seattle, WA, Counsel for Respondent Intervenor(s).
James Fitzgerald Williams, Perkins Coie, Seattle, WA, Counsel for Respondent Intervenor(s).
UNPUBLISHED OPINION
In this dispute between bidders on a public works project, Strand Hunt Construction appeals an award of reasonable attorney fees to Bayley Construction. For the reasons that follow, we reverse.
On October 10, 2001, the White River School District solicited bids for the construction of a new high school. Strand and Bayley submitted competing bids. On November 27, 2001, the District found that Bayley was the lowest bidder and announced its intent to award Bayley the contract.
On November 29, 2001, Strand sued the District, but not Bayley. Strand alleged that Bayley's bid should have been rejected and that Strand was actually the lowest bidder. Strand prayed for a temporary restraining order (TRO) and preliminary injunction that would bar the District from contracting with Bayley until after a trial.
On November 29, 2001, the trial court issued a TRO with an expiration date of December 13, 2001. The effect was to restrain the District, but not Bayley, `from signing a contract for the . . . New High School Project . . . with any one other than Strand Hunt Construction . . . .'1 The court set a show cause hearing and ordered Strand to post a $180,000 bond.
On November 29, 2001, Strand posted a bond in the required amount. In the bond, Strand and its surety promised as follows:
KNOW ALL BY THESE PRESENTS, That we, STRAND HUNT CONSTRUCTION, INC . . . as Principal, and SEABOARD SURTEY {sic} COMPANY . . . as Surety, are held and firmly bound unto the . . . WHITE RIVER SCHOOL DISTRICT . . . in the . . . sum of . . . $180,000 . . . for the payment of which . . . we hereby bind ourselves . . . jointly and severally . . . .{2}
The bond did not mention Bayley.
On December 10, 2001, Strand stipulated that Bayley could intervene in Strand's suit against the District. No one amended the TRO or the bond.
On December 11, 2001, the trial court extended the TRO until December 14, 2001. On December 14, the court again extended the TRO until December 18, 2001.
On December 14 and 17, 2001, the trial court held a hearing on whether to issue a preliminary injunction pending trial. The court denied a preliminary injunction and terminated the TRO, effective December 18, 2001, at 4:30 p.m.
On December 17, 2001, Strand moved this court for discretionary review. The next day, a court commissioner enjoined the signing of a contract for ten more days to permit consideration of the motion. On December 26, 2001, the court commissioner denied further restraint, and Bayley and the District signed a contract.
On January 31, 2002, pursuant to a stipulation between Strand and the District, the trial court dismissed with prejudice all claims between those two entities. It did not dismiss any claim by Bayley.
Meanwhile, on January 11, 2002, Bayley had moved for an award of reasonable attorney fees. On February 1, 2002, after a hearing, the trial court granted the motion and awarded Bayley $54,553.45. On February 12, 2002, Strand filed the present appeal.
The parties now dispute whether Bayley can recover (1) on the bond, or (2) on the law without reference to the bond. We consider the bond first and the law second.
The first issue is whether Bayley can recover against the bond that Strand posted on November 29, 2001. Liability on a bond is controlled by the terms of the bond.3 When the terms of a bond state that a principal and surety will pay damages to the bond beneficiary, damages may include reasonable attorney fees.4 According to the terms of the bond in this case, Strand and Seaboard promised to pay damages incurred by the District, not exceeding $180,000. They did not promise to pay damages incurred by Bayley, whom the bond never even mentioned. As the trial court recognized, neither Strand nor Seaboard is liable on the bond for Bayley's attorney fees.
The second issue is whether Bayley can recover attorney fees without relying on the bond. As a general rule, a party may recover attorney fees reasonably incurred to dissolve a wrongfully issued injunction or restraining order.5 The reasons are twofold: (1) because `the party enjoined may have no choice but to litigate'6 and (2) to `deter plaintiffs from seeking relief prior to a trial on the merits.'7
The first reason does not apply here, as Bayley was neither sued nor enjoined. Instead, Bayley intervened voluntarily.
The second reason also does not apply here. In Confederated Tribes of Chehalis Reservation v. Johnson,8 the Washington Supreme Court noted that attorney fees should not be awarded where `injunctive relief prior to trial is necessary to preserve a party's rights pending resolution of the action.'9 The court reasoned:
The applicable equitable rule is that attorney fees may be awarded to a party who prevails in dissolving a wrongfully issued injunction or, as here, temporary restraining order. . . . The purpose of the rule permitting recovery for dissolving a restraining order is to deter plaintiffs from seeking relief prior to a trial on the merits. The purpose of the rule would not be served where injunctive relief prior to trial is necessary to preserve a party's rights pending resolution of the action. Here, the trial on the merits would have been fruitless if the records had already been disclosed.{10}
Although the problem before the Supreme Court was disclosure of public records, Division One has reasoned similarly in a case in which a TRO or injunction was obtained by a losing bidder on a public works contract. In Quinn Construction v. King County Fire Protection Dist. No. 26, Division One said:
The District argues on cross-appeal that the trial court abused its discretion because it did not provide any reasoning in support of its decision denying attorney fees to the District for wrongful injunction. On this issue, Confederated Tribes v. Johnson, 135 Wn.2d 734, 958 P.2d 260 (1998) () is instructive:
The applicable equitable rule is that attorney fees may be awarded to a party who prevails in dissolving a wrongfully issued injunction or, as here, temporary restraining order. The award is discretionary . . . . The purpose of the rule permitting recovery for dissolving a restraining order is to deter plaintiffs from seeking relief prior to a trial on the merits. The purpose of the rule would not be served where injunctive relief prior to trial is necessary to preserve a party's rights pending resolution of the action. Here, the trial on the merits would have been fruitless if the records had already been disclosed.
Johnson, 135 Wn.2d at 758 (second emphasis added) (citations omitted).
This reasoning is even more applicable in the context of public bidding. Here, an injunction was not only necessary to preserve any rights Quinn might have; it was the only relief available to Quinn. See Dick, 83 Wn. App. at 569. Thus, for all practical purposes, the hearing on the injunction was the trial on the merits. The purpose of the equitable rule allowing attorney fees for wrongful injunction is to encourage plaintiffs to prove the merits of their cases before seeking relief. That purpose would not be served by deterring plaintiffs from seeking the only relief available to them under the law. Accordingly, an attorney fee award premised upon the theory of wrongful injunction would have been inappropriate in this case.{11}
Division One went on to state that `any award of fees for wrongful injunction would run afoul of the Supreme Court's decision in Johnson,'12 and to hold that the trial court had correctly denied fees.
We agree with Division One's application of Johnson to public bidding cases. Accordingly, we conclude that Bayley had no right to fees under the bond; that Bayley had no right to attorney fees under the law without reference to the bond; and that the judgment herein must be reversed.
The judgment for attorney fees is reversed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
2. CP at 443.
3. Hewson Const., Inc. v. Reintree Corp., 101 Wn.2d 819, 826, 685 P.2d 1062 (1984) () (citation omitted); Joint Administrative Bd. of Plumbing and Pipefitting Industry v. Fallon, 89 Wn.2d 90, 94, 569 P.2d 1144 (1977) (); Paulsell v. Peters, 9 Wn.2d 599, 603, 115 P.2d 708 (1941) (); Grand Lodge of Scandinavian Fraternity of America, Dist. No. 7 v. U.S. Fidelity & Guar. Co., 2 Wn.2d 561, 570, 98 P.2d 971 (1940) (...
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