Tampa Bay Water v. HDR Eng'g, Inc., Case No. 8:08-CV-2446-T-27TBM
| Decision Date | 02 November 2012 |
| Docket Number | Case No. 8:08-CV-2446-T-27TBM |
| Parties | TAMPA BAY WATER, Plaintiff, v. HDR ENGINEERING, Inc., Defendant. |
| Court | U.S. District Court — Middle District of Florida |
In their contract, Tampa Bay Water and HDR Engineering agreed that the prevailing party in any litigation arising from their agreement would be entitled to recover all of its attorneys' fees, costs, and litigation expenses.1 HDR is therefore entitled to an award of fees and costs. The parties have filed affidavits of their respective attorneys' fee experts, legal memoranda, and supporting evidence relating to HDR's attorneys' fees, costs, and expenses. An evidentiary hearing was held during which the parties' expert witnesses testified and argument was presented. In its motions and supplemental evidentiary submissions, HDR has requested a total of $10,474,291.50 in attorneys' fees, and $11,878,959.95 in litigation expenses and taxable costs.
By any account, the amount of attorneys' fees to which HDR is entitled is extraordinary. Tampa Bay Water's fee expert opines that a reasonable attorneys' fee is between $5.1 and $5.5 million. HDR's fee expert opines, on the other hand, that a reasonable attorneys' fee is $9,772,406.70 and that the reasonable litigation expenses and taxable costs incurred by HDR amountto $11,103,671.80.2 And while not determinative of the reasonableness of HDR's fees, costs, and expenses, it should be noted that Tampa Bay Water spent $5,347,233.00 in attorneys' fees and $6,281,116.97 in costs and expenses, adding some perspective to the fees and expenses sought by HDR.
Upon careful consideration, HDR is awarded $9,249,219.85 in attorneys' fees and $10,898,186.22 in litigation expenses and taxable costs.3 To put this extraordinary fee and cost award in its proper perspective, the nature of the litigation must be considered.
This was no ordinary engineering malpractice case. According to HDR's fee expert, Mr. Hill, "[t]he uniqueness of the design of the reservoir together with the exposure to HDR in a case tried to a jury combine to make this an unprecedented case" (Dkt. 653-3, p. 4). And Dennis Frostic, an attorney who was the "point person" for HDR's insurers with nearly 40 years experience working with insurers in large, complex cases, told Mr. Hill that to his knowledge, "this case is the largest engineering professional liability case ever tried to a jury" (Id., p. 9).
This case may be the largest engineering professional liability case, in terms of damages sought, ever tried to a jury (Dkt. 653-3, p. 9). Tampa Bay Water's initial demand from HDR was $225 million. In the parties' Joint Pretrial Statement, Tampa Bay Water projected that its total damages exceeded $131 million, plus interest, attorneys' fees and costs. At trial, Tampa Bay Water asked the jury to award it more than $100 million in damages from HDR (exclusive of attorneys' fees and expenses). The litigation spanned more than three years. After a five week trial, the jury returned a verdict in favor of HDR.
HDR contracted with Tampa Bay Water to design the C.W. Bill Young Reservoir and was the Engineer of Record for the design and permitting of the Reservoir. By all accounts, the design of the reservoir was unique. A reservoir of its size had never been built before. It encompassed more than a thousand acres and was designed to hold approximately 15,500,000,000 gallons of surface water for use as a potable water supply. It took nearly three years to build. Tampa Bay Water began operating the Reservoir in June of 2005.
In December of 2006, during the Reservoir's second draw-down cycle, unexpected cracking in the flat-plate soil cement was discovered. As the water elevation continued to be lowered, more cracking was discovered. Claiming that these cracks were the result of design errors and construction defects, Tampa Bay Water sued HDR, Construction Dynamics Group, Inc. ("CDG"), which served as the project's construction manager, Barnard Construction Company, Inc., the contractor, and Barnard's subcontractor, McDonald Construction Corporation.
Needless to say, the case has a lengthy and contentious history. Tampa Bay Water amended its original complaint twice. More than 20 experts were retained by the parties. The Joint Pretrial Statement listed seven trial experts for Tampa Bay Water, two for Barnard, and one for McDonald.4 HDR listed nine expert witnesses. Discovery in the case included 2.7 million files comprising more than 17 million pages of documents (Dkt. 653-1, ¶ 17). Between Tampa Bay Water and HDR alone, 35 depositions were taken in 40 sessions over 80 days in eight cities in five different states, resulting in 19,000 pages of transcripts (Id., ¶ 20). As of August 30, 2012, when Tampa Bay Water filed its Notice of Appeal, there were 678 separate docket entries, including 11 motions to strike, 2 motions to dismiss, 6 motions for protective order, 11 motions to compel, 3 motions to quash, a motion forsanctions, a motion for summary judgment (with two supplements), 4 Daubert motions, 29 motions in limine, and dozens of non-substantive motions. Tampa Bay Water alone filed 11 motions in limine and 7 dispositive motions (Dkt. 653-2, ¶ 23). HDR was required to respond to "approximately 20 contested discovery-related and pre-trial motions" filed in the case by either Tampa Bay Water, Barnard or McDonald (Dkt. 653-1, ¶ 22).
From the inception of the lawsuit, the battle lines were drawn, with HDR having to defend itself on all fronts, not just against Tampa Bay Water's claims. Barnard and McDonald also claimed that HDR's design was to blame for the unusual cracking in the Reservoir. In a sense, Tampa Bay Water, Barnard, and McDonald were aligned against HDR. Indeed, just two months before the pretrial conference, Tampa Bay Water settled with Barnard and McDonald utilizing a controversial "high-low" settlement agreement (Dkt. 307).5
Significantly, the settlement agreement included 133 paragraphs of "Agreed Facts." These "Agreed Facts" effectively absolved Barnard and McDonald of any fault whatsoever. Curiously, Barnard agreed to participate in the trial but agreed not to present any evidence on Tampa Bay Water's claims, agreed to call certain witnesses but not to call other witnesses, and agreed not to file any trial and post-trial motions. These provisions resulted in yet another round of legal skirmishes between Tampa Bay Water and HDR in which HDR challenged the agreement as a collusive "Mary Carter" agreement (Dkt. 323). Based on the "Agreed Facts," summary judgment was entered in favor of Barnard and McDonald and against Tampa Bay Water, ending their participation in the case (Dkt. 417, Order granting summary judgment).
The parties actually prepared for trial twice, adding to the cost of the litigation. The trial was originally scheduled for the July 2011 trial term, but because of other docket demands, was passedover and placed on 'stand-by' status for September, 2011 due to its length and other calendar demands (Dkt. 444). In anticipation of trial, the parties filed numerous motions in limine and trial related motions, including three motions to strike filed by Tampa Bay Water directed to HDR's affirmative defenses. In short, the parties were gearing up for trial. Then, however, the landscape of the litigation changed substantially.
In September of 2011, Tampa Bay Water announced that it had settled with HDR. The case was removed from the trial docket, dismissed without prejudice and administratively closed (Dkt. 454). Although Tampa Bay Water's Board of Directors initially voted to approve the settlement, it subsequently voted to reject it, and the case was re-opened (Dkt. 474). By then, HDR's agreement to pay Tampa Bay Water $30 million to settle the case had become public knowledge and generated extensive publicity.
The rejection of the settlement by Tampa Bay Water's Board and the highly publicized terms of the aborted settlement spawned more litigation, including HDR's motions to enforce the settlement and for a change in trial venue. Finally, despite numerous formal and informal attempts to resolve the case, the case proceeded to trial in March of 2012.6
Before trial, Tampa Bay Water voluntarily dismissed Count III of the Amended Complaint, (breach of contract - quality control) (Dkt. 558). The case was tried on Count One of Tampa Bay Water's Second Amended Complaint (breach of contract - defective design) (Dkt. 386). Tampa Bay Water listed 25 potential witnesses in its final trial witness list and 505 potential exhibits. HDR listed24 potential witnesses and 774 potential exhibits. The trial lasted 19 days over five weeks. Numerous expert and technical witnesses testified.
In sum, the contentious nature of the litigation, the issues involved, and the length of trial generated extraordinary attorneys' fees for both sides. To the extent Tampa Bay Water criticizes HDR's attorneys for the number of hours they spent defending the case, one cannot reasonably quarrel with those efforts, considering the result obtained. Certainly, there were other considerations driving the attorneys. HDR's international engineering reputation was on the line. And the consequences of an adverse verdict in the range sought by Tampa Bay Water would have been devastating to HDR's employee owners.
To appreciate the fees and expenses invested in this case by HDR, one must consider that Tampa Bay Water's initial demand of HDR was $225 million, well in excess of HDR's available insurance coverage. In the Pretrial Statement, Tampa Bay Water's damages, exclusive of pre-judgment interest, attorneys' fees and costs, was stated to be in excess of $131 million. At trial, Tampa Bay Water asked the jury to award it in excess of $100 million in damages (exclusive of attorneys' fees and costs).
Explaining the vigor with which HDR defended Tampa Bay Water's lawsuit, Mr. Hill noted that HDR is an employee-owned company and that Tampa Bay Water's...
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