Trytek v. Gale Industries, Inc.

• Decision Date: 26 February 2009
• Docket Number: No. SC07-1641.,SC07-1641.
• Citation: 3 So.3d 1194
• Parties: Frank J. TRYTEK, et al., Petitioners, v. GALE INDUSTRIES, INC., etc., Respondent.
• Court: Florida Supreme Court

3 So.3d 1194

Frank J. TRYTEK, et al., Petitioners, v. GALE INDUSTRIES, INC., etc., Respondent.

No. SC07-1641.

Supreme Court of Florida.

February 26, 2009.

Michael R. D'Lugo of Wicker, Smith, O'Hara, McCoy, and Ford, P.A., Orlando, FL, for Petitioner.

Edward M. Baird and Mark T. Snelson of Wright, Fulford, Moorhead, and Brown, P.A., Orlando, FL, for Respondent.

Barry Kalmanson, Maitland, FL, on behalf of Southeastern Association of Credit Management and Florida Independent Concrete and Associated Products, Inc., for Amicus Curiae.

PARIENTE, J.

In Gale Industries, Inc. v. Trytek, 960 So.2d 805 (Fla. 5th DCA 2007), the Fifth District Court of Appeal ruled on statutory attorneys' fees in construction lien actions and certified a question of great public importance. We therefore have jurisdiction. See art. V, § 3(b)(4), Fla. Const. We rephrase the certified question as follows:

Where a lienor obtains a judgment against a property owner in an action to enforce a construction lien brought pursuant to section 713.29, Florida Statutes (2005), are trial courts required to apply the "significant issues" test articulated in Prosperi v. Code, Inc., 626 So.2d 1360 (Fla.1993), in determining which party, if any, is the "prevailing party" for the purpose of awarding attorneys' fees?

We answer the rephrased certified question in the affirmative and hold that trial courts are required to apply the "significant issues" test of Prosperi to evaluate entitlement to prevailing party attorneys' fees under section 713.29, even when the lienor obtains a judgment on the lien.¹ We conclude that this Court has consistently approached the award of attorneys' fees in lien actions as being "tempered by equitable principles." Prosperi, 626 So.2d at 1363. In that regard, when applying Prosperi to the facts of a case, there is no mandatory requirement that the trial court determine that one party is the "prevailing party." We therefore quash the Fifth District's decision that held that the trial court is required to award the lienor "prevailing party" attorneys' fees if the lienor recovers a judgment in any amount on the lien claim that exceeds any setoff or damages claimed by the homeowner on his or her counterclaim.

FACTS AND PROCEDURAL HISTORY

In this case, the petitioners, Frank J. Trytek and his wife, Cathy L. Trytek, (hereinafter referred to as either "Trytek" or "homeowner"), were building a new residence. As part of the project, they contracted with Gale Industries, an insulation contractor, to install insulation throughout the structure (hereinafter referred to as either "Gale," "contractor," or "lienor"). It is undisputed that "[w]hile installing the insulation, Gale's employees inadvertently caused some staples to be driven through some previously installed electrical wires. The parties agreed that Try-Cor Electric Company, a corporation owned by Frank Trytek that was involved in electrical contracting, would make the necessary repairs." Gale Indus., 960 So.2d at 806. According to the invoice in the record, Trytek's cost incurred for the electrical repair work was $11,770, including a $250 building inspection fee. Trytek delivered a check to Gale for $736, which Trytek determined was the amount due on the contract work after setting off the inspection fee and repair work done by his company. Gale refused to accept Trytek's check and recorded a construction lien in the amount of $12,725, which did not include any offset for the damages it caused.

This case eventually proceeded to trial. As set forth in the Fifth District's opinion:

Early in the proceedings the parties stipulated that the Gale Industries claim of lien complied procedurally with the construction lien law, Chapter 713, Florida Statutes (2001), and that all notice requirements had been met. In addition, the parties agreed that the lien accurately stated the value of the labor, services and materials provided by Gale, subject only to the Trytek counterclaim. An agreed order was rendered that established that Gale's lien was procedurally sufficient; that no evidence would be necessary at trial on that issue; and that Gale Industries was entitled to recover the amount stated in the lien, less any damages proved by Mr. and Mrs. Trytek; and that the only issue to be resolved at trial was the value of the damages alleged in the counterclaim.

Following a nonjury trial, the trial court entered an order determining that the Tryteks were entitled to repair costs of $11,200. After setting off that figure against the agreed lien amount of $12,725, the net result was a judgment for $1,525 in favor of Gale Industries.

Thereafter, each party concluded that it was the "prevailing party" and filed cross-motions to tax attorneys' fees and costs pursuant to section 713.29, Florida Statutes (2005). After a hearing on the motions the trial court, while expressing some concern over this court's position on the definition of prevailing party in the construction lien context, determined that it was required to apply the "significant issues" test set forth in Prosperi v. Code, Inc., 626 So.2d 1360 (Fla.1993), in order to award fees and costs properly. The court then found that the Tryteks were the prevailing party because the only real issue in the case was how much money should be set off against the Gale Industries lien, and the Tryteks primarily prevailed on their counterclaim.

Id.

In determining that Trytek was the prevailing party, the trial court reasoned:

There was never an issue about Gale performing the insulation work at the Tryteks residence nor was there ever an issue about whether Gale was entitled to payment for its work. Early in the case, there was an agreed order on Plaintiff's Motion for Partial Summary Judgment which recognized the validity and amount of Gales' [sic] lien. The real issue in the case was how much money should be setoff from the lien amount as compensation to the Tryteks for repairing the damage done by Gale during its installation of the insulation. The Tryteks prevailed on their counterclaim to the extent of almost extinguishing the Gale lien. It was this aspect of the case that required expert testimony, document production, document analysis and trial time. The Tryteks recovered $11,200 on their counterclaim. Gale only offered a discount of from $320 to $3200. Therefore, this Court finds that the Tryteks prevailed on the "significant issue" of this case and are the prevailing parties entitled to recover attorneys' fees and costs pursuant to § 713.29, F.S.

Gale Indus., Inc. v. Trytek, No. 48-2004-CA-7549, order at 4 (Fla. Orange County Cir. Ct. Dec. 13, 2005).

The parties stipulated to the amount of attorneys' fees and costs and thus the trial court entered an order awarding attorneys' fees of $55,982.00 and costs of $4,016.67 in favor of the homeowner, Trytek.² On appeal, the Fifth District recognized that this Court's decisions in Moritz v. Hoyt Enterprises, 604 So.2d 807 (Fla. 1992), and Prosperi v. Code, Inc., 626 So.2d 1360 (Fla.1993), modified the "prevailing party" rule by applying the "significant issues" test. However, it concluded that the "significant issues" test of Prosperi applies only where the contractor is unsuccessful in its lien foreclosure action. The Fifth District concluded that under section 713.29, a contractor who obtains any monetary judgment pursuant to a construction lien claim would ordinarily be the prevailing party, and in this case, the contractor did receive a judgment of $1,525. The Fifth District therefore reversed and remanded for assessment of an attorneys' fees award in favor of Gale. The Fifth District also recognized that this Court's application of the "significant issues" test in Prosperi may have changed the legal landscape for determining the prevailing party in a construction lien case and accordingly certified a question of great public importance regarding whether the "significant issues" test of Prosperi is applicable even when the contractor obtains a judgment on its lien, no matter what the amount. Gale Indus., 960 So.2d at 807-09.

ANALYSIS

The contractor claims that because it obtained a judgment on its lien, the contractor is entitled to receive all of its attorneys' fees connected with the litigation. The homeowner contends that by prevailing on the only issue tried before the trial court—the counterclaim based on the contractor's damage to the electrical wiring— the trial court's determination of prevailing party should be affirmed. Both parties assert that one or the other must be the prevailing party.

The main issue in this case is what factors enter into a determination of "prevailing party" pursuant to section 713.29. The specific issue raised by this case is whether the trial court is vested with discretion, or is even required to consider, which party prevailed on the significant issues; or whether the trial court is bound by an inflexible bright-line rule that a prevailing party must be determined and that the contractor must be considered the prevailing party if it obtains a judgment on its lien in any amount in excess of an asserted set-off or counterclaim.

It is well-settled that attorneys' fees can derive only from either a statutory basis or an agreement between the parties. State Farm Fire & Cas. Co. v. Palma, 629 So.2d 830, 832 (Fla.1993). In this case, entitlement to attorneys' fees is based on statute. We thus start with the language of the lien statute that concerns the award of attorneys' fees in an action to enforce a lien. Section 713.29 was first enacted by the Legislature in 1963. Ch. 63-135, § 1, Laws of Fla. Section 713.29 states:

In any action brought to enforce a lien or to enforce a claim against a bond under this part, the prevailing party is entitled to recover a reasonable fee for the services of her or his attorney for trial and appeal or for arbitration, in an amount to be determined by the court, which fee must be taxed as part of the prevailing...