Wiggin Props., LLC v. Arco Bldg., LLC

• Decision Date: 15 June 2021
• Docket Number: Case No. 117,593,Companion to Case No. 116,403
• Citation: 510 P.3d 1274
• Parties: WIGGIN PROPERTIES, LLC, an Oklahoma Limited Liability Company, Plaintiff/Appellee, v. ARCO BUILDING, LLC, an Oklahoma Limited Liability Company, Defendant/Appellant, and James F. Hawkins, Jr., an individual, Third-Party Defendant/Appellee.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

510 P.3d 1274

WIGGIN PROPERTIES, LLC, an Oklahoma Limited Liability Company, Plaintiff/Appellee,

v. ARCO BUILDING, LLC, an Oklahoma Limited Liability Company, Defendant/Appellant,andJames F. Hawkins, Jr., an individual, Third-Party Defendant/Appellee.

Case No. 117,593

Companion to Case No. 116,403

Court of Civil Appeals of Oklahoma, Division No. 2.

FILED JUNE 15, 2021

Mandate Issued: April 27, 2022

Joseph R. Farris, FRANDEN | FARRIS | QUILLIN, GOODNIGHT + ROBERTS, Tulsa, Oklahoma, for Plaintiff/Appellee

John J. Carwile, BAUM GLASS JAYNE & CARWILE, PLLC, Tulsa, Oklahoma, for Defendant/Appellant

P. Scott Hathaway, Daniel E. Gomez, CONNER & WINTERS, LLP, Tulsa, Oklahoma, for Third-Party Defendant/Appellee James F. Hawkins, Jr.

OPINION BY DEBORAH B. BARNES, JUDGE:

¶1 ARCO Building, LLC (ARCO), appeals the denial of its request for fees from Wiggin Properties, LLC (WP), and the award of fees to James F. Hawkins, Jr. (Mr. Hawkins).¹ On review, we find that the current law of Oklahoma does not allow a party who is successful in rescinding a contract to invoke a prevailing party fee provision of the rescinded contract, and hence ARCO was not entitled to fees from WP. Regarding Mr. Hawkins' fees, we find that fee apportionment is required in this case pursuant to the principle we have outlined in the Opinion; that Mr. Hawkins did not attempt to perform such an apportionment, and, as such, we are unable to conduct a meaningful review of the amount arrived at by the district court. Hence this matter must be remanded for Mr. Hawkins to make an apportionment, and the district court to rule on the appropriate fees.

BACKGROUND

¶2 As we noted in Companion Case 116,403, in 2009 Mr. Hawkins and defendant ARCO were involved in a failed deal for Mr. Hawkins to purchase a commercial property known as the ARCO building for conversion into condominiums (the "First Agreement"). This proposed purchase collapsed in the post-2009 real estate market, and the deal dissolved in acrimony between the parties regarding changes made to the building during the construction of a "pilot" condominium. A 2011 lawsuit resulted. ARCO was adamant that it would never again deal with Mr. Hawkins on this matter from that time on, and made this known to Mr. Hawkins.

¶3 In 2012, Mr. Hawkins entered into what the district court found to be a joint venture with WP, in which WP attempted to purchase the ARCO building for development a second time, without Mr. Hawkins' involvement being known to ARCO (the "Second Agreement"). WP and ARCO executed a sale agreement on June 30, 2012, with the intent of closing in November 2012. In the time between the Second Agreement being signed and the closing date, ARCO settled the 2011 damage suit against Mr. Hawkins that had resulted from the First Agreement. This 2012 agreement to settle the first case (the "Hawkins Settlement") is one of the bases of the fee dispute in this appeal. After the Hawkins Settlement, Mr. Hawkins let it be known that he was, in fact, involved in the new purchase agreement. ARCO then refused to consummate the Second Agreement on the grounds of Mr. Hawkins' involvement.

¶4 WP filed suit against ARCO seeking declaratory judgment, damages for breach, and an order for specific performance of the Second Agreement. ARCO counterclaimed alleging improper anticipatory repudiation, civil conspiracy and fraud, and also seeking rescission of the Second Agreement. The court granted a temporary injunction against ARCO forbidding the sale of the building to any other party. ARCO also sued Mr. Hawkins for fraud and conspiracy, and sought to rescind the Hawkins Settlement.

¶5 In a 2015 summary judgment proceeding the district court 1) denied WP's motion for summary judgment on ARCO's anticipatory repudiation and civil conspiracy claims; 2) dismissed ARCO's claim for actual fraud against Mr. Hawkins; 3) limited ARCO's claim for constructive fraud to fraudulent inducement; and 4) limited WP's damages to specific performance.

¶6 The remaining claims were tried in a non-jury trial on March 21 and 22, 2017. On September 21, 2017, the district court ruled: 1) ARCO had not proven actual fraud in the inducement of the Second Agreement by WP; 2) the Second Agreement should be rescinded because of WP's constructive fraud in the inducement; 3) WP was not entitled to specific performance because of "unclean hands" for failing to disclose Mr. Hawkins involvement; and 4) in favor of Mr. Hawkins on ARCO's remaining claims against him.

¶7 In Companion Case 116,403, we found no error in the district court's challenged decisions, finding that the identity of the purchaser was a material fact in this case which was fraudulently concealed, justifying a rescission. We found, however, that a return of WP's earnest money by ARCO was an inherent part of the remedy of rescission, i.e., "Placing the parties back in the pre-contract status quo ," and interpreted the district court's order as requiring the earnest money be returned.

¶8 Case 116,403 was filed in October 2017. While it was under decision, both ARCO and Mr. Hawkins filed fee applications with the court, ARCO relying on a prevailing party fee provision in the contract for the Second Agreement, and Mr. Hawkins relying on a prevailing party fee provision in the Hawkins Settlement.

¶9 On April 16, 2018, the trial court determined ARCO's motion for attorney fees and costs was denied became the requested fees were contractual, and the rescission of the Second Agreement had destroyed the contractual basis for fees. It also determined that Mr. Hawkins was entitled to fees and costs against ARCO because the Hawkins Settlement provided for prevailing party fees regarding any "breach of this agreement that results in future litigation," and ARCO had sought to rescind the Hawkins Settlement.

¶10 ARCO presents the following claims of error in its appellate petition which we reproduce verbatim:

1. Did the District Court err in ruling that Defendant ARCO Building, LLC was not entitled to recover attorney's fees against the Plaintiff Wiggin Properties, LLC ("Wiggin"), as a prevailing party when the governing contract provides for an award of fees to the prevailing party in an action brought by a party to enforce its rights under the contract?

2. Did the District Court err in ruling that Defendant ARCO Building, LLC was not entitled to recover attorney's fees against the Plaintiff Wiggin Properties, LLC, as a prevailing party when the governing contract provides for an award of fees to the prevailing party in an action brought to enforce a party's rights under the contract and ARCO successfully defeated Plaintiff Wiggin's claim for specific performance through a successful assertion of a defense of unclean hands?

3. Did the District Court err in ruling that Third-Party Defendant James F. Hawkins, Jr. was entitled to recover attorney's fees against Defendant ARCO Building, LLC, in the absence of any statutory basis, when the applicable contract provides for an award of attorney's fees only to a party prevailing on a claim for breach of that contract?

4. Did the District Court err in failing to apportion the attorney's fees awarded to Hawkins to allow fees incurred only for work on fee bearing claims on which Hawkins prevailed, and not allow fees incurred on claims in which ARCO prevailed against Hawkins?

5. Did the District Court err in failing to apportion the attorney's fees awarded to Hawkins to allow fees incurred only for attorney's work done on fee bearing claims, and not allow fees incurred for work on non-fee bearing claims?

6. Did the District Court err in awarding Hawkins an amount of attorney's fees that is excessive and not reasonable, and not in compliance with the mandate of Burk v. The City of Oklahoma City , 179 OK 115, 598 P.2d 659?

7. Did the District Court err in awarding fees to Hawkins that do not bear a reasonable relationship to the amount in controversy and to the judgment recovered?

8. Did the District Court err in awarding any amount of fees to Hawkins when the District Court had previously found that Hawkins had unclean hands and when the Court had also previously found that Hawkins was in a joint venture with Plaintiff Wiggin Properties, LLC and had participated in and joined in committing constructive fraud on Defendant ARCO Building?

9. Did the District Court err in awarding fees based upon findings or reasoning in conflict with, and inconsistent with, its Findings of Fact and Conclusions of Law entered September 21, 2017?

STANDARD OF REVIEW

¶11 The reasonableness of attorney's fees and incentive awards depends on the facts and circumstances of each case and is a question for the trier of fact. The standard of review for considering the district court's award is an abuse of discretion. Hess v. Volkswagen of Am., Inc ., 2014 OK 111, ¶ 9, 341 P.3d 662. As a general matter, an abuse of discretion review standard includes an appellate examination of both fact and law issues; an abuse occurs when a court bases its ruling on an erroneous legal conclusion or there is no rational basis in the evidence for the decision. Christian v. Gray , 2003 OK 10, ¶ 43, 65 P.3d 591.

¶12 The issues in this appeal also concern the legal interpretation of issues involving contractual fees. The correct standard of review for these issues is de novo . State ex rel. Prot. Health Servs. State Dep't of Health v. Vaughn , 2009 OK 61, ¶ 9, 222 P.3d 1058. Under the de novo standard of review, the Court has plenary, independent, and non-deferential authority to determine whether the district court erred in its legal rulings. Id.

ANALYSIS

I. THE EFFECT OF RESCISSION ON ARCO'S CLAIM FOR CONTRACTUAL FEES

¶13 ARCO's fees were claimed pursuant to a contractual fee provision in the Second Agreement to purchase the building in question. The court reasoned that, as ARCO had been successful in rescinding the agreement, no contractual basis for fees survived the rescission. No case law directly on point was cited, and there appears...