CLEVELAND CONSTRUCTION INC v. STELLAR GROUP INCORPORATED et al
Filing
207
ORDER denying 167 Motion for Attorney Fees without prejudice; denying 177 Motion for Attorney Fees; and reserving ruling on 197 Motion to Alter Judgment. Ordered by US DISTRICT JUDGE CLAY D. LAND on 1/28/2019 (tlf).
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
UNITED STATES OF AMERICA, for
the use and benefit of
CLEVELAND CONSTRUCTION, INC.,
Plaintiff,
*
*
*
vs.
*
CASE NO. 4:16-CV-179 (CDL)
STELLAR GROUP, INC. and LIBERTY *
MUTUAL INSURANCE COMPANY,
*
Defendants.
*
O R D E R
This action arises from a delayed construction project on
Fort Benning.
The prime contractor on the project, Stellar Group,
Inc. (“Stellar”), subcontracted with Cleveland Construction, Inc.
(“Cleveland”) to provide certain construction services.
completion
of
the
project,
Cleveland
brought
this
After
breach
of
contract and Miller Act suit against Stellar and Stellar’s surety,
Liberty Mutual Insurance Company (“Liberty”), for damages arising
from the delay.
Stellar brought counterclaims for breach of
contract against Cleveland.
The majority of the parties’ claims proceeded to trial.
See
generally Order (Feb. 28, 2018), ECF No. 84 (granting in part and
denying in part Cleveland’s motion for partial summary judgment
and denying Stellar’s motion for partial summary judgment).
The
parties stipulated that they would present their claims for damages
1
against each other through expert testimony.
Cleveland
brought
the
following
Through its expert,
claims
against
Stellar:
(1) additional direct labor and material claim for $2,964,800;
(2) extended general conditions claim for $395,381; (3) pending
cost proposals $78,848; and (4) outstanding Subcontract balance
claim for $917,512.
Therefore, Cleveland sought total damages
against Stellar of $4,356,541.
See Trial Ex. P-345-053, Pattillo
Report § 13.1, ECF No. 181-4 at 53.
Stellar brought the following
counterclaims
against
(1) change
$947,498.88;
(2) added
(3) extended
general
Cleveland:
supervision
costs
conditions
for
(4) liquidated damages for $542,803.52.
damages
from
Cleveland
of
for
costs
for
$1,610,106.95;
$1,353,119.04;
and
Stellar thus sought total
$4,453,528.39,
Subcontract balance of $917,511.71.
order
less
the
retained
See Trial Ex. D-259-001,
Stellar Damages Summary, ECF No. 165-2.
The Court prepared a general verdict form that did not
differentiate between the types of claims brought by each party.
Neither party objected to the verdict form.
The jury awarded
$2,481,060 to Cleveland, but concluded Liberty was not jointly
liable for any of this amount.
Verdict 1, ECF No. 141.
also awarded $1,300,000 to Stellar.
Id. at 2.
The jury
Based on the
parties’ setoff stipulation, the clerk entered judgment in favor
of Cleveland in the amount of $1,181,060.
2018), ECF No. 145.
2
Judgment (Oct. 26,
The parties stipulated that any issues presented by motions
for attorneys’ fees would be decided by the Court.
post-trial
motions
attorneys’
fees
are
(ECF
now
No.
pending:
167);
The following
(1) Stellar’s
(2) Cleveland’s
motion
for
motion
for
attorneys’ fees (ECF No. 177); and (3) Cleveland’s motion to alter
the judgment to add pre-judgment interest (ECF No. 197).
For the
following reasons, the Court denies Stellar’s motion for fees
without
prejudice,
denies
Cleveland’s
motion
for
fees,
and
reserves ruling on Cleveland’s motion to alter the judgment.
I.
Stellar’s Motion for Attorneys’ Fees (ECF No. 167)
Stellar relies on a fee-shifting provision in the Subcontract
to support its claim for fees.
“Federal courts apply state law
when ruling on the interpretation of contractual attorney fee
provisions.”
Cir. 1993).
Stellar’s
In re Sure-Snap Corp., 983 F.2d 1015, 1017 (11th
Therefore, the Court applies Georgia law to analyze
claim
for
fees.1
Under
1
Georgia
law,
“a
party’s
Based on a choice of law provision in the Subcontract, the Court
previously explained that “to the extent that federal common law exists
regarding the legal issues presented, then that law shall apply.” See
Order 4 (Sept. 28, 2018), ECF No. 107. Cleveland (the party seeking
application of federal common law) pointed to no such law contravening
the established principle regarding application of state law in this
context.
Further, Cleveland did not identify any federal common law
discussing enforceability of contractual attorneys’ fees provisions.
Instead, Cleveland cited to Federal Circuit cases outside the attorneys’
fees context for the general principle that courts should interpret
contracts to avoid surplusage. See, e.g., NVT Techs., Inc. v. United
States, 370 F.3d 1153, 1159 (Fed. Cir. 2004).
Georgia courts also
recognize this well-established interpretive principle.
See, e.g.,
Horwitz v. Weil, 569 S.E.2d 515, 516 (Ga. 2002) (“The contract is to be
considered as a whole, and each provision is to be given effect and
interpreted so as to harmonize with the others.” (quoting Ga. Farm Bureau
3
entitlement to attorney fees under a contractual provision is
determined
by
the
usual
rules
of
contract
interpretation.”
Benchmark Builders, Inc. v. Schultz, 711 S.E.2d 639, 640 (Ga. 2011)
(quoting John K. Larkins, Jr., Ga. Contracts Law & Litigation § 1229(a)).
“The construction of contracts involves three steps.”
Gibson v. Decatur Fed. Sav. & Loan Ass’n, 508 S.E.2d 788, 791 (Ga.
Ct. App. 1998) (quoting CareAmerica v. S. Care Corp., 494 S.E.2d
720, 722 (Ga. Ct. App. 1997)).
First, the Court must consider
whether the language is “clear and unambiguous.”
CareAmerica, 494 S.E.2d at 722).
“If it is, the court simply
enforces the contract according to its clear terms.”
CareAmerica, 494 S.E.2d at 722).
Id. (quoting
Id. (quoting
If, however, the contract is
ambiguous in some respect, the Court must then “apply the rules of
contract construction to resolve the ambiguity.”
CareAmerica, 494 S.E.2d at 722).
Id. (quoting
“Finally, if the ambiguity
remains after applying the rules of construction, the issue of
what the ambiguous language means and what the parties intended
must be resolved” by the factfinder.
Id. (quoting CareAmerica,
494 S.E.2d at 722).
The critical issue presented by Stellar’s motion is whether
Stellar may recover all its fees despite only prevailing on some
Mut. Ins. Co. v. Gaster, 546 S.E.2d 30, 31 (Ga. Ct. App. 2001))).
Therefore, because Cleveland identified no material differences between
federal common law and state law, the Court applies the better-developed
Georgia law regarding enforceability of contractual attorneys’ fees
provisions.
4
of
its
claims.
Here,
the
Subcontract
provision
regarding
attorneys’ fees states as follows: “Upon any default, [Cleveland]
shall pay to [Stellar] its attorneys’ fees and court costs incurred
in enforcing this Subcontract or seeking any remedies hereunder.”
Compl. Ex. A, Subcontract 6, ¶ 7(c), ECF No. 1-2.
Thus, the
Subcontract permits recovery of two types of fees: (1) those
incurred in “enforcing” the Subcontract; and (2) those incurred
while “seeking any remedies” under the Subcontract.
But the
Subcontract also places a condition precedent on the recovery of
fees: there must be a “default.”
What is unclear is the connection
between this condition precedent and what is recoverable.
Court concludes the provision is ambiguous on this point.
The
Thus,
the interpretive issue is whether there is a relationship between
the condition precedent and the recoverable fees or whether the
provision permits Stellar to recover all its fees simply upon
establishing any default, regardless of whether the fees are
related to that particular default.
Under the latter interpretation and in the circumstances
presented here, Stellar could recover fees for claims it lost,
regardless of whether the claims were even viable.
As long as a
default occurs and Stellar seeks to either enforce the Subcontract
or pursue remedies, its fees are guaranteed.
But under the former
interpretation, Stellar must show some causal connection between
the default, the enforcement of the Subcontract (or the remedies
5
sought), and the fees.
Under this interpretation, the provision
thus authorizes the recovery of attorneys’ fees incurred for
enforcement of the Subcontract and/or for seeking remedies under
the Subcontract related to a default on the Subcontract.
Under
the enforcement prong, Stellar would be expected to show that the
fees it incurred related to the successful pursuit of a claim for
default.
Similarly, under the remedies prong, Stellar would only
be entitled to fees incurred in the actual obtaining of a remedy
for Cleveland’s default.
The Court finds that this interpretation
reveals the parties’ intention in light of the entire text.
See
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation
of Legal Texts 167-69 (2012) (describing application of the “whole
text” interpretive canon).
To hold otherwise would authorize a
party to recover fees for not only losing claims but even for
frivolous ones.
The applicable language in the Subcontract does
not support such an absurd interpretation, particularly when the
entire sentence is read in context.2
Based on the foregoing, the Court finds that Stellar is
entitled to attorneys’ fees that it can demonstrate arise from its
successful
enforcement
of
the
Subcontract
pursuit of remedies for a default.
2
and/or
successful
The Court further finds that
This possibility is not merely hypothetical. Stellar does indeed seek
fees incurred in pursuit of a claim the Court dismissed at summary
judgment.
6
although the jury did not make specific findings in its verdict on
these issues, Stellar’s claim is not doomed.
Stellar must simply
reconstruct its fee claim by showing that fees were incurred in
the pursuit of claims upon which it prevailed.
One way to make
this showing given the general verdict would be to establish that
the verdict is consistent with its fee claim.
Stellar has not
undertaken this approach, and therefore, its present fee claim is
deficient.
But the Court finds that it should be given an
opportunity to amend its fee motion to attempt to establish its
claim
under
the
Court’s
interpretation
of
the
Subcontract.
Accordingly, within 21 days of today’s Order, Stellar shall file
an amended motion for fees.
Cleveland shall have 14 days to
respond, and Stellar shall have 7 days to reply.3
II.
Cleveland’s Motion for Attorneys’ Fees (ECF No. 177)
Cleveland also filed a motion for attorneys’ fees.
Cleveland
urges the Court to employ its “inherent powers” to assess fees
based on Stellar’s bad faith.
See Kreager v. Solomon & Flanagan,
P.A., 775 F.2d 1541, 1543 (11th Cir. 1985) (explaining that courts
have inherent power to assess attorneys’ fees when losing party
acted in bad faith).
As evidence of bad faith, Cleveland points
to inconsistent positions taken by Stellar regarding the extent to
which various subcontractors were responsible for project delays.
3
For the same reasons, Stellar’s bill of costs (ECF No. 199) is
deficient.
To the extent Stellar seeks costs under the Subcontract,
Stellar must likewise reconstruct its cost claim.
7
Cleveland thus argues that Stellar has attempted to “double-dip”
on recovery from delays to the project.
The Court concludes that the evidence at trial and throughout
this litigation does not demonstrate bad faith by Stellar. Stellar
presented sufficient evidence at trial to permit the jury to
conclude that Cleveland’s shoddy work and insufficient manpower
caused substantial delay to the project.
Further, Stellar’s
scheduling expert offered an enlightening explanation of “critical
path delay,” analogizing the construction project in this case to
a Thanksgiving dinner.
Stellar’s expert employed this analogy to
demonstrate how Stellar’s assessment of delay responsibility could
change over time.
And despite thorough cross examination of
Stellar’s expert and Stellar’s vice president in charge of the
project regarding these allegedly inconsistent positions, the jury
still awarded Stellar $1,300,000 in damages.
The Court therefore
declines to exercise its inherent powers to award sanctions for
bad faith, and Cleveland’s request for fees is denied.
III. Cleveland’s Motion to Alter the Judgment (ECF No. 197)
Cleveland moved to add pre-judgment interest to the judgment
pursuant to either its Miller Act claim or its breach of contract
claims.
As noted above, however, the jury found that Liberty was
not jointly liable for any of Cleveland’s damages.
And because a
surety and principal are jointly liable on a Miller Act claim, the
jury could not have found for Cleveland on its Miller Act claim.
8
Accordingly,
improper.
prejudgment
interest
pursuant
to
that
claim
is
Stellar, however, does not object to an award of
interest pursuant to Cleveland’s breach of contract claims.
But
because the Court may amend the judgment amount after reviewing
Stellar’s renewed fee petition, the Court declines to add interest
to the judgment at this time.
CONCLUSION
As explained above, Stellar’s motion for attorneys’ fees (ECF
No. 167) is denied without prejudice.
Cleveland’s motion for
attorneys’ fees (ECF No. 177) is denied. The Court reserves ruling
on Cleveland’s motion to alter the judgment (ECF No. 197).
IT IS SO ORDERED, this 28th day of January, 2019.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
9
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