Fisk Electric Company v. DQSI, L.L.C., et al

Filing 90

ORDER AND REASONS: IT IS ORDERED that Defendants' 78 Motion for Attorneys' Fees is DENIED. Signed by Judge Ivan L.R. Lemelle on 7/11/2017. (mmv)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
FISK ELECTRIC COMPANY

CIVIL ACTION

VERSUS

NO. 15-2315

DQSI, LLC AND WESTERN
SURETY COMPANY

SECTION “B”(3)
ORDER AND REASONS

I.

NATURE OF MOTION AND RELIEF SOUGHT
Before the court is DQSI’s “FRCP 54 Motion For Attorney Fees

and Non-taxable Costs” (Rec. Doc. 78) and Fisk’s “Memorandum in
opposition to Defendants’ FRCP 54 Motion For Attorney Fees and Nontaxable Costs” (Rec. Doc. 80) and “Reply Memorandum In Support of
FRCP 54 Motion For Attorney Fees And Non-Taxable Costs” (Rec.
Doc.86). For the reasons set forth below, IT IS ORDERED that
Defendants’ Motion for Attorneys’ Fees is DENIED.
II.

FACTS AND PROCEDURAL HISTORY
Fisk contracted to perform electrical work on July 29, 2010

with DQSI, the prime contractor with the United States Army Corps
of

Engineers

(“USACE”),

for

a

storm

proofing

project

(the

“Project”). (Rec. Doc. 1 at 3). Prior to that date, but in
contemplation of the Project, Western issued a Miller Act payment
bond on the Project on behalf of DQSI. (Rec. Doc. 1 at 3). The
original completion date for the Project under Fisk and DQSI’s
contract was July 12, 2011, with a maximum completion date of

1

August 1, 2011; however, because of significant delays that were
not caused by Fisk, the completion date was prolonged another 464
days. (Rec. Doc. 1 at 3).
Under the

terms of Fisk’s

contract with

DQSI, Fisk was

permitted to assert monetary claims for unforeseen delays not
caused by the subcontractor. (Rec. Doc. 1 at 3). As a result of
the

delayed

completion

date,

Fisk

alleges

that

it

incurred

significant additional expenses, which it invoiced to DQSI, but
was not paid. (Rec. Doc. 1 at 4). Fisk subsequently sent a demand
letter to DQSI and Western on March 27, 2013, and thereafter met
with DQSI on several occasions in 2013 in an effort to resolve the
claims amicably. (Rec. Doc. 1 at 5).
After failure to resolve Fisk’s claims, Fisk filed suit
against DQSI and Western pursuant to 40 U.S.C. § 3131, et seq.
(the “Miller Act”) and for breach of contract, in the action
entitled Fisk Electric Co. v. DQSI, L.L.C., No. CV-13-6157 (E.D.
La. filed Oct. 15, 2013). Fisk and DQSI mediated this case on April
17, 2014 and entered into the Memorandum of Agreement, which was
later enforced by this Court on September 17, 2014. (Rec. Doc. 1
at 5, 7; Rec. Doc. 1-1). In addition to other conditions for Fisk
releasing its claims, the parties agreed that DQSI would submit a
Request for Equitable Adjustment (“REA”) to the USACE for the delay
damages alleged by Fisk, as Fisk would not be permitted to submit

2

its claims directly as a subcontractor, but must rely on its
contractor to adequately present them. (Rec. Doc. 1 at 5).
Fisk alleges that the ability to pursue the delay damages
from USACE was imperative in settling, and settlement would not
have been agreed upon in the absence of the promise by DQSI to
submit the REA. (Rec. Doc. 1 at 6). Fisk alleges that it confronted
DQSI prior to filing the original lawsuit and again at mediation
regarding concerns that DQSI may have waived its rights to seek
additional compensation from the USACE for delays, but relied on
DQSI’s representations that it had not. (Rec. Doc. 1 at 6). Fisk
prepared its REA with supporting documentation pursuant to the
Memorandum of Agreement and DQSI ultimately, pursuant to this
Court’s order enforcing that agreement, submitted an REA to the
USACE, which may or may not be identical to what Fisk prepared.
(Rec. Doc. 1 at 6-7).1 Thereafter, Fisk and DQSI finalized their
settlement with the Mutual Release and Compromise of Claims,
executed on December 11, 2014. (Rec. Doc. 1 at 7; Rec. Doc. 1-2).
On February 13, 2015, Fisk received correspondence from the
USACE via DQSI to suggest that, contrary to the alleged assurances
from DQSI that it had not already received delay payment that would
involve Fisk’s delay claims, all claims for the delays had been
paid and the rights of DQSI’s subcontractors had been waived. (Rec.

1

Fisk alleges that it has not seen a copy of the REA that DQSI submitted to
the USACE. (Rec. Doc. 1 at 7).

3

Doc. 1 at 7; Rec. Doc. 1-3). Fisk subsequently met with USACE and
DQSI on March 31, 2015, and alleges that USACE made clear that any
claims for damages related to project delays had previously been
paid

and

addressed

in

connection

with

the

original

contract

modifications requested by DQSI such that Fisk’s rights to seek
additional compensation had been waived. (Rec. Doc. 1 at 8). Fisk
alleges that, at the time of mediation and settlement, DQSI knew
that it had waived Fisk’s rights but assured Fisk that it had not.
(Rec. Doc. 1 at 8). Fisk further alleges that it agreed to settle
based on these representations. (Rec. Doc. 1 at 8).
On June 25, 2015, Fisk filed a law suit seeking rescission of
the release on the basis of fraud and damages for breach of
contract, and additionally adopted all of the claims from its
original lawsuit. (Rec. Doc. 1 at 2). Jurisdiction in this matter
is based upon diversity of citizenship pursuant to 28 U.S.C. §
1332 and is also proper pursuant to 28 U.S.C. § 1352 and 28 U.S.C.
§ 1367(a), insomuch as Fisk requests relief under the Miller Act
and all state law claims arise out of the same case or controversy.
(Rec. Doc. 1 at 2).
Defendants filed a Motion to Dismiss, a Motion to Enforce
Settlement and a Motion for Summary Judgment. In this Court’s
November 2, 2015 Order and Reasons (Rec. Doc. 31), all three of
the Defendants’ motions were denied. The Plaintiffs filed an
Amended

Complaint

on

November

17,

4

2015

and

the

Defendants’

initiated the

instant matter by

judgment on December 6, 2016. This

filing a
Court

motion

issued

a

for summary
Judgment

in

favor of the Defendant (Rec. Doc. 77). Defendant filed the instant
motion in order to recover attorneys’ fees’, taxable and nontaxable costs (Rec. Doc. 78).
III. LEGAL AND FACTUAL FINDINGS
Federal rule of Civil Procedure 54 provides in pertinent part:
“A claim for attorneys’ fees and related nontaxable expenses must
be made by motion unless the substantive law requires those feeds
be proved at trial as an element of damages. Unless a statute or
a court order provides otherwise, the motion must be: (i) filed no
later than 14 days after the entry of judgment; (ii) specify the
judgment and statue, rule or other grounds entitling the movant to
the award; (iii) state the amount sought or provide a fair estimate
of it; and (iv) disclose, if the court so orders, the terms of any
agreement about fees for the services for which the claim is made.
Local Civil Rule 54.2 of the United States District Court for the
Eastern District of Louisiana provides: “In all cases in which a
party seeks attorneys’ fees, the party must submit to the court a
verified,

contemporaneous

report

reflecting

the

date,

time

involved and nature of the services performed.”
DQSI’s Motion for Attorneys’ fees should be denied given the
facts of this case and therefore this Court will not analyze the
propriety of the requested fee amounts. Fisk contends that the

5

agreement that governs the instant controversy is the Mutual
Release and Compromise of Claims Agreement (Rec. Doc. 1-2). The
validity of this agreement was the subject of the previously
adjudicated Motion for Summary Judgment (Rec. Doc. 76). Fisk argues
that when this Court granted DQSI’s Motion for Summary Judgment,
by operation of law, the Mutual Release agreement was reinstated.
Fisk contends that the Mutual Release is a complete resolution of
all claims does not allow for an award of attorneys’ fees because
the settlement agreement extinguished all claims between the two
parties (Rec. Doc. 1-2). DQSI argues that Fisk’s lawsuit against
them was based on a breach of contract, the subcontract between
Fisk and DQSI, and not the Mutual Release contract. DQSI argues
that the subcontract entitles them to attorneys’ fees even though
the Mutual Release and Compromise of Claims agreement may not.
Nonetheless, this Court agrees with Fisk’s contention. Even
though the lawsuit in question was based on an alleged violation
of the subcontract, which allowed for attorneys’ fees, the Court’s
Summary Judgment decision affirmed the validity of the parties
previously

reached

settlement

agreement.

The

subcontract

was

material only insofar that it had a bearing on the parties’ Mutual
Release agreement and whether or not there was a legally sufficient
fraud

claim

to

invalidate

the

contract.

The

operative

legal

agreement that currently governs relationship between Fisk and
DQSI is the Mutual Release and Compromise of Claims, not the

6

allegedly breached subcontract (Rec. Docs. 1-1 and 1-2, 76). The
Mutual

Release

and

Compromise

of

Claims

is

the

controlling

agreement and precludes DQSI from entitlement to attorneys’ fees.
The subcontract

is not the operative

legal document

and its

provisions are immaterial. The Court’s Order and Reasons did not
reinstate the subcontract between the parties, it upheld the
validity

and

reinstated

the

previously

disputed

settlement

agreement. DQSI’s reliance on a subcontract in order to obtain
attorneys’ fees is unpersuasive when this Court has ruled on a
contemporary settlement agreement whose terms address all claims.
Furthermore,

DQSI’s

contention

that

it

is

entitled

to

attorneys’ fees because Fisk brought a baseless lawsuit is without
merit. DQSI argues that Fisk’s claims were baseless because this
Court granted its Motion for Summary Judgment (Rec. Doc. 76).
However, Fisk argues that their lawsuit was neither baseless nor
vexatious, as this Court found “very convincing evidence of fraud”
by DQSI (Rec. Doc. 76). This Court agrees with Fisk and finds that
DQSI should not be entitled to attorneys’ fees and costs based on
this ground. Even though the law of this Circuit led to a favorable
result for DQSI in an earlier proceeding, as this Court previously
held, there is “very convincing evidence of fraud” by DQSI (Rec.
Doc. 76). Based on this Court’s review of the record, this lawsuit
was not baseless or vexatious and DQSI should not be awarded
attorneys’ fees based on equity.

7

Moreover, it is within the power of the district court to
determine award costs to a prevailing party. Sigur v. Emerson
Process Mgmt., Case No.05-1323, 2008 U.S. Dist. LEXIS 106617 at*4
(M.D. La. Feb. 21, 2008). Moreover, the district court can choose
to refuse to award attorneys’ fees based on the facts of a case.
Id. Courts may decide to excuse a losing party from paying costs
for several reasons. Pacheco v. Mineta, 448 F.3d 783, 794 (5th
Cir. 2006); see also Lightfoot v. Hartford Fire Ins. Co., Case
No.07-4833, 2012 U.S. Dist. LEXIS 175247 at*11 (E.D. La. Dec. 11,
2012). If the court excuses the losing party from paying costs, it
must explain its reasons for doing so. Pacheco, 448 F.3d at 794.
The

Fifth

Circuit

considers

five

factors

in

determining

whether to deny attorneys’ fees: “(1) The losing party’s limited
financial

resources;

(2)

Misconduct

by

the

prevailing

party;

(3)Close and difficult legal issues presented; (4) Substantial
benefit
enormous

conferred
financial

by

the

public;

resources.

Id.

(5)The
This

prevailing
Court

party’s

denies

DQSI

attorneys’ fees in this context because of a “substantial benefit
conferred by the public.” The public benefits from not rewarding
a party where strong evidence indicates fraudulent behavior with
another business. The law of this Circuit required this Court to
rule in favor of DQSI in an earlier proceeding. However, this Court
will not award attorney’s fees to a party where there is convincing
evidence of questionable business practices that are against the

8

public’s

interest.

Companies

should

engage

in

fair

business

dealings with other companies. Despite the legal insufficiency of
the Fisk’s fraud claims against DQSI, it is clear that something
ran afoul in their dealings.

This Court had no choice but to allow

DQSI to prevail in a previous lawsuit. However, this Court will
not condone the recovery of attorneys’ fees in reward for highly
suspect business behavior with Fisk. Attorneys’ fees are not
appropriate in this case for all of the previously mentioned
reasons.

New Orleans, Louisiana, this 11th day of July, 2017.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

9