Category Archives: attorneys fees

PRIME CONTRACTOR & SURETY’S RECOVERY OF ATTORNEY’S FEES IN MILLER ACT LAWSUIT

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imagesCan a claimant recover attorney’s fees in a Miller Act payment bond dispute even though the Miller Act does not contain a prevailing party attorney’s fee provision?  Yes, if the underlying contract that formed the basis of the suit provided for attorney’s fees.  

 

What about a prime contractor and surety—can they recover their attorney’s fees if they prevail in a Miller Act payment bond claim and the underlying contract provides a basis for fees?   The Eleventh Circuit Court of Appeals in U.S.A. f/u/b/o RMP Capital Corp. v.  Turner Construction Co., 2017 WL 244066 (11th Cir. 2017) seemingly just answered this question in the affirmative when it reversed a lower court’s ruling that precluded a prime contractor and surety that prevailed in a Miller Act claim from recovering their attorney’s fees:

 

“Like all other parties to contracts, general contractors on federal projects and their sureties can recover attorney’s fees where a contract allocates attorney’s fees to them. Here the contract that Turner [prime contractor] and the Sureties claim entitles them to an award of attorney’s fees was between Southwick [sub-subcontractor] and Bolena [subcontractor]. We remand to the district court to interpret that contract in the first instance, so as to determine whether it entitles Turner and the Sureties to an award of attorney’s fees, and if so how much.  Id at *2 (internal citation omitted).

 

 

While this ruling may seem harmless, it is a favorable ruling to a prime contractor and surety that prevail in a Miler Act payment bond claim when the underlying contract provides for attorney’s fees (which would likely be the same contract the claimant relies on to seek attorney’s fees).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

SIGNIFICANT ISSUES TEST APPLIES TO FRAUDULENT LIEN CLAIMS TO DETERMINE ATTORNEY’S FEES

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imagesConstruction lienors need to appreciate on the frontend that recovering statutory attorney’s fees in a construction lien action is NOT automatic—far from it.  This is because the prevailing party for purposes of attorney’s fees in a construction lien action is determined by the “significant issues test,” a subjective test with no bright line standards based on who the trial court finds prevailed on the significant issues in the case.  If you want to talk about the subjective and convoluted nature of recovering attorney’s fees in a construction lien action under the significant issues test, a recent opinion by the Fourth District Court of Appeal is unfortunately another nail in the coffin.   

 

In Newman v. Guerra, 2017 WL 33702 (Fla. 4th DCA 2017), a contractor recorded a construction lien on a residential renovation project and filed a lien foreclosure lawsuit.  The homeowner countersued the contractor and asserted a fraudulent lien claim pursuant to Florida Statute s. 713.31.  An evidentiary hearing was held on whether the lien was a fraudulent lien and the trial court held that the lien was fraudulent (therefore unenforceable) because it included amounts that were not lienable under the law.  The remaining claims including both parties’ breach of contract claims proceeded to trial.  There was no attorney’s fees provision in the contract.  At the conclusion of the trial, the court found that the contractor was entitled a monetary judgment on its breach of contract claim. 

 

Question:  If the owner prevailed in the contractor’s construction lien claim and established that the lien was in fact fraudulent, is the owner entitled to his statutory attorney’s fees? 

 

While equity may suggest “yes” as the answer, the answer is not necessarily.  This is because of the significant issues test where the court is going to look at the outcome of the entire litigation to determine the party that prevailed on the significant issues in the entire case.   Since the contractor ultimately recovered a money judgment, the court held the owner was not the prevailing party for purposes of attorney’s fees under the significant issues test.  The contractor was not either, but this is beside the point since the owner established the lien was fraudulent and the contractor recovered a money judgment under a breach of contract claim that did not provide for attorney’s fees.  Nonetheless, the court maintained:

 

In sum, the trial court properly applied the “significant issues” test…in denying the homeowner’s claim for attorney’s fees under section 713.31 [fraudulent lien statute]. Even if a party prevails on a fraudulent lien claim, the party must be the prevailing party in the case as a whole to be entitled to attorney’s fees under section 713.31.

Newman, supra, at *4.

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: ATTORNEY’S FEES AND THE SIGNIFICANT ISSUES TEST

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imagesAttorney’s fees become a component of damages that parties seek to recover whenever there is a contractual or statutory basis for them to recover their fees.  Parties want to be able to recover all or substantially most of the attorney’s fees they incurred in pursuing their claim. (In my experience, recovering all of the fees incurred is very challenging.)  But, to be entitled to attorney’s fees, a party has to be deemed the prevailing party.  There is the sentiment that as long as you recover a positive net judgment (even if it is for $100 when your claim was for $50,000) then you will be able to recover your attorney’s fees which will likely exceed the amount that was ever in dispute.  With this sentiment, certain disputes become solely driven by attorney’s fees.  Now, there is a trend for the prevailing party for purposes of attorney’s fees for certain disputes such as construction lien actions and breach of contract actions to be determined by the significant issues test.  While recovering a net judgment is important, there are other equitable considerations a court or arbitrator can consider to determine the party that prevailed on the significant issues for purposes of awarding attorney’s fees.  This article explains more.  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

THERE DOES NOT HAVE TO BE A PREVAILING PARTY FOR PURPOSES OF ATTORNEY’S FEES IN CONSTRUCTION LIEN DISPUTE

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images-1Just because you are suing to foreclose your construction lien does NOT mean you will automatically recover your attorney’s fees as the prevailing party.   There does NOT have to be a prevailing party for purposes of recovering attorney’s fees.  This means a court or arbitrator could rule that neither party was the prevailing party for purposes of attorney’s fees; thus, neither party can recover their attorney’s fees from the other (or presumed losing) party.  This is an important consideration because it is impossible to predict on the frontend whether a court or arbitrator will deem you the prevailing party for purposes of recovering your attorney’s fees. This is because a court or arbitrator is to employ the significant issues test to determine which party prevailed on the significant issues to be deemed the prevailing party; and, again, a court or arbitrator could find neither party prevailed on the significant issues, hence there is no prevailing party.

 

This issue was clarified the hard way in Wells v. Halmac Development, Inc., 41 Fla.L.Weekly D924a (Fla. 3d DCA 2016) when an arbitrator ruled that neither party was the prevailing party for purposes of awarding attorney’s fees.  (Check here for a history of this dispute.) The attorney’s fees incurred in the arbitration were probably significant so a party believed it should have been declared the prevailing party for purposes of attorney’s fees and continued to fight this issue in court when the arbitration award was trying to be confirmed and enforced.  The fight turned acrimonious–there were motions for sanctions served and two appeals. 

 

Of applicability here, one of the appeals dealt with whether the trial court should have granted attorney’s fees pursuant to a motion for sanctions due to the opposing party continuing to try to declare itself as the prevailing party after (a) the arbitrator determined there would be no prevailing party and (b) the arbitrator’s determination corresponded with the law.  The Third District held that the motion for sanctions should have been granted awarding the party attorney’s fees because the continuous fight to be declared the prevailing party was not colorable under the law—the law was clear that there did NOT have to be a prevailing party for purposes of attorney’s fees in a construction lien action.  On this point, the Third District stated:

 

In fact, at the time Castro filed his motion requesting the trial court to declare him the prevailing party, the Florida Supreme Court had already weighed in on this issue and had explicitly “reject[ed] the notion that in every construction lien case the trial court is compelled to find a prevailing party.” Trytek, 3 So. 3d at 1204 n. 13. The Trytek court further emphasized that there might not always be a “prevailing party” in these types of suits and held that “the possibility that neither party is a ‘prevailing party’ is consistent with an application of the ‘significant issues’ test of Moritz and .” Id. at 1203. Most notably for our analysis, Trytek made it clear that Hollub and similar cases should not be read to mean that a prevailing party must be declared in a construction lien action:

We do not construe any of the appellate cases concerning prevailing party attorneys’ fees to mandate that there be a prevailing party, only that where a “prevailing party” is determined, the entitlement to attorneys’ fees is mandatory. See Pennington & Assocs., Inc. v. Evans, 932 So.2d 1253, 1254 (Fla. 5th DCA 2006); Hollub Constr. Co. v. Narula, 704 So.2d 689, 690 (Fla. 3d DCA 1997); Grant v. Wester, 679 So.2d 1301, 1308 (Fla. 1st DCA 1996); Sanfilippo v. Larry Giacin Tile Co., 390 So.2d 413, 414 (Fla. 4th DCA 1980). We reject the notion that in every construction lien case the trial court is compelled to find a prevailing party. See Kenmark Constr., Inc. v. Cronin, 765 So.2d 129 (Fla. 2d DCA 2000) (declining to announce a bright-line rule that a trial court must find a prevailing party in every construction lien action).

Id. at 1204 n. 13.

The Trytek decision — issued in 2009 — represented the settled law in Florida well before the arbitration proceedings in this case, and the arbitrator specifically relied upon and cited to Trytek in its determination that “there is no prevailing party for the purposes of an award of attorney’s fees.” Therefore, Castro’s counsel knew or should have known that any claim that Castro was entitled to be declared the prevailing party, after the arbitrator clearly determined there was no prevailing party, “[w]ould not be supported by the application of then-existing law to those material facts.” § 57.105(1)(b), Fla. Stat. (2012). This court has already and necessarily made this very determination when we held (in the prior appeal) that the trial court had no legal basis upon which to overturn the arbitrator’s determination (that there was no prevailing party) and to declare that Castro was the prevailing party.

Wells, supra. 

 

If you extract anything from this case, it is that a court or arbitrator does NOT have to deem a party the prevailing party in a construction lien case. The court or arbitrator will do this by finding that neither party prevailed on the significant issues of the case (as determined by the court or arbitrator).  As such, neither party is the prevailing party and neither party is entitled to attorney’s fees from the opposing party.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

ATTORNEY’S FEES AGAINST COMMON LAW PAYMENT BONDS

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imagesOn sophisticated construction projects (federal, Florida public, or Florida private projects), it is not uncommon for a prime (general) contractor to require that certain subcontractors furnish the prime contractor a payment bond.  When the subcontractor furnishes the prime contractor a payment bond, this bond is a common law bond because it is not a bond furnished in accordance with a statutory requirement.  Unlike a statutory payment bond (whether furnished per the Miller Act, Florida Statute s. 255.05, Florida Statute s. 713.23, or Florida Statute s. 337.18) there are no statutory prerequisites in order for a claimant to preserve rights under the common law payment bond.

 

For instance, if the subcontractor that furnished a payment bond has an unpaid subcontractor or supplier, these entities can pursue claims directly against the subcontractor’s payment bond instead of the prime contractor’s (statutory) payment bond. Thus, if the subcontractor’s unpaid subcontractors or suppliers failed to preserve their rights against the prime contractor’s (statutory) payment bond, they can still pursue rights against the subcontractor’s common law payment bond.

 

In USA f/u/b/o Vulcan Materials v. Volpe Const., 622 F.2d 880 (5th Cir. 1980), an earthwork subcontractor furnished a payment bond on a federal project (where the prime contractor would have furnished a Miller Act payment bond).  The subcontractor had an unpaid supplier of fill.  Amongst other claims, the supplier sued the earthworks subcontractor’s payment bond.  The Fifth Circuit found that not only was this payment bond a common law bond, but the supplier (bond claimant) was entitled to attorney’s fees pursuant to Florida Statute s. 627.756.

 

Florida Statute s. 627.756 provides:

 

(1) Section 627.428 (entitlement to attorney’s fees) applies to suits brought by owners, subcontractors, laborers, and materialmen against a surety insurer under payment or performance bonds written by the insurer under the laws of this state to indemnify against pecuniary loss by breach of a building or construction contract. Owners, subcontractors, laborers, and materialmen shall be deemed to be insureds or beneficiaries for the purposes of this section.

 

Thus, even if the bond is a common law payment bond, an unpaid claimant can still recover their attorney’s fees.  Thus, the unpaid claimant gets the benefit of not having to comply with statutory prerequisites to preserve rights under the prime contractor’s payment bond and the recovery of attorney’s fees against a common law payment bond.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

FEDERAL GOVERNMENT CONTRACTING AND RECOVERY OF ATTORNEY’S FEES UNDER THE EQUAL ACCESS TO JUSTICE ACT (“EAJA”)

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UnknownThe ability to recover attorney’s fees against the federal government is a consideration before initiating a dispute against the government, whether in federal court or in an administrative proceeding.

 

The Equal Access to Justice Act (referred to as the “EAJA”) authorizes a court to award reasonable attorney’s fees and costs to a prevailing, eligible contractor in an action brought by or against the United States.  28 U.S.C. s. 2412(d)(1)(a).  The purpose of the EAJA has been explained as follows:

 

“The purpose of the EAJA is to eliminate legal expenses as a barrier to challenges of unreasonable government action. Accordingly, the EAJA authorizes this court to award attorney fees and expenses incurred by contractors who prevail in litigation against the government provided the contractors do not exceed certain size and net worth limitations. The government may escape liability for legal expenses if its actions were substantially justified or if special circumstances make the award unjust.  The burden is on the government to present a substantial justification for its actions.”

Community Heating & Plumbing Co., Inc. v. Garrett, 2 F.3d 1143, 1145 (Fed.Cir. 1993) (internal citations and quotations omitted)

 

First, the contractor needs to be eligible to recover fees under the EAJA.  Not every contractor is eligible.  Such eligible contractors are defined by the EAJA as:

 

“(i) an individual whose net worth did not exceed $2,000,000 at the time the civil action was filed, or (ii) any owner of an unincorporated business, or any partnership, corporation, association, unit of local government, or organization, the net worth of which did not exceed $7,000,000 at the time the civil action was filed, and which had not more than 500 employees at the time the civil action was filed….”

28 U.S.C. 2412 (d)(2)(B)

 

Second, the contractor needs to be the prevailing party.  A prevailing contractor under the EAJA is a contractor that recovers a judgment on the merits in its favor.  Ulysses, Inc. v. U.S., 117 Fed.Cl. 772, 777 (Fed.Cl. 2014).   The government however, can avoid the award of fees against it if it proves it was substantially justified in advancing its position.  Substantial justification is a subjective standard determined on a case-by-case basis:

 

“In determining whether to award attorney’s fees under EAJA, the Court looks to whether the Government’s position prior to and throughout litigation had a reasonable basis in both law and fact. While the appropriateness of the Government’s position might vary on individual matters, the Court considers the totality of circumstances to determine whether that position was substantially justified. In the words of the United States Supreme Court, ‘While the parties’ postures on individual matters may be more or less justified, the EAJA … favors treating a case as an inclusive whole, rather than as atomized line-items.’”

Ulysses, 117 Fed.Cl. at 778 (internal quotations and citations omitted). 

 

Stated more simplistically, the government must prove that it advanced a position “justified to a degree that could satisfy a reasonable person.”  BCPeabody Construction Services, Inc. v. U.S., 117 Fed.Cl. 408, 413 (Fed.Cl. 2014) (internal quotation and citation omitted).

 

And third, even if the contractor is eligible to recover attorney’s fees under the EAJA and prevails against the government, this does NOT mean that it will recover 100% of the fees it incurred in the action.  The EAJA provides a statutory cap of $125/hour for attorney’s fees time unless the “court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys or the proceedings involved, justifies a higher fee.” 28 U.S.C. s. 2412(d)(2)(A).  Unfortunately, exceeding this hourly cap has nothing to do with the novelty of the issues, the competence of the attorney, or the results obtained.  BCPeadbody Construction Services, 117 Fed.Cl. at 415. This means that contractors should not bank on exceeding the statutory cap in recovering attorney’s fees against the government.

 

Importantly, there is also a relevant EAJA for administrative proceedings initiated prior to or instead of  any civil action in court.   5 U.S.C. s. 504.  This administrative EAJA largely mirrors the EAJA discussed above for civil actions, but applies to administrative proceedings. See Melkonyan v. Sullivan, 501 U.S. 89 (1991).

 

Before proceeding with a dispute against the federal government in federal court or an administrative proceeding, consider whether you have a basis under the EAJA to recover attorney’s fees.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

DON’T FORGET TO TIMELY FORECLOSE THE CONSTRUCITON LIEN IN COURT!

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imagesKBDKQVLNA Notice of Contest of Lien under Florida Statute s. 713.22 is a vehicle that will shorten the statute of limitations for a lienor to foreclose on a recorded construction lien from one year to 60 days from the date the lien is contested.  A copy of a Notice of Contest of Lien is identified below.  An unwary lienor that fails to timely foreclose on its claim of lien in court will be deprived of its lien rights!

 

The recent decision in Snell v. Mott’s Contracting Services, Inc., 39 Fla. L. Weekly D1053a (Fla. 2d DCA), illustrates such an unwary lienor.  In this case, a contractor recorded a claim of lien on a residential project.  The owner then filed a lawsuit against the contractor and the contractor moved to dismiss or stay the action based on an arbitration provision in the contract.  The owner then filed a Notice of Contest of Lien to shorten the contractor’s statute of limitations to foreclose on the lien to 60 days.  The contractor, however, never moved to foreclose its lien in court; the court compelled the dispute to arbitration.

 

The contractor prevailed in arbitration and the arbitrator found that the contractor was the prevailing party under Florida Statute s. 713.29 that entitles a prevailing party in a lien action to its attorney’s fees (i.e., a party that prevails on the significant issues in the action).

 

However, the two issues on appeal were: (1) whether the contractor could be entitled to its attorney’s fees under s. 713.29 when it failed to timely foreclose on its lien in court after it received the Notice of Contest of Lien and (2) whether the arbitrator, absent express agreement of the parties, had authority to determine entitlement to attorney’s fees.

 

As it pertains to the first issue, the Second District found that because the contractor failed to comply with s. 713.22 by foreclosing on its lien in court within 60 days after the lien was contested, the contractor was not entitled to attorney’s fees pursuant to s. 713.29.  Stated simpler, the contractor was not entitled to attorney’s fees because it no longer had lien rights since it failed to timely foreclose on its lien in court within 60 days after the lien was contested by the owner.

 

As it pertains to the second issue, the Second District found that an arbitrator has no authority / jurisdiction to determine a party’s entitlement to attorney’s fees unless the parties to the arbitration expressly waive the right to have a court determine entitlement.

 

This cases raises a few important points:

 

  • Even if there is an arbitration provision in a contract, it is still imperative that a lien foreclose action be filed in court!  File the lien action and simultaneously move to stay the lien foreclosure action pending the arbitration.

 

  • If you receive a Notice of Contest of Lien, do not forget that it operates to shorten the statute of limitations to foreclose on the lien to 60 days.  Otherwise, the lien will not be enforceable.

 

  • If you want an arbitrator to determine the entitlement to attorney’s fees, it is good practice to ensure that the parties to arbitration expressly agree to grant the arbitrator this authority and waive the court’s authority to determine entitlement.

 

 

NOTICE OF CONTEST OF LIEN

To: (Name and address of lienor)

You are notified that the undersigned contests the claim of lien filed by you on ___, (year) , and recorded in ___ Book ___, Page ___, of the public records of ___ County, Florida, and that the time within which you may file suit to enforce your lien is limited to 60 days from the date of service of this notice. This ___ day of ___, (year) .

Signed: (Owner or Attorney)

 

For more information on Notice of Contests of Lien, please see: https://floridaconstru.wpengine.com/oh-no-a-lien-is-recorded-what-are-some-of-my-options/.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

 

 

ATTORNEY’S FEES UNDER (A) FLORIDA’S DECEPTIVE AND UNFAIR TRADE PRACTICES ACT AND (B) OFFERS OF JUDGMENT

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In Florida, a party can recover attorney’s fees if it has a contractual or statutory basis. If a party has neither a contractual or statutory basis to recover attorney’s fees, another vehicle is to serve an Offer of Judgment (also known as a Proposal for Settlement).  Whether there is an argument to recover attorney’s fees is an important consideration.

 

A. Attorney’s Fees Under The Florida Deceptive and Unfair Trade Practices Act

 

The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) is a consumer-protection related law designed to allow parties to sue other parties for deceptive and unfair trade or business practices. FDUTPA is discussed in more detail in https://floridaconstru.wpengine.com/actual-damages-under-floridas-deceptive-and-unfair-trade-practices-act/. There are certain circumstances when asserting a FDUTPA claim is worthwhile and should be explored such as when a party is looking for a statutory basis to recover attorney’s fees.

 

FDUTPA contains a statutory basis to recover attorney’s fees. Section 501.2105 of FDUTPA provides in relevant part:

 

 “(1) In any civil litigation resulting from an act or practice involving a violation of this part, except as provided in subsection (5), the prevailing party, after judgment in the trial court and exhaustion of all appeals, if any, may receive his or her reasonable attorney’s fees and costs from the nonprevailing party.”

 

 

The reason the word “may” is highlighted is because this is permissive, not mandatory, language. In other words, it is not automatic or mandatory that attorney’s have to be awarded to the prevailing party, but they could (i.e., may) be awarded. This is an important distinction. However, recently, Florida decisions have indicated that attorney fees should be mandatorily awarded to the prevailing party in a FDUTPA action.

 

Recently, in Bull Motors, LLC v. Alicia Borders, 39 Fla. L. Weekly D28a (Fla. 3d DCA 2013), the Third District stated:

 

“FDUTPA’s attorneys’ fees provision recognizes the policy of protecting consumers from unfair and deceptive trade practices and the need to attract private attorneys to take such cases by assuring them of a legal fee proportionate to their effects if their clients prevail. Such an award requires that the client prevail by recovering a judgment and, if there are counterclaims, by recovering a net judgment in the entire case. There is no express requirement of proportionality between the amount of the FDUTPA judgment and the attorney’s fees and costs incurred in obtaining the judgment.”

Bull Motors, supra (internal quotations omitted).

 

 

Bull Motors relied on the Florida Supreme Court’s decision in Diamond Aircraft Indus., Inc. v. Horowitch, 107 So.3d 362 (Fla. 2013).  In Diamond Aircraft, a plaintiff asserted a FDUTPA claim against a defendant. However, it was determined that FDUTPA did not apply because Arizona law, not Florida law, governed the case. Thus, the defendant prevailed under the plaintiff’s FDUTPA claim. A question certified to the Florida Supreme Court to answer was whether FDUTPA entitled a prevailing party to attorney’s fees if the court determines that FDUTPA does not apply to the case because the substantive law of another state (in this case, Arizona) applied. The Court stated that it did (or answered the question in the affirmative) holding that by a plaintiff asserting a FDUTPA claim, it exposes itself to both the benefits and potential consequences of the statute. Further, the Court expressed: “Under FDUTPA, a prevailing party is entitled to reasonable attorney’s fees and costs in civil litigation arising from a violation of that act ‘after judgment in the trial court and exhaustion of all appeals.’” Diamond Aircraft, supra, at 370 quoting Fla.Stat. s. 501.2105.

 

Hence, even though the statute contains permissive language, there is strong legal authority that would mandatorily entitle a prevailing party to recover attorney’s fees. This cuts both ways. This means that a plaintiff could expose itself to attorney’s fees by improperly asserting a FDUTPA claim without facts to support a deceptive or unfair trade practice or without evidence to support actual damages as provided under the statute.  Plaintiffs need to be cognizant of this before asserting a FDUTPA claim.

 

B. Attorney’s Fees By Serving Offers of Judgment

 

 

 

Moreover, Bull Motors discussed the vehicle to create an argument for the recoverability of attorney’s fees known as offers of judgment or proposals for settlement (“Offer of Judgment”). The Offer for Judgment statute in Florida Statute 768.79 provides in material portion:

 

“In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer….If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand.”

 

 

In a nutshell, a defendant can recover its attorney’s fees if it serves an Offer of Judgment and the plaintiff gets a $0 judgment against the defendant or the plaintiff gets a judgment of at least 25% less than the offer. For example, and using simple math, let’s say the defendant serves an Offer of Judgment for $100,000 and the plaintiff obtains a net judgment against the defendant for $50,000. In this situation, the defendant could be entitled to its attorney’s fees from the date of the Offer of Judgment and forward since the plaintiff obtained a judgment of at least 25% less than its $100,000 Offer.

 

And, if a plaintiff serves an Offer of Judgment, it can recover its attorney’s fees if gets a net judgment of at least 25% greater than the Offer. Let’s say the plaintiff serves a $100,000 Offer of Judgment and recovers a net judgment against the defendant for $150,000. In this situation, the plaintiff could be entitled to its attorney’s fees from the date of the Offer of Judgment and forward since the plaintiff obtained a judgment of at least 25% greater than its $100,000 Offer.

 

However, serving Offers of Judgment are not sure-things under Florida law that will guarantee a party to attorney’s fees even if the math (shown above) works. There are numerous Florida decisions that find defects in Offers of Judgment (including technical defects) that ultimately prevent a party from recovering its attorney’s fees. Both Bulls Motor and Diamond Aircraft are examples of decisions whereby the Courts found flaws in the Offers of Judgment. Offers of Judgment do not apply to claims for equitable relief, only claims for damages. Thus, parties need to be crystal clear that the Offers only apply to claims for damages. But it is unfortunately not that simple. The Florida Supreme Court in Diamond Aircraft stated:

 

“Courts have also held that when a plaintiff seeks both monetary and nonmonetary relief, and a party makes a general offer of settlement, section 768.79 is not applicable. The reasoning adopted in those decisions is that strict construction of the phrase “any civil action for damages” in the offer of judgment statute does not include a claim for equitable relief, or one that involves claims for both monetary and nonmonetary relief.
***
We hold that section 768.79 does not apply to an action in which a plaintiff seeks both damages and equitable relief, and in which the defendant has served a general offer of judgment that seeks release of all claims.”
Diamond Aircraft, 107 So.3d at 373-74 (internal citations omitted); accord Bull Motors, supra (“The offer of judgment statute, section 768.79…does not apply to cases that, as here, involve a general offer seeking release of all claims in the case, both equitable and monetary.”).

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

ARGUMENTS TO RECOVER ATTORNEYS’ FEES AGAINST A MILLER ACT PAYMENT BOND

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UnknownFor those subcontractors and suppliers providing labor, services, or materials to federal construction projects, understanding your rights under the Federal Miller Act (40 USC s. 3131 et seq.) is important. Among other things, the Miller Act advises what a subcontractor and supplier need do to preserve a right against the prime contractor’s payment bond, from providing the prerequisite notice of nonpayment to the surety within 90 days from final furnishing / performance (if there is no privity of contract with the prime contractor) to ensuring suit is filed in federal court within a year from final furnishing / performance. Obtaining a copy of the payment bond and understanding these timeframes is critical to an unpaid subcontractor or supplier; otherwise, their claim will be barred against the payment bond.

 

One of the downsides to Miller Act bond claims is that there is no statutory right to the recovery of attorneys’ fees under the Federal Miller Act. This means that every dollar spent on lawyers is potentially reducing the amount in recovery because there is no avenue to recoup those attorneys’ fees under the Miller Act.  Unless this claim is significant, this downside often demotivates a supplier or subcontractor from filing suit in federal court against a Miller Act payment bond.

 

There are, however, arguments to recover attorneys’ fees in a Miller Act action.  The first argument is if there is an underlying contract involving the claimant relating to the project that provides for attorneys’ fees (such as the contract between the subcontractor and prime contractor), the claimant can recover its attorneys’ fees.  See, e.g., U.S. f/u/b/o Southeastern Mun. Supply Co., Inc. v. National Union Fire Ins. Co. of Pittsburg, 876 F.2d 92 (11th Cir. 1989) (finding that attorneys’ fees provision in contract between supplier and subcontractor was enforceable to enable supplier to recover attorneys’ fees against Miller Act surety).

 

There is also a second argument that attorneys’ fees should be recoverable in Florida against a Miller Act bond under a 1968 Fifth Circuit Court of Appeal’s decision in United States Fidelity and Guaranty Co. v. Hendry Corp., 391 F.2d 13, 20-21 (5th Cir. 1968). This case analyzed Florida law to fill in the gap to determine whether attorneys’ fees were recoverable under the Miller Act (since the Act is silent on the issue). In doing so, the Fifth Circuit analyzed Florida’s Insurance Code and maintained that provisions in Florida’s Insurance Code (still in effect today) allow for the recoverability of attorneys’ fees in a Miller Act bond dispute.

 

Parties pursuing Miller Act actions for Florida-based federal projects should plead for attorneys’ fees whether through a contractual provision and/or the Fifth Circuit’s ruling in Hendry Corp.  Now, it is uncertain whether the Fifth Circuit’s ruling would still apply today; however, it is an argument that should still be pursued in furtherance of trying to recover attorneys’ fees in an action against a Miller Act payment bond, especially if there is not an underlying contract that provides for attorneys’ fees.

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

FURTHER CONFUSION TO RECOVERING ATTORNEYS’ FEES IN A LIEN ACTION

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feesRecovering attorneys’ fees in a lien action is becoming more and more convoluted. Recent caselaw has made it more challenging for a party prevailing in a lien action to recover their attorneys’ fees. Now, the test to recover attorneys’ fees is the “significant issues test,” i.e., which party prevailed on the significant issues in the case. In other words, a party could win the lien action yet still not be entitled to recover their attorneys’ fees. Plus, the determination of the significant issues is in the discretion of the judge, meaning it is very difficult to predict whether a party will recover any attorney fees even if they prevail on the lien action.

 
The case of GMPF Framing, LLC v. Villages at Lake Lily Associates, LLC, 100 So.3d 243 (Fla. 5th DCA 2012), illustrates the challenges in recovering attorneys’ fees. In this case, a lienor recorded a claim of lien and filed a lien foreclosure action. However, instead of just suing to foreclose the lien, the lienor also sued for unjust enrichment and for an equitable lien (both counts which are difficult counts for a lienor / contractor to prevail on against an owner). The owner prevailed on the lien claim and the trial court awarded the owner attorneys’ fees. However, on appeal, the Fifth District Court of appeal reversed because it was undetermined which party won on the significant issues because the equitable lien and unjust enrichment claims remained pending even though the trial court discharged the lien. In particular, the Fifth District found that it is possible that the lienor could prevail on these remaining counts and be deemed the prevailing party by prevailing on the significant issues in the case.

 
This decision complicates how attorneys’ fees are awarded in a lien action and, to that end, which party will be deemed the prevailing party. A lien action is a statutory action that statutorily entitles a party to prevailing party attorneys‘ fees. See Fla.Stat. s. 713.29. The other counts in this lawsuit (unjust enrichment and equitable lien) have no statutory or contractual basis for attorneys‘ fees. Thus, they really should not factor in as to which party won on the significant issues of the lien action–the action that entitles a party to attorneys‘ fees. Unfortunately, this is not how the GMPF Framing Court ruled (nor does it appear to be how other Florida appellate courts will rule), which may have the undesirable effect of motivating lienors to sue on otherwise improper liens by simply coupling their lien claim with another claim and hope they are still able to prevail on the significant issues even if the lien claim is discharged.

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.