Burton v. Jeremiah Beach Parker Restoration & Construction Management Corp.

2010 VT 55, 6 A.3d 38, 188 Vt. 583, 2010 Vt. LEXIS 56

• Court: Supreme Court of Vermont
• Decided: June 21, 2010
• Docket: 09-312
• Status: Published

Opinions

¶ 1. A1 Burton, the homeowner in this construction-contract dispute, appeals from a superior court order awarding attorney’s fees to the contractor, Jeremiah Beach Parker Restoration and Construction Management Corporation. Burton contends the trial court erred in awarding attorney’s fees because: (1) the attorney’s fee provision of the Prompt Payment Act, 9 V.S.A. § 4007(c), had expired; (2) the contractor was found to be in breach of contract; (3) the contractor was not the “substantially prevailing party” under the Act; (4) the attorney’s fee motion was untimely; and (5) Burton was not afforded a reasonable opportunity to be heard. In addition, Burton contends the court erred in denying a motion to extend the appeal period for the underlying judgment. For the reasons set forth below, we affirm.

¶ 2. The basic facts of this dispute may be briefly summarized. Additional material facts will be set forth in the discussion which follows. In February 2002, Burton entered into an agreement with contractor for substantial renovations to Burton’s property in Benson, Vermont. Contractor began work, but disputes over certain changes in the renovation plans led to a breakdown in the relationship, and Burton ultimately filed this lawsuit seeking damages for breach of contract, breach of the implied covenant of good faith and fair dealing, common law fraud, breach of fiduciary duty, violation of the Consumer Fraud Act, and negligent misrepresentation. Contractor counterclaimed for breach of contract, claiming that Burton had wrongfully hired other contractors to perform work specified in the contract, and failed to pay invoices in a timely manner.

¶ 3. The trial court (Judge Katz presiding) granted contractor’s pretrial motion to dismiss several of the counts, and the remaining claims were tried before the court (Judge Toor presiding) over several days in March and July 2008. In August 2008, the court issued written findings and conclusions, ruling in favor of Burton on his breach-of-contract claims for defective workmanship on a “ridge beam,” for which it awarded damages of $2,000, and overbilling, for which it awarded damages of $6,627, but found no evidence to support Burton’s remaining claims for which he had sought extensive additional damages. The court ruled for contractor on its counterclaim, awarding damages of $4,901 plus interest (later calculated to total about $3,160), and directed the parties to submit a proposed judgment order. Thereafter, on October 20,2008, the court issued a written judgment order which, after deducting contractor’s award, resulted in a net judgment to Burton of $566. Burton did not appeal.

¶ 4. Contractor then moved for an award of attorney’s fees under the Prompt Payment Act, which provides that, “Notwithstanding any contrary agreement, the substantially prevailing party in any proceeding to recover any payment within the scope of this chapter shall be awarded reasonable attorneys’ fees in an amount to be determined by the court or arbitrator, together with expenses.” 9 V.S.A. § 4007(c). The court granted the motion in March 2009, finding that contractor was the substantially prevailing party, and ordered contractor to submit an affidavit detailing its fees “so that Burton may be heard on their reasonableness.” Thereafter, with the exception of several minor charges, the court found the amounts claimed to be reasonable and awarded contractor attorney’s fees totaling $81,043 plus costs of $8,124. In the same order, the court denied Burton’s motion to permit an appeal from the underlying judgment. This appeal followed.

¶ 5. Burton first contends the trial court lacked statutory authority to award attorney’s fees because the fee provision of the Prompt Payment Act, 9 V.S.A. § 4007(c), had expired under a “sunset” provision prior to the effective date of an amendment repealing the expiration clause. Burton did not raise this issue with the trial court in his opposition to the motion for attorney’s fees and therefore did not preserve it for review on appeal. Progressive Ins. Co. v. Brown, 2008 VT 103, ¶ 6, 184 Vt. 388, 966 A.2d 666 (to rely upon an argument on appeal, appellant must properly preserve it by raising it with the trial court in a timely manner and with specificity and clarity).

Í 6. Burton did eventually raise the issue below, but not in a timely manner. In granting the motion for attorney’s fees, the trial court ordered contractor to submit an affidavit “detailing the fees so that Burton may be heard on them reasonableness” and authorized Burton to submit within ten days “written objections” to contractor’s submission. About a month later, Burton filed a response citing the sunset provision and “ask[ing] the Court to reconsider its award of attorney[’s] fees.” The motion to reconsider was plainly untimely, however, and the trial court properly denied it. See V.R.C.P. 59(e) (motion to alter or amend must be filed no later than ten days after entry of judgment). Burton maintains that the court's decision granting the motion for attorney’s fees was not a judgment, that the court contemplated additional briefing, and that Burton’s subsequent pleading was not therefore a motion to reconsider but merely a supplemental filing. The arguments are unpersuasive. The order granting contractor’s motion for attorney’s fees was plainly a judgment on the merits of the motion and merely authorized contractor to submit a followup affidavit outlining the fees reasonably incurred and Burton to register any objections thereto. Indeed, Burton’s subsequent pleading in which it asked the court to “reconsider its award of attorney’s fees” acknowledged as much. Accordingly, we find that Burton’s challenge to the validity of the statute was not properly raised below, and therefore decline to address it.¹

¶ 7. Burton next contends the trial court violated public policy in awarding attorney’s fees to a party in breach of contract. Burton relies on Fletcher Hill, Inc. v. Crosbie, 2005 VT 1, ¶ 8, 178 Vt. 77, 872 A.2d 292, where we upheld the trial court’s finding that it would be unfair to base an award of attorney’s fees on a contract which the contractor had violated. As the trial court here correctly observed, however, our holding in Fletcher Hill was based on a contractual fee provision and did not apply to the statutory fee provision of the Prompt Payment Act, which we analyzed separately. Accordingly, the claim has no merit.

¶ 8. Burton further contends the trial court erred in determining that contractor was the “substantially prevailing party” under 9 V.S.A. § 4007(c). Burton notes that, even after set-offs, he remained the recipient of a net judgment of $566. As we explained in Fletcher Hill, 2005 VT 1, ¶ 14, however, identifying which — if any — of the parties substantially prevailed under § 4007(c) “falls within the trial court’s discretion, and does not flow automatically from the calculation of the net victor.” Indeed, relying on the plain language of the statute and decisions from other jurisdictions, we emphatically declined “to read ‘substantially’ out of § 4007(c) by equating the ‘substantially prevailing party* with the party holding a net judgment.” Id. ¶ 17. We concluded, rather, that in determining the prevailing party a trial court has greater discretion and may essentially apply — as one court has stated — a more “flexible and reasoned approach” focused on determining which side achieved a “comparative victory” on the issues actually litigated or the greater award “proportionally” to what was “actually sought.” A.K. & R. Whipple Plumbing & Heating v. Guy, 2004 UT 47, ¶¶ 12, 14, 26, 94 P.3d 270 (quotation omitted); see also Trytek v. Gale Indus., Inc., 3 So. 3d 1194, 1201 (Fla. 2009) (holding that obtaining a “net judgment is significant but does not necessarily control the determination of the ‘prevailing party’ ” and that “the trial court must have flexibility to consider the equities and determine which party prevailed on the significant issues”); Zavatchen v. RHF Holdings, Inc., 2006 PA Super 240, ¶ 6, 907 A.2d 607 (rejecting the claim that “determining whether a party substantially prevails turns on a simple mathematical comparison of the parties’ respective recoveries”); Keystone Elevator Co. v. Johnson & Wales Univ., 850 A.2d 912, 918-19 (R.I. 2004) (rejecting the notion that determining the prevailing party is “susceptible to mathematical precision” and holding that “the fairest test to determine who is the prevailing party is to allow the trial judge to determine from the record which party has in fact prevailed on the significant issues tried before the court”) (quotation omitted).

¶ 9. Assessed in light of this flexible standard, we find no basis to conclude that the trial court abused its discretion in finding contractor to be the substantially prevailing party. Relying expressly on Fletcher Hill, the trial court here explained its reasoning clearly and succinctly, observing that, although it had awarded some damages to both parties, it had “ruled against Burton on most of his claims” and as a result Burton had “recovered [only] a tiny fraction of what he sought.” The record amply supports these findings. Although Burton asserted six separate grounds of recovery, contractor prevailed on its pretrial motion to dismiss the claims for breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and breach of contract predicated upon contractor’s alleged failure to submit the subcontract work to competitive bidding. As to the remaining claims, Burton’s trial memorandum alleged five separate construction defects for which he sought damages totaling over $108,000, and additional consumer fraud claims for which he sought compensatory damages in excess of $224,000 as well as exemplary damages of $672,160. After several days of trial, the court dismissed all but three of the construction-defect claims. In its written decision following the conclusion of trial, the court found for Burton on only one of the defect claims, awarding damages of $2,000, and one breach-of-eontraciy'overbilling claim for $6,627. The court further found that the evidence failed to support Burton’s additional claims that contractor had breached the contract by failing to compíete the job, breached the covenant of good faith and fair dealing, violated the Consumer Fraud Act, or made false representations. The trial court found for contractor on its counterclaim, awarding damages and interest totaling over $8,000, which resulted in a net recovery to Burton of $566.

¶ 10. The record thus firmly supports the trial court’s finding that contractor not only prevailed on its own counterclaim for breach of contract, but also successfully defended against the bulk of Burton’s claims. The court was therefore well within its discretion in concluding that, all things considered, contractor was the substantially prevailing party in this lawsuit despite the fact that Burton was the “net victor” to the tune of $566. As noted, we have squarely rejected the notion that “the party with a net verdict is automatically the substantially prevailing party.” Fletcher Hill, 2005 VT 1, ¶ 15. Furthermore, while Fletcher Hill merely affirmed the trial court’s decision not to award attorney’s fees to the party obtaining a net judgment, other courts have specifically upheld attorney’s fee awards to a party that failed to obtain a net monetary judgment but otherwise achieved the greater success on the issues litigated. See, e.g., Matthews v. Candlewood Builders, Inc., 685 S.W.2d 649, 650 (Tex. 1985) (per curiam) (holding that, although contractor obtained a net judgment after set-offs of over $2,000, the trial court should have awarded attorney’s fees to homeowner as the prevailing party on its counterclaims for construction defects and fraud); Occidental/Neb. Fed. San Bank v. Mehr, 791 P.2d 217, 221-22 (Utah Ct. App. 1990) (applying a “flexible and reasoned approach” the court concluded that defendants were the statutorily “prevailing” party where the plaintiff had claimed $600,000 in damages but recovered only about $7,300). We thus find no basis to conclude that the trial court abused its discretion in determining that contractor was the substantially prevailing party.

¶ 11. The dissent’s arguments to the contrary are unpersuasive. First, the dissent fails to consider the trial court’s detailed findings rejecting nearly all of Burton’s construction-defect claims, as well as its related findings carefully explaining its decision to award attorney’s fees to contractor as the prevailing party. These findings are amply supported by the record evidence, and we are not at liberty to second-guess them. See Fletcher Hill, 2005 VT 1, ¶ 12 (determination of which party prevailed is committed to the trial court and is reviewable only for abuse). The dissent also repeats Burton’s assertion that the law precludes a finding that contractor was the prevailing party because contractor did not receive a “net recovery.” As discussed, however, our law is to the contrary. The dissent’s expressed concern that our holding in this regard will somehow discourage or disadvantage pro se homeowners at the expense of predatory contractors is entirely unfounded. It is, after all, the trial court not the contractor that determines the prevailing party at the conclusion of a trial, and we are confident in the trial courts’ ability to distinguish frivolous from meritorious claims, to properly balance competing monetary awards or other considerations, and to vigilantly protect the rights and interests of all litigants. Finally, the dissent challenges our reliance on certain out-of-state decisions. Although these cases plainly speak for themselves, their support for a flexible rather than a mechanistic approach to determining the prevailing party in construction-contract disputes is clear, and the dissent’s characterization of them as “unavailing” is simply erroneous. See Trytek, 3 So. 3d at 1201 (reaffirming its earlier holdings “that [when] a claimant recovers a net judgment [it] is significant but does not necessarily control the determination of the ‘prevailing party,’ and the trial court must have flexibility to consider the equities and determine which party prevailed on the significant issues”); Zavatchen, 2006 PA Super 240, ¶ 6 (flatly rejecting the “assertion that determining whether a party substantially prevails turns on a simple mathematical comparison of the parties’ respective recoveries”); Keystone, 850 A.2d at 918-19 (rejecting a “mathematical” test of determining the prevailing party in favor of a test predicated on determining which party “prevailed on the significant issues”) (quotation omitted); Matthews, 685 S.W.2d at 650 (relying on its holding in McKinley v. Drozd, 685 S.W.2d 7, 8 (Tex. 1985), which rejected the proposition that a party claiming damages under the Texas deceptive practices act must receive a net recovery in order to obtain attorney’s fees); Whipple, 2004 UT 47, ¶ 26 (reaffirming its adherence to a “flexible and reasoned approach” rather than a straight “net judgment rule” in determining the successful party).

¶ 12. Burton next contends the trial court erred in awarding attorney’s fees incurred in defending the claims that contractor ultimately lost — specifically, the claims for defective workmanship on the ridge beam and overbilling. Burton asserts that the court improperly failed to address this argument in its decision and unfairly denied Burton a hearing on the issue. Burton’s assertion to the contrary notwithstanding, the trial court specifically addressed and rejected this argument, finding that Burton had “fail[ed] to specify which portions of the fee affidavit it feels are inappropriate” and that, in any event, Burton had cited “no authority to suggest that the court must break down the winning and losing claims in determining the reasonableness of [the] fee award.” The court’s ruling was correct. See Elec. Man, Inc. v. Charos, 2006 VT 16, ¶ 9, 179 Vt. 351, 895 A.2d 193 (rejecting a request under § 4007(c) to break the lawsuit into “ ‘a series of discrete claims so that the hours expended can be divided on a claim-by-claim basis’ ” and only a portion thereof compensated) (quoting L’Esperance v. Benware, 2003 VT 43, ¶ 24, 175 Vt. 292, 830 A.2d 675). As for a hearing on the motion, the trial court found that neither side had requested such a hearing and that no factual disputes required one. See V.R.C.R 78(b)(2) (a hearing may be provided “if requested,” but the court may dispense with a hearing when it “finds there to be no genuine issue as to any material fact”). Burton has not shown these findings to be incorrect.

¶ 13. Burton additionally contends the court erred in awarding contractor its litigation costs totaling $8,124. Burton asserts that contractor was not the “prevailing” party under Vermont Rule of Civil Procedure 54(d)(1), which states that “[c]osts other than attorneys’ fees shall be allowed as of course to the prevailing party.” He also argues that the court failed to make the requisite findings and conclusions on the issue. The claims lack merit. Although contractor specifically requested an award of costs in addition to attorney’s fees, the court noted that Burton had “not objected to the award of costs.” This finding, which Burton has not challenged on appeal, plainly bars any objection to the award of costs on appeal. Brown, 2008 VT 103, ¶ 6. The record also fails to show that Burton requested findings and conclusions on the award of attorney’s fees and costs. See V.R.C.P. 52(a)(1) (court shall “upon request of a party” enter findings and conclusions within five days after notice of its decision). Accordingly, we find no error in the court’s award of costs.

¶ 14. Burton next claims that contractor’s motion for attorney’s fees was untimely. Burton argues in this regard that “judgment” was entered with the issuance of the trial court’s findings and conclusions on August 21, 2008, rather than its judgment order on October 20, 2008, so that the motion for attorney’s fees filed on November 3, 2008 was not within the requisite fourteen days “after entry of judgment.” V.R.C.P. 54(d)(2)(B). Burton notes that, in addition to memorializing the court’s findings and conclusions, the docket entries for August 21, 2008, also state “[jjudgment for [pjlaintiff” and “[cjase closed.” Burton’s premise is fundamentally flawed. Rule 58 of the Vermont Rules of Civil Procedure provides that “[ejvery judgment and amended judgment shall be set forth on a separate document,” V.R.C.P. 58(a), and further provides that, upon a jury verdict or decision by the court, the judge “shall promptly approve and sign the judgment.” V.R.C.P. 58(b). We have thus held that Rule 58 “requires that the court approve and sign a written judgment” and that “[wjithout such an order, the docket entry of the court’s decision does not constitute entry of judgment and does not commence the running of the appeal period.” Baker v. Town of Goshen, 169 Vt. 145, 150, 730 A.2d 592, 596 (1999) (emphasis added). Thus, the findings and conclusions issued by the court on August 21, 2008, plainly did not constitute the “judgment,” and the docket entries for that date did not convert the findings and conclusions into an entry of judgment.² Burton’s claim that the attorney’s fee motion was untimely lacks merit.

¶ 15. Finally, Burton contends the court erred in denying his motion to extend the appeal period for the underlying judgment. As noted, the trial court entered judgment on October 20,2008, so that the normal thirty-day appeal period expired in late November. Burton did not appeal the judgment, but subsequently contested the attorney’s fee issue. Following the court’s decision in March 2009 awarding attorney’s fees to contractor, however, Burton filed a motion seeking to extend the period in which to appeal the underlying judgment. Burton’s motion explained that, although he had previously “decided, based on a number of factors, not to appeal,” he had reconsidered that decision “in the wake of the [cjourt’s award of attorneyt’s] fees.” The motion was based on Vermont Rule of Civil Procedure 58(c), which provides that, while “[ejntry of the judgment shall not be delayed, nor the time for appeal extended, for the taxing of costs or the award of attorneys’ fees,” the court may toll the appeal period “when a timely motion for attorneys’ fees is made” and “before a notice of appeal has been filed and has become effective” by “orderfing] that the motion have the same effect under Rule 4 of the Vermont Rules of Appellate Procedure as a timely motion under Rule 59.”

¶ 16. Burton’s reliance on this provision is misplaced. Although contractor filed a timely motion for attorney’s fees, Burton did not request, nor did the court order, that the appeal period be tolled before it expired in late November. As the trial court here correctly observed, Rule 58 plainly contemplates that any order extending the appeal period “must be made during the appeal period that otherwise applies.” The rule does not extend the court’s authority indefinitely. Burton claims that he did not receive notice of the attorney’s fee motion until January 2009, and therefore could not have made a timely request under Rule 58, but cites nothing in the record to support the claim. Moreover, even after he admittedly received notice of the motion in January 2009, he waited three additional months, until April 2009, to file his request. We thus find no basis to disturb the court’s ruling.

Affirmed.

1 In a variation on Burton’s argument, the dissent maintains that the order granting attorney’s fees was not a judgment but an “interlocutory” order. Even if that were the case, the trial court’s order made it clear that the sole issue it was reserving for review was the reasonableness of the fees sought by contractor, and it was fully within the court’s authority to conclude that Burton’s subsequent argument relating to the “sunset” provision of the Prompt Payment Act was unrelated to this reserved question, dilatory, and not properly raised. Accordingly, the issue was not properly preserved for review on appeal. See Reed v. Zurn, 2010 VT 14, ¶ 12, 187 Vt. 613, 992 A.2d 1061 (mem.) (holding that a brief post-judgment argument is not “a substitute for a timely legal argument” and therefore that the issue “was not preserved for review on appeal”).

2 Burton also suggests that entry of judgment must have occurred on August 21, 2008, because Jeremiah Parker filed a motion for attorney’s fees on his own behalf on September 4, 2008, and the court denied it on October 20,2008 on the ground that the corporation, not the individual, was the contractor. The argument is patently without merit. Rule 54 merely provides that a motion for attorney’s fees must occur within fourteen days of entry of judgment. V.R.C.P. 54(d)(2)(B). The rule does not bar a party from filing such a motion after the court’s decision but before the entry of judgment.