UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Kinetic Systems, Inc.
v. Case No. 20-cv-1125-SM Opinion No. 2025 DNH 040 IPS-Integrated Project Services, LLC and Lonza Biologics, Inc.
O R D E R
Following jury verdicts in favor of Kinetic Systems, Inc.
and Lonza Biologics, Inc., in this commercial construction
contract case, all three parties moved for an award of
attorneys’ fees under provisions in the Subcontracts. The
primary issue is which of them is a “prevailing party” within
the meaning of § 17.7 of the Subcontracts. For the reasons that
follow, Kinetics’s motion is granted in part, and IPS’s and
Lonza’s motions are denied.
Background
Kinetics filed suit in state court in October of 2020,
seeking to recover $13,973,898.26 that it claimed IPS and Lonza
owed it under the Subcontracts, or alternatively, through a
claim for quantum meruit/unjust enrichment. Doc. 1-2. The
defendants removed the case to this court and moved to dismiss
the claims. The court dismissed only the quantum meruit/unjust enrichment claim, based on the viability of the breach of
contract claim. Doc. no. 15.
The case proceeded through discovery (which included a
motion for a writ of replevin against Kinetics by Lonza to
recover turnover package documents and a challenge to Kinetics’s
expert witness). Kinetics voluntarily dismissed its claims
against Lonza. The trial scheduled in September of 2023 was
continued due to Kinetics’s counsel’s medical issue. Counsel
withdrew from representation, and new counsel filed an
appearance on behalf of Kinetics in December of 2023.
The court granted IPS’s partial motion for summary judgment
to the extent the breach of contract claim in Count I was based on
amounts that IPS failed to pay in response to change orders CP-10
and CP-24 and the Bulletin Change Proposals that were rejected as
untimely. The court reinstated the quantum meruit claim, but
allowed IPS to move for summary judgment, which was granted.
After those proceedings, Kinetics’s breach of contract claim,
Count I, remained as to claims for back charges, which totaled
$2,227,028.98, for Change Order 009 and a back charge invoice and
for reductions in amounts paid on the Process Subcontract, as
supported by Exhibits 1 and 2 to document no. 91. The court
dismissed four of Lonza’s counterclaims against Kinetics, leaving
Lonza’s breach of contract and violation of the New Hampshire
Consumer Protection Act claims.
2 The court held a six-day jury trial on Kinetics’s breach of
contract claim against IPS and Lonza’s breach of contract claim
against Kinetics. Following trial, the court dismissed the
Consumer Protection Act claim. The jury returned a verdict on
Kinetics’s breach of contract claim, finding that IPS improperly
back charged $444,875.53 against the amount Kinetics claimed. The
jury also found that Lonza proved that Kinetics breached one or
both Subcontracts, but awarded no damages to Lonza. Doc. no. 148.
Kinetics renewed its motion for judgment as a matter of law
under Federal Rule of Civil Procedure 50(b) post trial, which the
court denied. Doc. no. 163. Lonza moved to amend the judgment
entered by the clerk of court to show that the jury found in its
favor on the breach of contract claim but awarded no damages. The
court granted that motion, and an amended judgment was entered.
Doc. no. 165. Kinetics, IPS, and Lonza each moved for an award of
attorneys’ fees and costs.
Discussion
Under New Hampshire law, parties generally bear their own
litigation costs, but the court may award attorneys’ fees and costs
to a prevailing party when that recovery is authorized by an
agreement among the parties. In re J.P., 173 N.H. 453, 466, 242
A.3d 823, 834 (2020). All three motions seek fees and costs under
the following provision in the Subcontracts:
3 § 17.7 If any legal action, arbitration, or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, successful or prevailing Party or Parties will be entitled to recover reasonable attorney fees and other costs authorized by Statute which are incurred in that action or proceeding, in addition to any other relief to which they may be entitled.
Doc. no. 57-8, at 43. In addition, IPS mentions § 6.10 to support
its request for fees and costs:
A. Section 6.10 – IPS
IPS argues briefly that it is entitled to an award of fees and
costs under § 6.10, 1 which provides as follows:
In the event the Subcontractor submits an adjustment request for a Change that has no merit or that is based in whole or in part upon materially inaccurate assertions, IPS shall be entitled to collect from Subcontractor by offset or otherwise any and all costs and expenses, including but not limited to reasonable attorney’s fees, incurred by IPS investigating, responding to, defending against and resolving such claim or request.
1 Given the lack of developed argument by IPS to support an award under § 6.10, that theory is likely waived. United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (“It is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel's work, create the ossature for the argument, and put flesh on its bones.”); see also Wadsworth v. Nguyen, No. 23-1463, 2025 WL 547405, at *19 (1st Cir. Feb. 19, 2025); Higgins v. New Balance Athletic Shoe, Inc., 194 F.3d 252, 260 (1st Cir. 1999) (“The district court is free to disregard arguments that are not adequately developed.”).
4 Id., at 22. Taken in context and particularly in light of the
attorneys’ fees provision in § 17.7, § 6.10 only applies when a
subcontractor submits a change request that is frivolous or made in
bad faith. See Wescott v. Warden, New Hampshire State Prison, ---
A.3d ---, No. 2022-0562, 2024 NH 56, 2024 WL 4469345, at *2 (N.H.
Oct. 11, 2024) (“When interpreting a written agreement, we give the
language used by the parties its reasonable meaning, considering
the circumstances and the context in which the agreement was
negotiated, and reading the document as a whole.”). IPS has not
demonstrated that either of those circumstances occurred here. 2
Therefore, IPS’s motion for an award of fees and costs is
denied to the extent it is based on § 6.10.
2 Notably, IPS moved to dismiss Kinetics’s breach of contract claim for unapproved change requests on procedural grounds as premature, arguing that the parties were continuing to process the claims. Doc. no. 15, at 7. IPS did not assert that the change requests had no merit. Later, the court granted summary judgment in IPS’s favor on claims for unapproved change requests that were not timely submitted to IPS, but IPS did not establish that the unapproved change requests had no merit. Doc. no. 89. Before trial, IPS and Kinetic stipulated that IPS owed Kinetic certain amounts for approved change orders that it had not paid because it claimed back charges against those amounts. Doc. no. 131. In sum, these circumstances do not show that Kinetic submitted change order requests that had no merit or that were based on materially inaccurate assertions.
5 B. Section 17.7 – All Parties
To be entitled to an award of attorneys’ fees and costs under
§ 17.7, the moving party must be the “successful or prevailing
Party.” IPS argues that it is the successful or prevailing party
with respect to Kinetics because the amount awarded to Kinetics was
significantly less than Kinetics sought. Lonza argues that it is
the successful or prevailing party with respect to its
counterclaims against Kinetics. And, finally, Kinetics argues that
it is the successful or prevailing party with respect to IPS
because the jury found in its favor and awarded it more than
$440,000 in damages. Neither “successful” nor “prevailing” is
defined in the Subcontracts.
1. Successful or Prevailing Party
In the absence of a contractual definition of “successful or
prevailing,” the court looks to New Hampshire’s principles of
contract interpretation to determine the meaning of those terms.
“In interpreting a contract, [the court] consider[s] the contract
as a whole, and [the court] give[s] words their ordinary meaning
unless it appears from the context that the parties intended a
different meaning.” Moore v. Grau, 171 N.H. 190, 194 (2018); see
also Com. Park Condo. Ass'n v. Little Deer Valley, LLC, 176 N.H.
517, 529 (2024). Nothing in the Subcontracts suggests an intent to
6 apply a meaning other than the ordinary meaning of “prevailing or
successful party.”
What then is the ordinary meaning of successful or prevailing?
Kinetics relies on cases construing “prevailing party” for purposes
of federal statutory fee-shifting provisions. IPS also relies on
the interpretation of “prevailing party” for purposes of federal
fee-shifting statutes, along with the definition of “prevailing
party” provided in Black’s Law Dictionary, (12th ed. 2024). In its
objection to Kinetics’s motion, however, IPS challenges Kinetics’s
reliance on the federal statutory standard (despite its own prior
reliance), but provides no authority for a different interpretation
of “prevailing party” in a fee-shifting contract clause. 3 Lonza
contends that the federal statutory standard does not apply and
cites dictionary definitions for successful and prevailing, arguing
that successful means favorable termination of attempts or
endeavors and prevailing means predominant. Doc. no. 156-1, at 5.
3 IPS cites Shlasinger v. Yarrington, 2018 DNH 167, 2018 WL 3873235, (D.N.H. Aug. 15, 2018), to assert that the fee shifting provision in the Subcontracts was intended “to deter claims and meritless change proposals by introducing financial risk for a nefarious subcontractor who wrongly seeks to double the price of the subcontracts." Doc. no. 167, at 3. The cited section of Shlasinger, however, states that the contractual fee shifting provision in that case did not apply, but even if it did, “[t]he term ‘prevailing party,’ whether arising in statute or contract, is a ‘legal term of art.’” Id. at *15.
7 Black’s Law Dictionary defines “prevailing party” and
“successful party” as follows: “A party in whose favor a judgment
is rendered, regardless of the amount of damages awarded.” 4 Black’s
Law Dictionary (12th ed. 2024). As authority, the dictionary cites
Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep’t of Health &
Human Res., 532 U.S. 598, 603 (2001), which addresses the phrase
“prevailing party” for purposes of federal fee-shifting statutes.
In Buckhannon, the Supreme Court held that “prevailing party” is a
term of art that has a “clear meaning” for purposes of fee-shifting
statutes. Id. at 603 and 610. Given that history of the term
“prevailing party,” its status as a term of art, and the absence of
a different definition in the Subcontracts, the parties are
presumed to have understood and intended the same meaning for
“prevailing party” that is given to the term for purposes of
federal fee-shifting statutes. See Shlasinger, 2018 WL 3873235, at
*15; see also Tradespot Markets Inc. v. ICARO Media Grp. Inc., No.
21-62295-CIV, 2022 WL 5198661, at *2 (S.D. Fla. Sept. 12, 2022),
report and recommendation adopted, No. 21-CIV-62295-RAR, 2022 WL
5170893 (S.D. Fla. Oct. 5, 2022); Waas v. Red Ledges Land Dev.,
Inc., No. 20-CV-00580-TC-DBP, 2022 WL 35717, at *2 (D. Utah Jan. 3,
4 As is further discussed below, while the amount of damages does not determine prevailing party status, a judgment that awards enforceable relief, damages or another remedy, is required for prevailing party status. See Buckhannon, 532 U.S. at 603-604.
8 2022); In re DB Holdings Liquidation, Inc., 592 B.R. 539, 550 (D.
Del. 2018).
Prevailing party status is achieved “when a party has
prevailed on the merits of at least some of his claims.”
Buckhannon, 532 U.S. at 603–04. “[E]ven an award of nominal
damages suffices under this test.” Id. (citing Farrar v. Hobby,
506 U.S. 103 (1992)). “A plaintiff prevails, we have held, when
actual relief on the merits of his claim materially alters the
legal relationship between the parties by modifying the defendant’s
behavior in a way that directly benefits the plaintiff.” 5 Lefemine
v. Wideman, 568 U.S. 1, 4 (2012) (emphasis added) (internal
quotation marks omitted); see also Farrar, 506 U.S. at 111 (holding
5 IPS presumes that an award of fees and costs to a “prevailing and successful party” under § 17.7 applies to both plaintiffs and defendants. In the context of fee shifting under 42 U.S.C. § 1988, however, the standard for a prevailing defendant is more demanding than for a prevailing plaintiff. Hughes v. Rowe, 449 U.S. 5, 15 (1980); Tang v. R.I. Dep’t of Elderly Affairs, 163 F.3d 7, 13 (1st Cir. 1998); accord McMenamon v. Shibinette, No. 21-CV-479-PB, 2023 WL 3093475, at *1 (D.N.H. Apr. 26, 2023). A court may award fees to a prevailing defendant only if it “finds that [the plaintiff’s] claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so.” Hughes, 449 U.S. at 15. “In determining whether this standard has been met, the court must assess the claim at the time the complaint was filed, and must avoid the post-hoc reasoning that, because the plaintiff did not ultimately prevail, the claim must have been frivolous, unreasonable or without foundation.” Tang, 163 F.3d at 13. The circumstances in this case would not support finding IPS a prevailing defendant under the § 1988 standard.
9 that a prevailing “plaintiff must obtain at least some relief on
the merits of his claim”); Black’s Law Dictionary, at 1349 (12th
ed. 2024) (quoting Lefemine, 568 U.S. at 4).
Recently, the Supreme Court focused on when, in the course of
a case, prevailing party status may be determined. Lackey v.
Stinnie, 604 U.S. ---, --- S. Ct. ---, No. 23-621, 2025 WL 594737
(U.S. Feb. 25, 2025). The Court concluded “that prevailing party
status does not depend upon the degree of success at different
stages of the suit, but whether, at the end of the suit, or other
proceeding, the party who has made a claim against the other, has
successfully maintained it.” Id. at *4 (internal quotation marks
omitted). “A prevailing party, in other words, is the party
ultimately prevailing when the matter is finally set at rest.” Id.
(internal quotation marks omitted).
2. Kinetics and IPS
Before trial, IPS and Kinetics stipulated to the amount IPS
owed Kinetics based on approved change orders, $2,227,028.98,
subject to IPS’s defense that it properly offset that full amount
by valid back charges. The jury found that IPS properly back
charged some (but not all) of that amount and awarded Kinetics
$444,875.53 in damages on its breach of contract claim. Judgment
was entered in Kinetics’s favor on that amount. Based on the
10 judgment entered in this case, Kinetics is the prevailing party
with respect to its claim against IPS.
IPS argues, nevertheless, that it is the prevailing party
because it was successful on its motions for summary judgment,
which resolved Kinetics’s claims for unapproved change requests
against Kinetics, and it was successful in justifying most of its
back charges. IPS argues that because it successfully opposed 97%
of the damages that Kinetics was seeking at the beginning of the
case, it is the prevailing party. As the cited cases establish,
however, prevailing party status is determined at the end of the
case, based on the judgment entered.
To be sure, judgment was entered in Kinetics’s favor on some,
but not all, of its claims, and it was awarded only a portion of
the damages it was seeking. But, the degree of success does not
determine eligibility for prevailing party status - a prevailing
party may succeed on only some of its claims or even be awarded
only nominal damages, as long as the judgment “materially alters
the legal relationship between the parties.” Farrar, 506 U.S. at
114. IPS cites no case that holds a defendant’s partial success on
summary judgment or in defending against part of the plaintiff’s
damages request confers upon it prevailing party status, despite a
final judgment in favor of and awarding damages to the plaintiff.
See also Lackey, 2025 WL 594737, at *4 (prevailing party status
determined at the end of the case).
11 Kinetics is the prevailing party for purposes of an award of
fees and costs from IPS under § 17.7.
3. Lonza and Kinetics
Lonza moves for an award of fees and costs from Kinetics
under § 17.7 based on the jury’s verdict that found Kinetics
breached the Subcontracts but awarded Lonza no damages.
Kinetics opposes the motion, arguing that Lonza is not a party
to the Subcontracts for purposes of an award under § 17.7 and,
in any event, is not a prevailing party. The court need not
resolve the dispute about Lonza’s third-party beneficiary
status, because Lonza is not properly viewed as a prevailing
party in this case.
Although the jury found in Lonza’s favor on its breach of
contract claim, the absence of a damages award or any
enforceable relief at all renders that verdict a pyrrhic victory
at best. “A party ‘prevails’ when a court conclusively resolves
his claim by granting enduring relief on the merits that alters
the legal relationship between the parties.” Lackey, 2025 WL
594737, at *8. That is, “to qualify as a prevailing party . .
., a plaintiff must obtain at least some relief on the merits of
his claim. The plaintiff must obtain an enforceable judgment
12 against the defendant from whom fees are sought . . . .”
Farrar, 506 U.S. at 111.
Lonza did not obtain an enforceable judgment against
Kinetics – the jury’s verdict requires nothing from Kinetics
and, as such, does not alter Kinetics’s relationship with Lonza
in any respect, materially or otherwise. For that reason, Lonza
is not a “prevailing party” and is not eligible for an award of
fees and costs under § 17.7. Further, even if the bare verdict
were sufficient to confer prevailing party status, which it is
not, it would not be reasonable to award fees and costs in light
of Lonza’s complete lack of material success. See, e.g.,
Farrar, 506 U.S. at 114.
C. Award of Fees and Costs to Kinetics
Kinetics asks for an award of $240,894.00 in attorneys’
fees and $38,729.85 in costs, which represents compensation for
less than all of the time counsel spent on the case. Kinetics’s
counsel submitted his affidavit along with a statement of
billing rates and contemporaneous billing records for his firm’s
work on this case from May 5, 2022, through November 30, 2024.
Section 17.7 requires that the fees awarded be reasonable.
Because this is a diversity case, the court assesses the
reasonableness of the fee award based on New Hampshire law. SRS
13 Distribution Inc. v. Southers Constr. Inc., No. 24-CV-50-PB-AJ,
2024 WL 5010150, at *4 (D.N.H. Nov. 20, 2024), report and
recommendation adopted, No. 24-CV-50-PB-AJ, 2024 WL 5007364
(D.N.H. Dec. 6, 2024). For that purpose, under New Hampshire
law, courts consider “the amount involved, the nature, novelty,
and difficulty of the litigation, the attorney’s standing and
the skill employed, the time devoted, the customary fees in the
area, the extent to which the attorney prevailed, and the
benefit thereby bestowed on his clients.” Town of Barrington v.
Townsend, 164 N.H. 241, 250, 55 A.3d 952 (2012).
There is no dispute in this case about the nature of the
litigation, counsel’s standing and skill, and the customary
fees. The primary issue is the extent to which Kinetics
prevailed and what a reasonable award of fees should be in light
of that limitation.
Kinetics’s recovery in this case was modest compared to the
amount it originally sought. In the complaint, Kinetics claimed
$13,973,898.26 from IPS for unapproved change requests and
amounts approved but not paid because of back charges. Through
summary judgment, the claims for unapproved change requests were
dismissed. At trial, Kinetics sought $2,227,028.98 that IPS had
retained as back charges from approved change orders. Of that
amount, the jury awarded Kinetics $444,875.53.
14 Kinetics acknowledges its lack of complete success and
states that it has trimmed the requested attorneys’ fees
accordingly. Kinetics states that it did not include fees and
costs attributable to its original counsel who represented it
until March 30, 2022. Kinetics also states (and demonstrates
with highlighting on the billing records) that it did not
include time spent on losing efforts, including opposing summary
judgment and defending its expert witness. IPS objects to the
amount requested, arguing that Kinetics did not remove all of
the fees and costs attributable to unsuccessful work and argues
that most of the time counsel spent on the case was for the
unapproved change requests.
The court is not persuaded that all of the work done by
Kinetics’s counsel prior to September 4, 2024, was done
exclusively in connection with the unapproved change request
issues, as IPS urges. Given IPS’s own argument that the issues
in this case are not analytically severable for purposes of
discounting or offsetting the amount of attorneys’ fees and
costs spent on specific issues, it is likely that the earlier
work was also related to or inseparable from the back charge
issues. 6 Given the specific instances of time and expenses for
6 In support of its motion for an award of nearly a million dollars in fees and costs, IPS argued, citing Halifax-American Energy Co., LLC v. Provider Power, LLC, 170 N.H. 569, 589
15 unsuccessful matters that IPS cites, and that can be identified
based on the billing record, $4,675.00 in fees and costs is
deducted from the amount Kinetics requests. The court declines
to consider IPS’s more general objections to time spent on
depositions that IPS contends were not entirely focused on the
back charges issues.
Kinetics is seeking all of its fees and costs attributable
to the back charges issue, which, with the above deduction,
(2018), that the work done on the unapproved change requests is not severable from the work on the back charges issues. Doc. no. 154, at 5. For that reason, IPS asserted, its counsel’s work on all of the issues overlapped and could not be apportioned for purposes of a fee award. Based on that theory, IPS argued it was entitled to all of its fees without offset for issues on which Kinetics prevailed. In its objection to Kinetics’s motion for an award of fees and costs, IPS first argues that certain depositions and other work may be separated as not material to the back charges issues, but it then again asserts that Kinetics’s invoices show that the issues are not separable for purposes of subtracting work done on nonsuccessful issues. Apparently, IPS intends nonseverability to support a fee reduction of 97% - based on a calculation that Kinetics was awarded only 3% of the damages it originally sought.
When “claims share a common core of facts that make severance impracticable and unreasonable” and when “the facts relevant to each claim overlap significantly, and the investigation and work performed to prosecute one claim necessarily related to the others,” the court may decline “to apportion the attorney time consumed in preparing and proving [separate claims.]” Id. (internal quotation marks omitted). Under IPS’s theory of nonseverability, Kinetics would be entitled to all of its fees and costs without apportionment related to work done on particular issues. Kinetics, however, does not pursue that result and has presented its fees and costs with unsuccessful work subtracted.
16 total $242,256.85. Kinetics, however, prevailed, on only 21% of
the back charges issue: the back charges on the approved change
orders amounted to $2,106,314.75 and the jury awarded
$444,875.53 to Kinetics as the amount improperly withheld. In
the circumstances of this case, it is appropriate to further
reduce the award to 21% of the fees and costs incurred on the
back charges issue, which is $50,873.94.
Conclusion
For the foregoing reasons, Kinetics’s motion for fees and
costs (document no. 166) is granted. IPS’s motion and Lonza’s
motion for fees and costs (document nos. 154 and 156) are
denied.
Kinetics is awarded $50,873.94 in fees and costs.
The clerk of court shall enter an amended judgment to
reflect that result and close the case.
SO ORDERED.
______________________________ Steven J. McAuliffe United States District Judge
March 24, 2025
cc: Counsel of Record