Enforcing a mechanics lien can be an expensive, yet sometimes necessary, step to securing your right to payment. A fair amount of the expenses goes to the attorneys who litigate the case. Florida’s lien laws attempt to correct this imbalance by providing the award of attorney fees if the claimant is a “prevailing party.” But deciding who the prevailing party is isn’t always as clear-cut as it seems.
Construction litigation can be complex, and in many instances, there may be small victories for each party. As a recent Florida Court of Appeals case highlighted, determining the prevailing party for attorney fees isn’t as straightforward as it seems.
Award of attorney fees in Florida
In Florida, to be entitled to attorney fees, there must be some basis — such as a statutory right or a contractual provision providing for the award of attorney fees. For lien enforcement actions, there is a statutory basis built in directly to the law under Fla. Stat. §713.29:
“In any action brought to enforce a lien or to enforce a claim against a bond under this part, the prevailing party is entitled to recover a reasonable fee for the services of her or his attorney for trial and appeal or for arbitration, in an amount to be determined by the court…”
Note, however, that the court does have the discretion to determine whether or not there is even a prevailing party in the first place. Meaning, in some cases, no attorney fees will be awarded. And there are a lot of factors that the court will consider — including setoffs from other related cases, as you’ll see in the following case.
Set-offs are a consideration when deciding the prevailing party
The case in question is Hayward Baker, Inc. v. Westfield Insurance Co. & The Diaz Fritz Group, Inc.
- General Contractor: Diaz Fritz Group, Inc. (Diaz)
- Subcontractor: Hayward Baker, Inc. (Baker)
Diaz was the general contractor on a project for the construction of additions to the University Community Hospital in Carrollwood, Florida. Baker was hired as a subcontractor to perform foundational work for the project under a $290,000 subcontract.
As Baker completed their scope of work, Diaz refused to pay the $290,000 due under the subcontract claiming that Baker had caused significant damage to the existing building during the performance of their work.
Three separate lawsuits filed
There were multiple lawsuits filed in an attempt to resolve this payment dispute:
- 2010 case: An action filed by Baker against Westfield to enforce the claim of lien against the bond
- 2011 case: A breach of contract action filed by Diaz against Baker to recover the cost of remediating damages. Baker filed a counterclaim seeking recovery of the unpaid subcontract amount
- 2012 case: Federal court action filed by Diaz against Baker’s insurance carrier (Zurich American Insurance Co.) claiming the same damages under the 2011 case
The 2012 federal case was resolved by reaching a settlement where Zurich agreed to pay Diaz $450,000. The other two cases were consolidated.
Before the trial began, both parties stipulated that Baker was entitled to the $290,000 pursuant to the subcontract. At the end of the trial, the court declared that Baker was indeed responsible for over $266,000 worth of the damages caused to the hospital. However, given the stipulation that Baker was owed the full subcontract price, the resulting verdict was that Baker was entitled to $23,403.68 (which was reduced a bit post-trial).
Baker then moved to set off the award with the $450,000 that Diaz had received from Zurich. The court granted the motion, which resulted in Diaz recovering nothing, and a judgment of $290,000 in favor of Baker.
After the final judgment was made, both parties moved for an award of attorney’s fees — both of which were denied by the trial court. The reasoning being that neither was a “prevailing party” as Diaz won its claim for damage to the property, and Baker won its breach of contract claim and motion for setoff. The decision was appealed.
Prevailing parties are those who received the benefit sought
On appeal, the court clarified that to be considered a prevailing party, the party must be successful on “any significant issue in the litigation which achieves some of the benefit the parties sought in bringing the suit.”
The issue of setoff was, according to the appeals court, pivotal in determining whether the parties received the benefit sought from litigation.
In fact, the court even admitted that “[i]n the absence of the setoff, we would be inclined to agree with the trial court that there was no prevailing party in this case since [Diaz] and [Baker] were both at fault for the failure of the subcontract.” Essentially stating that, without factoring in the set-off, the parties basically “tied.” But the impact of the set-off couldn’t be ignored by the appeals court.
“The result of applying the setoff against [Diaz’s] damages award was that [Diaz] received none of the benefit it sought in the litigation: a judgment was not entered against [Baker] for any of the damage caused to the hospital property. On the other hand, [Baker] received all of the benefits it sought in the litigation, as it obtained $290,000 plus prejudgment interest for the work it performed under the subcontract and it was relieved from paying any damages to [Diaz].”
Thus, Baker was deemed to be the prevailing party and was therefore entitled to the award of attorney fees.
Attorney fees aren’t always guaranteed
When a party needs to enforce their lien rights, it isn’t always an isolated action. Construction litigation can get complicated quickly and there are a number of different causes of action that may be brought. And these may lead to more than one lawsuit, which complicates things even further.
When it comes to attorney’s fees, all these different related causes of action can be used to determine who the prevailing party actually is. And even if you “win” the case, you may not be considered a prevailing party — meaning there’s no guarantee of attorney fees.