Opinion
No. 11–P–1531.
2012-06-20
FARMER & FLIER ASSOCIATES v. GUILFORD TRANSPORTATION INDUSTRIES, INC.
He determined that Farmer was not a prevailing party, in large part on the basis that the claims on which Guilford prevailed far exceeded in value those claims on which Farmer prevailed. Accordingly, he ruled that Farmer was not entitled to fees under the contract. However, he determined that five of Guilford's six counterclaims were frivolous (he found Guilford's misrepresentation claim to be not frivolous) and awarded Farmer attorney's fees pursuant to G.L. c. 231, § 6F, and Mass.R.Civ.P. 11, 365 Mass. 753 (1974), for his defense of those counterclaims. In sum, he awarded Guilford $632,538.40 in fees pursuant to the prevailing party provision, and Farmer $85,438 under rule 11 and c. 231, § 6F. The award to Farmer represented ten percent of the total fees expended by Farmer in the litigation. Both parties appealed. We concluded:
By the Court (KAFKER, BROWN & VUONO, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Farmer & Flier Associates (Farmer) appeals from an order concerning attorney's fees due under a prevailing party provision of a contract with Guilford Transportation Industries, Inc. (Guilford). The contract at issue involved the North Point development project (Northpoint) in North Cambridge. We had previously remanded the matter for a redetermination of fees in light of several errors in the trial judge's original decision. Farmer & Flier Assocs. v. Guilford Transportation Indus., Inc., 74 Mass.App.Ct. 1125 (2009).
Guilford, the developer for Northpoint, terminated its contract with Farmer, which had been named the development manager, in 1999. Farmer sued, claiming breach of contract, violation of the duty of good faith, and G.L. c. 93A violations. The complaint sought payment for a “value enhancement fee” allegedly due under the contract, compensation for commissions paid to others, and reimbursement for payments made to third-party consultants. Guilford counterclaimed, alleging fraud, rescission, breach of contract, negligence, breach of fiduciary duty and of the covenant of good faith and fair dealing, and c. 93A violations. Summary judgment on Farmer's breach of contract claim for compensation for the value enhancement fee entered for Guilford in 2004; this count represented the bulk of Farmer's claim for damages. The remaining claims and counterclaims proceeded to trial, jury-waived, in 2006, resulting in a judgment for Guilford on Farmer's claims and for Farmer on Guilford's counterclaims; in other words, no one won anything. The focus then turned to the issue of attorney's fees. The judge's findings and rulings awarded attorney's fees to Guilford pursuant to paragraph 13 of the contract, which provided:
“If attorneys [ sic ] fees or other costs are incurred to secure the performance of any obligation hereunder, or to establish damages for the breach thereof or to obtain any appropriate relief, whether by way of prosecution or defense, the prevailing party will be entitled to recover reasonable attorneys' fees and costs incurred in connection therewith.”
He determined that Farmer was not a prevailing party, in large part on the basis that the claims on which Guilford prevailed far exceeded in value those claims on which Farmer prevailed. Accordingly, he ruled that Farmer was not entitled to fees under the contract. However, he determined that five of Guilford's six counterclaims were frivolous (he found Guilford's misrepresentation claim to be not frivolous) and awarded Farmer attorney's fees pursuant to G.L. c. 231, § 6F, and Mass.R.Civ.P. 11, 365 Mass. 753 (1974), for his defense of those counterclaims. In sum, he awarded Guilford $632,538.40 in fees pursuant to the prevailing party provision, and Farmer $85,438 under rule 11 and c. 231, § 6F. The award to Farmer represented ten percent of the total fees expended by Farmer in the litigation. Both parties appealed.
In our earlier decision, we affirmed the judgment, but reversed the attorney's fees award. We held that the judge erred in his determination that Farmer was not a prevailing party, as it had prevailed on all of Guilford's counterclaims, including the misrepresentation count for which no fees had been awarded, and which we noted “consumed a significant portion of the trial.” We then instructed that on remand:
“New findings should enter on Farmer & Flier's reasonable attorney's fees as the prevailing party on all six of Guilford's counterclaims. In making such findings, the judge should not rely on the ten percent figure he awarded for Farmer & Flier's defense of the insubstantial and frivolous counterclaims under c. 231, § 6F, and rule 11, as it does not take into account the work performed on the TRA counterclaim. The record indicates that a significantly larger percentage of Farmer & Flier's total fees is warranted as the prevailing party on all the counterclaims. Moreover, our ruling here and our review of the record also call into question the judge's deduction of only ten percent of Guilford's requested attorney's fees for its unsuccessful enforcement of the six counterclaims; the amount should be revisited on remand.”
We concluded:
“On remand, the judge shall enter an award of attorney's fees to Farmer & Flier as the prevailing party on Guilford's counterclaims, and shall recalculate the award of attorney's fees to Guilford, consistent with this memorandum and order.”
On remand, following the submission of almost 1,000 pages of additional documents, the judge agreed with an argument raised by Guilford which substantially limited the fees due to Farmer. Guilford argued that the contract's fee provision entitled a prevailing party only to fees “incurred.” It argued that because Farmer's fee agreement with its attorney provided for payment of hourly fees only until January 15, 2000, followed by a contingency based fee of thirty-three percent, plus a $100,000 bonus, the award was limited to those fees actually incurred. The judge determined that Farmer had “incurred” only $8,700 in hourly fees, nothing pursuant to the contingency provision, and $100,000 for the bonus provision, resulting in a total fee “incurred” of $108,700, plus costs of $30,313.80. He also rejected arguments by Guilford that that amount should be offset by the fees previously awarded under c. 231, § 6F ($85,438.63), as those fees constituted a penalty payable to Farmer directly. The total fee and cost award to Farmer was $224,457.43.
In addition, the judge, pursuant to our direction on remand, revisited the ten percent reduction of the fees incurred by Guilford for the time spent on its unsuccessful enforcement of its counterclaims. Both parties maintained that the claims and counterclaims were so intermingled and interwoven that they could not be unravelled. Farmer therefore proposed a total offset and no award of fees to either party. The judge rejected that approach and accepted Guilford's proposed formula. He reduced Guilford's fees by an additional 16.3 percent, which resulted in a total fee reduction of 26.3 percent and a reduced award of $517,855.07 for Guilford. Farmer appealed.
We conclude that the contingent fee agreement limits Farmer's recovery of fees. See Winthrop Corp. v. Lowenthal, 29 Mass.App.Ct. 180, 185–186 (1990). Farmer nonetheless contends that Guilford waived any argument concerning limitations imposed by the fee agreement on the fees “incurred” by failing to raise the issue in its first appeal to this court. However, because the trial judge had found that Farmer was not entitled to any fees under the prevailing party provision of the contract, there was no need to reach any issue concerning the amount of fees which might be due under that provision. The judge did reject the limitation to fees “incurred” argument in the context of the c. 231, § 6F, award, but there was no need for Guilford to pursue the issue on appeal as the amount awarded under c. 231, § 6F, was less than the fee calculated pursuant to the fee agreement. We therefore conclude that the issue has not been waived and the judge properly limited Farmer's fees. We also discern no authority for Farmer's contention that its recovery of fees should not be limited by the fee agreement on equitable grounds given the prior finding that most of Guilford's counterclaims were frivolous.
We next turn to Farmer's argument that Guilford failed in its burden on remand to distinguish between fees incurred for defending against Farmer's claims and those incurred in its pursuit of its failed counterclaims. The problem is that both parties argued to the judge that the claims were too interwoven to allow such an unravelling, and neither party provided the judge the necessary documentation to allow him to undertake such a refined review. The trial judge therefore had limited options. He decided to reduce Guilford's attorney's fee award by an additional 16.3 percent—the amount proposed by Guilford and the percentage of fees that Farmer recovered for litigating the counterclaims. Based on our review of this lengthy record, and in these unusual circumstances, where both parties agreed that the claims were too intermingled to be unravelled, we conclude that the reduction of more than twenty-six percent of the attorney's fees incurred by Guilford due to the counterclaims was not an abuse of the judge's discretion. See Northern Assocs. v. Kiley, 57 Mass.App.Ct. 874, 882–883 (2003).
Order dated April 28, 2011, affirmed.