Opinion
C.A. No. 18476
Remanded: May 22, 2002
Submitted: June 14, 2002
Daniel R. Losco, Esquire, and William P. Brady, Esquire, LOSCO MARCONI, P.A., Wilmington, Delaware, Attorneys for Plaintiff.
Benjamin C. Wetzel, III, Esquire, and Natalie M. Ippolito, Esquire, BAILEY WETZEL, P.A., Wilmington, Delaware, Attorneys for Defendants.
MEMORANDUM OPINION REPORT ON REMAND
In its opinion of May 22, 2002, the Delaware Supreme Court reversed and remanded aspects of this matter to this court and directed that a report thereon be filed with it within 30 days. The matters remanded relate to this court's decision (i) to award prejudgment interest at the legal rate rather than at the higher rate prescribed in certain relevant documents, and (ii) to deny the parties' cross-applications for an award of attorneys' fees and costs. As the decision of the Supreme Court notes, the post-trial opinion does not adequately state the court's rationale for either of these determinations.
In remanding the case, the Supreme Court asked this court to specify the findings and rationales supporting these aspects of the post-trial decision. On remand, this court has received and considered the views of the parties on the matters remanded, and reviewed the trial record and the post-trial opinion. On that basis, the court submits the following report to the Delaware Supreme Court, in accordance with its directive.
A. Attorneys' Fees and Costs
In the pretrial stipulation and in their pretrial briefs, both the plaintiff condominium association and the defendant unit owners sought an award of attorneys' fees and costs in accordance with Article 9 of the Code of Regulations of the Dorset Condominium Apartments ("COR"). The pertinent section of the COR is Article 9, paragraph A(2), which provides as follows:
Costs and Attorneys' Fees. In any proceeding arising out of any alleged default by a Unit Owner, the prevailing party shall be entitled to recover the costs of the proceeding, and such reasonable attorneys' fees as may be determined by the court.
Both sides renewed those requests in their post-trial submissions, although the defendants' request was sensibly limited to the circumstance that they prevailed entirely in the litigation.
Mr. Wetzel's letter of February 8, 2001 stated, at page 5, as follows: "If the court finds that defendants are not required to pay any of the special assessment, defendants request attorneys' fees" pursuant to the COR Article 9, para. A(2).
After the court concluded that the defendants were obligated to pay a relatively small portion of the assessments at issue, there was no occasion to consider further their request for an award of fees or costs, since they had not prevailed entirely. Because the plaintiff's request was not expressly limited to the circumstance in which it prevailed on all aspects of the litigation, the court did consider whether Article 9, paragraph A(2) required the court to shift fees to the defendant unit owners even though they had prevailed on the more important, and time consuming, aspects of the litigation.
Ultimately, the court denied the plaintiff's request for attorneys' fees and costs for several reasons. First, the authority to award fees and costs found in the COR runs in favor of "the prevailing party." Because the plaintiff had prevailed only on the less important of the two issues resolved at trial, it would have been a stretch to find that it was "the prevailing party." To the contrary, the defendants were, in large measure, the prevailing parties. Second, if this court had interpreted the COR to authorize or even require an award of fees or costs to the plaintiff condominium association as the prevailing party on the less important claim, any such award would have been limited to fees and costs related to that claim. Moreover, in fairness and justice, any such award would have been offset by the amount of fees and costs incurred by the defendants on the more significant claim. Since the latter was the more difficult issue that required more time for presentation and briefing, the court had no doubt that the amount of any such offset would have exceeded the amount of the fees and costs otherwise payable to the plaintiff.
The plaintiff relies on Graham v. Keene Corp., 616 A.2d 827 (Del. 1992), a case dealing with the taxing of costs under Superior Court Civil Rule 54(d), to support its claim that it is "the prevailing party" and entitled to an award of attorneys' fees and costs under the COR. Graham held that a plaintiff who won a jury verdict on a claim for injuries relating to an exposure to asbestos was entitled to an award of costs under Rule 54(d) as the "prevailing party" notwithstanding the fact that a set off to the damage award to account for contributions made by settling defendants reduced the amount of the judgment to zero. The situation here is completely distinguishable, as this court found in favor of the defendants and against the plaintiff on the major aspect of the litigation and that decision was affirmed on appeal.
Finally, the court was of the opinion that, to a substantial degree, the entire dispute was prompted by the high-handed manner in which plaintiff dealt with the defendants and other unit holders at the Dorset in relation to the matters at issue in the litigation. In the circumstances, the court believed that the interests of justice opposed shifting fees and costs from the plaintiff to the defendants.
B. Interest
The court's determination to award prejudgment interest at the legal rate, rather than at the 18% rate authorized by the COR, was based on the fact that the defendants were substantially justified in refusing to pay the Spring 2000 assessment. Certainly, this court's opinion, which has now been affirmed by the Supreme Court in this regard, held that the defendants were not obliged to pay a large majority of that assessment. In light of that fact, it was far from clear that any of the defendants could be said to have been in "default . . . in paying any Common Expenses or other sum assessed against him [or her]." And, unless such a finding could be made, there was no basis for applying the higher interest rate. Moreover, as already discussed, the court was of the view that the plaintiff itself shared a large measure of responsibility for the defendants' refusal to pay any portion of the amount assessed. In the circumstances, the court was unwilling to add interest at the 18% rate permitted by the COR. Rather, the court viewed an award of interest at the legal rate as fully compensating the plaintiff condominium association for the loss of use of the portion of the assessment that was properly assessed.
COR at Article 9, para. A(4).