JAMES G. DAVIS CONSTRUCTION CORPORATION v. HRGM CORPORATION
147 A.3d 332
| D.C. | 2016Background
- Davis and HRGM formed an 80/20 joint venture to renovate McKinley Technical High School; the JVA required periodic and final audits and placed accounting responsibility on Davis.
- After project completion, HRGM sued Davis for breach of contract, breach of fiduciary duty, and for an accounting, alleging improper charges, self-dealing, and failures in accounting; Davis counterclaimed for unpaid capital contributions.
- A jury found for HRGM on contract and fiduciary claims, awarded $5,056 compensatory and $70,500 punitive damages, and rejected Davis’s counterclaim; HRGM later withdrew its accounting claim before submission to the jury.
- HRGM moved post-trial for attorney’s fees and costs under Article XXI of the JVA (an indemnity clause explicitly mentioning attorneys’ fees); the trial court awarded $736,152.76 in fees and $39,344.67 in costs after reductions.
- Davis appealed, arguing (1) the jury already considered attorney’s fees in punitive damages so post-trial fees created double recovery; (2) Article XXI doesn’t cover first-party disputes or the breaches here; (3) fees should have been proved to the jury under Rule 54(d)(2); and (4) the fee award was unreasonable.
Issues
| Issue | HRGM’s Argument | Davis’s Argument | Held |
|---|---|---|---|
| Whether a post-trial contractual fee award is barred when the jury considered fees in punitive damages | Contractual indemnity permits recovery of fees; punitive damages serve a different (punitive) purpose and do not preclude contractual compensation | Jury’s punitive award considered attorney’s fees, so awarding contractual fees post-trial yields double recovery | Court: No bar. Punitive damages and contractual fees serve different purposes; award allowed with court adjusting to avoid double recovery if needed |
| Whether Article XXI authorizes fees in a first-party action between venturers | Article XXI expressly references attorneys’ fees and covers “any breach,” reading broadly to include first-party breaches | Indemnity clauses like Article XXI typically cover third-party litigation; first-party fee-shifting requires clear language | Court: Article XXI’s plain language and contract structure authorize recovery of fees in this first-party dispute |
| Whether HRGM had to present attorney’s fees to the jury as damages under Rule 54(d)(2) | Parties treated fees as recoverable by post-trial motion; Article XXI functions like a prevailing-party/indemnity provision and fees can be awarded post-trial | Because fees stem from contract indemnity, they were an element of damages and had to be proved to the jury | Court: No error. Parties agreed to seek fees post-trial and Calomiris is distinguishable; post-trial Rule 54(d)(2) motion was proper |
| Whether the fee award was reasonable given limited monetary recovery | Fees compensate for litigation tied to breaches and also vindicated non-monetary objectives (accounting, vindication); trial court reduced lodestar for limited monetary success | Award disproportionate to monetary damages (very small recovery) — trial court abused discretion | Court: No abuse of discretion. Trial court computed lodestar, applied reductions (pre-litigation time and 15% for limited monetary success), and reasonably considered overall success |
Key Cases Cited
- St. Luke Evangelical Lutheran Church, Inc. v. Smith, 568 A.2d 35 (Md. 1990) (jury may consider attorney’s fees in awarding punitive damages)
- Central Armature Works, Inc. v. American Motorists Insurance Co., 520 F. Supp. 283 (D.D.C. 1980) (court declined separate fee award where punitive damages sufficiently covered litigation expenses)
- Equitable Life Leasing Corp. v. Abbick, 757 P.2d 304 (Kan. 1988) (punitive damages and statutory/contractual fees serve different purposes; both may be awarded)
- Nova Research, Inc. v. Penske Truck Leasing Co., 952 A.2d 275 (Md. 2008) (contract interpretation governs whether indemnity clauses cover first-party attorney’s fees)
- Atlantic Contracting & Material Co. v. Ulico Cas. Co., 844 A.2d 460 (Md. 2004) (certain indemnity/surety agreements support first-party fee recovery even absent express "attorney’s fees" language)
- Calomiris v. Calomiris, 3 A.3d 1186 (D.C. 2010) (fees under some contractual indemnities are not always an element of damages at trial; prevailing-party language matters)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (lodestar method and adjustment for degree of success in attorney’s-fee awards)
- Farrar v. Hobby, 506 U.S. 103 (U.S. 1992) (degree of success is a critical factor in awarding fees)