MULTIPLEX, INC., a West Virginia Corporation, Art R. Poff and Pamela A. Poff, individually, Petitioners v. TOWN OF CLAY, Respondent.
No. 12-0418.
Supreme Court of Appeals of West Virginia.
Oct. 4, 2013.
749 S.E.2d 621
Submitted Sept. 11, 2013.
ee relationships and morale throughout the State.
In view of the foregoing, I respectfully dissent.
Carl J. Roncaglione, Jr, Esq., Charleston, WV, for Respondent.
PER CURIAM:
After the petitioners, Multiplex, Inc., Art R. Poff and Pamela A. Poff, voluntarily dismissed their suit for injunctive relief, the Circuit Court of Clay County, West Virginia, ordered that the petitioners’ $25,000.00 injunction bond be forfeited and paid over to the respondent, Town of Clay, to compensate respondent for its attorney fees and costs. On appeal, the petitioners argue that the bond was not subject to forfeiture in the absence of a finding that the underlying suit was filed in bad faith; that attorney fees and expenses are not recoverable “costs” within the meaning of
Upon careful consideration of the parties’ briefs, the appendix record,1 the oral arguments, and this Court‘s precedents, we affirm, in part, reverse, in part, and remand for further proceedings consistent with this opinion.
I. FACTUAL AND PROCEDURAL HISTORY
On or about October 16, 2009, the petitioners, Multiplex, Inc. and its principals, Art R. Poff and Pamela Poff (hereinafter collectively referred to as “the petitioners“), entered into a construction contract with the respondent, Town of Clay, for various improvements to the town‘s water treatment plant. According to the contract, the project was designed by Boyles & Hildreth, which was to act as the project engineer and the Town of Clay‘s representative. The petitioners executed a Performance Bond2 and an Agreement of Indemnity with United States Surety Company.
On or about October 22, 2010, a dispute arose between the parties to the contract. The petitioners claimed that they were unable to proceed with the work until the project engineer answered certain questions and provided certain information; and further that the engineer‘s failure to issue change orders was causing unwarranted delay in compensation. The respondent claimed, in contrast, that the petitioners had walked away from the job without cause. Correspondence and discussions between the parties did not resolve the issues, and on November 16, 2010, the respondent notified the
Thereafter, on December 3, 2010, the petitioners filed a Complaint for Preliminary Injunctive Relief in the Circuit Court of Clay County, against the Town of Clay, Boyles & Hildreth, and United States Surety,3 alleging that
[p]reliminary injunction to prevent the Town from declaring default is necessary to avoid immediate, permanent and irreparable harm to Multiplex, Inc. in regards to the Contract. Without responses to the pending inquiries, Multiplex has been unable to proceed with this critical schedule items and such has caused an additional delay in the schedule. Since that time, delays continue to occur and losses continue to accrue.
Following the taking of some evidence at a hearing held on December 7, 2010, the circuit court ruled that:
I‘ll tell you what I‘ll do, I can see now that this hearing is going to take quite a long and lengthy time. Pursuant to Rule 65(a) of the Rules, I‘m going to consolidate the hearing with this preliminary hearing in the matter. And I‘m going to, at this point, issue a temporary injunction in the matter, finding that there is immediate and irreparable injury and lоss or damage that could occur to Multiplex; they would be forced into bankruptcy and there could be a potential of the assets of Art Poff and Pamela Poff being at dire circumstances. And I‘m going to continue this hearing and I‘m consolidating, the rules allow me to do that. I‘m going to temporarily order, pending a full hearing, both the preliminary and the entire hearing in the matter, that the Town of Clay shall not declare Multiplex in default of the contract. I‘m going to prohibit U.S. Surety from collecting any money from Multiplex or Art Poff or Pamela Poff. I‘m not going to address the issue of whether to order the town to issue a change order or to answer Multiplex[‘s] questions; that‘s an issue that I will address at the hearing in the matter.
The court set а hearing for January 27, 2011, and took under advisement the petitioners’ request for mediation. Shortly after the hearing had concluded, the following exchange took place in chambers:
THE COURT: Let the record reflect that counsel is back in Chambers with the Court. I failed to set a bond, and I believe the rule requires that I set a bond. I‘m setting it for $25,000 in the matter. Okay. I‘ll note and preserve all parties’ objections. The injunctive relief would not take affect [sic] until the bond is posted.
MR. MORRIS: Your Honor, we would be happy to post a bond. We can do that forthwith. Although, quite frankly, we had estimated that the only likely harm, there was little or no monetary harm associated to the defense with our request of a, simply, status quo TRO. We had hoped for something—we could, we could post cash to the Court in roughly the ten percent amount immediately, or very close to it, would be my guess.
THE COURT: Court will permit the ten percent to be posted, cash or surety.
MR. MORRIS: In cash, which would be the—that would be great and we can post that.
THE COURT: Ten percent or surety.
On December 21, 2010, the Town of Clay filed a motion to dismiss the Complaint, or in the alternative, to dissolve the temporary restraining order and preliminary injunction. No response to this motion was filed by the petitioners,4 and the circuit court never issued a ruling thereon.
The parties began discovery on the underlying contract issues raised in the Complaint,5 and as a result of the volume of
Thereafter, the petitioners moved to voluntarily dismiss the Complaint, and by order dated January 21, 2011, the court granted the motion. The court made the following relevant findings:
2. Dismissal of the Plaintiffs’ Complaint for Preliminary Injunctive Relief will not prejudice the Defendants.6 No counterclaim has been filed by the Defendants which would require independent adjudication by the Court.
3. Accordingly, Plaintiffs’ request for preliminary injunction is hereby dismissed WITH PREJUDICE; all other claims and remedies sought are hereby dismissed WITHOUT PREJUDICE.7
On January 26, 2011, the Town filed a motion seeking to forfeit the injunction bond, and for “attorneys’ fees, costs, and sanctions[.]” In this regard, the Town sought reimbursement for $47,186.08 in fеes and costs allegedly expended in contesting the injunction from the date it was entered, December 7, 2010, to the date the petitioners voluntarily dismissed their case, January 21, 2011. The gist of the motion, which may fairly be termed a broadside, was that the petitioners’ injunction suit had been filed in bad faith,8 was filled with falsehoods, and was intended “to loot the Town of Clay‘s public fisc.” By order entered on February 5, 2011, the court referred the motion to the special commissioner. Significantly, the order stated that “[t]he Clerk of this Court shall not release the $25,000.00 bond that was posted by the Plaintiffs. The Clerk of this Court shall hold the $25,000.00 bond in his account, until such time as the Court resolves the Town of Clay‘s Motion to Forfeit Bond.”
In drawn-out proceedings before the special commissioner,9 the petitioners sought, and the respondеnt Town resisted, production of invoices and checks evidencing the payment of the town‘s attorney fees and costs.10 Instead, the Town produced a three-line summary: Bill Date January 15, 2011, $20,722.26; Bill Date February 3, 2011, $18,820.21; and Bill Date March 31, 2011, $7,643.50. The summary contained no description whatsoever of the work performed by the Town‘s counsel or the dates on which the work was performed. Not until November 22, 2011, when required by the special commissioner to provide itemized invoices together with an argument addressing the factors listed in Aetna Casualty & Surety Co. v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986), did the Town produce copies of invoices describing work performed and fees
Of significance to these proceedings, thе special commissioner‘s initial Report contains the following findings of fact:
Multiplex argues that the basis for its Complaint for an injunction remains sound. It says that it prevailed on its Complaint, evidenced by the fact that a temporary injunction was granted, and that it cannot have its bond forfeited or be sanctioned on a Complaint on which it prevailed.
...
Achieving the temporary injunction is not the ultimate victory that Multiplex now claims it is. Being awarded a permanent injunction and relief from performing the contract pending receipt of answers to the proposed questions would have been the victory. Multiplex folded up the game board before it allowed anyone to determine the result of the gаme. There is no reason on the record that shows that Multiplex had grounds for the injunction it sought, allegedly based on questions it claims the Town needed to answer. Now that issue is dismissed with prejudice, there will never be an answer to whether the request for the injunction was based upon solid grounds.
Further, the special commissioner‘s initial report contains the following recommendations to the circuit court that are relevant to this appeal:
- The Town of Clay is entitled to at least some of the proceeds of the bond posted by Multiplex because Multiplex filed a Complaint for a Temporary Injunction, well-founded or unfounded which delayed the Town of Clay from pursuing its business interests and resulted in the Town incurring certаin expenses before it was allowed to resume its business activities, followed by Multiplex abandoning the Complaint after such delay and before the Court could determine the merits of the Complaint.
- The amount of the bond posted by Multiplex should be determined to have been set at $25,000.
- Any recompense to the Town of Clay should be limited to the amount of the Multiplex injunction bond, as Multiplex has not been shown to have acted in bad faith that additional sanctions should be imposed beyond that said bond.
The special commissioner issued his final report on February 14, 2012, recommending that the petitioners’ bond be forfeited to benefit the Town of Clay “on the grounds of Multiplex‘s filing the unfounded action for an injunction which resulted in the Town of Clay incurring costs and attorney fees.” The commissioner concluded that the invoices for legal work during the time period in which the injunction was in effect were properly included in the fees to be awarded, although he found “that the amount for which Multiplex should be liable for abandoning its injunction action without any indication that the petition had any merit should not exceed the amount of the said bond.”12
By order dated February 15, 2012, the circuit court adopted all recommendations made by the special commissioner; ordered that the bond be forfeited “as the Town of Clay proved to this Court that it suffered such expenses and costs resulting from Multiplex‘s having filed a Complaint for a Temporary Injunction, and then abandoning the Complaint before the Court could determine the merits of the Complaint[]“; and ordered the petitioners to pay the special commissioner‘s
II. STANDARD OF REVIEW
A case involving the dissolution of an injunction, after which the circuit court orders forfeiture of the injunction bond and payment of a party‘s costs and/or damages from the bond, presents mixed issues of law and fact. This Court has held that
‘In reviewing challenges to the findings and conclusions of the circuit court, we apply a two-prong deferential standard of review. We review the final order and the ultimate disposition under an abuse of discretion standard, and we reviеw the circuit court‘s underlying factual findings under a clearly erroneous standard. Questions of law are subject to a de novo review.’ Phillips v. Fox, 193 W.Va. 657, 661, 458 S.E.2d 327, 331 (1995) (citation omitted).
Syl. Pt. 2, Walker v. W. Va. Ethics Com‘n, 201 W.Va. 108, 492 S.E.2d 167 (1997). With respect to our review of the amount of the costs and/or damages awarded, we have held that
‘[T]he trial [court] ... is vested with a wide discretion in determining the amount of ... court costs and counsel fees; and the trial [court‘s] ... determination of such matters will not be disturbed upon appeal to this Court unless it clearly appears that [it] has abused [its] discretion.’ Syl. Pt. 3, in part, Bond v. Bond, 144 W.Va. 478, 109 S.E.2d 16 (1959).
Syl. Pt. 1, Heldreth v. Rahimian, 219 W.Va. 462, 637 S.E.2d 359 (2006); see also Martin v. W. Va. Div. of Labor Contr. Lic. Bd., 199 W.Va. 613, 616, 486 S.E.2d 782, 785 (1997) (award of attorney fees in mandamus action reviewed under abuse of discretion standard); Hopkins v. Yarbrough, 168 W.Va. 480, 489, 284 S.E.2d 907, 912 (1981) (award of attorney fees in action for delinquent child support reviewed under abuse of discretion standard).
III. DISCUSSION
This Court has held that “‘[a]n order of injunction is of no legal effect *** [
In this case, there is no question that a bond was required, and that the bond was secured by the petitioners’ payment of $2,500.00. As a threshold issue, the petitioners contend that the amount of the bond was not $25,000.00, the amount set by the court, but rather $2,500.00, the sum they tendered. On this point, we find the petitioners’ argument to be frivolous.13 The circuit court clearly stated at the December 7, 2010, hearing that “I‘m setting [the bond] for $25,000 in the matter.” When petitioner‘s counsel responded that “we could post cash to the Court in roughly the ten percent amount immediately[,]” the court agreed that it “will permit the ten percent to be posted, cash or surety[,]” after which the injunction would be in effect. (Emphasis supplied.) In the vernacular, the circuit court gave the petitioners a break by allowing them to secure the bond with a ten percent cash payment in order that the injunction they sought could go into immediate effect. It is pure sophistry for the petitioners to now claim that because no bond document was ever filed evidencing the $25,000.00 amount, the $2,500.00 they paid to secure the bond is the total amount that can be recovered thereon. The duty to have a bond “acknowledged, or proved before the
The petitioners also argue that because they dismissed their lawsuit, the injunction bond was not “dissolved” by the court and therefore
In this case, when the petitioners dismissed their case, the injunction “dissolved into nothingness, as effectually as if the court had said, in so many words, ‘Let it be dissolved.‘” Id. For this Court to hold otherwise would be to set a precedent whereby a litigant, whose sole purpose is to evade the consequences of the statute and аvoid forfeiture,14 could dismiss his case “in the nick of time” and leave the other party without a remedy.
The petitioners’ next argument, that the bond was not subject to forfeiture in the absence of a finding that the underlying suit was filed in bad faith, requires little comment. Although the respondent sought sanctions as well as forfeiture, and made numerous allegations of bad faith on the petitioners’ part, it is clear from the record that both the special commissioner and the circuit court treated this from the outset as a straightforward bond forfeiture case. The special commissioner concluded (albeit without any real analysis) that the lawsuit had not been filed in bad faith, the court accepted the commissioner‘s findings in toto, and the respondent has not cross-appealed on the issue of whether it was entitled to sanctions.
In a forfeiture case, the question of bad faith does not come into play; as this Court explained in Meadow River Lumber, the common law required such a showing, but
The petitioners next argue that attorney fees and costs are not an element of damages that may be recovered in a bond forfeiture. The petitioners rely upon Bush v. Carden, 111 W.Va. 631, 163 S.E. 54 (1932), for the proposition that where an injunction is only ancillary to the main object of the suit, which was dismissed without prejudice, attorney fees and costs incurred are not recoverable from an injunction bond. This is not a fair reading of Bush, which holds in syllabus point two that “[i]n an action on an injunction bond, when the injunction is only ancillary to the main object of the suit, counsel fees paid for services in the suit as a whole, are not recoverable.” Id. at 631, 163 S.E. at 54 (emphasis supplied.) In this regard, Bush was completely consistent with this Court‘s earlier decision in Meadow River Lumber, where we held in syllabus point two that
[w]hen counsel fees and personal expenses are sought to be recovered as damages on an injunction bond, it is incumbent on the plaintiff to show either that injunction was the sole relief to which the suit pertained or that the fees and expenses were paid out solely for the purpose of procuring a dissolution of the injunction, as distinguished from expenditures for the hearing of the principal issues involved in the case.
104 W.Va. at 324, 140 S.E. at 49; see also Meyers v. Washington Heights Land Co., 107 W.Va. 632, 149 S.E. 819 (1929); Wolverton v. Holcomb, 174 W.Va. 812, 329 S.E.2d 885 (1985).
The petitioners’ next argument, that the attorney fees and costs incurred by respondent were not shown to have resulted from its efforts to secure a dissolution of the injunction, merits more discussion. As noted, our precedents make it clear that only attorney fees and costs incurred by the party enjoined, for the purpose of securing a dissolution of the injunction, are recoverable as damages under the statute. See State ex rel. Shatzer v. Freeport Coal Co., 144 W.Va. 178, 181, 107 S.E.2d 503, 506 (1959) (distinguishing between costs incurred in seeking dissolution of an injunction and damages incurred as a result of the injunction); Bush, 111 W.Va. at 634, 163 S.E. at 55 (to same effect).15
In the instant case, notwithstanding the special commissioner‘s acknowledgment that the invoices for attorney fees were “block entry” invoices with no indication of the time devoted to individual tasks, and notwithstanding that many of the entries on the invoices appear to relate to the Town‘s defense on the merits, see notes 11 & 12 supra, the commissionеr simply reduced the fees to the total amount of the bond, $25,000.00, apparently concluding that this solved the problem. The circuit court accepted the commissioner‘s report in toto, without giving the petitioners an opportunity to present evidence or argument to support their objection thereto. Based on our review of the record, this Court finds that the commissioner‘s analysis was flawed and the circuit court therefore erred in accepting his findings.
Although a percentage reduction may well be a proper approach when evaluating the reasonableness of a fee request supported by block entry invoices,16 it is wholly insufficient where the threshold question is whether the legal tasks are compensable at all. In this case, the threshold question was whether the legal fees incurred by the Town resulted from its attempt to secure a dissolution of the injunction, in which case the fees were payable from the bond, or from the Town‘s defense on the merits of the contract action, in which case the fees were not.17 Neither
The petitioners’ final argument is that they were entitled to a hearing to determine the reasonableness of the Town‘s attorney fees. We agree. It has lоng been established that
‘[w]here attorney‘s fees are sought against a third party, the test of what should be considered a reasonable fee is determined not solely by the fee arrangement between the attorney and his client. The reasonableness of attorney‘s fees is generally based on broader factor such as: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.’ Syl. Pt. 4, Aetna Cas. & Sur. Co. v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986).
Syl. Pt. 12, Horkulic v. Galloway, 222 W.Va. 450, 665 S.E.2d 284 (2008). The determination of whether fees are reasonable “is simply a fact driven question that must be assessed under the Pitrolo factors.” Id. at 466, 665 S.E.2d at 300 (Davis, J., concurring). In order for a circuit court to determine those facts, it must allow the parties to present evidence on their own behalf and to test their opponents’ evidence by cross-examination, “the greatest legal engine ever invented for the discovery of truth[.]” California v. Green, 399 U.S. 149, 158, 90 S.Ct. 1930, 26 L.Ed.2d 489 (1970) (citing 5 Wigmore § 1367). See Paugh v. Linger, 228 W.Va. 194, 201, 718 S.E.2d 793, 800 (2011) (ordering, in reliance on Pitrolo, that “[t]he issue is remanded to the circuit court with directions to rеmand to the family court for entry of an order making findings of fact which would allow a court to engage in meaningful review of the award of attorney‘s fees.“); Kanawha Valley Radiologists, Inc. v. One Valley Bank, N.A., 210 W.Va. 223, 229, 557 S.E.2d 277, 283 (2001) (“We have previously determined, on numerous occasions, that a circuit court has erred by failing to afford a party notice and the opportunity to be heard prior to awarding attorney‘s fees.“); (Statler v. Dodson, 195 W.Va. 646, 653-55, 656, 466 S.E.2d 497, 504-06, 507 (1995) (remanding for a hearing on several issues including, “if appropriate, the reasonableness of the requested attorney‘s fees followed by the preparation of findings of fact and conclusions of law as predicates to the ultimate decision as to the amount of fees to be paid.“)); Daily Gazette Co. v. Canady, 175 W.Va. 249, 251, 332 S.E.2d 262, 264 (1985) (“Like other sanctions, attorney‘s
This Court‘s decision in Corporation of Harpers Ferry v. Taylor, 227 W.Va. 501, 711 S.E.2d 571 (2011), is not to the contrary. In Harpers Ferry, the petitioner had not contested the amount of attorney fees sought, and “[i]mportantly ... did not request an evidentiary hearing. The City merely argued in its response that the evidence was insufficient to award attorney‘s fees.” Id. at 506, 711 S.E.2d at 576. Noting that the petitioner‘s first request for an evidentiary hearing was made in its Rule 59(e) motion to alter or amend the judgment, we concluded that “Rule 59(e) is not a vehicle for a party to undo his/her own procedural failures or to advance arguments that could have been presented to the trial court prior to judgment.” Id. (citing Franklin D. Cleckley, Robin J. Davis, Louis J. Palmer, Jr., Litigation Handbook on the West Virginia Rules of Civil Procedure, § 59(е), at 1179 (3d ed.2008)).
We have made clear that while a court is not required to make detailed findings on each and every element of the Pitrolo test, some being irrelevant in a given situation, the court must make findings sufficient to permit meaningful appellate review. See Shafer v. Kings Tire Serv., Inc., 215 W.Va. 169, 177, 597 S.E.2d 302, 310 (2004) (“Because our abuse of discretion review is limited to analyzing whether the circuit court engaged in a proper balancing of applicable factors, we have found that a ‘circuit court is required to make findings of fact and conclusions of law on the issue of attorneys’ fees.’ “);19 Heldreth v. Rahimian, 219 W.Va. 462, 470, 637 S.E.2d 359, 367 (2006) (“While the trial court‘s findings relative to the fee award in this case amount to more than the summary conclusion of a specific fee award that this Court found dеficient in Shafer, the findings made in this case do not fully comport with what is required under both Bishop Coal [Co. v. Salyers, 181 W.Va. 71, 380 S.E.2d 238 (1989)]20 and Pitrolo.“); Erwin v. Henson, 202 W.Va. 137, 143, 502 S.E.2d 712, 718 (1998) (finding that circuit court‘s order reducing fee request failed to provide sufficient reasoning to permit parties to “respond meaningfully ... and ... submit additional supporting written documentation or explanation“).
In the instant case, because there was no hearing either before the special commissioner or the circuit court, and therefore no way for the petitioners to cross examine or otherwise meaningfully contest the Town‘s proffered evidence, there was nothing on which either the commissioner or the court could base findings of fact sufficient to permit meaningful review.21 Accordingly, the case must be remanded for the taking of evidence and the resolution of any material issues of fact.
In summary, we affirm the circuit court‘s ruling that the amount of the injunction bond was $25,000.00, affirm the court‘s ruling that the respondents are entitled to re- cover attorney fees pursuant to
IV. CONCLUSION
The judgment of the Circuit Court of Clay County is affirmed, in part, reversed, in part, and remanded for further proceedings consistent with this opinion.
Affirmed in part; reversed in part; and remanded.