Prosperi v. Code, Inc.Prosperi v. Code, Inc.
We review Prosperi v. Code, Inc., 609 So.2d 59 (Fla. 4th DCA 1992), in which the court certified the following as questions of great public impоrtance:
IS AN OWNER WHO PREVAILS ON A COMPLAINT BY A CONTRACTOR OR SUB-CONTRACTOR TO ENFORCE A MECHANIC‘S LIEN UNDER PART I, CHAPTER 713, FLORIDA STATUTES (1989), ENTITLED TO ATTORNEY‘S FEES UNDER 713.29, EVEN THOUGH, IN THE SAME SUIT, THE CONTRACTOR PREVAILED AGAINST THE OWNER ON A CLAIM FOR MONEY DAMAGES FOR BREACH OF THE CONTRACT, BOTH CLAIMS ARISING OUT OF THE SAME TRANSACTION?
DOES THE TEST OF MORITZ V. HOYT FOR DETERMINING WHO IS THE PREVAILING PARTY FOR THE PURPOSES OF AWARDING ATTORNEY‘S FEES APPLY TO FEES AWARDED UNDER SECTION 713.29, FLORIDA STATUTES?
Prosperi, 609 So.2d at 59. We have jurisdiction under
A. Paul Prosperi (owner) hired Code, Inc. (contractor) to make improvements to the owner‘s real property. The parties had a combination written and oral contract which provided that the owner would periodically make payments to the contractor to reimburse it for payments to subcontractors. The contractor would request payment from the owner by submitting affidаvits claiming the amount of reimbursement due. There was no contractual agreement for attorney‘s fees to be paid to the prevailing party in the event of a lawsuit. A dispute arose over the amount of payment due to the contractor. The contractor left the job, and the owner hired another contractor to finish it.
The contractor filed a complaint against the owner in four сounts: (1) foreclosure of a mechanic‘s lien; (2) breach of contract; (3) quantum meruit; and (4) account stated. The owner counterclaimed for breach of contract arising from the filing of untrue affidavits, failure to account, and incomplete or negligent performance of the contract.
The court denied the claim for mechanic‘s lien because the contractor had submitted fаlse interim affidavits which failed to state that the contractor had actually withheld ten percent of the payments to the subcontractors. With respect to the claim for breach of contrаct, the court held that the contract was originally breached by the contractor as a result of filing untrue affidavits and inaccurately accounting to the owner. The court found that $31,898.01 remained unpаid under the contract but that the owner was entitled to a setoff of $14,588.95 for the cost of completion of the contract, certain construction defects, and other expenses incurred as a result of the contractor‘s leaving the job. The claims based on quantum meruit and account stated were denied.
As a consequence, the court entered judgment in favor of the contractor for $17,309.06 but denied the contractor‘s claim for attorney‘s fees. The court also denied the owner‘s claim for attorney‘s fees (1) under
The Court finds that the greater weight of the evidence has proven that the attorneys fees and costs incurred in this action directly, naturally, and proximately, resulted from the filing of the false affidavits. But for the filing of the false affidavits, Prosperi would have continued to have made all payments due under the contract
and Code would have continued to work on the project until it was properly completed.
The owner appealed that portion of the judgment which denied him attorney‘s fees. The district court of appeal affirmed, citing several cases in support of its position. However, the appellate court certified the questions quoted above and made the following observation:
We acknowledge the supreme court‘s recent opinion in Moritz v. Hoyt Enterprises, Inc., 604 So.2d 807 (Fla. 1992), in which it held that the test for determining who is the prevailing party for purposes of awarding attorney‘s fees in a contract action is “to allow the trial judge to determine from the record which party has in fact prevailed on the significant issues tried before the court.” Id. at 810. It may be that the supreme court will extend that test tо cases involving attorney‘s fees awarded under section 713.29, Florida Statutes (1991). Indeed there is room in the statute for such an equitable approach. See e.g. S.C.M. Assoc. Inc. v. Rhodes, 395 So.2d 632, 634 n. 2 (Fla. 2d DCA 1981).
[I]t was obviously not the intent of the legislature to award attorneys’ fees to a defendant in a mechanics’ lien foreclosure merely because he successfully defends against thе impression of a lien yet is nevertheless found liable in damages, in the same case, for labor and/or materials furnished for his benefit. To conclude otherwise would be anathema to the purposе of the mechanics’ lien law which is to afford the laborer or materialman adequate assurance of being fully compensated for his labor or services.
Emery, 249 So.2d at 500.1 This principle has been consistently followed in subsequent decisions. M & P Concrete Prods., Inc.; Ahimsa Technic, Inc. v. Lighthouse Shores Town Homes Dev. Co., 543 So.2d 422 (Fla. 5th DCA 1989); AAA Sod, Inc. v. Weitzer Corp., 513 So.2d 750 (Fla. 4th DCA 1987); Plaza Builders, Inc. v. Regis, 502 So.2d 918 (Fla. 2d DCA 1986); Magee v. Bishop Signs, Inc., 458 So.2d 1174 (Fla. 4th DCA 1984); Schabert v. Montaltos, 445 So.2d 1136 (Fla. 2d DCA 1984); General Dev. Corp. v. John H. Gossett Constr. Co., 370 So.2d 380 (Fla. 2d DCA), cert. denied, 379 So.2d 205 (Fla. 1979); First Atl. Bldg. Corp. v. Neubauer Constr. Co., 352 So.2d 103 (Fla. 4th DCA 1977).
While this is the first time our Court has addressed the net judgment rule, we feel compelled to give substantial deference to the long line of precedent which supports the rule. At the same time, we must consider whether the rule has been affected by our recent decision in Moritz v. Hoyt Enterprises, Inc., 604 So.2d 807 (Fla. 1992). That case involved a dispute in which the Moritzes were deеmed to have breached the contract
It is our view that the fairest test to determine who is the prevailing party is to allow the trial judge to determine from the record which party has in fact prevailed on the significant issues tried before the court. Given the circumstances of this record, we find that the trial judge was within his discretion to grant Hoyt‘s motion for attorney‘s fees and costs.
Moritz is not directly on point because it did not involve a claim calling for the payment of attorney‘s fees to the prevailing party combined with another claim which did not provide for the payment of attorney‘s fees. However, Moritz bears significantly upon the instant case because it disapproved Casavan v. Land O‘Lakes Realty, Inc., 542 So.2d 371 (Fla. 5th DCA 1989), and Daniels v. Arthur Johannessen, Inc., 496 So.2d 914 (Fla. 2d DCA 1986), each of which had held that the party obtaining the greatеr award was the prevailing party even though that party rather than the other had breached the contract. We also believe it is significant that in 1977 the legislature amended section 713.29 to provide thаt the attorney‘s fees awarded under that section should be taxed as part of costs “as allowed in equitable actions.” Ch. 77-353, § 11, at 531, Laws of Fla.
As we see it, the net judgment rule itself was originated as a device to do equity. For example, under most circumstances it would be unfair to require a contractor who recovers the bulk of its claim to pay attorney‘s fees for failure to meet the technical requirements of the mechanic‘s lien law. In some of the later cases, however, the net judgment rule appears to have been applied mechanically without regard to the equities. We bеlieve that Moritz now requires a more flexible application. The fact that the claimant obtains a net judgment is a significant factor but it need not always control the determination of who should be considered the prevailing party. We hold that in considering whether to apply the net judgment rule, the trial judge must have the discretion to consider the equities and determine which party has in fact prevailed оn the significant issues.
In the instant case, the findings of the trial judge make it clear that he believed that the owner was the innocent party but felt constrained not to award him attorney‘s fees under a strict application of the net judgment rule. Under the net judgment rule as tempered by equitable principles according to the rationale of our opinion, it is equally clear that the trial judge would have found the owner to be the prevailing party. Therefore, we quash the decision below and remand with directions that attorney‘s fees be awarded to the owner. We quash the order awarding the contractor аppellate attorney‘s fees and direct that appellate attorney‘s fees also be awarded to the owner.
The rationale of this opinion precludes us from giving an unqualified affirmative or negative answer to the first certified question. We answer the second certified question in the affirmative. We disapprove of the cases cited herein in support of the net judgment rule only to thе extent they may be read to require a strict application of the rule.
It is so ordered.
BARKETT, C.J., and OVERTON, McDONALD, SHAW, KOGAN and HARDING, JJ., concur.