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HPS Mechanical, Inc. v. JMR Construction. Corp.

United States District Court, N.D. California

December 9, 2014

HPS MECHANICAL, INC., Plaintiff,
v.
JMR CONSTRUCTION CORP., et al., Defendants

For HPS Mechanical, Inc., Plaintiff: David Bryan Potter, Bakersfield, CA; Gary Lee Eastman, Gary L. Eastman, APLC, San Diego, CA; Matthew Coleman McCartney, Eastman and McCartney LLP, San Diego, CA; Noel Thomas McCartney, McCartney & Associates, Bakersfield, CA.

For JMR Construction Corp., Great American E & S Insurance Company, Defendants: George Richard Gore, LEAD ATTORNEY, Attorney at Law, El Dorado Hills, CA; Martin A Little, Jolley Urga Woodbury Little, Las Vegas, NV.

For JMR Construction Corp., Counter-claimant: George Richard Gore, LEAD ATTORNEY, Attorney at Law, El Dorado Hills, CA; Martin A Little, Jolley Urga Woodbury Little, Las Vegas, NV.

For HPS Mechanical, Inc., Counter-defendant: David Bryan Potter, Bakersfield, CA; Gary Lee Eastman, Gary L. Eastman, APLC, San Diego, CA; Noel Thomas McCartney, McCartney & Associates, Bakersfield, CA.

ORDER GRANTING PLAINTIFF'S MOTION FOR ATTORNEYS' FEES AND DENYING DEFENDANTS' MOTION FOR ATTORNEYS' FEES Re: Dkt. Nos. 168, 171

JOSEPH C. SPERO, United States Magistrate Judge.

I. INTRODUCTION

This Miller Act case arises from a construction subcontract (the " Subcontract") for a water infrastructure project in San Ramon, California. Plaintiff HPS Mechanical, Inc. (" HPS"), a subcontractor, claimed that Defendant JMR Construction Corporation (" JMR"), the general contractor, improperly withheld payment and failed to compensate HPS for changed circumstances. HPS also sued JMR's surety, Defendant Great American Insurance Company (" GAIC"). JMR[1] counterclaimed for expenses and delay allegedly caused by HPS's breach of the Subcontract. The Court held a bench trial in February of 2014, found each party entitled to recover a portion of its claims, and entered judgment in favor of HPS, with both Defendants jointly and severally liable for $120, 094.32 and GAIC severally liable for an additional $11, 859.00.

Both HPS and JMR, each claiming to be the " prevailing party, " now move to recover their attorneys' fees pursuant to the Subcontract and California Civil Code section 1717. The Court previously found this issue suitable for resolution without oral argument and vacated the hearing scheduled to occur on December 12, 2014. See dkt. 181; Civ. L.R. 7-1(b). For the reasons stated below, HPS's Motion is GRANTED and JMR's Motion is DENIED. The Court awards HPS its attorneys' fees in full, in the amount of $454, 525. The Clerk's taxation of costs in favor of HPS (dkt. 179) stands.[2]

II. BACKGROUND

This Order assumes the parties' familiarity with the facts of the case, which are set forth in more detail in the Court's Findings of Fact and Conclusions of Law (" FFCL, " dkt. 156).[3] In brief, this case arises from a U.S. Army Corps of Engineers (" USACE") project to build a pumping station and pipeline in San Ramon, California (the " Project"). The USACE contracted with JMR to complete the Project, and JMR subcontracted with HPS to complete certain aspects of it (the " Subcontract"), [4] including much of the work on the pipeline. The Project faced numerous setbacks and delays, and ultimately finished years behind schedule. At the conclusion of the Project, JMR entered negotiations with the USACE regarding a Request for Equitable Adjustment and was able to reach a settlement with the USACE.

HPS filed this action against JMR and GAIC to recover payment that JMR had withheld based on the counterclaims discussed below, and to bring claims based on a number of Proposed Change Orders (" PCOs") that HPS had submitted for increased costs and expenses that HPS contended were outside of its control. JMR filed a counterclaim for " backcharges" --costs and expenses that JMR purportedly incurred due HPS's improper acts and omissions--and for compensation that JMR claims it would have received from the USACE but for project delays attributable to HPS. The Court held a bench trial on February 19, 20, 24, and 25, 2014, and, after extensive post-trial briefing, issued its FFCL on August 1, 2014. HPS was entitled to recover $344, 294.72 of $576, 498.38 that it sought at trial:[5] $325, 508.72 for the withholding and $18, 786.00 for the PCOs. See FFCL at 18, 25, 59. JMR was entitled to recover $212, 341.40 of the $401, 517.03 that it sought for its backcharge claims, and nothing for its $341, 062.00 delay claim. See id. at 18-19, 59. Offsetting these amounts and taking into account the liability applicable to each defendant, the Court judged JMR and GAIC jointly and severally liable to HPS in the amount of $120, 094.32, and GAIC severally liable for an additional $11, 859.00. Id. at 60; Judgment (dkt. 157).

Both parties now move for attorneys' fees. See generally JMR Mot. (dkt. 168); HPS Mot. (dkt. 171). Each party contends that it is the " prevailing party" for the purposes of section 11.5 of the Subcontract and section 1717 of the California Civil Code. JMR Mot. at 5-11; HPS Mot. at 2-8. JMR also presents two alternative arguments. First, JMR argues that it is entitled to attorneys' fees regardless of whether it " prevailed, " citing two other sections of the Subcontract. JMR Mot. at 3-5. Less optimistically, JMR argues that if the Court does not award fees to JMR, the parties should bear their own fees and costs. Id. at 11-13.

III. ANALYSIS

A. Fees Are Governed by Section 11.5 of the Subcontract and California Civil Code Section 1717

Section 11.5 of the Subcontract, titled " Cost of Dispute Resolution, " provides that the " prevailing party in any dispute arising out of or relating to [the Subcontract] or its breach . . . shall be entitled to recover from the other party . . . reasonable attorneys' fees, " so long as the method of dispute resolution is consistent with the terms of the Subcontract. Subcontract ยง 11.5. Neither party contends that this ...


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