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What’s Fair Is Fair: No Attorney’s Fees for Victor
Emily Zung Manninger, Esq.
The California Court of Appeal recently determined that successfully defending a Prompt Payment Statutes (PPS) violation claim, does not necessarily entitle a contractor to recover attorney’s fees under the PPS’ fee-shifting provisions.
In James L. Harris Painting, etc. v. West Bay Builders, Inc., et al., Harris (the subcontractor) sued West Bay (the general contractor), alleging breach of contract and violation of the PPS based on West Bay’s refusal to pay Harris for work that it performed beyond the contract’s original scope. West Bay filed a cross-complaint against Harris for breach of contract arising from the same project, alleging that Harris abandoned the project. The jury found that both West Bay and Harris failed to perform, and did not award damages to either side. Notably, West Bay defeated Harris’ prompt payment claims.
After trial, West Bay moved for attorney’s fees under the PPS’s fee-shifting provisions, on the grounds that it was the “prevailing party” for purposes of the statutes. However, the trial court refused to award West Bay’s attorney’s fees, reasoning that “[e]ach party sued for breach of contract, but neither side prevailed. The Jury denied all relief. Fairness dictates that each side should pay its own attorney’s fees.” West Bay appealed the decision. However, the Appellate Court upheld the ruling, holding that trial courts have the discretion to determine that there is no prevailing party in an action, and that in this particular case, the court did not abuse its discretion in concluding there was no prevailing party.
The Harris decision muddies the PPS litigation strategy waters. Under Harris, courts analyzing PPS fee shifting claims will look at the end result of the litigation as a whole, rather than the success of the PPS claims distinctly. Even if there is a clear “winner” as to PPS claims, the court may still find that no prevailing party exists for purposes of the fee-shifting provisions—especially where the winning party’s result is minimal, or cannot be considered successful in a realistic sense. Additionally, contractors suing under the prompt payment statutes should note that failing to allege violations as separate causes of action may impact their ability to recover (or their liability for) attorney’s fees thereunder.
Emily Zung Manninger is an Associate with Hunt Ortmann, a leader in California construction law. If you have any questions about this bulletin, Prompt Payment Statutes, or attorney’s fees provisions please contact her at Manninger@huntortmann.com.