Daily Decisions: Three Strikes, You’re Out (of Bases for Attorneys’ Fees)

Well, here we go again — another opinion with our friends from NYBA, Seattle Boat, Bridges, and Radovich. You’ll remember them from this morning’s post about quitclaim deeds and property disputes. In that opinion, the Court of Appeals reversed the trial court’s decision (on six separate grounds!) regarding the validity of the deed. In a companion opinion, Bridges Investment Group v. Radovich (Division 1, May 7, 2012), the Court of Appeals affirmed the trial court’s grant of partial summary judgment in favor of Bridges, but reversed all three bases of the trial court’s award of attorneys’ fees to Bridges (from Radovich).

For factual and procedural background, please check out the previous post. Bridges (who bought the property from Radovich and then sold it to Seattle Boat) moved for summary judgment against Radovich seeking a declaration that if (1) the quitclaim deed from Radovich to NYBA was valid, then (2) Radovich breached the 2004 statutory deed to Bridges and the Purchase and Sale Agreement (“PSA”) between Bridges and Radovich because both documents purported to convey a fee simple interest in the property described in the quitclaim deed. The trial court granted Bridges’ motion.

The Court of Appeals affirmed. Radovich’s only real argument was that he could not be in breach because, whatever problems with the 2004 deed or the PSA, they were somehow immunized by Bridges’ subsequent conveyance to Seattle Boat, “in which Radovich took no part.” Moreover, in the conveyance from Bridges to Seattle Boat, Bridges apparently did not warrant that it was transferring a fee interest to Seattle Boat. But according to the Court of Appeals, that didn’t matter for purposes of Radovich’s breach. As soon as Radovich transferred to Bridges an interest less than that which was represented in the PSA and the 2004 deed, Radovich breached. The other issues — those relating to Bridges’ tranasaction with Seattle Boat — may well go to damages or causation. However, because the trial court’s decision was limited to breach, the Court of Appeals affirmed.

Now, on to the attorneys’ fees decision. The trial court awarded attorneys’ fees to Bridges from Radovich based on (1) the prevailing party provision in the PSA, (2) the indemnification provision in the PSA, and (3) equitable indemnity. The Court of Appeals reversed on all three grounds.

First, the Court noted that “both the propriety and the amount of an award of fees depend greatly upon whether the award is based on principles of contractual indemnity, a theory of equity, or pursuant to a contractual prevailing party provision.” That is becasue the bases “involve different elements, different standards of review, and relate to different aspects of this multi-party litigation.”

On the previaling party basis, the Court held that the trial court’s partial summary judgment on breach was not a sufficient basis to determine that Bridges was the prevailing party. It is still too early to determine whether Bridges can convert that determination of breach into an actual judgment in its favor. Until then, it is not the prevailing party.

On the indemnification provision in the PSA, the Court first determined that the provision did apply in this case. Sure, Radovich’s conduct was not the sole cause of Bridges’ problems, and Bridges could have caught the issue with a title search, but that doesn’t matter. Radovich conveyed the same land to two different people, and that was a cause of this litigation. Accordingly, the provision applies.

But that doesn’t meant the award of fees was proper. Attorneys’ fees “sought pursuant to a contractual indemnity provision are an element of damages that must be proved to the trier of fact.” Here, there was no evidence of fees provided at trial. Indeed, there was no trial on damages at all! The trial court set a schedule providing for a damages trial, but it never occurred. Instead, Bridges just submitted a post-trial motion for fees based on a declaration. The Court held that was insufficient and therefore vacated the award.

As for equitable indemnity, well, it had the same problems of proof and trial as contractual indemnity. But that’s not all. Unlike contractual indemnity, equitable indemnity requires that the party seeking indemnity not be at fault for the harm. As discussed above, Bridges was indeed somewhat at fault for this problem, so equity doesn’t save it. Moreover, because Bridges and Radovich contractually provided for when/if fees would be appropriate, there was “no room for equity to interfere with the bargain of the parties.”


One thought on “Daily Decisions: Three Strikes, You’re Out (of Bases for Attorneys’ Fees)

  1. Pingback: [Tuesday] Monday [Afternoon] Morning Mash-up: May 15, 2012 | Ziff Blog

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