Appellate Court Ordered Apportionment to Limit Fee Award to Those Incurred Solely to the Section 7107 Claim, Meaning $3.85 Million Fee Recovery Went POOF!
For Now.
In FTR International, Inc. v. Rio School Dist., Case No. B238618 (2d Dist., Div. 6 Jan. 27, 2015) (partially published; fee discussion published), school district and its general contractor engaged in a decade-long legal battle after the school was completed, with general contractor eventually obtaining a judgment exceeding $9 million against district. $3.85 million of this judgment was attorney’s fees to contractor under Public Contract Code section 7107, which allows a prevailing party to recover fees and costs in an action for wrongfully withheld retention payments.
District appealed, with the Second District, Division 6, in a 3-0 opinion authored by Presiding Justice Gilbert, affirming most aspects of the merits ruling but remanding the fee recovery for redetermination.
The fee recovery was reversed because the appellate court determined that work on an unclean hands defense did not apply as a legal matter of law such that the lower court erred in allowing recoupment of work on this defense with respect to the section 7107 claim. Instead, on remand, the reviewing court directed that fee recovery should be apportioned differently, limited to fees incurred solely in relation to contractor’s cause of action under section 7107.
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