Allocation, Construction, Reasonableness Of Fees: $222,202.75 Contractual Fee Award In Favor Of Property Owners And Against General Contractor, After Offsets, Was Not Erroneous Except For One Minor Deduction In Gnarly Construction Defect Dispute.

$557,441.75 Was The Fee Request, But Owners’ Apportionment Not Credited Below Or On Appeal, So Reduced Award Was The Result.

            In Stolp v. Murphy-True, Inc., Case Nos. A154770/A155426 (1^st Dist., Div. 1 June 4, 2020) (unpublished), a litigation snafu resulted over a $3 million-plus remodel job at plaintiffs’ home, with plaintiffs suing for water intrusion damages against the general contractor and stucco manufacturer.  As is not uncommon, the general cross-complained against seven other subcontractors.  Plaintiffs ultimately settled with everyone other than the general, even though three of the settlement agreements had general contractor releases and allocation of attorney’s fees expended.  General contractor was hit with $690,000 in damages, with the trial court rejecting any releases under prior subcontractor settlements. 

            So, as we are really surprised, the attorney’s fees contest began.

            Initially, because there was fees “amount” dispute under a contractual fee clause (no entitlement at issue) in the owners-general contractor agreement, plaintiff owners requested $518,926 against general contractor based on some apportionment of fees arising from subcontractor settlements.  However, the trial judge did not like the apportionment and ordered supplemental briefing, with plaintiffs still not being able to justify the allocation—unfortunately, plaintiffs requested $557,441.75, even more than the initial request.  Plaintiffs also requested that the general contractor pay $4,017.25 from a general-subcontractor settlement, although nothing in the settlement required a “pass through” to plaintiffs.  In the end, the lower court did its own apportionment, finding $222,202.75--based on the express settlement allocation--was justified, although ordering general contractor to divert the $4,107.25 from the other subcontractor settlement.

            The appellate court affirmed everything, except for the $4,017.25 “diversion.”  The trial judge did a proper apportionment under the subcontractor settlement agreements, which plaintiffs were aware of, and nothing in the “diversion” settlement indicated that this amount had to be passed through to plaintiffs.  So, in essence, the reviewing court enforced all of the settlement agreements and bargains between the various parties in a gnarly CD dispute!