This action between plaintiff Harbor Insurance Company ("Harbor") and defendant Schnabel Foundation Company ("Schnabel"), was retried to the Court following remand by the Court of Appeals.
Harbor, subrogee of OMNI Construction, Inc. ("OMNI"), brought this action against Schnabel for professional negligence. In an Opinion dated April 4, 1997, this Court found that defendant Schnabel, OMNI's subcontractor, had been negligent in its installation of the sheeting and shoring system at an office building at 601 Pennsylvania Avenue, N.W. The Court adjudged Schnabel liable for the damages its negligence caused to the Sears Building, located at 633 Pennsylvania Avenue, N.W., but required further briefing from the parties on the issue of damages.
OMNI, the general contractor at the 601 Pennsylvania Avenue site, incurred substantial costs in repairing the damage to the Sears Building. OMNI submitted these claims to Harbor, its umbrella liability insurance carrier, as these costs were incurred. In the coverage dispute between Harbor and OMNI, this Court ordered that Harbor pay OMNI $ 844,199.60, plus post-judgment interest in the amount of $ 65,826.91, attorneys' fees in the amount of $ 54,876.88, and prejudgment interest in the amount of $ 65,904.31. The total amount paid by Harbor to OMNI was $ 1,030,727.17.
The parties have entered into a settlement agreement with respect to the damages for repair costs to the Sears Building.
Still in dispute, however, is Harbor's entitlement to attorneys' fees and prejudgment interest accruing upon its claims for the reasonable cost of repair of the Sears Building.
District of Columbia law provides that "in an action . . . to recover a liquidated debt on which interest is payable by contract or by law or usage the judgment for the plaintiff shall include interest on the principal debt from the time when it was due and payable, at the rate fixed by the contract, if any, until paid." D.C. Code § 15-108. The award of prejudgment interest on liquidated debts is mandatory as a matter of law. Giant Food, Inc. v. Jack I. Bender & Sons, 399 A.2d 1293, 1305 (D.C. 1979).
A debt is liquidated if "at the time it arose, it was an easily ascertainable sum certain." Kiser v. Huge, 170 U.S. App. D.C. 407, 517 F.2d 1237, 1251 (D.C. Cir 1974), rev'd on other grounds, 171 U.S. App. D.C. 1, 517 F.2d 1275 (1975)(en banc).
Harbor is entitled to prejudgment interest on the reasonable cost of repairs to the Sears Building, as well as the amounts paid for profit and overhead, because these sums are "liquidated debt[s] on which interest is payable by contract . . . ." From the onset of litigation, the parties stipulated that $ 978,208.60 was the reasonable amount for repair of the Sears Building. These amounts were easily determinable at the time they arose, when OMNI submitted the claims to Harbor. They did not fluctuate during the course of the litigation. See Hartford Accident & Indemnity Co. v. District of Columbia, 441 A.2d 969, 974 (D.C. 1982). The amount paid to OMNI for overhead and profit was precisely determinable as well. This sum was calculated as a portion of the reasonable cost of repair according to specified percentages. The only contested issue throughout the two trials was Schnabel's liability for the damage to the Sears Building. The fact that Schnabel disputed the validity of these claims does not affect whether prejudgment interest is to be awarded. Giant Food, Inc., 399 A.2d at 1302.
Interest was payable on this debt pursuant to the Subcontract Agreement between OMNI and Schnabel, which incorporated by reference the General Conditions of the Contract for Construction ("Contract Documents") between OMNI and Westminster Investing Corp. ("Westminister"), a real estate development company.
Accordingly, prejudgment interest is mandated under section 108.
Prejudgment interest is calculated from the date the liquidated debts became due and payable. D.C. Code § 15-108. Article 6.e. of the Subcontract Agreement between OMNI and Schnabel provided that "all liability provisions of this Subcontract shall be paid upon demand." OMNI demanded this payment from Schnabel by letter dated August 31, 1984 and by the filing of this action on August 25, 1987. Thus for the claims submitted on August 28, 1986, November 19, 1986, May 21, 1987, and July 14, 1987 prejudgment interest commences on August 25, 1987. For the claims submitted at a later time which were in dispute, prejudgment interest will commence from the date of the agreement by which these disputed claims were resolved. Thus for claims agreed to on August 25, 1987, interest commences on September 24, 1987 and for claims agreed to on January 11, 1988 prejudgment interest commences on February 10, 1988 (the dates on which these sums became due and payable).
Harbor also seeks attorneys' fees. First, Harbor argues that Schnabel must reimburse Harbor for the $ 54,876.88 Harbor paid to OMNI for investigating and settling Sears' claim. Second, Harbor claims that is entitled to recover $ 653,747 in attorneys' fees and costs that Harbor incurred in this proceeding.
In the original coverage case, Harbor paid OMNI $ 54,876.88 in attorneys' fees: $ 41,093 in legal fees from negotiating a settlement with Sears and $ 13,783.88 in fees incurred by investigating Sears' claim for damages. This Court found that the insurance policy between Harbor and OMNI required that Harbor bear these costs. Schnabel argues that Harbor is not entitled to these amounts because these fees were not incurred by OMNI in prosecuting its claims against the party which caused the loss, but in establishing its right to coverage under its insurance policy with Harbor. The Court disagrees. These fees would be recoverable by OMNI in connection with litigating a claim based on Schnabel's negligence and are recoverable by Harbor as OMNI's subrogee.
Harbor also requests attorneys' fees involved in litigating this action. The general rule is that attorneys' fees are not recoverable as damages unless provided for by contract or statute. Attorneys' fees are recoverable in an action to establish a right of indemnity, however, if an agreement between the parties so provides. Dillingham v. Associated Insulation Co., 649 F.2d 1322, 1328 (9th Cir. 1981).
The Subcontract Agreement in this case requires Schnabel to indemnify OMNI against property damage caused in whole or in part by Schnabel's negligence. Article 6.c. provides:
If, as a result, in whole or in part, of negligence . . . of Subcontractor, his employees, agents, or lower-tier Subcontractors . . . any property is damaged, lost or destroyed, Subcontractor assumes the liability therefor and agrees to hold OMNI . . . and its agents, servants, employees and sureties harmless therefor.