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Window Specialists, Inc. v. Forney Enterprises, Inc.

United States District Court, District of Columbia

June 18, 2015

FORNEY ENTERPRISES, INC., et al., Defendants.


ROSEMARY M. COLLYER, District Judge.

Forney Enterprises, Inc. (FEI) was a contractor on an Army project at Fort McNair in Washington, D.C. FEI subcontracted with Window Specialists, Inc. (WSI) for the installation of windows and doors on the project. There were deficiencies in the work, and when the deficiencies remained uncured, FEI and WSI were terminated. WSI and FEI sued one another for breach of contract. After lengthy litigation culminating in a bench trial, the Court found in favor of each party on various claims. As part of its Opinion, the Court determined that WSI breached the subcontract with FEI and awarded FEI nominal damages on FEI's Counterclaim. FEI and WSI each assert that it is entitled to substantial attorney fees as the prevailing party. While FEI was awarded nominal damages and thus is the party that "prevailed, " the only reasonable fee here is none at all because FEI failed to prove its damages, an essential element of its claim. The parties' cross motions for attorney fees will be denied.


A. Background

The U.S. Army decided to improve historic homes for officers at Fort McNair in Washington, D.C., namely Quarters 1, 3 through 13, and 15 (the Project). On September 22, 2010, the Army hired IIU Consulting Institute, Inc. (IIU) as the general contractor on the Project. On December 14, 2010, IIU subcontracted a portion of its work on the Project to FEI. On January 12, 2011, FEI entered into a subcontract with WSI whereby WSI agreed to install 684 sash pack windows and 66 doors at Fort McNair. FEI Mot. for Fees [Dkt. 68], Ex. 1 (Subcontract).

IIU obtained a performance bond on the Project, as required under the Miller Act, 40 U.S.C. §§ 3131-3134. IIU, as principal, and Hanover Insurance Company, as surety, entered into a bond agreement. FEI and its President, Keith Forney, were indemnitors on the bond.

In addition to acting as indemnitor on the bond, FEI's role on the Project was to process payments. FEI did not supply labor or materials, provide an on-site supervisor, or otherwise oversee the Project. WSI was responsible for installing the windows and doors. IIU was responsible for removal of the old windows, preparation of the window openings, trim, caulking, and painting. After WSI had installed approximately 100 windows and 12 doors on the Project, the Army found deficiencies in the work. WSI and IIU attempted to cure, but failed. Subsequently, IIU terminated FEI and FEI terminated WSI. Other than payment for its initial measuring, WSI's payment applications remained unpaid. IIU hired another contractor to redo the work.

B. This Litigation

On September 7, 2011, WSI filed a Complaint that set forth three counts: Count I, breach of contract against FEI; Count II, unjust enrichment against FEI; and Count III, action on the payment bond against Hanover Insurance Company. See Compl. [Dkt. 1]. WSI originally sought damages in the amount of $936, 967, but later reduced its claim to $626, 884. Notice of Reduction of Claim [Dkt. 17]. FEI filed an Amended Counterclaim, alleging breach of contract and indemnification. See Am. Countercl. [Dkt. 23].[2] FEI sought damages in the amount of $198, 617.59, which included lost profits and FEI's obligation to pay IIU for reprocurement costs and attorney fees. FEI Mem. in Support of Fees [Dkt. 68-1] at 3-4.

Prior to trial, the Court dismissed FEI's counterclaim for indemnification because the claim had not accrued and was not ripe for decision. See Op. [Dkt. 45] at 6-7; Order [Dkt. 46]. Courts have routinely found that "indemnity claims are unripe until the alleged indemnitee's liability has been fixed by a judgment or settlement." Pardee v. Consumer Portfolio Servs., Inc., 344 F.Supp.2d 823, 836 (D.R.I. 2004). An indemnity claim "does not accrue until the party seeking indemnification is held liable and makes a payment." Casanova v. Marathon Corp., 256 F.R.D. 11, 14 (D.D.C. 2009). FEI argued that its right to indemnity had accrued because it had entered into a Settlement Agreement with IIU, whereby IIU agreed to limit its recovery against FEI to the amount FEI might recover in this suit from WSI, less FEI's lost profits. The Court found that the Settlement Agreement was a ploy to give the illusion that IIU and FEI had reached a fixed settlement, but in fact IIU's claim against FEI was not liquidated at all, as the Settlement Agreement did not set any particular sum that FEI was required to pay IIU, did not actually fix liability, and did not cause FEI to suffer any actual loss. Op. [Dkt. 45] at 6-7. The Court dismissed the indemnity claim.

Also before trial, the Court granted WSI's motion to limit FEI's claim for breach of contract to permit recovery only of lost profits. The Court explained:

Forney's allegation that IIU "held" it responsible for the cost to correct and complete the windows and doors on the project is evidenced by a "settlement agreement" that does not settle anything at all. IIU has not demanded payment of any particular sum from Forney for the costs of curing the problems; Forney has not paid IIU for such costs; IIU settled its claims against Forney by agreeing to limit its recovery against Forney to "those amounts Forney recovers from WSI in this litigation, less Forney's lost profits, " see Ukoh Aff. ¶ 26; Settlement Agreement. Forney's alleged injury, i.e. the cost of curing the window/door deficiencies, is not an injury in fact because it is not "concrete and particularized." Also, due to the settlement agreement, the alleged injury is not "actual or imminent." Under the settlement agreement, if Forney does not recover damages in excess of its lost profits, it does not owe IIU anything. Because Forney has not alleged an injury in fact, it lacks standing to pursue a claim against WSI for the costs of curing the alleged deficiencies on the project caused by WSI. Forney's damages on its breach of contract claim will be limited to lost profits.

Op. [Dkt. 45] at 9.

On July 14 through 21, 2014, the Court conducted a bench trial. Throughout trial, FEI proceeded on the theory that WSI had mismeasured the window openings and had ordered improperly-sized ...

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