CRACE CONSTRUCTION COMPANY , ET AL. VS. ANTHONY CRANE RENTAL, LP , ET AL.Annotate this Case
RENDERED: SEPTEMBER 12, 2008; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
CRACE CONSTRUCTION COMPANY
AND OHIO FARMERS INSURANCE COMPANY
APPEAL FROM BOYD CIRCUIT COURT
HONORABLE C. DAVID HAGERMAN, JUDGE
ACTION NO. 05-CI-00335
ANTHONY CRANE RENTAL, LP,
D/B/A MAXIM CRANE WORKS;
GBBN ARCHITECTS; ASHLAND HOSPITAL
CORPORATION, D/B/A KING’S DAUGHTERS’
MEDICAL CENTER; KENTUCKY ECONOMIC
DEVELOPMENT FINANCE AUTHORITY;
TIFFOM, INC.; LOUIS T. OLLESHEIMER &
SON, INC.; KREPS & ZACHWIEJA, ARCHITECTS/
OPINION AFFIRMING IN PART,
REVERSING IN PART, AND REMANDING
** ** ** ** **
BEFORE: CLAYTON AND NICKELL, JUDGES; GRAVES,1 SENIOR JUDGE.
CLAYTON, JUDGE: Crace Construction Company (Crace) and Ohio Farmers
Insurance Company (Ohio Farmers) appeal from judgments of the Boyd Circuit
Senior Judge John W. Graves sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
Court finding the bond which they posted to release a mechanic’s lien covers the
full amount of a judgment rendered against Crace’s subcontractor, Tiffom, Inc.,
(Tiffom). We agree with the trial court that Crace and Ohio Farmers are precluded
from relitigating issues related to Tiffom’s liability under that judgment, and that
the release bond covers the full amount of that judgment, including interest and
attorney fees allowed under the contract. While we find no statutory or contractual
basis for the court’s additional award of attorney fees against Crace and Ohio
Farmers, we conclude that the equities of this case would support an award of
additional attorney fees incurred to collect on the judgment. However, we note
that the trial court failed to make any findings as to the reasonableness of those
fees, and the court’s award appears to include fees which are not related to the
claims against Tiffom, Crace or Ohio Farmers. Hence, we affirm in part, reverse
in part, and remand for additional findings and a new supplemental judgment
awarding these attorney fees.
The underlying facts of this action are not in dispute. Crace was the
general contractor on a project for the construction of a building known as
“Medical Plaza B” on real estate owned by Ashland Hospital Corporation d/b/a
King’s Daughters’ Medical Center in Ashland, Kentucky. Crace hired Tiffom as a
subcontractor on the project. On July 19, 2004, Tiffom entered into a contract with
Anthony Crane Rental, LP d/b/a Maxim Crane Works (Maxim Crane) to lease
heavy equipment and to provide supplies for the project. Between August 24 and
September 8, 2004, Tiffom also entered into ten short-term rental agreements with
Maxim Crane to lease equipment and provide supplies for the project.
After Tiffom failed to pay three invoices, Maxim Crane filed a
mechanic’s/materialman’s lien against the property on February 11, 2005.
Subsequently, Maxim Crane filed this action seeking to foreclose on the lien. On
April 22, 2005, Crace, as principal, and Ohio Farmers, as surety, executed a release
bond pursuant to Kentucky Revised Statutes (KRS) 376.100, discharging the lien.
In its answer, Tiffom disputed the amounts claimed by Maxim Crane.
Tiffom also filed a counterclaim, asserting that Maxim Crane had breached the
contracts by delivering defective equipment. On October 21, 2005, Maxim Crane
filed a motion for summary judgment on its claims against Tiffom. Following a
hearing on the motion, the trial court gave Tiffom an additional thirty days to
submit an affidavit containing specific information to support its defenses to
Maxim Crane’s claims. On January 17, 2006, after Tiffom failed to submit the
affidavit, the trial court granted Maxim Crane’s motion for summary judgment. In
its order, the court entered judgments totaling $30,785.00, representing all amounts
outstanding under the invoices. The court also directed that interest of 1.5% per
month would run on the judgment from the dates of the invoices as provided in the
contracts. Finally, the court awarded Maxim Crane attorney fees of $15,633.71
and costs of $252.86, also as provided in the contracts.
After entry of this judgment, Tiffom filed a motion to alter, amend or
vacate pursuant to Kentucky Rules of Civil Procedure (CR) 59.05. Tiffom
attached an affidavit to the motion, again asserting that the equipment provided by
Maxim Crane was defective and that Maxim Crane had overcharged. On February
3, 2006, the trial court denied the motion and noted that Tiffom’s affidavit was
untimely. Subsequently, the trial court awarded Maxim Crane an additional
$1,175.64 for additional attorney fees and expenses incurred responding to
Tiffom’s motion to reconsider.
Thereafter, on April 17, 2006, Maxim Crane filed a motion for
summary judgment to collect on the judgment from the bond posted by Crace and
Ohio Farmers. On June 15, 2006, the court entered a judgment against Crace and
Ohio Farmers for the full amount of the judgment against Tiffom, including
interest and attorney fees. The trial court subsequently denied Crace’s motion to
alter, amend or vacate. The trial court also granted Maxim Crane’s motion for a
supplemental judgment of attorney fees against Crace and Ohio Farmers in the
amount of $6,448.92. This appeal followed.
In their appeal, Crace and Ohio Farmers raise four arguments. First,
they assert that the trial court erred in finding that the doctrine of collateral
estoppel bars them from relitigating the issues determined by the January 17, 2006,
judgment against Tiffom. Second, they argue that the trial court erred in finding
that the bond executed by Crace and Ohio Farmers covers amounts for interest and
attorney fees provided under the contracts between Tiffom and Maxim Crane.
Third, they contend that the trial court failed to make a determination as to the
reasonableness of the attorney fees claimed by Maxim Crane. And fourth, they
claim that the trial court erred by including attorney fees and expenses related to
As to the first issue, we agree with the trial court that Crace and Ohio
Farmers are bound by the judgment against Tiffom. Res judicata consists of both
claim preclusion and issue preclusion. Yeoman v. Com., Health Policy Bd., 983
S.W.2d 459, 465 (Ky. 1998). Crace and Ohio Farmers assert that the party to be
bound must be the same party against whom the judgment was rendered in the
prior action. But while identity of parties is necessary for claim preclusion to bar
further litigation, it is not an element to establish issue preclusion. Id.
Rather, collateral estoppel, or issue preclusion, the other subset of
“res judicata . . . bars the parties from relitigating any issue actually litigated and
finally decided in an earlier action.” Id. For issue preclusion to operate as a bar to
further litigation, a court must find that there was: “(1) a final decision on the
merits; (2) identity of issues; (3) issues actually litigated and determined; (4) a
necessary issue; (5) a prior losing litigant; and (6) a full and fair opportunity to
litigate.” May v. Oldfield, 698 F. Supp. 124, 126 (E.D. Ky. 1988). See also Sedley
v. City of West Buechel, 461 S.W.2d 556, 558 (Ky. 1970). The court must inquire
whether the judgment was rendered under such conditions that the party against
whom collateral estoppel is pleaded had a realistically full and fair opportunity to
present his case. Id. at 559.
Crace and Ohio Farmers further contend that there was no final
decision on the merits. Crace and Ohio Farmers assert that they are not bound by
the judgment against Tiffom because the issues in that claim were different from
those asserted against them, Tiffom’s defenses were not actually litigated, and
Tiffom was not afforded a full and fair opportunity to litigate these issues. We
disagree with all of these arguments.
The trial court’s judgment was based upon Tiffom’s contractual
liability to Maxim Crane. The mechanic’s/materialman’s lien secures that
obligation. While there is a question whether the lien also secures the judgment for
attorney fees and costs, the trial court’s resolution of the underlying contractual
issues against Tiffom conclusively resolves those issues as to Crace and Ohio
Moreover, the trial court’s judgment was clearly decided on the
merits. A motion for summary judgment may only be granted if there is no
genuine issue of material fact and the moving party is entitled to judgment as a
matter of law. Kentucky Rules of Civil Procedure (CR) 56.03. In support of its
motion for summary judgment, Maxim Crane presented the underlying contracts,
evidence that it performed under the contracts, and the unpaid invoices.
Consequently, the trial court entered a judgment against Tiffom for the full amount
claimed by Maxim Crane. That judgment has never been appealed. Consequently,
the trial court’s summary judgment conclusively resolved the issues between
Maxim Crane and Tiffom.
Finally, we conclude that Tiffom had a full and fair opportunity to
litigate these issues. Tiffom admitted to the contracts and that it had not paid the
invoices submitted by Maxim Crane. In its defense, Tiffom asserted that Maxim
Crane had breached the contracts by delivering defective equipment. However,
Tiffom failed to present any affirmative evidence to support its defenses even after
the trial court gave it an additional month to submit an affidavit detailing its
defenses. A party opposing a properly supported summary judgment motion
cannot defeat it without presenting at least some affirmative evidence showing that
there is a genuine issue of material fact for trial. Steelvest, Inc. v. Scansteel
Service Center, Inc., 807 S.W.2d 476, 482 (Ky. 1991). Since Tiffom failed to
present timely evidence supporting its defenses, Crace and Ohio Farmers are not
entitled to relitigate those issues.
The central issue in this case concerns the scope of bond executed by
Crace and guaranteed by Ohio Farmers. Maxim Crane argued, and the trial court
agreed, that the bond secures the full judgment rendered against Tiffom, while
Crace contends that the bond does not cover the judgment for interest and attorney
fees awarded under the contract.
Resolution of this question turns on the scope of KRS 376.100, which
provides for release of a lien by execution of a surety bond as follows:
The owner or claimant of property against which a
lien has been asserted, or any other person contracting
with the owner or claimant of such property for the
furnishing of any improvements or services for which a
lien is created by this chapter, may, at any time before a
judgment is rendered enforcing the lien, execute before
the county clerk in which the lien was filed a bond for
double the amount of the lien claimed with good sureties
to be approved by the clerk, conditioned upon the
obligors satisfying any judgment that may be rendered in
favor of the person asserting the lien. The bond shall be
preserved by the clerk, and upon its execution the lien
upon the property shall be discharged. The person
asserting the lien may make the obligors in the bond
parties to any action to enforce his claim, and any
judgment recovered may be against all or any of the
obligors on the bond.
Crace and Ohio Farmers point out that the bond serves as a mere
substitute for the lien property. Jungbert v. Marret, 313 Ky. 338, 231 S.W.2d 84,
85 (Ky. 1950). They also note that the purpose of the mechanic’s lien statutes is to
protect a mechanic or materialman to the extent of the value of improvements
which he makes on property. Id. Consequently, they contend that any recovery on
the bond must be limited to the value of the improvements and does not extend to
additional amounts allowed by the underlying contract.
However, we agree with Maxim Crane that KRS 376.100 specifically
requires a surety to execute a bond for “double the amount claimed . . . conditioned
upon the obligors satisfying any judgment that may be rendered in favor of the
person asserting the lien.” The statute’s requirement that the bond be for double
the amount claimed indicates that the General Assembly considered the possibility
that a lien judgment may be for a greater amount than the parties originally stated.
Moreover, the plain language of KRS 376.100 states that bond is conditioned upon
Crace and Ohio Farmers “satisfying any judgment” rendered in favor of Maxim
Nevertheless, Crace notes that its obligation to pay for material and
labor furnished to Tiffom arises by statute, and not under the contract between
Tiffom and Maxim Crane. Crace further contends that it should not be bound by
the terms of a contract to which it was not a party. But while Crace’s statutory
liability arises under KRS 376.070, it assumed liability for the full amount of the
judgment against Tiffom by executing a release bond pursuant to KRS 376.100.
Since the contract between Tiffom and Maxim Crane provided for interest and
attorney fees and the trial court’s final judgment against Tiffom included those
amounts, we agree with the trial court that Crace’s bond covers the full amount of
the judgment rendered against Tiffom.
Crace and Ohio Farmers also contest the reasonableness of the
attorney fees awarded to Maxim Crane. But as previously noted, Tiffom did not
appeal the January 16, and March 9, 2006, judgments awarding those fees.
Therefore, the trial court’s findings that the claimed fees were reasonable are res
However, we note that on July 19, 2006, the trial court awarded an
additional $6,448.92 for attorney fees. Maxim Crane incurred these fees while
attempting to collect on the judgment from Crace’s bond. Since these fees do not
arise from the prior judgments against Tiffom, Crace and Ohio Farmers were not
barred from relitigating the reasonableness of these claimed fees.
Furthermore, it is well-established that attorney fees are generally not
recoverable without a specific contractual provision or a fee-shifting statute. AIK
Selective Self-Insurance Fund v. Minton, 192 S.W.3d 415, 420 (Ky. 2006). The
additional fees claimed do not arise from the contract between Tiffom and Maxim
Crane, but from Maxim Crane’s efforts to collect on the judgment from the bond
posted by Crace and Ohio Farmers. In turn, Crace’s liability on the judgment
arises from its posting of a release bond pursuant to KRS 376.100. The bond
clearly secures the judgment against Tiffom. But the statute contains no language
indicating that the bond secures any other liabilities, such as attorney fees incurred
to pursue a claim to enforce the bond. Consequently, we find no contractual or
statutory basis for the trial court’s supplemental judgment of July 19, 2006,
awarding additional attorney fees against Crace and Ohio Farmers.
Nevertheless, the trial court noted that it has the equitable discretion to
award attorney fees depending upon the circumstances of the particular case.
Batson v. Clark, 980 S.W.2d 566, 577 (Ky. App. 1998), citing Kentucky State
Bank v. AG Services, Inc., 663 S.W.2d 754, 755 (Ky. App. 1984). In this case, the
clear language of KRS 376.100 allowed Maxim Crane to collect on its judgment
against Tiffom from Crace’s bond. In defending against Maxim Crane’s efforts to
collect on that judgment, Crace attempted to interpose defenses which had been
previously resolved against Tiffom. In essence, Crace sought to escape liability for
the judgment by stepping into Tiffom’s shoes. Since Crace’s efforts in this regard
were unsuccessful and further delayed collection of Maxim Crane’s judgment, we
agree with the trial court that the equities of this case support the award of
additional attorney fees to Maxim Crane.
However, we agree with Crace that the trial court failed to make a
finding as to the reasonableness of these fees. Furthermore, the fee affidavit
attached to Maxim Crane’s motion shows that some of the additional attorney fees
involved matters concerning other parties to the litigation. In particular, the
invoices filed by Maxim Crane’s counsel include charges for work on claims
against GBBN Architects, Inc. The trial court ultimately dismissed these claims,
concluding that there was no basis to hold GBBN liable for any of the obligations
arising under the contract between Tiffom and Maxim Crane.
Under the circumstances, we conclude that the trial court abused its
discretion by awarding attorney fees incurred while pursuing these other claims.
We also conclude that the trial court failed to make necessary findings concerning
the reasonableness of the attorney fees incurred by Maxim Crane to collect on the
judgment from the release bond posted by Crace. Consequently, the trial court’s
supplemental judgment must be set aside and remanded for additional findings and
entry of a new judgment.
Accordingly, the July 19, 2006, judgment against Crace and Ohio
Farmers awarding $6,448.92 in additional attorney fees is affirmed in part,
reversed in part, and remanded for additional findings as set forth in this opinion.
In all other respects, the judgment of the Boyd Circuit Court is affirmed.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Thomas R. Yocum
Julie A. Neuroth
Donald R. Yates, II