Natkin & Co. v. Midwesco, Inc.

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Natkin & Co. v. Midwesco, Inc.
1993 OK 143
863 P.2d 1222
64 OBJ 3363
Case Number: 71976
Decided: 11/02/1993
Supreme Court of Oklahoma

NATKIN & COMPANY, A MISSOURI CORPORATION, APPELLEE,
v.
MIDWESCO, INC., AND FEDERAL INSURANCE COMPANY, APPELLANTS.

Certiorari to the Court of Appeals, Division IV, Appeal from the District Court of Oklahoma County, Robert J. Scott.

¶0 Trial court granted summary judgment and confirmed arbitrators' award in favor of Appellee. Appellant seeks certiorari to review an unpublished decision of the Court of Appeals that affirmed the award of attorneys' fees and reversed the award of prejudgment interest as a purported penalty under the Oklahoma Insurance code.

Certiorari Previously Granted; Court of Appeals' Opinion Vacated in Part; Judgment of the Trial Court Affirmed in Part; Reversed in Part and Remanded with Directions.

David R. Frensley, Craig Towerman, Frensley & Towerman, P.C., Kansas City, MO, Kenneth M. Smith, Scott E. Coulson, Robinson, Lewis, Orbison, Smith & Coyle, Tulsa, for appellee.

Charles Greenough, Doerner, Stuart, Saunders, Daniel & Anderson, Tulsa, Harvey J. Barnett, Michael S. Blazer, Michelle F. Kantor, Harvey J. Barnett & Associates, Ltd., Chicago, IL, for appellants.

LAVENDER, Vice Chief Judge.

[863 P.2d 1223]

¶1 The only viable question presented for our review is whether Appellee was entitled to an award of attorneys fees under 12 O.S. 1981 § 936 although the proceeding was brought for confirmation of the "arbitration award" under 15 O.S. 1991 § 801 et seq. on a motion for summary judgment. We find that Appellee was entitled to attorneys' fees.

FACTS

¶2 Appellant, Midwesco, Inc. (Midwesco) was the subcontractor for the mechanical and electrical work on the Tulsa Resource Recovery Facility. Midwesco retained Appellee, Natkin & Company (Natkin) to install the station piping for the project. Natkin performed work as Midwesco's subcontractor. The contract between the parties contained an arbitration clause. A dispute arose over the contract and Natkin filed a demand for arbitration against Midwesco. Midwesco filed a counterclaim. The arbitration proceeding was held in Oklahoma City, Oklahoma. The arbitrators issued an award in Natkin's favor and Midwesco filed a motion to modify the award.

¶3 Following the arbitration proceeding, but prior to the arbitrators issuing their decision, Natkin filed an action in Tulsa County to enforce a mechanics' lien. In response, Midwesco filed a motion to stay or dismiss the Tulsa County action citing § 803(D) of the Arbitration Act.

[A]ll proceedings in this cause [shall] be stayed pending final disposition of the arbitration proceedings currently in progress . . .

Upon the conclusion of said proceedings, the parties will notify the Court of the effect of such proceedings on this cause and seek reactivation of this cause, as may be appropriate.

The arbitration panel subsequently granted Midwesco's motion to modify.

¶4 Thereafter, Midwesco filed in the United States District Court for the Western District a petition to vacate the modified award pursuant to § 812 of the Act on the grounds that the arbitrators exceeded their authority. Natkin filed a motion to dismiss for improper venue and the motion was granted.

[863 P.2d 1224]

¶5 The Federal District Court determined that the agreement to stay the litigation pending arbitration constituted an initial application under the Oklahoma Arbitration Act in that it was filed pursuant to § 803(D) of the Oklahoma Arbitration Act. Because § 816 of the Act states that all subsequent applications must be made in the court hearing the initial application unless the parties are directed otherwise the court reasoned that venue was only proper in Tulsa county where the initial application had been filed.

¶6 Following the dismissal of the motion to vacate by the Federal District Court, but prior to the Tenth Circuit's affirmance, Natkin filed motions in state district court in Tulsa to confirm the arbitrators' award and for summary judgment. The trial court ruled in favor of Natkin on both motions. Midwesco and its surety, Federal Insurance Company (Federal Insurance)

¶7 The Oklahoma Court of Appeals ruled that the action was one to foreclose a lien for materials and labor provided under 12 O.S. § 936 and thus, was a proper case for attorney fees. The court rejected the trial court's award of prejudgment interest as a purported penalty under the Oklahoma Insurance Code, 36 O.S. § 3629 .

¶8 We previously granted certiorari. We now hold that Natkin was entitled to the award of attorneys fees under 12 O.S. § 936 , but only for that portion of fees generated in the state action. We find neither 42 O.S. § 176 nor 36 O.S. § 3629 (B) applicable to the present action.

ANALYSIS

¶9 A prevailing party may not recover attorney's fees against his adversary absent an authorizing statute or a contract.

¶10 A dismissed action is not a "judgment rendered in Natkin's favor" as [863 P.2d 1225] defined fined in 42 O.S. 176 . Though Natkin pre-vailed in the summary judgment action, it was not the enforcement of the lien that was rendered. We hold that 42 O.S. 176 offered no statutory basis for the award of attorneys' fees. Further, there is no issue before us concerning Natkin's claim against Federal Insurance under 36 O.S. § 3629 (B); we therefore disallow any claim to attorneys' fees under this statute.

¶11 We agree however, that the essence of the summary judgment was on a contract for labor and services and that Natkin was entitled to attorneys' fees under 12 O.S. § 936 . Burrows Constr. Co. v. Independent School District,

It is the underlying nature of the suit itself which determines the applicability of the labor and services provisions of section 936. If the action is brought for labor and services rendered, the provisions of section 936 apply. If the nature of the suit is for damages arising from the breach of an agreement relating to labor and services the provisions of this section do not necessarily apply. The question is whether the damages arose directly from the rendition of labor or services, such as a failure to pay for those services, or from an aspect collaterally relating to labor and services, such as loss of profits on a contract involving the rendition of labor and services.

Because this action was one for failure to pay for services rendered, Natkin is entitled to attorneys' fees under § 936.

¶12 Midwesco contends that the arbitration clause in the contract requiring each party to pay its own attorneys' fees precludes Natkin from recovering attorneys' fees in the summary judgment action. Such contention has no merit.

¶13 Clearly, in the case where neither the agreement to arbitrate nor the award provides for an allowance for cost and disbursements, the court may not award them in the absence of a statutory grant of such a right.

¶14 In Park Lane Properties v. Fisher,

¶15 Nor do we agree with Midwesco's contention that such an allowance varies the arbitration award. In City of Yukon v. International Assoc. of Firefighters,

¶16 However, we find it necessary to remand the case for a determination of what portion of fees were awarded for work done in the federal action since, as we stated in Moses v. Hoebel, "[c]osts must be enforced in the action in which they are taxed and not by a subsequent suit."

¶17 Midwesco also argues that under Moses attorneys' fees could not be confined to work done in this case. We do not read Moses and progeny as narrowly as Midwesco argues it should be. "Costs" as analyzed in Moses would include in this case attorneys' fees.

CONCLUSION

¶18 Accordingly, we hold that Natkin was entitled to attorneys' fees for the action filed in Oklahoma district court. The court of appeals' opinion is VACATED IN PART and the judgment of the trial court is AFFIRMED IN PART and REVERSED IN PART and REMANDED with directions to determine what portion of the attorneys' fees rendered by the trial court for work performed in the federal courts must be deleted from the award.

¶19 HODGES, C.J., and SIMMS, HARGRAVE and OPALA, JJ., concur.

¶20 KAUGER and SUMMERS, JJ., concur in result.

¶21 WATT, J., concurs in part; dissents in part.

¶22 ALMA WILSON, J., dissents.

Footnotes:

1 Section 803 is titled, Application to court - Order to arbitration - Stay of proceedings. Section (D) of 803 holds that "[a]ny action or proceeding involving an issue subject to arbitration shall be stayed if an order for arbitration or an application therefor has been made under this act or, if the issue is severable, the stay may be with respect thereto only. When the application is made in such action or proceeding, the order for arbitration shall include such stay."

Midwesco later asserted the motion to stay was mistakenly brought under this section.

2 Record at 576.

3 Section 816 provides that "[a]n initial application shall be made to the district court in the county in which the agreement provides the arbitration hearing shall be held or, if the hearing has been held, in the county in which it was held. Otherwise, the application shall be made in the county where the adverse party resides or has a place of business or, if he has no residence or place of business in this state, to the district court in any county of this state. All subsequent applications shall be made to the court hearing the initial application unless the court otherwise directs."

4 Federal Insurance Company was to provide a 100% payment and performance bond covering the extent of Midwesco's work on the Project.

5 This issue was not challenged in the petition for certiorari. We therefore do not disturb that part of the court of appeals' decision.

6 We vacate this part of the courts decision in that no lively controversy existed on which to base the courts decision. Midwesco did not have an application denied by the trial court such that would have presented an issue for that court to decide.

7 Moses v. Hoebel, 646 P.2d 601, 603 (Okla. 1982).

8 R.A. 767, Tr. 31.

9 704 P.2d 1136, 1138 (Okla. 1985); LPCX Corp. v. Faulkner, 818 P.2d 431, 442-43 (Okla. 1991).

10 Cecil v. Bank of America, 142 Cal. App. 2d 249, 298 P.2d 24 (1956).

11 89 Colo. 591, 5 P.2d 577, 579 (1931).

12 Cecil, 298 P.2d at 25; Uneeda-Hempstead, Inc. v. Bill Well Contracting Co., 168 Misc. 774, 5 N.Y.S.2d 1022, 1023 (N.Y. City Ct. 1938).

13 792 P.2d 1176 (Okla. 1990).

14 Id. at 1181 (citations omitted).

15 Garner v. City of Tulsa, 651 P.2d 1325, 1328 (Okla. 1982).

16 646 P.2d at 604; See also Chamberlin v. Chamberlin, 720 P.2d 721, 727 (Okla. 1986).