Delaware Technical & Community College ( 2015 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
DELAWARE TECHNICAL & §
COMMUNITY COLLEGE, §
§ No. 553, 2014
Defendant-Below, §
Appellant. § Court Below:
§ Superior Court of the
v. § State of Delaware, in and for
§ Sussex County
EMORY HILL & COMPANY §
§ C.A. No. S12C-08-032 THG
Plaintiff-Below, §
Appellee. §
Submitted: June 10, 2015
Decided: July 7, 2015
Before STRINE, Chief Justice; HOLLAND and VALIHURA, Justices.
ORDER
This 7th day of July 2015, upon consideration of the parties’ briefs and the
record below, it appears to the Court that:
(1) On February 18, 2014, a jury found that both Appellant Delaware
Technical & Community College (“DTCC”) and Appellee Emory Hill & Company
(“Emory Hill”) had breached their contractual obligations to each other. Both
parties filed motions for attorneys’ fees, interest, and costs. On May 7, 2014, the
Superior Court awarded Emory Hill attorneys’ fees because it deemed Emory Hill
to be the prevailing party in the breach of contract action, and rejected DTCC’s
motion (the “May Opinion”).1 The May Opinion was silent on the issue of interest.
On July 15, 2014, Emory Hill filed a motion to recover pre- and post-judgment
interest and additional attorneys’ fees (the “July Motion”), which the Superior
Court granted on August 29, 2014 (the “August Opinion”).2
(2) DTCC raises several arguments on appeal. First, it argues that Emory
Hill’s July Motion was untimely under Superior Court Rule of Civil Procedure
59(d) (“Rule 59(d)”) and under Superior Court Rule of Civil Procedure 59(e)
(“Rule 59(e)”). Second, it argues that Emory Hill failed to comply with 29 Del. C.
§ 6516(f)(4). Third, it argues that the Trial Court erred in setting the rate at which
pre- and post-judgment interest would accrue. In addition to responding to the
merits of DTCC’s claims, Emory Hill argues that this Court should find that DTCC
waived its arguments on the rate at which interest should accrue. For the reasons
stated herein, we AFFIRM the judgment below.
(3) On June 29, 2010, DTCC and Emory Hill entered into a contract (the
“Contract”), which was amended on July 1, 2014 (the “Amended Contract”), to
construct a building on DTCC’s campus. The Contract provided that outstanding
1
Emory Hill & Co. v. Del. Technical & Cmty. Coll., C.A. No. S12C-08-032 DI 38 (Del. Super.
May 7, 2014) [hereinafter May Opinion].
2
Emory Hill & Co. v. Del. Technical & Cmty. Coll., C.A. No. S12C-08-032 DI 52 (Del. Super.
Aug. 29, 2014) [hereinafter August Opinion].
2
payments would be subject to a monthly interest rate of 1%, not to exceed 12% per
year (the “Contract Rate”). The parties were also bound by two other agreements,
the General Conditions of the Contract for Construction (the “General
Conditions”) and the General Construction Contract and Specifications (the
“Contract Specifications”), which governed, among other things, claims
procedures.
(4) The Contract Specifications provided that the “Contract Sum and
Completion Date shall be adjusted only by a fully executed Change Order.” The
Amended Contract provided that DTCC “shall not be liable for payment of any
change order that has not received prior written authorization.” The agreement
between the parties also required that Emory Hill submit an “Application for
Payment” consistent with 29 Del. C. § 6516(f)(4)(a) when requesting payments.
(5) On February 11, 2011, Emory Hill submitted a change request for
additional compensation and time due to construction delays (the “Change
Request”). DTCC rejected the Change Request on July 27, 2011. Because the
Change Request was denied, Emory Hill did not submit an Application for
Payment.
(6) On August 22, 2012, Emory Hill filed a complaint in the Superior
Court against DTCC for, among other things, breach of contract. On October 1,
2012, DTCC filed its answer and asserted a counterclaim against Emory Hill for
3
liquidated damages stemming from Emory Hill’s delay in completing the
construction project. On February 18, 2014, the jury found that Emory Hill was
entitled to $54,548.12 of the $59,996.71 it claimed as damages, and that DTCC
was entitled to $2,900 of the $19,500 it claimed as liquidated damages.
(7) On March 4, 2014, Emory Hill filed a timely motion under Superior
Court Rule of Civil Procedure 54(f)3 to collect attorneys’ fees, costs, and interest at
the Contract Rate as the prevailing party. DTCC responded on March 12, 2014,
and contended that “a more accurate and reasonable characterization of this
litigation is that it was a ‘draw’ in which neither party ‘prevailed’ nor ‘lost’ as a
result of the verdicts entered by the jury.” In its response, DTCC did not object to
the application of the Contract Rate to calculate the interest award.
(8) On March 6, 2014, DTCC filed its own motion under Rule 54(d) for
attorneys’ fees, costs and interest. DTCC contended that “[p]ursuant to Section 8.2
of the contract for construction, payments due and unpaid bear interest at an annual
3
Emory Hill’s reference to Super. Ct. R. Civ. P. 54(f) was incorrect. The motion should have
been made pursuant to Super. Ct. R. Civ. P. 54(d). Compare Super. Ct. R. Civ. P. 54(d) (“Costs.
Except when express provision therefor is made either in a statute or in these Rules or in the
Rules of the Supreme Court, costs shall be allowed as of course to the prevailing party upon
application to the Court within ten (10) days of the entry of final judgment unless the Court
otherwise directs.”), with Super. Ct. Civ. P. 54(f) (“Court reporter fees. The fees paid court
reporters for the Court's copy of transcripts of depositions shall not be taxable costs unless
introduced into evidence. Fees for other copies of such transcripts shall not be taxable costs. The
production and playback costs associated with any videotape deposition may also be taxable as
costs if the video deposition is introduced into evidence.”).
4
rate of 12% or 1% per month. In the alternative, pursuant to 6 Del. C. § 2301, the
lawful rate of interest is 5% over the Federal Reserve discount rate. . . .” Emory
Hill responded on March 20, 2014, and argued, among other things, that DTCC’s
motion was untimely pursuant to Rule 54(d) because the motion was filed more
than ten days after the final judgment. It contended that for DTCC’s motion to be
timely, the motion should have been filed on or before March 4, 2014, two days
before DTCC actually filed its motion.
(9) On May 7, 2014, the Trial Court found that Emory Hill was the sole
prevailing party and was entitled to reasonable attorneys’ fees and costs. Despite
both parties having sought pre- and post-judgment interest, the May Opinion was
silent on the issue of interest.
(10) On June 11, 2014, DTCC sent Emory Hill a letter and two checks “in
payment of the judgment, interest and attorneys’ fees.” DTCC calculated “post-
judgment interest at the legal rate of 5.07% ($7.174 per day) from February 18,
2014 through June 6, 2014.” The letter enclosed an additional check for $50.22
representing “additional post-judgment interest through June 13th.” The letter did
not address pre-judgment interest.
(11) On July 15, 2014, Emory Hill filed a motion to modify the judgment
to seek unpaid pre- and post-judgment interest, and an award for additional
5
attorneys’ fees.4 In its July Motion, Emory Hill argued, among other things, that
the interest DTCC was required to pay must be computed at the Contract Rate as
opposed to the legal rate.5 After DTCC filed a response on August 8, 2014, the
Superior Court held a hearing on August 26, 2014 (the “August Hearing”).6 On
August 29, 2014, the Superior Court awarded Emory Hill interest calculated using
the Contract Rate, and additional attorneys’ fees.
(12) Notwithstanding that its own March 6, 2014, motion was
unquestionably late, DTCC now argues that Emory Hill’s July Motion was
untimely because it was filed more than ten days after the May Opinion as required
by Rule 59(d) (for motions to alter or amend a judgment),7 and more than five days
after the May Opinion as required by Rule 59(e) (for motions to reargue a
judgment).8 Superior Court Rule of Civil Procedure 6(b) provides that the
4
Again, Emory Hill filed the motion pursuant to Super. Ct. R. Civ. P. 54(f). However, the
pertinent rule was Super. Ct. R. Civ. P. 54(d) (addressing motions to alter or amend a judgment).
5
6 Del. C. § 2301(a) (“Where there is no expressed contract rate, the legal rate of interest shall
be 5% over the Federal Reserve discount rate including any surcharge as of the time from which
interest is due; provided, that where the time from which interest is due predates April 18, 1980,
the legal rate shall remain as it was at such time.”).
6
Transcript of Proceedings, Emory Hill & Co. v. Del. Technical & Cmty. Coll., C.A. No. S12C-
08-032 DI 57 (Del. Super. Aug. 26, 2014) [hereinafter August Hearing].
7
Super. Ct. R. Civ. P. 59(d) (“Motion to alter or amend a judgment. A motion to alter or amend
the judgment shall be served and filed not later than 10 days after entry of the judgment.”).
8
Super. Ct. R. Civ. P. 59(e) (“Rearguments. A motion for reargument shall be served and filed
within 5 days after the filing of the Court’s opinion or decision. The motion shall briefly and
distinctly state the grounds therefor. Within 5 days after service of such motion, the opposing
6
Superior Court may not extend the time for taking action under Rules 59(d) or
59(e).9
(13) The Superior Court noted that Emory Hill had filed a timely
application on March 4, 2014 following the jury verdict in which “[i]t asked to be
awarded pre- and post-judgment interest at the contract rate, as well as attorneys’
fees.”10 Thus, the Trial Court “consider[ed] the subsequent [July Motion] to
modify merely as revisiting what the Court did not decide earlier.”11
(14) We review the Superior Court’s decision to revisit and modify its
earlier ruling to determine whether the modifications are supported by the record.12
We then determine whether the Superior Court’s modified decision was the
product of an orderly and logical deductive process.13
party may serve and file a brief answer to each ground asserted in the motion. The Court will
determine from the motion and answer whether reargument will be granted. A copy of the
motion and answer shall be furnished forthwith by the respective parties serving them to the
Judge involved.”).
9
See Super. Ct. R. Civ. P. 6(b) (providing that the Superior Court “may not extend the time for
taking any action under Rules 50(b) . . . 59(b), (d) and (e), 60(b), except to the extent and under
the conditions stated in them”).
10
August Opinion at *2.
11
August Opinion at *2-3.
12
Moffitt v. Carroll, 640 A.2d 169, 176-77 (Del. 1994) (“In Delaware, trial courts have long had
the inherent power to vacate, modify or set aside their judgments or orders during the term in
which they were rendered.” (internal citation and quotations omitted)).
13
Id. (citing Levitt v. Bouvier, 287 A.2d 671, 673 (Del. 1972)).
7
(15) In its response to Emory Hill’s March 4, 2014, motion, DTCC
appeared to take issue only with the claim that Emory Hill was the prevailing
party. DTCC did not argue that the interest rate sought by Emory Hill was
incorrect. In fact, DTCC also sought interest computed at the Contract Rate in the
event that the Superior Court were to rule in its favor. Thus, it appears that the
Superior Court assumed that the interest rate was not in dispute, and that the parties
would resolve the calculations on their own.14 The Superior Court’s apparent
belief is reflected in its statement in the May Opinion that “[t]he questions to be
answered in this decision are as follows: (1) is there one prevailing party or
because each obtained an award are there two prevailing parties; and (2) should
attorney’s fees be awarded on a winner takes all basis, or a more balanced
application.”15
(16) In addition, the Superior Court’s August Opinion suggests that it was
modifying or correcting its earlier ruling, which had been based upon its incorrect
assumption that the parties would “crunch the numbers” themselves. Accordingly,
14
The Superior Court stated at the August 26, 2014 hearing that, “And I will be quite honest with
you, it wasn’t included in the decision of May 7th . . . because in 25 years, I have never had,
when prejudgment interest and post-judgment interest has been prayed for and there is a
judgment, I have never had anybody refuse not to calculate it.” August Hearing at *2. The Trial
Judge noted further that “I literally assumed that after I made the determination on who was the
prevailing [party] and set the attorney’s fees, the two of you would sit down with a calculator and
could figure out what it would be.” August Hearing at *9.
15
May Opinion at *3.
8
the record fully supports the conclusion that the Superior Court was revisiting the
interest issue that Emory Hill had timely raised, but which the court mistakenly
thought the parties would resolve without judicial assistance. The revisitation was
due largely to DTCC’s own conduct in advocating (in an untimely fashion) for, or
at a minimum, not objecting to the application of the Contract Rate. Although we
address the substantive interest issues below, we find no fault with the Superior
Court’s conclusion that DTCC’s “Contract Rate” arguments “come too late in the
game.”
(17) DTCC argues that Emory Hill was required to submit an “Application
for Payment” in order to trigger DTCC’s obligation to pay. Because Emory Hill
did not submit an Application for Payment after filing the Change Request, DTCC
contends that Emory Hill is prohibited by 29 Del. C. § 6516(f)(4) from seeking
interest from DTCC.16
16
See 29 Del. C. § 6516(f)(4)(a) (“If a progress payment to a contractor is delayed by more than
21 days after the date of the agency agent’s approval or the final payment to a contractor is
delayed by more than 60 days after the date of the final submission, the contractor may require
the payment of interest by such agency, except for periods of time during which payment is
withheld pursuant to paragraph (f)(2) of this section, beginning on the twenty-second day for
progress payments and on the sixty-first day for final payment; provided, however, that:
Presentment is deemed made when an invoice or bill is received by that agency or agency agent,
provided that the invoice or bill is received in a form consistent with the State Accounting
Manual and regulations issued by the Director of the Office of Management and Budget and the
Secretary of Finance. Such forms shall be included in the project's bid documents.” (emphasis
added)).
9
(18) Questions of statutory interpretation are questions of law subject to de
novo review.17 Factual findings are reviewed for clear error.18
(19) On February 11, 2011, Emory Hill submitted the Change Request,
which was consistent with the contract requirements and was submitted in the
same format as eleven previous change orders.19 DTCC rejected the Change
Request. The Superior Court noted “that due to the contract dispute in which
DTCC was found to be at fault, it would have been futile for Emory Hill to have
invoiced DTCC [through an Application for Payment] for interest on a claim
DTCC refused to pay.” Obtaining an approved Change Request was a necessary
precondition to submitting an Application for Payment. Thus, we find no error in
the Superior Court’s determination that submitting an Application for Payment by
Emory Hill would have been futile.
(20) Emory Hill also argues that 29 Del. C. § 6516(f)(4) should not apply
because the statute only applies to outstanding “progress payments” and not to
breach of contract damages. Section 6516(f)(4) provides that “[i]f a progress
payment to a contractor is delayed,” then “the contractor may require the payment
17
Dambro v. Meyer, 974 A.2d 121, 129 (Del. 2009).
18
Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010).
19
The eleven previous change orders were each individually approved by DTCC, and only after
their approval did Emory Hill submit an Application for Payment for each change order.
10
of interest. . . .”20 Because the Change Request was never approved and no
Application for Payment was submitted, there was no outstanding progress
payment due to Emory Hill. Rather, the interest Emory Hill sought was interest on
the damages awarded by the jury to Emory Hill for DTCC’s breach of contract.
Thus, the Trial Court was correct in concluding that Emory Hill was entitled to
pre- and post-judgment interest as a matter of right.21
(21) Lastly, DTCC argues that if Emory Hill is entitled to an award of
interest, it should be computed at the rate for public works contracts as provided by
29 Del. C. § 6516(f)(4)(d), specifically “at a rate not to exceed 2 percent above the
prime interest rate as established by the Federal Reserve.”22 DTCC further
contends that any post-judgment interest should not be computed at the Contract
Rate because the legal rate of post-judgment interest is statutorily capped by 6 Del.
C. § 2301(a) at “5% over the Federal Reserve discount rate.”23
(22) As stated above, statutory interpretation is a question of law and is
subject to de novo review.24 Factual findings are reviewed for clear error.25
20
29 Del. C. § 6516(f)(4) (emphasis added).
21
See Brandywine Smyrna, Inc. v. Millennium Builders, 34 A.3d 482, 485 (Del. 2011) (citing
Moskowitz v. Mayor and Council of Wilmington, 391 A.2d 209, 210 (Del. 1978)).
22
29 Del. C. § 6516(f)(4)(d).
23
6 Del. C. § 2301(a).
24
Dambro, 974 A.2d at 129.
25
Osborn, 991 A.2d at 1158.
11
(23) Section 6516(f)(4)(d) of Title 29 provides that “[a] contractor may
require that interest under this subsection accrue on the unpaid balance at a rate not
to exceed 2 percent above the prime interest rate as established by the Federal
Reserve.”26 Here, the interest Emory Hill sought was with respect to damages for
its breach of contract claim, not outstanding progress payments. In any event,
§ 6516(f)(4) does not preclude parties from negotiating an express contract rate of
interest in excess of the legal rate. Rather, it limits the rate of interest a contractor
may charge in the absence of a contractually agreed upon rate.
(24) We also reject DTCC’s claim that 6 Del. C. § 2301(a) provides the
applicable rate of post-judgment interest, as opposed to the Contract Rate:
Any lender may charge and collect from a borrower interest at any
rate agreed upon in writing not in excess of 5% over the Federal
Reserve discount rate including any surcharge thereon. Where there is
no expressed contract rate, the legal rate of interest shall be 5% over
the Federal Reserve discount rate including any surcharge as of the
time from which interest is due; provided, that where the time from
which interest is due predates April 18, 1980, the legal rate shall
remain as it was at such time. Except as otherwise provided in this
Code, any judgment entered on agreements governed by this
subsection, whether the contract rate is expressed or not, shall, from
the date of the judgment, bear post-judgment interest of 5% over the
Federal Reserve discount rate including any surcharge thereon or the
contract rate, whichever is less.27
26
29 Del. C. § 6516(f)(4)(d).
27
6 Del. C. § 2301(a) (emphasis added).
12
The last sentence (italicized) was added by the General Assembly in 2012. 28 The
synopsis of Senate Bill 85 provides the purpose of the enactment:
This bill clarifies that the applicable post-judgment interest rate on
any judgments entered in cases of personal loans is the lesser of the
legal interest rate or the contract rate. This bill does not affect the
usury statute or other special circumstances contemplated by current
law.29
(25) The synopsis suggests that the Legislature intended for § 2301(a) to
cap post-judgment interest only in cases of personal loans to the lesser of the legal
rate under § 2301(a) or the contractual rate. Because Emory Hill does not seek
interest due for the failure to pay a personal loan, the Contract Rate applies to the
accrual of post-judgment interest.30 DTCC should not be heard to complain given
its own assertions that the Contract Rate might apply. Based upon the record
before us, we find no error in the Superior Court’s modified ruling, and conclude
that it was the product of an orderly and logical deductive process.
28
78 Del. Laws, ch. 222 (2012).
29
Del. S. B. 85 syn., 146th Gen. Assem., 78 Del. Laws, ch. 222 (2012) (emphasis added).
30
Cf. Sequoia Presidential Yacht Group LLC v. FE Partners, 2014 WL 2610577 (Del. Ch. Jun.
12, 2014) (finding that the April 5, 2012 amendment to 6 Del. C. § 2301 applied to a loan
agreement, but fell under the subsection (c) exception “for for the loan or use of money, where
the amount of money loaned or used exceeds $100,000, and where repayment thereof is not
secured by a mortgage against the principal residence of any borrower” (quoting 6 Del. C.
§ 2301(c))); Midland Funding, LLC v. Carrion, 2013 WL 8845053, at *2 (Del. Com. Pl. Oct. 25,
2013) (“The April 5, 2012, amendment to 6 Del. C. § 2301, restricting the award of post
judgment interest to 5% over the Federal Reserve discount rate, applies only to personal loans,
not to revolving lines of credit.”).
13
NOW, THEREFORE, IT IS HEREBY ORDERED that the judgment of the
Superior Court is AFFIRMED.
BY THE COURT:
/s/ Karen L. Valihura
Justice
14