City of Jeffersonville, Indiana, and City of Jeffersonville Sanitary Sewer Board v. Enviornmental Management Corporation (mem. dec.) ( 2016 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be Sep 21 2016, 8:19 am
regarded as precedent or cited before any
CLERK
court except for the purpose of establishing Indiana Supreme Court
Court of Appeals
the defense of res judicata, collateral and Tax Court
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
R. Scott Lewis Mark E. Miller
David A. Lewis Bowers Harrison LLP
Jeffersonville, Indiana Evansville, Indiana
C. Gregory Fifer
Applegate Fifer Pulliam LLC
Jeffersonville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
City of Jeffersonville, Indiana, September 21, 2016
and City of Jeffersonville Court of Appeals Case No.
Sanitary Sewer Board, 10A01-1511-PL-1967
Appellants-Defendants, Appeal from the Clark Circuit
Court
v. The Honorable Vicki L.
Carmichael, Judge
Environmental Management Trial Court Cause No.
Corporation, 10C04-0808-PL-757
Appellee-Plaintiff
Crone, Judge.
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 1 of 15
Case Summary
[1] This is the third appeal brought by the City of Jeffersonville (“Jeffersonville”)
and the City of Jeffersonville Sanitary Sewer Board (“Sewer Board”)
(collectively “the City”) from the trial court’s award of attorney’s fees in favor
of Environmental Management Corporation (“EMC”). This Court has twice
reversed the trial court’s fee award and remanded for redetermination and
recalculation of recoverable attorney’s fees. See City of Jeffersonville v. Envtl.
Mgmt. Corp., 954 N.E.2d 1000 (Ind. Ct. App. 2011), and City of Jeffersonville v.
Envtl. Mgmt. Corp., No. 10A01-1210-PL-485, 2013 WL 2716135 (June 12,
2013), trans. denied (“EMC I” and “EMC II” respectively). The City again
appeals arguing that the trial court abused its discretion yet a third time in
determining and calculating the attorney’s fees incurred and recoverable by
EMC as a result of its contempt claim against the City. Finding no abuse of
discretion, we affirm.
Facts and Procedural History
[2] The relevant facts and procedural history as recited in the most recent
memorandum decision by another panel of this Court in EMC II follow:
On May 1, 2004, Jeffersonville through the Sewer Board entered
into a contract (the Contract) with EMC for the operation and
maintenance of Jeffersonville’s sewer system. EMC was
obligated to operate and maintain the sewer system in accord
with state, federal and other requirements. The Contract
contained a notice and cure provision giving both parties the
right to terminate “in the event of a material breach or
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 2 of 15
unsatisfactory performance of a material obligation” upon 90
days’ prior notice. [EMC I, 954 N.E.2d at 1004.]
On April 15, 2008, the Sewer Board held a public meeting where
Mayor Thomas Galligan of Jeffersonville (Mayor Galligan)
discussed his concerns with EMC’s performance. Although not
recorded in the meeting minutes, the Sewer Board instructed its
attorney to first send written notice to EMC regarding its
deficient operation and maintenance of the sewer treatment
system and then to send a notice terminating the Contract if
“EMC had not corrected the issues within 90 days.” Id. at 1005.
On April 18, 2008, the attorney sent EMC a letter requesting
detailed operational documentation, inspection or investigation
results, and records “including lists of equipment and equipment
maintenance, a history of work performed, and customer
complaints.” Id. However, the letter did not indicate that the
City intended to terminate the Contract if the performance issues
were not corrected within 90 days. EMC later informed
Jeffersonville that the Sewer Board’s April 18 letter “requested
documentation that exceeded EMC's production obligations
under the Contract.” Id. In its August 7, 2008 letter, the City
notified EMC that they were terminating the Contract because
EMC had failed to provide records requested by the City’s April
18 letter and had failed to correct the operational deficiencies
previously identified at the April 15 meeting. EMC later
responded that the City still had not provided EMC with written
notice of a specific material breach or unsatisfactory performance
as contractually required prior to termination.
On August 18, 2008, EMC filed its complaint for declaratory
judgment, breach of contract, and specific performance, as well
as a motion for preliminary injunction and expedited hearing. On
August 22, 2008, the trial court approved the parties’ agreed
entry and order (Agreed Entry) vacating and resetting the
preliminary injunction hearing. Under the Agreed Entry, the
parties agreed to maintain the status quo until a ruling on EMC's
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 3 of 15
preliminary injunction motion, and that the City would neither
interfere with EMC’s access to the sewer facilities, nor hire EMC
employees pending the ruling on the preliminary injunction. On
September 12, 2008, the matter was referred to mediation. On
September 23, 2008, the City filed its answer, a counterclaim
against EMC, and its response to EMC’s preliminary injunction
request. The City’s counterclaim included fraudulent inducement
and damages resulting from EMC’s acts or omissions. On
October 17, 2008, in a separate cause of action, EMC filed a
complaint against the City, alleging a violation of Indiana’s Open
Door Law. On October 23, 2008, EMC filed its motion to
dismiss the City’s counterclaim in the breach of contract action,
which was later denied.
On December 1, 2008, Mayor Galligan, accompanied by two
police officers, arrived at the sewer plant “and took over its
operations, declaring that EMC could no longer have access to
the [p]lant or the treatment system.” Id. at 1007. That same day,
EMC filed “a verified information for contempt, a motion to
enjoin further violation of the Agreed Entry, and a motion for an
emergency hearing thereon against the City.” Id. On December
3, 2008, the City filed its verified response to EMC’s contempt
motion. In addition to denying that it violated the Agreed Entry,
the City made a counter-motion for contempt against EMC,
alleging that EMC had violated alternative dispute resolution
rules by filing a notice of tort claim and a second Open Door
Law complaint against the City subsequent to the Agreed Entry.
Thereafter, both parties moved for summary judgment, which the
trial court denied on February 24, 2009. The trial court also
consolidated EMC’s four claims—two Open Door claims, breach
of contract, and the City’s contempt—as well as the City’s
counterclaim for trial. A lengthy bench trial ensued, stretching
over three separate trial periods in June, July and December
2009. On April 12, 2010, the trial court entered judgment in favor
of EMC on all four of its claims and the City’s counterclaim,
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 4 of 15
awarded damages to EMC, and ordered the City to pay EMC’s
attorney fees and costs. In addition to post-judgment interest, the
trial court awarded EMC its lost profits of $268,560.39 from
operation of the sewer plant and attorney fees and costs in the
amount of $315,554.04.
The City appealed raising six issues of alleged trial court error
including EMC’s breach of contract, Open Door Law, and
contempt claims as well as the trial court’s award of attorney fees
and costs. Id. at 1003. We affirmed in part, reversed in part and
remanded. Id. at 1016-17. Regarding the breach of contract
issue, we found that the City's “April 18 letter did not provide
EMC with written notice that the City intended to terminate the
Contract,” and did not “allege inadequate performance.” Id. at
1008-[0]9. This court therefore concluded that “the trial court did
not err in concluding that the City breached its contract with
EMC.” Id. at 1009. Regarding the Open Door Law Claims, we
concluded that EMC waived its claims by failing to timely file
them. Id. at 1011. Regarding the contempt action, we rejected the
City’s argument “that it did not violate the Agreed Entry because
EMC violated it first.” Id. at 1012. Because “the City has not
disputed that it violated the Agreed Entry,” we held that “the
trial court did not abuse its discretion in finding the City in
contempt of the Agreed Entry.” Id.
We next reviewed the trial court’s award of $315,554.04 in
attorney fees and costs to EMC. The City argued that this award
was an abuse of discretion because it was awarded “without
regard to whether the [attorney] fees were incurred in relation to
the Open Door Complaints, the contempt of the Agreed Entry,
or the breach of contract Complaint.” Id. We concluded that the
trial court had abused its discretion and remanded “to the trial
court with instructions that the trial court modify its award of
[attorney] fees and costs to EMC to include only the amount of
[attorney] fees EMC incurred as a result of its contempt
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 5 of 15
complaint and costs reflecting EMC’s losses for filing fees and
statutory witness fees.” Id. at 1017.
On July 26, 2012, the trial court held a hearing on attorney fees.
EMC introduced affidavits and time sheets from five of its
attorneys at the law firms of Applegate Fifer Pulliam LLC
[(“AFP”)] and Bowers Harrison LLP [(“Bowers Harrison”)].
Two of the attorneys’ affidavits contained the following
statements:
3. In order for EMC to prove that the City’s actions
on December 1, 2008 violated the Agreed Order,
EMC had to prove at trial that the City had violated
the terms of the Agreed Order, and that the City had
no contractual authority to physically remove EMC
without prior notice from the City’s [wastewater]
treatment and collection facilities.
4. Due to the City’s defenses to EMC’s claim that the
City violated the Agreed Order, EMC had to prove at
trial that the City had no contractual authority to
physically remove EMC without prior notice from
the City’s wastewater treatment and collection
facilities in order for EMC to prove that the City’s
action on the [sic] December 1, 2008 violated the
Agreed Order.
5. Due to the City’s defenses to EMC’s claim that the
City violated the Agreed Order, EMC had to prove at
trial that the City had no contractual authority to take
its actions on December 1, 2008, and that EMC had
been damaged by the City’s violation of the Agreed
Order.
Affidavits from EMC’s three other attorneys contained
substantially similar allegations. As a result, each attorney
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 6 of 15
requested fees that admittedly pertained to both EMC’s contempt
and breach of contract claims.
On September 26, 2012, the trial court issued its Findings of
Fact, Conclusions of Law, and Judgment awarding EMC’s
attorney fees. The trial court found that EMC filed “its
Complaint for Declaratory Judgment, Breach of Contract, and
Specific Performance and its Plaintiff's Motion for Preliminary
Injunction and Expedited Hearing;” that the parties’ Agreed
Entry required maintenance of the status quo; and that EMC
requested that the City be found in contempt of the Agreed
Order. However, the trial court found that “[t]he City’s actions
made it necessary for EMC to prove that it had the right to
operate the facilities, that the City lacked the authority to
interfere with EMC’s rights, and that EMC was damaged.” The
trial court also found that the Contract terminated on April 30,
2010 and “but for the City’s violation of the Agreed Order,
EMC’s right to operate the facilities would have remained
unimpaired through the contract termination date.” The trial
court further concluded that to prove the City’s contempt, EMC
had to not only prove the City’s violation of the Agreed Order
but because the City asserted its contractual authority as a
defense to the contempt claim, EMC “had to prove that the City
had no contractual authority to physically remove EMC without
prior notice from the City’s wastewater treatment and collection
facilities.” The trial court also concluded that “[s]olely due to the
contemptuous acts of the Defendants, EMC was required to
provide its lost profit damages at the trial of this case.”
The trial court calculated attorney fees from December 1, 2008 to
February 23, 2010 as “$170,754.54 to the firm of [Bowers
Harrison], and [attorney] fees of $76,195.50 to the firm of [AFP]
[ ... ], for a total of $246,950.04.” The trial court then deducted
fees in the amount of $19,644.91 for EMC’s Open Door Law
claims during the same period. It awarded EMC attorney fees of
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 7 of 15
$227,305.13, to which it added post-judgment interest of eight
percent, resulting in a total award of $269,004.47.
EMC II, slip op. at *1-4 (some alterations added) (record citations omitted).
[3] The City appealed, arguing that the trial court improperly awarded attorney’s
fees for legal services unrelated to EMC’s contempt claim. A second panel of
this Court again reversed the trial court’s award of attorney’s fees to EMC.
Specifically, the Court held,
[T]he trial court abused its discretion by not specifically
apportioning the attorney fees so as to impose fees only for the
contempt claim. Although the trial court excluded attorney fees
incurred either as a result of the unsuccessful Open Door Law
claims or after trial had concluded, it again awarded “blanket
compensation” to include fees incurred in the breach of contract
claim. We therefore reverse the trial court’s award of attorney
fees to EMC, and remand for a determination as to the amount
of attorney fees incurred solely for the prosecution of the
contempt claim.
Id. at *6 (citation omitted).
[4] The trial court held remand hearings in April and July 2015. After considering
extensive evidence and testimony, and conducting a “careful analysis of the
time slips of Bowers Harrison’s attorneys and the time slips of AFP’s attorneys,
as well as the trial transcript, the post-trial briefs and opinion, and the first
appellate briefs and opinion,” the trial court entered detailed findings of fact
and conclusions thereon awarding EMC $191,472.74 in attorney’s fees plus
post-judgment interest of $82,128.69. Appellants’ App. at 10-36. The City now
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 8 of 15
appeals for a third time. We will provide additional facts in our discussion as
necessary.
Discussion and Decision
[5] The sole issue presented for our review is whether the trial court abused its
discretion in determining and calculating the amount of attorney’s fees
recoverable by EMC as a result of its contempt claim against the City. We
begin by reiterating our well-settled standard of review:
We review an award of attorney’s fees keeping in mind that a
trial court is afforded broad discretion in awarding attorney’s fees
and expenses. In light of that standard, we will only reverse a
trial court’s decision when an abuse of discretion is apparent. A
trial court has abused its discretion when its decision is clearly
against the logic and effect of the facts and circumstances before
it.
EMC I, 954 N.E.2d at 1012-13 (citations omitted). On appeal, we neither
reweigh the evidence nor judge the credibility of witnesses. In re Paternity of
Pickett, 44 N.E.3d 756, 771 (Ind. Ct. App. 2015). We presume the trial court
properly exercised its discretion in making its award and we will reverse only
when “there is no evidence to support the award.” Witt v. Jay Petroleum, Inc.,
964 N.E.2d 198, 205 (Ind. 2012).
[6] Additionally, at the City’s request, the trial court entered findings of fact and
conclusions thereon pursuant to Indiana Trial Rule 52. Again, our standard of
review is well settled.
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 9 of 15
First, we determine whether the evidence supports the findings
and second, whether the findings support the judgment. In
deference to the trial court’s proximity to the issues, we disturb
the judgment only where there is no evidence supporting the
findings or the findings fail to support the judgment. We do not
reweigh the evidence, but consider only the evidence favorable to
the trial court’s judgment. Challengers must establish that the
trial court’s findings are clearly erroneous. Findings are clearly
erroneous when a review of the record leaves us firmly convinced
a mistake has been made.
Estate of Kappel v. Kappel, 979 N.E.2d 642, 651-52 (Ind. Ct. App. 2012) (citations
and quotation marks omitted).
[7] We observe that once a party is found in contempt, the trial court has the
inherent authority to compensate the aggrieved party for losses and damages
resulting from another’s contemptuous actions. EMC I, 954 N.E.2d at 1013.
This compensation can include an award of attorney’s fees. Id. However, an
award of attorney’s fees is “appropriately limited to those fees incurred because
of the basis underlying the award.” Nance v. Miami Sand & Gravel, LLC, 825
N.E.2d 826, 838 (Ind. Ct. App. 2005), trans. denied. The party requesting an
assessment of attorney’s fees bears the burden of proving an appropriate
allocation of fees between issues for which attorney’s fees may be assessed and
those for which they may not. Id. “‘While a perfect breakdown is neither
realistic nor expected, a reasonable, good faith effort is anticipated.’” Id.
(quoting Shell Oil Co. v. Meyer, 684 N.E.2d 504, 525 (Ind. Ct. App. 1997), aff'd in
relevant part, 705 N.E.2d 962, 981 (Ind. 1998)). Moreover, “[t]he trial judge
possesses personal expertise that he or she may use when determining
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 10 of 15
reasonable attorney’s fees.” Weiss v. Harper, 803 N.E.2d 201, 208 (Ind. Ct. App.
2003).
[8] In determining which attorney’s fees were incurred as a result of the City’s
contempt and therefore recoverable by EMC, the trial court divided the time
slips for EMC’s attorneys into three groups: (1) time slips relating to EMC’s
claims for breach of contract, Open Door Law violations against the City, and
the City’s breach of contract claims and constructive fraud claims; (2) time slips
relating solely to the complaint for contempt; and (3) time slips relating to a
combination of contempt and other legal issues. Appellants’ App. at 13. The
parties agree with one another, and with the trial court, that no fees are
recoverable from the first group of time slips and that all the fees are recoverable
from the second group of time slips. Regarding the third group of time slips,
the trial court determined that a percentage of those fees were incurred based on
the City’s contempt and thus were recoverable by EMC. It is the trial court’s
decision to award these fees that the City now challenges.
[9] In considering the third group of time slips, the trial court found in relevant
part,
13. A percentage of the third group of Bowers Harrison and
[AFP] time slips relating to a combination of contempt and other
legal issues are included in the calculation of EMC’s attorney’s
fees … because precisely extricating just the contempt from these
time slips requires an apportionment of the fees. These
percentages are based off of a careful analysis of the trial
transcripts [and] post-trial briefs[] and represent the percentage of
documents that directly relate solely to EMC’s complaint for
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 11 of 15
contempt for each respective phase of the case. Recognizing the
extent of the impracticality of requiring EMC and its attorneys to
extricate and apportion fractions of each individual time slip as
relating solely to the complaint for contempt (the time slips for
which date back as long as seven years prior), this Court finds
that the application of these percentages to the third group of
time slips represents the most accurate and practical allocation of
the attorney fees directly relating solely to the prosecution of
EMC’s complaint for contempt. The Court finds that the
allocated percentages of the documents directly relating solely to
the complaint for contempt for each phase of the case is
representative of the percentage of time EMC’s attorney’s [sic]
spent working directly relating solely to the contempt issues, and
therefore the application of these percentages to the attorney’s
fees related to the time slips with combined legal issues for each
respective phase accurately apportions EMC’s attorney’s fees
related directly related solely to the prosecution of the complaint
for contempt.
Id. at 14.
[10] In determining the applicable percentages, the trial court analyzed the trial
transcript and post-trial briefs, searching for eight “key terms” identified by
EMC as terms solely related to its contempt claim. 1 Based upon its analysis,
the trial court concluded that seventy-eight percent of the transcript pages
directly related to EMC’s contempt claim, and therefore seventy-eight percent
of the fees incurred during the pretrial and trial period were recoverable.
Similarly, the court concluded that thirty-two percent of the post-trial briefing
1
Those key terms were: contempt, Agreed Order, Consent Decree, December 1st, Hydrogen Sulfide,
Damages, Environmental Protection Agency, and EPA. Appellants’ App. at 15.
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 12 of 15
pages directly related to EMC’s contempt claim, and therefore thirty-two
percent of the fees incurred during the post-trial period were recoverable. Based
upon these calculations, the trial court awarded EMC $191,472.74 in attorney’s
fees.
[11] The City does not specifically challenge the trial court’s findings in this regard,
but argues that the trial court abused its discretion in awarding EMC any
amount of fees from the third group of time slips and points to one sentence
from EMC II which states, “We therefore reverse the trial court’s award of
attorney fees to EMC, and remand for a determination as to the amount of
attorney fees incurred solely for the prosecution of the contempt claim.” EMC II,
slip op. at *6. The City focuses on the word “solely” in that sentence and
complains that EMC proved that it incurred only $18,968 of attorney’s fees
“solely” for the contempt claim because the time slips for those fee entries were
the only ones that were specifically delineated with the term “contempt.”
Appellants’ Br. at 7. Thus, the City argues, the trial court abused its discretion
in awarding EMC any attorney’s fees other than those in the second group of
time slips that were specifically delineated.
[12] However, a single sentence or single word should not be taken out of context
and read in isolation to lead to as restrictive of a result as the City suggests.
Indeed, the City wholly ignores the specific holding of EMC I in which the
Court stated that, “We remand to the trial court with instructions that the trial
court modify its award of attorney’s fees to reflect only the amount EMC
incurred in relation to its contempt Complaint.” EMC I, 954 N.E.2d at 1013
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 13 of 15
(emphasis added). This holding is consistent with the discussion in the body of
EMC II, which provided that an award of attorney’s fees should be limited to
fees incurred “as a result of” the contempt.” EMC II, slip op. at *4. Contrary to
the City’s assertions, the holdings in the prior appeals in this matter did not
deprive the trial court of its considerable discretion to award any and all
attorney’s fees incurred by EMC in relation to and as a result of the contempt
claim. The trial court was specifically directed to calculate the amount of
attorney’s fees incurred by EMC as a result of the contempt claim but to refrain
from awarding EMC “blanket compensation” to include fees incurred as a
result of the breach of contract claim. EMC I, 954 N.E.2d at 1013; EMC II, slip
op. at *6. The trial court followed that directive by carefully analyzing the
voluminous record to determine an accurate apportionment of EMC’s
attorney’s fees from this third group of time slips between its contempt claim
and its other claims for which attorney’s fees are not recoverable. The trial
court’s extensive and detailed findings and conclusions reflect its thorough and
thoughtful examination of the record. We commend the trial court for
undertaking this daunting task.
[13] The City maintains that the “key terms” methodology proffered by EMC and
applied by the trial court in determining the apportionment of attorney’s fees
was arbitrary and unreasonable. However, recognizing the “impracticality” of
extricating and apportioning fractions of each individual time slip as relating to
the contempt, the trial court concluded in its considerable discretion that, under
the specific circumstances presented in this complex litigation, application of
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 14 of 15
the key terms methodology to determine what percentages of the attorney’s fees
were directly related to the contempt represented “the most accurate and
practical” way to apportion fees. Appellants’ App. at 14. We will not second-
guess this determination. The trial court sat through the evidence and the
testimony and therefore possesses unique knowledge of the case and has
personal expertise that places her in the best position to determine reasonable
attorney’s fees. See Witt, 964 N.E.2d at 203 (observing considerable trial court
discretion in both determining whether to find a party in contempt and in
apportioning amount of attorney’s fees as sanction for contempt). Moreover,
EMC was not required to submit an exact breakdown of its attorney’s fees, and
we think that its submission of detailed affidavits explaining the use of the key
terms methodology constituted a reasonable, good-faith effort to aid the trial
court in properly allocating its attorney’s fees between issues for which
attorney’s fees may be assessed and those for which they may not. We cannot
say that the trial judge’s decision to apply this methodology in combination
with her observing the trial was clearly against the logic and effect of the facts
and circumstances before it.
[14] Based on the foregoing, we conclude that trial court did not abuse its discretion
in determining and calculating the amount of attorney’s fees recoverable by
EMC. The judgment of the trial court is affirmed in all respects.
[15] Affirmed.
Kirsch, J., and May, J., concur.
Court of Appeals of Indiana | Memorandum Decision 10A01-1511-PL-1967 | September 21, 2016 Page 15 of 15