Circle Y Construction, Inc., vs WRH Realty Services, Inc., WRH Hidden Colony LLLP , 427 F. App'x 772 ( 2011 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
_________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 10-13746 MAY 24, 2011
_________________________ JOHN LEY
CLERK
D.C. Docket No. 1:08-cv-01010-TCB
CIRCLE Y CONSTRUCTION, INC.,
Plaintiff-Appellee,
versus
WRH REALTY SERVICES, INC.,
WRH HIDDEN COLONY LLLP,
Defendants-Appellants.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(May 24, 2011)
Before TJOFLAT, WILSON and RIPPLE,* Circuit Judges.
PER CURIAM:
*
Honorable Kenneth F. Ripple, United States Circuit Judge for the Seventh Circuit,
sitting by designation.
Circle Y Construction, Inc. (“Circle Y”) brought this diversity action against
WRH Hidden Colony LLLP (“Hidden Colony”) and WRH Realty Services, Inc.
(“WRH Realty”) to recover compensation for work performed. After a bench trial,
the district court returned a verdict in favor of Circle Y on all claims and awarded
damages and attorney’s fees. After examination of the record, study of the briefs
and hearing counsel on oral argument, we affirm the judgment of the district court.
A.
Following a bench trial, we review the district court’s factual findings for
clear error and its legal conclusions de novo. Proudfoot Consulting Co. v.
Gordon, 576 F.3d 1223, 1230 (11th Cir. 2009).
The district court made factual findings, which the defendants do not
challenge on appeal. These factual findings, as well as the procedural history of
the case in the district court, are set forth fully in Circle Y Construction, Inc. v.
WRH Realty Services, Inc., 721 F. Supp. 2d 1272 (N.D. Ga. 2010). Notably, the
district court found that “Circle Y’s [witnesses] were highly credible and that
Defendants’ witnesses were evasive and to a certain extent not credible.” Id. at
1278. The defendants do not challenge these credibility determinations.
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1.
Hidden Colony maintains that the disputed work performed by Circle Y was
outside the scope of the written contract and that, therefore, any modifications
required a written change order approved by Grahame Brown, the vice president
of construction services at WRH Realty and the only person authorized, by the
terms of the contract, to negotiate on Hidden Colony’s behalf.
The district court correctly held, however, that parties to a contract can
waive strict adherence to conditions through their subsequent representations or
course of conduct.1 Ample evidence supports the district court’s determination
that Hidden Colony waived the formal requirements for modifying the scope of the
written contract. Shortly after signing the contract, Brown asked Circle Y to
perform work outside the scope of the contract without a written change order, and
Circle Y was paid for this work. Moreover, although Waldy Sanchez, a regional
director for WRH Realty, kept Brown informed of additional work requests being
made, Brown never attempted to stop the additional work, to require a written
change order or to tell his subordinates to stop requesting additional work.
1
See Caribbean Lumber Co. v. Anderson, 205 Ga. App. 415, 422 S.E.2d 267, 269 n.1
(1992); J.E.M. Enters., Inc. v. Taco Pronto, Inc., 145 Ga. App. 573, 244 S.E.2d 253, 255 (1978);
State Highway Dep’t v. Wright Contracting Co., 107 Ga. App. 758, 131 S.E.2d 808, 812-13
(1963).
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The defendants also submit that the WRH Realty employees who made
additional work requests were without authority to bind Hidden Colony. This
contention is without merit. Hidden Colony designated Brown as its agent in
administering the contract. Brown thus had actual authority to bind Hidden
Colony, and Brown himself made some of the additional work requests. Brown
also placed Sanchez in charge of supervising Circle Y’s work. Sanchez, in turn,
authorized two other WRH employees to make additional work requests. Sanchez
kept Brown informed of the work requests made by himself and the other two
WRH Realty employees, and Brown did nothing to stop them. The record
supports a finding that Brown, acting within his actual authority, thereby ratified
and authorized the actions of those WRH Realty employees who were acting as
agents for him. See O.C.G.A. § 10-6-52; see also Merritt v. Marlin Outdoor
Adver., Ltd., 298 Ga. App. 87, 679 S.E.2d 97, 102 (2009) (noting that whether
ratification occurred is a question of fact). Accordingly, the district court did not
err in finding that the additional work requests made by the WRH Realty
employees bound Hidden Colony. The defendants’ course of conduct subsequent
to the execution of the contract both waived the written change order requirement
and modified the terms of the contract to include compensation for the extra work
performed by Circle Y.
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The defendants submit, in the alternative, that no breach of the written
contract occurred because the additional work was within the scope of that
contract. According to the defendants, because the written contract was a turnkey
contract, Circle Y assumed the risk of performing all extra work necessary to make
the units ready to rent.
The district court did not err in finding that the extra work was outside the
scope of the contract. Exhibit H to the contract explicitly defines the scope of the
project subject to the turnkey provision: It lists the nine units and the particular
renovations requested. None of the additional work involved the particular
renovations listed in Exhibit H. In fact, some of the extra work was done on a unit
not even included in the contract. Given the record and the district court’s
credibility determinations, the district court’s conclusion that the additional work
was beyond the scope of the original contract was not erroneous. Accordingly,
Hidden Colony is liable for breach of the written contract.
2.
Only Hidden Colony had a written contract with Circle Y. Circle Y claims,
however, that it also had an oral contract with WRH Realty. In reply, WRH
Realty submits that it is not bound by any oral agreement because it was merely
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acting as an agent for Hidden Colony.
The Georgia agency statute provides:
If an agent shall fail to disclose his principal, when discovered, the
person dealing with the agent may go directly upon the principal
under the contract, unless the principal shall have previously
accounted and settled with the agent.
O.C.G.A. § 10-6-54. In elucidating this paragraph, the Court of Appeals of
Georgia has written:
Similar to the principle that a person may become liable as an
ostensible partner is the principle that an agent who makes a contract
without disclosing that he is acting as an agent or without identifying
his principal, or an agent who makes a contract with the express or
implied understanding with the other party that he is binding himself
individually, will become individually liable on the contract. . . .
Whether or not the fact of the agency and the identity of the principal
were disclosed or known to the other contracting party is a question
of fact which may be shown by direct or circumstantial evidence.
Chambliss v. Hall, 113 Ga. App. 96, 147 S.E.2d 334, 338 (1966); see also Reed v.
Burns Int’l Sec. Serv., Inc., 215 Ga. App. 60, 449 S.E.2d 888, 889 (1994). The
evidence supports the district court’s determination that, to avoid personal
liability, WRH Realty had the duty to disclose that it was acting solely as Hidden
Colony’s agent in making the oral contracts. WRH Realty points to no evidence
that its employees disclosed to Circle Y, when they requested additional work, that
they were acting solely as Hidden Colony’s agents. Accordingly, the district court
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did not err in concluding that WRH Realty is liable for breaching these oral
agreements.
Because we agree with the district court that Hidden Colony breached the
written contract and that WRH Realty breached its oral contracts, we do not need
to reach the issue of quantum meruit and unjust enrichment.
B.
Under the written contract, Circle Y, as the prevailing party, is entitled to
attorney’s fees from Hidden Colony. WRH Realty, although not a party to the
written contract, is also liable for attorney’s fees based on the district court’s
finding that it acted in bad faith. See O.C.G.A. § 13-6-11.
1.
WRH Realty contends that it cannot be held responsible for bad faith merely
because it stood on a bona fide contract defense and denied liability. The bad faith
inquiry, however, focuses on the defendant’s behavior in “the transaction and
dealings out of which the cause of action arose, not the defendant’s conduct after
the cause of action arose.” Dep’t of Transp. v. Hardin-Sunbelt, Joint Venture, 266
Ga. App. 139, 596 S.E.2d 397, 403 (2004); see also Runion v. Hofer, 245 Ga.
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App. 854, 538 S.E.2d 462, 463 (2000).
The record contains sufficient evidence that WRH Realty acted in bad faith.
See Fertility Tech. Res., Inc. v. Lifetek Med., Inc., 282 Ga. App. 148, 637 S.E.2d
844, 848 (2006) (holding that “even slight evidence of bad faith” will support the
grant of attorney’s fees). The record supports the district court’s conclusion that
WRH Realty and its employees manipulated Circle Y into doing a great deal of
work that was clearly beyond the written contract with Hidden Colony. Despite
Circle Y’s reasonable expectations that it would be paid for the work, WRH
Realty then attempted to shield itself behind the written contract.2
2.
The defendants also contend that the district court erred by awarding
attorney’s fees after a Rule 54(d)(2) hearing rather than after a trial on the amount.
At the outset, we note that Hidden Colony is liable for attorney’s fees under the
written contract, and so it was appropriate for the district court to determine, under
Rule 54, the amount of attorney’s fees for which Hidden Colony was liable. Thus,
2
See Fertility Tech. Res., Inc. v. Lifetek Med., Inc., 282 Ga. App. 148, 637 S.E.2d 844,
849 (2006) (finding bad faith when the agent’s conduct misled plaintiff about the principal’s
intention to perform under contract); Wheat Enters., Inc. v. Redi-Floors, Inc., 231 Ga. App. 853,
501 S.E.2d 30, 35 (1998) (concluding that a jury could find bad faith where “there was some
evidence that [the defendant] was attempting to avoid payment for work he authorized”).
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the defendants’ procedural attack can reach only WRH Realty’s liability for
attorney’s fees.
With respect to WRH Realty, because the case was tried to the bench, it was
for the district court to determine the issues of bad faith and the amount of fees.
See Covington Square Assocs., LLC v. Ingles Markets, Inc., 287 Ga. 445, 696
S.E.2d 649, 651 (2010). The district court made a finding of bad faith at trial.
Therefore, WRH Realty may only challenge the amount of the fee award, not the
fact that Circle Y was entitled to an award.
The defendants are correct that Rule 54(d)(2)(A) does not permit use of the
post-trial motion procedure where the “substantive law requires those fees be
proved at trial as an element of damages.” Fed. R. Civ. P. 54(d)(2)(A). We can
perceive, however, no substantive harm to WRH Realty from the procedure that
was followed. Under Federal Rule of Civil Procedure 42(b), the district court is
permitted to bifurcate proceedings and to hold a trial on attorney’s fees after a trial
on liability. See Harrington v. Cleburne Cnty. Bd. of Educ., 251 F.3d 935, 938
(11th Cir. 2001). The district court provided ample opportunity for both sides to
present, albeit on paper, their positions on the amount of fees that were due and to
make a determination on the basis of that evidence. Additionally, the district court
followed the appropriate procedures for determining the amount of attorney’s fees
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for which Hidden Colony was liable under the written contract, and it is not clear
how that amount would have differed for WRH Realty. Accordingly, the district
court committed no reversible error in its determination of attorney’s fees.
The defendants also submit that the district court erred in failing to
apportion the claims for fees between successful and unsuccessful claims. The
district court found, however, that Circle Y “did as well as anyone could have
done” to apportion the hours spent on the claims that survived summary judgment
and the one claim that did not. Circle Y Constr., Inc., 721 F. Supp. 2d at 1283.
Moreover, given the overlapping nature of the claims, Circle Y’s efforts to
apportion the fees and the district court’s finding that it would be difficult to
apportion further, the district court’s grant of the fees requested by Circle Y was
not erroneous. See Campbell v. Beak, 256 Ga. App. 493, 568 S.E.2d 801, 806-07
(2002).
The district court committed no factual or legal error in its adjudication of
this case. Accordingly, the judgment of the district court is affirmed.
AFFIRMED.
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