Case Title: George E. Jensen Contractor, Inc. v. Quality Mill Works, Inc.

Citation: 431 So. 2d 1232

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1983-05-06T00:00:00Z

Document:
431 So. 2d 1232 (1983)
GEORGE E. JENSEN CONTRACTOR, INC.
v.
QUALITY MILL WORKS, INC., et al.
81-768.

Supreme Court of Alabama.
May 6, 1983.
*1233 Robert D. Marshall and Michael E. Utley of Griffin, Cochrane & Marshall, Atlanta, Ga., and Robert W. Barr of Gibson & Barr, Troy, for appellant.
Keith Watkins of Clower & Watkins, Troy, for appellees.
ADAMS, Justice.
This appeal arises from a claim by George E. Jensen Contractor, Inc. (Jensen) that Quality Millworks, Inc. (Quality) is liable for attorneys' fees incurred by Jensen in a successful appeal to the Armed Services Board of Contract Appeals (ASBCA). The original dispute involved work performed in renovating barracks at Redstone Arsenal. Jensen was the general contractor for the project, while Quality supplied to Jensen doors for the barracks. Quality obtained the doors from Florida Made Door Manufacturing Company (Florida Made), which was made a third party defendant in the present action. There being no dispute on any issue of material fact, the question regarding attorneys' fees went to the Circuit Court for Pike County on motions for summary judgment filed by all parties. The court issued an order denying Jensen's motion, and granting the motions of Quality and Florida Made. From this order and judgment Jensen appealed.
The issue before us on appeal is whether the trial court properly held that Quality was not obligated to reimburse Jensen for its successful defense of a breach of warranty claim, absent a breach of contract or duty by Quality. We affirm.
The following facts provide the background for this case:
Jensen, a contractor in the sole business of contracting with the United States Government (the Government), entered into a contract with the Government known as the "Barracks Modernization, Redstone Arsenal, Alabama" contract. Pursuant to a purchase order for $35,291.00, Quality agreed to supply wooden doors that complied with requirements and specifications set forth in Jensen's Government contract. The doors were manufactured and supplied to Quality by Florida Made.
Several months after the installation of the doors and use of the barracks by troops, the Government notified Jensen of widespread door failure, and directed that the doors be replaced. After extended negotiations, Jensen replaced the doors under protest. The Government refused to pay Jensen for this work, contending that the original doors did not meet the contract specifications. Jensen filed a "protective" breach of contract action against Quality, asking the Circuit Court for Pike County for an indefinite stay of that action pending the outcome of its dispute with the Government. In its motion to stay Jensen stated, "If Jensen prevails in those claims [against the Government], this action would be dismissed." Jensen meanwhile made claim for equitable adjustment in its contract price for the additional work, but this claim was rejected by the contracting officer.
Jensen then notified Quality of its intent to appeal the contracting officer's decision to the ASBCA, and tendered the prosecution of such an appeal to Quality. Quality refused prosecution of the appeal, maintaining that the doors were furnished in compliance with Jensen's contract specifications.
Jensen's appeal was tried before the ASBCA, which ruled that the doors did comply with the Government's specifications. As a result of this ruling, the Government paid Jensen $99,894.40 for replacement of the doors.
After the favorable ASBCA decision, Jensen amended its complaint in circuit court against Quality, seeking to recover attorneys' fees of $32,550.33 expended in prosecution *1234 of the ASBCA appeal. It is agreed by all parties that the doors supplied under the contracts did comply with Government specifications.
The general rule in Alabama and most other jurisdictions is that attorneys' fees are not recoverable as damages, in the absence of a contractual or statutory duty, and a few other exceptions on equitable principles. Highlands Underwriters Insurance v. Eleganté Inns, 361 So. 2d 1060 (Ala. 1978); State v. Alabama Public Service Commission, 293 Ala. 553, 307 So. 2d 521 (1975).
Highland Underwriters, supra, at 1066.
While Highland Underwriters involved a tortious breach of duty, the above principle regarding attorneys' fees has also been applied in Alabama where litigation with a third party was a foreseeable result of the breach of some contractual duty between the parties to the action for indemnity. See Edwards v. Beard, 211 Ala. 251, 100 So. 101 (1924). Edwards involved an implied warranty of title in the sale of a chattel. This court found that the warranty was breached, and held that the buyers' costs, including reasonable attorneys' fees incurred in seeking to sustain his title, were proper elements of damage in his suit against the seller.
The cases regarding attorneys' fees, in this jurisdiction and elsewhere, have almost universally held that the right to indemnity, including attorneys' fees, requires a breach of duty on the part of the indemnitor. The Court of Appeals for the Fifth Circuit has, as recently as 1981, had occasion to interpret Alabama law on this point. In Wood v. Old Security Life Insurance Company, 643 F.2d 1209 (5th Cir.1981), plaintiff sued on an insurance policy and collected. She then sued the agency which had procured the policy, and others, for costs, including attorneys' fees, of the prior litigation. The trial court dismissed the indemnity suit for reasons which included the fact that plaintiff had been successful in her suit against the insurance company. In reversing the trial court, the Court of Appeals stated:
Woods, supra, at 1217. It then added: "On remand, plaintiff will be able to recover from the Agency and the Bank only if she carries her burden of proving that their conduct in fact caused her a loss...." Emphasis added.
Jensen cites only one case in which an indemnitor was held liable for his indemnitee's attorneys' fees where the indemnitor was found innocent of wrongdoing (Heritage v. Pioneer Brokerage & Sales, Inc., 604 P.2d 1059 [Alaska 1979]), and our extensive research has uncovered no others. In Heritage, Pioneer, the retailer of a mobile home, and Moduline Industries, Inc., the manufacturer, were held not liable to Heritage in an action alleging strict liability in tort. The trial court then granted Pioneer's motion for costs and attorneys' fees against Moduline. In affirming that decision, the appeals court held that an implied right of indemnity based on the relationship between the retailer and the manufacturer included the duty of the manufacturer to defend the strict liability suit. The court stated:
Heritage v. Pioneer Brokerage, 604 P.2d  at 1067.
Jensen urges us to adopt the Heritage rationale in the instant case, noting that it tendered prosecution of the defense to Quality. We decline to do so. In Edwards v. Beard, cited above, this court explained:
Edwards v. Beard, 211 Ala. at 253, 100 So.  at 103-104.
Jensen argues that Code 1975, § 7-2-607(5)(a) mandates Quality's responsibility for the costs of litigation between Jensen and the Government. We disagree. That section states:
Code 1975, § 7-2-607(5)(a). We read this to mean, as applied to the case before us, only that the litigants may not relitigate any issue of fact already decided in the action before the ASBCA. The only issue before that board was whether the doors furnished under the contracts complied with Government specifications. The ASBCA determined that they did, and to that determination Quality is bound under § 7-2-607(5)(a).
Jensen places great emphasis on two other cases as supportive of his positionPender v. Skillcraft Industries, Inc., 358 So. 2d 45 (Fla.Dist.Ct.App.1978), and Conrad v. Suhr, 274 N.W.2d 571 (N.D.1979)pointing out that in both instances the appeals courts held that the indemnitee did not have to fail in his case in chief in order to be entitled to attorneys' fees. These cases are readily distinguishable from the case before us. Both of the cited cases involve situations in which a customer sued both a retailer and a manufacturer. In the case before us, Quality was not a party to the original suit. In the cited cases, the retailer was exonerated in the principal litigation, while the manufacturer was held liable. In the case before us, Jensen's success with his claim before the ASBCA necessarily absolved Quality of any liability under his contract. As we observed earlier in this opinion, Alabama law requires not that the indemnitee be liable to a third party, but that the litigation arose because of some breach of the indemnitor's duty under his contract. See Highland Underwriters, supra; Wood v. Old Security Life, supra.
Additionally, in the case of Pender, the court found that the retailer's position in the case was wholly passive. In that case *1236 the court ordered the manufacturer to pay the retailer's cost of litigation. However, in Conrad, although the manufacturer was found to have breached a duty, he was not ordered to pay his retailer's costs of litigation. The reasoning of the appeals court was that the retailer, while involved in a suit alleging his manufacturer's negligence, was actually defending against allegations of his own negligence. The court said: "[W]e believe that because the defense was conducted for his own benefit, Suhr did not fit within the exception set forth in Davis, i.e. attorney fees are allowed if the defense is essentially being conducted for another's benefit." Conrad v. Suhr, 274 N.W.2d  at 578. The court then added:
Conrad v. Suhr, at 578. We emphasize that in Conrad the manufacturer was found to be negligent.
AFFIRMED.
TORBERT, C.J., and FAULKNER, ALMON and EMBRY, JJ., concur.