November 20, 2014
BNY Mellon, N.A., Plaintiff,
RE/MAX Realty One, Defendant.
ORDER ON FEES
John O'Neil, Jr. Justice, Superior Court
A. Procedural Posture
Plaintiff BNY Mellon ("the Bank") filed this suit against Defendant RE/MAX Realty One ("Re/Max") alleging several claims arising out of Re/Max's refusal to pay the Bank escrowed monies. The court granted Summary Judgment to the Bank. The Law Court reversed, Bank of New York Mellon, N.A. v. Re/Max Realty One, 2014 ME 66, 91 A.3d 1059, holding that the Bank was in breach of contract and remanded to this court address the issue of attorney's fees.
The Bank owned property in York, Maine, and entered an agreement with Re/Max to retain, exclusively list, and sell the property. The underlying litigation concerned entitlement to certain escrow monies arising out of a breach of a purchase and sale agreement for the property by a potential buyer, Joseph Sullivan ("Sullivan"). The facts concerning that dispute need not be repeated here. Relevant to this matter are several contractual provisions that Re/Max asserts establish the Bank must pay Re/Max's attorney's fees for litigating this case.
Re/Max points to three different contractual provisions that purport to establish entitlement attorney's fees: (1) The Purchase and Sale Agreement between the Bank and Sullivan, (2) Earnest Money Authorization/Authorization Demand, also between the Bank and Sullivan, and (3) the Listing Agreement between Re/Max and the Bank.
The Listing Agreement provided: "Seller agrees to hold Agency harmless from any loss or damage that might result from authorizations provided in the Agreement." The Purchase and Sale Agreement provided:
In the event that the Agency is made a party to any lawsuit by virtue of acting as an escrow agent, Agency shall be entitled to recover reasonable attorney's fees and costs which shall be assessed as court costs in favor of the prevailing party.
The Authorization for Release of Earnest Money Deposit stated:
The undersigned hereby agree to hold each other, all real estate brokerage agencies involved in the transaction and their licensees harmless from any and all claims, suits, actions and damages arising out of such agreement.
A. The Law Court Decision Did Not Explicitly Limit this Court's Inquiry to Attorney's Fees Under the Listing Agreement.
The Law Court spent very little ink on the issue of attorney's fees:
Re/Max also seeks to enforce its contractual right to indemnification and attorney fees. Because this requires fact-finding as to whether Re/Max suffered loss or damage resulting from the authorizations stated in the listing agreement, see Lee v. Scotia Prince Cruises Ltd., 2003 ME 78, ¶ 21, 828 A.2d 210, the matter must be remanded to the Superior Court for it to decide in the first instance whether Re/Max is entitled to indemnification and attorney fees under the listing agreement, and, if so, the amount Re/Max is entitled to.
Bank of New York Mellon, N.A. v. Re/Max Realty One, 2014 ME 66, ¶ 22, 91 A.3d 1059. The Law Court discussed the listing agreement, but did not address Re/Max's entitlement to attorney's fees under the purchase and sale agreement or the authorization. The Bank argues this limits the court to construing the listing agreement. The Law Court's passing reference to the issue contained no analysis and does not appear to foreclose considering Re/Max's arguments here. Ultimately, the Listing Agreement gave rise to the later provisions, which, as discussed below, contemplated Re/Max and is another contractual basis for recovery. Indeed, the Court's introduction framed Re/Max's contractual entitlement to attorney's fees more broadly:
[W]e vacate the judgment and remand the matter to the Superior Court to enter a judgment in Re/Max's favor on the Bank's breach of contract claim and to determine whether Re/Max is contractually entitled to indemnification for costs and attorney fees.
Bank of New York Mellon, N.A., 2014 ME 66, ¶ 3 (emphasis added).
Nonetheless, while the Bank makes the strategic decision to rest on the language of the Law Court decision, Pl.'s Obj. Arty. Fees 1-2, there could be another legal basis for this court to decline to entertain those provisions. As noted, Re/Max was not a party to the latter two agreements, which were between the Bank and Sullivan. Re/Max thus presses its argument under a third-party beneficiary theory. Third-party beneficiaries have enforceable rights where the promisee intends for the beneficiary to receive the benefit of performance and to enforce the contract. Martin v. Scott Paper Co., 511 A.2d 1048, 1049-50 (Me. 1986). The Law Court has emphasized the contracting parties must intend to confer contractual rights to the third party. Stull v. First Am. Title Ins. Co., 2000 ME 21, 745 A.2d 975.
Maine courts have not considered whether a party may recover attorney's fees under a third-party beneficiary theory. A number of courts have declined to do so, closely scrutinizing whether the fee provision contemplated collection of attorney's fees by a third-party beneficiary. See, e.g., Int'l Bhd. of Elec. Workers, Local Union No. 134 v. Chicago & Ne. Illinois Dist. Council of Carpenters, 149 F.Supp.2d 452, 459 (N.D. Ill. 2001) (holding reference to "prevailing party" in fee provision did not contemplate a third-party beneficiary and denying fees); Harris v. Richard N. Groves Realty, Inc., 315 So.2d 528, 529 (Fla. Dist. Ct. App. 1975) (holding examination of entire contract indicated "prevailing party" intended for "party" to be an actual party to the contract, not a third party designated to hold a deposit); see also Wardley Corp. v. Welsh, 962 P.2d 86, 92 (Utah Ct. App. 1998).
The Harris case involved a similar situation as the one here, where an entity holding a deposit sought to collect attorney's fees as a third-party beneficiary of a purchase and sale agreement. The court read the contract narrowly to find that attorney's fees were not warranted because the deposit holder was not a contemplated "party" within the meaning of the contract. Here, however, the terms of the Purchase and Sale Agreement contemplates Re/Max becoming a party, and thus a potential prevailing party entitled to attorney's fees: "In the event that [Re/Max] is made a party to any lawsuit. .. by virtue of acting as an escrow agent, [Re/Max] shall be entitled to recover reasonable attorney's fees and costs which shall be assessed as court costs in favor of the prevailing party" The Authorization for Release of Earnest Money Deposit contains a broad indemnity provision that also contemplates Re/Max as a third-party beneficiary: "The undersigned hereby agree to hold . . . all real estate brokerage agencies involved in the transaction . . . harmless from any and all claims, suits, actions and damages arising out of such agreement." The express language of these agreements recognized Re/Max as a party, and evidences the intent to confer rights on Re/Max as a third party. The court may therefore consider all three provisions.
B. Whether Re/Max is Entitled to Indemnification and May Recover Attorney's Fees
Indemnity clauses must arise from "clear, express, specific, and explicit contractual provision, under which the party against which a claim is to be asserted has agreed to assume the duty to indemnify." Devine v. Roche Biomedical Labs., Inc., 637 A.2d 441, 446 (Me. 1994). Courts ordinarily must enforce reasonable attorney fees imposed by contract provisions. Yim K. Cheung v. Wing Ki Wu, 2007 ME 22, ¶ 24, 919 A.2d 619. Whether a contractual provision applies is a question of law. Id.
The Bank, by addressing only the Listing Agreement, argues only that there are two indemnity provisions in the Agreement and neither applies in this case, which concerns only the liquidated damages clause. Even accepting the Bank's narrow reading of the Listing Agreement, the Purchase and Sale Agreement is not so circumscribed. Under that provision, Re/Max became a party to this litigation as a result of its role as escrow agent, and is now clearly a prevailing party because the Law Court found Re/Max was entitled to summary judgment on the Bank's breach of contract claim. Bank of New York Mellon, N.A., 2014 ME 66, ¶ 21, 91 A.3d 1059. Unlike the indemnity provisions contained in the Listing Agreement, the Purchase and Sale Agreement does not limit the circumstances in which the Bank has an obligation to pay attorney's fees. Therefore, Re/Max is entitled to reasonable attorneys fees. Having so found, the court need not construe the Listing Agreement or the Authorization for Release of Earnest Money Deposit.
C. Amount of Attorney's Fees Award
The parties lastly dispute that total fee to which Re/Max is entitled. The Bank argues the amount should be limited to $8, 788.77-the amount Re/Max paid in legal fees and costs according to the Robert C. Coles Affidavit. Re/Max counters that law does not limit an attorney's fee award on the basis of monies personally paid. In other words, whether Re/Max paid individually or its insurer paid the fees is immaterial. This court is unable to find any legal authority for the Bank's argument, and finds the contention unpersuasive. Hypothetically, if Re/Max's insurer had declined to defend Re/Max in this suit and a duty to defend existed, the insurer would be liable for the full amount of Re/Max's attorney fees. Maine Mut. Fire Ins. Co. v. Gervais, 1999 ME 134, ¶¶ 12-13, 745 A.2d 360. It makes little sense that the insurer should not be entitled to the same fee award as the insured. Re/Max is therefore not limited to attorney's fees actually paid out, but all attorney's fees accrued in this matter.
Re/Max requests $28, 550.20 in attorney's fees in its motion.
The amount of a reasonable fee is a discretionary determination by the court, with reference to the following factors:
(1) the time and labor required; (2) the novelty and difficulty of the questions presented; (3) the skill required to perform the legal services; (4) the preclusion of other employment by the attorneys due to acceptance of the case; (5) the customary fee in the community; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by client or circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.
Poussard v. Commercial Credit Plan, Inc. of Lewiston, 479 A.2d 881, 884 (Me. 1984); see also Saucier v. Allstate Ins. Co., 1999 ME 197, ¶ 35, 742 A.2d 482 (noting trial court has "broad discretion" in awarding attorney's fees).
Re/Max. has submitted detailed accountings of legal billing and costs incurred in the case. (Def.'s Mot. Ex. 1 and 2.) After reviewing these materials, and considering the above factors, the court is satisfied that the fees are reasonable.
The Defendant's Motion for Attorney's Fees is hereby GRANTED in the amount of $28, 550.20.