September 10, 2019- Laurence Bernhardt v. Advance Concept Construction, LLC, No. A-1-CA-37700

OCR transcription for search; preserved printed pages are authoritative

Court of Appeals of New Mexico
Filed 9/10/2019 8:48 AM

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IN THE CO RT OF APPEALS OF THE STATE OF NEW MEXICO

LAURENCE BERNHARDT and
MARIA-LOUISE BERNHARDT,

Plaintiffs-Appellees,
Vv. NO. A-1-CA-37700

ADVANCE CONCEPT CONSTRUCTION,
LLC, ADVANCE CONCEPT CONSTRUCTION,
A VANCE CONCEPT GROUP, ADVANCE
CONCEPT LABOR, LLC, RUTH ANNE
BOWKER, Individually, and KURT BOWKER,
Individua y,

Defendants-Appellants.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Victor S. Lopez, District Judge

Caren I. Friedman
Santa Fe, NM

for Appellees

Michael L. Danoff & Associates, P.C.
Brett J. Danoff

Albuquerque, NM

for Appellants

1 	MEMORANDUM OPINION
2 M. ZAMORA, Chief Judge.
3 	{l} 	Plaintiffs appeal from the district court 's award of attorney fees. We issued a
4 	notice of proposed summary disposition proposing to reverse, and Plaintiffs have
5 responded with a timely memorandum in opposition. We have duly considered these
6 arguments, and we remain unpersuaded that our initial proposed disposition was
7 incorrect. We therefore reverse the attorney fee award and remand to the district court
8 for further proceedings.
9 DISCUSSION
10 	{2} 	We briefly set out the relevant facts and proceedings as follows. Plaintiffs sued
11 	Defendants alleging eight different causes of action, including filing an improper lien,
12 breach of contract, a violation of the Unfair Practices Act (UP A), and various tort
13 	claims. [RP 115-126] See NMSA 1978, § 48-2-9 (2007) (authorizing the filing of a
14 petition to cancel a NMSA 197 8, Section 48-2-2 (1993) lien).
15 	{3} 	Following trial, the district court found that Defendants filed three "erroneous
16 and invalid" liens against Plaintiffs' property pursuant to Section 48-2-2. [RP 793]
17 	The district court determined that Plaintiffs were therefore the prevailing party in the
18 	lien dispute and were entitled to recover attorney fees and costs pursuant to NMSA
19 	1978, Section 48-2-14 (2007), which provides that "[a] prevailing party in a dispute
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1 arising out of or relating to a lien action is entitled to recover from the other party the
2 reasonable attorney fees , costs and expenses incurred by the prevailing party." The
3 district court also dismissed Plaintiffs ' remaining claims, determining that Plaintiffs
4 had failed to meet their burden of proof on those claims. [RP 794]
5 {4} 	Plaintiffs ' attorney then filed an affidavit setting forth fees in the amount of
6 $7 1,119.14 for work related to the litigation. [RP 796-797] Plaintiffs' attorney did not
7 separate the fees related to work done on the Section 48-2-9 claim from those related
8 to work on the other claims in either her affidavit or the accompanying invoice. [RP
9 796-818] Plaintiffs' attorney also submitted a bill of costs requesting $4,592.22,
10 	which similarly failed to separate costs. [RP 819-820]
11 	{S} 	Defendants filed an objection to the affidavit in which they argued that
12 Plaintiffs were improperly attempting to recover attorney fees for all the work done
13 	by their attorney on their behalf, and had not attempted to segregate the attorney fees
14 authorized under Section 48-2-14 from those related to litigation of the other claims
15 	for which there was no basis for an award of attorney fees. [RP 842-846] The record
16 contains no response from Plaintiffs to this objection.
17 	{6} 	The district court ultimately awarded attorney fees and costs to Plaintiffs in the
18 	amount of$56,653.60. [RP 1019] Defendants now challenge the award of attorney
19 	fees , arguing that the district court abused its discretion by awarding attorney fees for
20 work that was not done on the statutory claim. Additional facts are set forth below.
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1 {7} 	"We review an award of attorney's fees for abuse of discretion." Cobb v.
2 	Gammon, 2017-NMCA-022, ,-r 60,389 P.3d 1058; see also Garcia v. Jeantette, 2004-
3 NMCA-004, ,-r 15, 134 N.M. 776, 82 P.3d 947 ("The decision whether to grant or
4 deny a request for attorney fees rests within the sound discretion of the district
5 court."). The district court abuses its discretion when "a ruling is clearly contrary to
6 the logical conclusions demanded by the facts and circumstances of the case." Sims
7 	v. Sims, 1996-NMSC-078, ,-r 65, 122 N.M. 618,930 P.2d 153.
8 	{8} 	"[I]t has long been the rule in New Mexico that a party is only entitled to those
9 fees resulting from the cause of action for which there is authority to award attorney
10 	fees." Dean v. Brizuela, 2010-NMCA-076, ,-r 16,148 N.M. 548,238 P.3d 917. "Our
11 	Supreme Court has continued to direct that recoverable fees be segregated from
12 	non-recoverable fees to ensure that only those fees for which there is authority to
13 	award attorney fees are in fact awarded." Id. ,-r 17; see also J. R. Hale Contracting Co.
14 	v. Union Pacific R.R., 2008-NMCA-037, ,-r,-r 92, 95, 143 N.M. 574, 179 P.3d 579
15 	(stating that an award of attorney fees under a statutory claim, which allows an award
16 	for attorney fees that is joined with non-statutory claims, must be limited to the work
17 done on the statutory claim). This Couti has recognized that in some cases it may be
18 	difficult or impossible to segregate the work performed on different claims because
19 the work is "inextricably intertwined." Id. ,-r 95 (internal quotation marks and citation
20 omitted). However, we have further emphasized that, notwithstanding that some work
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1 may be intertwined, "the [district] court should attempt to distinguish between the two
2 types of work to the extent possible." Hinkle, Cox, Eaton, Coffield & Hensley v.
3 Cadle Co. of Ohio, Inc., 1993-NMSC-010, ,r 32, 115 N.M. 152, 848 P.2d 1079.
4 	{9} 	In our notice of proposed summary disposition we proposed to reverse, noting
5 that Plaintiffs had made no attempt to segregate the attorney fees related to their
6 improper lien claims, which were recoverable, from the fees related to their claims for
7 breach of contract, violation of the UP A, and the tort claims, on which Plaintiffs were
8 unsuccessful and for which there was no authority to award attorney fees. We
9 understand Plaintiffs to make two arguments in their memorandum in opposition: ( 1)
10 	that it was impossible to segregate fees in this case, and (2) that the district court's
11 	award of attorney fees was reasonable and only awarded fees related to the statutory
12 	lien claim. [MIO 7-17] For the following reasons, we disagree with Plaintiffs'
13 	arguments.
14 {10} 	Plaintiffs first 	argue that segregation 	of attorney fees 	was "difficult or
15 	impossible" in this case. [MIO 8-9] In support of this argument, Plaintiffs contend
16 	that the work done on the wrongful liens claims was inextricably intertwined with
17 	work done on their other claims because in order to prevail on the wrongful liens
18 	claim, they were required to prove that Defendants' conduct was wrongful, and it is
19 	immaterial whether the wrongful conduct is defined as fraudulent, negligent, or
20 tortious. [MIO 1OJ To the extent Plaintiffs argue that their claim for a wrongful lien
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1 was predicated on Defendants' alleged breach of contract, violations of the UPA, and
2 the other alleged tortious conduct, we disagree. 	The district court's judgment
3 indicates that its finding that Defendants filed three wrongful liens was based on
4 Defendant s' inadvertent addition of a digit to the amount of the first lien, resulting
5 in a lien for $2,390,268.98 rather than $239,268.98 , and Defendants ' failure to
6 comply with the requirements of NMSA 1978, Section 48-2-6 (1979), in recording
7 the second and third liens, rendering the liens invalid. These improper liens were not
8 withdrawn, which resulted in a continuing cloud on Plaintiffs' property and prevented
9 from them obtaining financing to complete the construction project. [RP 779-783]
10 	However, Plaintiffs were not required to prevail on their contract, tort, and other
11 	statutory claims in order to establish that the liens filed by Defendants were improper,
12 and in fact, the district court found that Plaintiffs had failed to prove the other claims.
13 	Accordingly, we reject this argument.
14 {11} 	Plaintiffs also argue that the driving force behind the lawsuit was cancellation
15 	of the wrongful liens, and that the lawsuit would not have been initiated had the
16 wrongful liens not been filed, as Plaintiffs were not motivated by the shoddy and
17 	incomplete 	construction 	work 	done, but 	by 	the 	nearly 	$2.8 	million 	in 	liens
18 	encumbering their property. [MIO 9] Regardless of the motivation for the lawsuit,
19 however, New Mexico law requires that recoverable fees be segregated from non-
20 	recoverable fees. Plaintiffs have cited no authority to suggest that this requirement
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1 can be disregarded based on the importance to the parties of the claims for which fees
2 are authorized. SeeMcNeill v. Rice Eng'g & Op erating, Inc., 2010-NMSC-015, ,r 11,
3 	148 N.M. 16, 229 P.3d 489 (stating that where parties fail to cite authority for their
4 legal propositions, appellate courts "wi ll presume that no such authority exists" ). We
5 understand Plaintiffs to further argue that Defendants were engaged in a series of
6 wrongful acts related to the construction of the home and the filing of the liens and
7 that, following entry of the attorney fee award, Defendants continued this pattern of
8 wrongful conduct by failing to promptly comply with a court order to remove the
9 liens. However, none of these circumstances provides a basis to award attorney fees
10 	for work done on the claims that Plaintiffs failed to prove at trial.
11 	{12} 	Plaintiffs also ask this Court to review the attorney fee affidavit and conclude
12 on appeal that the nature of the litigation was such that segregation of fees was
13 	impossible. We decline to do so. We first note that Plaintiffs did not argue to the
14 district court that the fees for litigating the improper liens were inextricably linked to
15 	the fees related to litigation of the other claims. Plaintiffs simply submitted a request
16 	for the entirety of the fees without acknowledging the fact that fees were only
17 	authorized on the statutory lien claim. Plaintiffs also did not respond to Defendants'
18 	argument that they had failed to segregate the fees. Further, the district court, whi le
19 acknowledging that Plaintiffs were seeking to recover for work that was not done on
20 the lien claims, did not find that the fees were inextricably intertwined in rendering
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1 its attorney fee award. As the this argument was not made by Plaintiffs below or ruled
2 on by the district court, we decline Plaintiffs ' invitation to make such a determination
3 on appeal. See Dean, 201 O-NMCA-076, ,r,r 18-19 (stating that the burden to show the
4 impossibility of segregating attorney fees is with the attorney who seeks the attorney
5 fee award and affirming the denial of attorney fees where the defendant made no
6 showing to the district court what portion 	of the attorney fees 	charged were
7 attributable to defending the statutory claim or why it was difficult or impossible to
8 segregate the statutory claims from the other claims).
9 {13} 	Plaintiffs next argue that the district court's award of attorney fees should be
10 upheld on the basis that it was reasonable. [MIO 11-17] We understand Plaintiffs to
11 	argue that they met their burden to show the reasonableness of the attorney fee award
12 	because they submitted detailed records, the amount of attorney fees was low given
13 	the nature of the litigation, and trial counsel's hourly rate was relatively low. [MIO
14 	13-14] Plaintiffs also argue that the district court did reduce the attorney fees into
15 	recoverable and non-recoverable fees and only awarded those fees incurred for work
16 on the improper lien claim. [MIO 11-17]
17 	{14} 	As we noted in the notice of proposed summary disposition, the district court's
18 	amended order does contain findings relative to the factors set out in Lenz v.
19 	Chalamidas, 1989-NMSC-067, ,r 19 , 109N.M. 113, 782 P.2d 85 (enumerating factors
20 	for the district court to consider in assessing the reasonableness of an award of
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1 attorney fees under Section 48-2-14). Specifically, in considering the time and effort
2 expended by the attorney, the district court found that the amount of $71,119. 19 was
3 excessive under the circumstances of the case and that "[i]t appears that some of this
4 time was required to pursue the other . . . tort and statutory claims that were
5 dismissed." [RP 1018] Based on this factor and others, including the substantial value
6 of the cancelled liens, Plaintiffs' success in defeating Defendants' counterclaims for
7 breach of contract, and the amount of damages recovered for the cancelled liens, the
8 district court awarded a lesser amount of attorney fees than Plaintiffs' attorney had
9 sought. [RP 1017-1018]
10 	{IS} 	However, 	while 	the language in the district court's fee award order
11 	demonstrates that it was aware that Plaintiffs ' attorney was seeking attorney fees for
12 	work not done on the statutory claim, the district court's order awarding attorney fees
13 	does not indicate whether or how the district court segregated the recoverable fees
14 from the non-recoverable fees. See Dollens v. Wells Fargo Bank, N.A., 2015-NMCA-
l 5 096, ,r 25, 356 P.3d 531 	(stating that the district court must ensure that only
16 	recoverable fees are being awarded); see also Hinkle, 1993-NMSC-O 10, ,r 32 ("[T]he
17 	[district] court should attempt to di stinguish between the two types of work to the
18 	extent possible."). We therefore cannot determine whether the award of a lesser
19 amount of attorney fees was based on a principled attempt to segregate fees so that
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1 only recoverable fees 	were awarded, 	or whether the reduction was based on ·
2 application of the Lenz factors, which are not directed at segregating fees.
3 {16} 	As Plaintiffs did not attempt to segregate the fees in the materials they
4 submitted to the district court, and there is nothing in the record to indicate whether
5 the district court attempted to segregate the fees and on what basis, we conclude that
6 we are not in a position to review the reasonableness of the attorney fee award on
7 appeal or determine whether the district court exercised its discretion in a manner
8 consistent with New Mexico law.
9 CONCLUSION
10 {1 7} 	For these reasons, we reverse and remand this case to the district court for
11 	further proceedings consistent with this opinion. See Rio Grande Sun v. Jemez
12 Mountains Pub. Sch. Dist., 2012-NMCA-091, ,r 29,287 P.3d 318 (reversing and
13 	remanding for recalculation of an attorney fee award where the district court
14 	improperly calculated the award); see also Lenz, 1989-NMSC-067, ,r,r 20, 22, 24-25
15 	(remanding for a new hearing on the issue of attorney fees in a claim under Section
16 48-2-9, where the record was insufficient to allow for appellate review of the
17 	reasonableness of the attorney fee award, and to what extent the award had been
18 	based on the defense of counterclaims and other issues collateral to the lien issue).
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1 {18} IT IS SO ORDERED.
2 3 4 WE CONCUR:
M. MONICA ZAMORA, Chief Judge
5 6
Megan PDuffy
MEGAN P. DUFFY, Judge
8|
Braha
BRIANA H. ZAMORA, Judge
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