Hess Construction Co. v. Board of Education

CATHELL, Judge. Appellant, Hess Construction Company (Hess), appeals from a judgment in favor of appellee, the Board of Education of Prince George’s County (the Board). The Circuit Court for Prince George’s County (Spellbring, Jr., J. presiding), in granting appellant’s petition for a writ of mandamus, ultimately declined to include appellant’s attorney’s fees as damages. We rephrase the question presented to us as: Whether the trial court erred in not assessing appellant’s attorney’s fees against appellee under either (1) the provisions of Md.Rule BE44 or (2) the “collateral litigation” rule.

Facts The parties, under an Agreed Statement of Facts, agreed below (and on appeal) that Hess was the apparent low bidder for the construction of a new elementary school in Prince George’s County, Maryland; that Columbia Construction Co., Inc., the next lowest bidder, complained that Hess’s bid was improper for various reasons; that, ultimately, the Board rejected all bids and planned to resolicit new bids; that Hess filed an action under Md.Rule BE40' for a writ of mandamus (as well as for other relief not pertinent to this appeal); that Columbia intervened in that action; that the trial court ruled in Hess’s favor and granted its request for a writ of mandamus; that the trial court initially granted Hess its attorney’s fees in the amount of $27,231.15; and that, thereafter, upon the Board’s objection, the trial court rescinded its previous order granting Hess’s attorney’s fees. The Law The General Rule The general rule applicable in Maryland with respect to awarding attorney’s fees has been restated recently by the Court, of Appeals in a case in which a majority of that Court, ⁷³⁹ for the first time, permitted a jury to consider attorney’s fees in determining a punitive damage award. St. Luke Evangelical Lutheran Church, Inc. v. Smith, 318 Md. 337 , 568 A.2d 35 (1990), was a defamation and invasion of privacy suit. The majority initially stated: Any consideration of a common-law standard for awarding attorney’s fees must begin with the prevailing rule in this country.

Known as the American Rule, it prohibits the prevailing party in a lawsuit from recovering his attorney’s fees as an element of damages. Alyeska [Pipeline Service Co. v. Wilderness Society], 421 U.S. [240,] 247, 95 S.Ct. [1612,] 1616, 44 L.Ed.2d [141,] 147 [ (1975) ]; Empire [Realty Co. v. Fleisher], 269 Md. [278,] 285, 305 A.2d [144,] 148 [ (1973) ]. A brief history of the American Rule reveals that it evolved from the English Rule, which originated some time before the reign of Edward I. At that time, a successful plaintiff could obtain the costs of litigation as an element of damages. See C. McCormick, Handbook on the Law of Damages 234, 235 (1935), relying on 2 F. Pollock & F. Maitland, The History of English Law 597 (2d ed. 1911).

Beginning with the reign of Henry VIII, this benefit was also extended to successful defendants. McCormick at 235. Consequently, the English Rule—which allows the successful party in a lawsuit to recover from the losing party the costs of litigation, including attorney’s fees—became firmly established in the English common-law courts. Id.

The rule continues in England today. Alyeska, 421 U.S. at 245, 95 S.Ct. at 1616, 44 L.Ed.2d at 147-48 (1975); Goodhart, Costs, 38 Yale L.J. 849 , 849 (1929). The English Rule was popular in America before the Revolution. McCormick at 235.

Originally, the pre-colonial statutes which fixed the scale of recoverable court costs satisfied a substantial portion of the attorney’s fees incurred by a successful litigant. Id.; Restatement {Second) of Torts § 914, comment a at 492 (1979). This was so even though local statutes rigidly limited the amount recoverable as attorney’s fees. McCormick at 235. ⁷⁴⁰ Of course, nowhere in this country have statutorily-fixed attorney’s fees been revised to keep pace with the fall in the value of money.

Id. at 236. Such legislative reluctance to keep pace suggests that the principle of full compensation for litigation expenses never firmly took hold in this country. Id. at 235-36. This may best be explained by a historic distrust of lawyers prevalent throughout the colonial era, and a then growing preference of the organized bar for fee schedules set by a free market and not hostile legislatures.

Leubsdorf, Toward a History of the American Rule on Attorney Fee Recovery, 47 Law & Contemp.Probs. 9, 11, 19 (1984). Nevertheless, there are exceptions to the American Rule. For example, in Maryland, attorney’s fees may be awarded when (1) parties to a contract have an agreement to that effect, Empire, 269 Md. at 286, 305 A.2d at 148, citing Webster v. People’s Loan, Savings & Deposit Bank, 160 Md. 57 , 152 A. 815 (1931); (2) there is a statute which allows the imposition of such fees, Freedman v. Seidler, 233 Md. 39, 47 , 194 A.2d 778, 783 (1963); or (3) the wrongful conduct of a defendant forces a plaintiff into litigation with a third party, McGaw v. Acker, Merrall & C. Co., 111 Md. 153, 160 , 73 A. 731, 734 (1909). See also, Empire, 269 Md. at 286, 305 A.2d at 148; Fowler v. Benton, 245 Md. 540, 550 , 226 A.2d 556, 563 (1967).

Counsel fees may also be awarded when a plaintiff is forced to defend against a malicious prosecution. Tully v. Dasher, 250 Md. 424, 442 , 244 A.2d 207, 217 (1968). 318 Md. at 344-46 , 568 A.2d 35 (footnotes omitted). The majority of the Court then carved out a new (in Maryland) exception to the American Rule with respect to punitive damages. Judge Rodowsky, dissenting, writing for himself, Chief Judge Murphy and Judge McAuliffe, noted: Philosophically the Court’s new rule, but for the label attributed to the additional recovery, does not involve punitive damages at all.

Rather, it is a judicially adopted rule of fee shifting, contrary to this Court’s historic position of viewing fee shifting as the exercise of legislative or rulemaking power. ⁷⁴¹ Conceptually the question presented here is whether this Court, as a matter of decisional law, should adopt for cases in which punitive damages are awarded an exception to the American rule on counsel fees. For more than 165 years it has been settled in Maryland that fees between attorney and client are not, absent statute, awarded to the prevailing party and are not taxed as costs in the judgment. Nor are counsel fees awarded as damages, absent a contract so providing, or special circumstances. See Taylor v. Wahby, 271 Md. 101, 115-16 , 314 A.2d 100, 107-08 (1974); Empire Realty Co. v. Fleisher, 269 Md. 278, 285-86 , 305 A.2d 144, 148 (1973); New Carrollton v. Belsinger Signs, Inc., 266 Md. 229, 238 , 292 A.2d 648, 652 (1972); Marney v. Stack, 261 Md. 78, 81 , 273 A.2d 426, 428 (1971); Freedman v. Seidler, 233 Md. 39, 47 , 194 A.2d 778, 783 (1963); Harry’s Thrifty Tavern, Inc. v. Pitarra, 224 Md. 56, 63 , 166 A.2d 908, 912 (1961); Rice v. Biltmore Apartments Co., 141 Md. 507, 516-17 , 119 A. 364, 367 (1922); McGaw v. Acker, Merrall & Condit Co., 111 Md. 153, 160 , 73 A. 731, 734 (1909); Hollander v. Central Metal & Supply Co., 109 Md. 131, 154-55 , 71 A. 442, 446 (1908); Hamilton v. Trundle, 100 Md. 276, 278-79 , 59 A. 719, 719-20 (1905); Singer v. Fidelity & Deposit Co., 96 Md. 221, 224 , 54 A. 63 (1903); McGraw v. Canton, 74 Md. 554, 558-59 , 22 A. 132 (1891); Wood v. State, Use of White, 66 Md. 61, 69-70 , 5 A. 476, 478-79 (1886); Corner v. Mackintosh, 48 Md. 374, 390 (1878); Marshall v. Cooper, 43 Md. 46, 62 (1875); Wallis v. Dilley, 7 Md. 237, 249 (1854); Kiersted v. Rogers, 6 H. & J. 282, 286-87 (1823); Strike’s Case, 1 Bland 57 , 98-99, aff'd Strike v. McDonald & Son, 2 H. & G. 191 (1826).

Historically, in Maryland, creation of exceptions to the American rule has been allocated to legislative or rulemaking action. The majority’s prediction of the benefits to be achieved in punitive damage cases by creating an exception to the American rule for those cases is too tenuous a prediction, in my view, to justify departing from the historic ⁷⁴² pattern. If there is some public support for fee shifting in punitive damage cases, the General Assembly is in a better position than this Court to weigh the probability of the majority’s prediction by taking testimony on how the rule has worked in the handful of jurisdictions which have adopted it. Id. at 355-61, 568 A.2d 35 (footnotes omitted).

The instant case does not involve punitive damages or any of the exceptions to the American Rule except to the extent appellant relies on Maryland Rule BE44 and the “collateral litigation” rule. We next note that the proper interpretation of Md.Rule BE44 and its history in conjunction with the law of false returns does not support reliance on Rule BE44 as a vehicle for the imposition of attorney’s fees against the losing party. We shall also hereafter address the “collateral litigation” rule in this regard. 1. Appellant asserts that the Legislative Intent and History» of Rule BE44 supports an award of attorney’s fees to the successful litigant.

To the contrary, it does not. Appellant has been misled by its interpretation of language in a previous statute (Chapter 285 of the Laws of 1858) that “such further proceedings shall there upon be had ... as if the petitioner had brought an action on the case for a false return ... such petitioner shall there upon recover his damages and costs as he might have done in such action on the case aforesaid.... ” Appellant’s interpretation of that language and its similarity with language in a later codification in Md.Code Art. 60 of mandamus procedures leads appellant to the position it attempts to assert in the case sub judice. When describing the enactment of the later statute, Article 60 (the predecessor to the current BE Rules), appellant relies on a statement in an “Explanatory Note” in the subcommittee’s proceedings evidencing an intent that a petitioner be permitted to “recover his damages ... as he might have done in an action on the ⁷⁴³ case for a false return.” Ultimately, the provision of Article 60 first became Rule 1240e, and then Md.Rule BE44. 1 Appellant, in its brief, alleges that an action on a false return “generally speaking, arises when a person ... summoned ... has been damaged through the intentional or unintentional filing of a false return by a sheriff,” citing Main v. Lynch, 54 Md. 658 (1880), and our recent case of Sensabaugh v. Gorday, 90 Md.App. 379 , 600 A.2d 1204 (1992). Because the trial court permitted attorney’s fees to be assessed in Sensabaugh , appellant asserts that it is entitled to them in the instant case.

Appellant has misconstrued the entire nature of the “false return” to which the subcommittee and the prior statutes refer. Sheriffs returns and the Sensabaugh case are completely irrelevant. The false return with which the statute and the subcommittee were concerned was the response to a petition for mandamus that was historically referred to as a “return.” In Maryland, mandamus is a writ in the nature of a prerogative writ, and is an extraordinary remedy.... [M]any courts, including this one, and text-writers have stated that mandamus may be compared to a bill in equity for specific performance. Ipes v. Board of Fire Comm’rs, 224 Md. 180,183 , 167 A.2d 337 (1961).

See also Town, of District Heights v. County Comm’rs, 210 Md. 142, 146 , 122 A.2d 489 (1956). The Ipes Court further described the historical significance of mandamus procedure: At common law the pleading and practice in mandamus proceedings were very tedious and technical. Upon the filing of a petition which set forth sufficient facts, the court directed the writ to issue. This writ commanded the re ⁷⁴⁴ spondent to do the thing ordered, or to show cause, by a time certain, why he should not be required to do it.... [I]f the respondent wished to contest the matter, he either moved to quash the writ ... or replied to it.

This reply was called a “return. ” Upon the sufficiency of this return, the relator’s right to the writ depended. In this return, the respondent was obliged to set forth with great care, ... the facts upon which he relied to defeat the petition____ [I]f matters stated therein [the return] were not true, the only remedy of the petitioner was an action on the case for a false return.... However, even with this legislation, the technicalities of the common-law practice continued to embarrass the courts in administering relief by way of mandamus. Finally, the Legislature passed Chapter 285 of the Acts of 1858 (now Article 60 of the Code), by which the practice and procedure in all cases of mandamus were made uniform.

Under this act, the old alternative writs and returns are abolished.... ... According to the present practice, the answer required by Article 60, Section 3 (and Rule 1240 b 2) stands in the place of the return to the alternative writ under former practice.... 224 Md. at 184-85, 167 A.2d 337 (citations omitted, footnote omitted). See also Pennington v. Gilbert, 148 Md. 649, 652 , 129 A. 905 (1925) (“which reply was known as a return”); Legg v. Mayor, Counsellor & Aldermen, 42 Md. 203, 222 (1875); Weber v. Zimmerman, 23 Md. 45, 53 (1865). It is clear, therefore, that the “false return” referred to in the common-law and by the commentators was the return of a respondent in a mandamus action when that return was alleged to be false.

It was utilized when, in a later case, it was proven that a false return had caused the failure of a petitioner’s action for mandamus. In the case sub judice, appellant prevailed. The false return’s modern day equivalent would be a false response of a respondent to a petition for a writ of mandamus. The present case is a mandamus action, not an action on the ⁷⁴⁵ case for a “false return.” Even under present practice, there is no allegation that the response was false.

Thus, even if, in Maryland, one seeking a writ of mandamus was entitled to his attorney’s fees in a subsequent action on the case for a false return (and no Maryland court has so held), the case sub judice is not a subsequent action on the case. Moreover, appellant was not denied mandamus relief by reason of a false response to the petition. As we have said, the writ was issued. To the extent that the case at bar would encompass an action on the case for a false return, there were no allegations of a false response nor any evidence proffered of a false return or response.

Even if a prevailing party in a mandamus action would be entitled to attorney’s fees resulting from a false response (and we do not so hold), there is no evidence nor any allegation in the case at bar of a false response. The mere fact that a party prevails in an action for mandamus, without more, would not support the award of attorney’s fees, even in a jurisdiction that would award such fees. Historically, an action on the case for a false return was available only to a party who had not prevailed because of the falseness of the return. As we perceive the cause of action, the fact that the false return caused a petitioner to be denied relief to which he was entitled was the central element of the action—it was the damage.

A petitioner who prevailed did not incur the damage and the falseness of the return was of no relevance. There was no tort because there was no damage. Appellant in the case sub judice attempts to utilize this ancient procedure to create responsibility in appellee for appellant’s attorney’s fees that it incurred in pursuing its case, without any false response ever having been made by the Board. An action on the case for a false return has never encompassed such a theory.

Appellant states that its position is supported by the law in “numerous” jurisdictions. It then directs our attention to only four foreign cases in support of the imposition of attorney’s fees in mandamus cases. We have discovered three others, although those cases are factually unique. Appellee, however, has furnished us with more persuasive cases from other ⁷⁴⁶ jurisdictions.

With respect to foreign cases, we first note the three unusual cases we have discovered where such fees were awarded in mandamus actions. The foreign cases that have approved the inclusion of attorney’s fees in mandamus actions are, as we have indicated, factually inapposite to the case at bar. In Hale v. Smith, 271 Ind. 92 , 390 N.E.2d 645 (1979), the county authorities who were responsible for funding a trial court’s operations refused to provide for the salaries of a court reporter and bailiff that state law permitted the judge to hire and required the county to pay. The trial judge retained an attorney, presented the matter to the county council at a council hearing, and the county declined to pay the expenses.

The trial court ultimately ordered the county to pay, an order on which the county requested a hearing. Another judge held a hearing and upheld the mandate, further ordering the county to pay the attorney’s fees. The Supreme Court of Indiana noted that it had never been presented with “whether attorney’s fees ... of the court in a mandate action ... are properly granted. In general there is no legal right to recover attorney fees in a mandate action.” 390 N.E.2d at 648 .

The court nevertheless held: However, these cases [holding attorney’s fees not recoverable] are ... different from the case at bar____ The relief sought in both cases would inure to the personal benefit of the plaintiffs. In the case at bar Judge Smith issued the mandate in his official capacity ..., but for the purpose of meeting the operational needs of the ... Court____ In light of this, this ... proceeding is ... to be viewed ... as a dispute between two arms of the county government ... and the fees ... should be paid by the county. Id.

See also Levco v. Auditor of State, 271 Ind. 415 , 393 N.E.2d 749, 750-51 (1979) (an action for the traveling expenses of judge sitting in two different counties). Another instance of allowing counsel fees as damages in mandamus actions was the unusual case of State ex rel. Pacific Bridge Co. v. Washington Toll Bridge Authority, 8 Wash.2d 337 , 112 P.2d 135 (1941), where, after construction of a bridge across Puget ⁷⁴⁷ Sound was completed, but before final payment was tendered, the bridge collapsed. The Authority’s bonding company required that the Authority not make the final payment.

The contractor successfully filed a petition for a writ of mandamus that included counsel fees as damages. Contrary holdings include the case of Wayne Township Bd. of Auditors v. Vogel, 68 Ill.App.3d 714 , 24 Ill.Dec. 887 , 386 N.E.2d 91 (Ct.1979), where an auditor filed a petition for a writ of mandamus against Vogel, the Township’s Supervisor of General Assistance, seeking that he produce records to which the auditor was entitled. Vogel was ordered to produce the records and pay the auditor’s attorney’s fees of $3,682, the mandamus statute’s damages provision having been interpreted to be broad enough to include attorney’s fees. The statute at issue, in relevant part, provided: “If judgment is given for the petitioner he shall recover his damages and costs, as a peremptory writ of mandamus shall be granted.” Id. 24 Ill.Dec. at 890 , 386 N.E.2d at 94 .

Quoting from a prior case, People ex rel. Henderson v. Redfern, 104 Ill.App.2d 132 , 243 N.E.2d 252 (Ct.1968), the appellate court noted: “Consideration of ... attorneys’ fees is permissible only where the statute specifically allows their assessment and we may not judicially enlarge the phrase ‘costs of the prosecution’ to include such expense.” Vogel, 24 Ill.Dec. at 890-91 , 386