Noyes Air Conditioning Contractors, Inc. v. Wilson Towers Ltd. Partnership

JAMES S. GETTY, Judge (retired), Specially Assigned. At the conclusion of a court trial in the Circuit Court for Montgomery County, the trial judge awarded the appellant a judgment in the full amount claimed under two contracts with the appellee for the replacement of air conditioning units in an apartment complex. Appellant’s appeal is based upon the trial judge’s refusal to award attorney’s fees, prejudgment interest, and costs, which appellant claims were expressly provided for ²⁸⁶ in the two contracts. By counterclaim, appellee asserted that the contracts were procured by appellant’s fraud.

Background From the record, we set forth the chronology of events which, for the most part, are not in dispute. In 1994 and 1995 PEPCO sought to reduce excessive power loads by inducing owners of large facilities to replace older, less efficient air conditioning equipment. The users who participated in the program received a rebate from PEPCO equal to the amount by which the total cost of replacement exceeded the cost of rebuilding the units. Noyes Air Conditioning Contractors, Inc., the appellant herein, was one of the contractors who participated in the replacement program.

Wilson Towers Limited Partnership, the appellee, owns and operates a large apartment complex in Oxen Hills. In the spring of 1994, Noyes advised Wilson of the PEPCO “chiller” retirement program. Thereafter, Noyes and Wilson entered into two substantially identical contracts for the replacement of two chillers in the Wilson complex. Typically, the contractor assisted the property owner in preparing the rebate application and submitting it to PEPCO.

Noyes figured the rebate on one of the chillers to be $59,250 and the other to be $55,500. The rebate applications were not accepted by PEPCO, because the chillers called for in the application would not produce sufficient savings to warrant approval. Noyes revised and resubmitted the application, which included the installation of more expensive, efficient chillers. In August 1994, Noyes submitted two contracts to Wilson reflecting the need for the higher quality chillers.

The rebate data, however, remained unchanged from the first application. Each contract contained the following language on the first page: PLEASE NOTE: A. This proposal is contingent on acceptance by PEPCO for the early chiller retirement program and will not be ²⁸⁷ binding until this approval is obtained. Amounts quoted as rebates are estimates and are subject to approval by PEPCO, with final payment for the project being the ultimate responsibility of Wilson Towers Apartments. On page two of the quotation, the following figures appear as to each contract: PRICE GOOD FOR 30-DAYS INSTALLATION COST (REBATE CALCULATIONS) #2 INSTALLED COST OF NEW CHILLERS $82,750.00 Less Resale Value of Refrigerant 50.00 Less Rebuild Cost of Existing Chiller 5,200.00 PEPCO REBATE $77,500.00 OWNERS COST Installed cost-less PEPCO rebate = OWNERS COST $82,750.00 — $77,5400.00 = $ 5,250.00 On the second contract, the figures are as follows: # 3 Cost etc. $82,750.00 Resale-etc. 50.00 Rebuild etc. 8,950.00 PEPCO REBATE $73,750.00 OWNERS COST OWNERS COST $82,750.00 $ 9,000.00 — $73,750.00 = On or about August 31, 1994, PEPCO approved the application for rebates but reduced the amount allowable on each contract as follows: #2 $ 77,500.00 to $51,603.22 #3 $ 73,750.00 to $44,000.00 $151,250.00 3.22 $55,656.78 This information was submitted by PEPCO, by letter on August 31, to Wilson’s property manager.

The property manager notified Noyes of the rebate approval from PEPCO, but he failed to mention that PEPCO reduced the amount of the rebate it would allow on each chiller. The contracts to install the chillers were executed in early 1995, and Noyes proceeded with the installation. Wilson ²⁸⁸ assigned to Noyes the right to reeeive the rebates. In June 1995, Noyes received checks from PEPCO for the amounts of the rebates.

According to Noyes, that was the first knowledge the company had of the amounts approved by PEPCO. Noyes applied the amount of the rebates to the contract amount and billed Wilson for the difference after subtracting the “Owner’s Costs” that Wilson paid previously. The litigation ensued when Wilson refused to pay the additional amounts claimed by Noyes. Appellant argues that the contract expressly provided for the payment of prejudgment interest, attorney’s fees, and court costs.

The trial court reasoned that each contract provided a total price for installing a chiller and that Wilson was obligated to pay the difference between that price and the rebate received from PEPCO. The court stated: So, the total amount is $55,656.78, and I am not awarding any attorney’s fees or interests or costs. Whether the court, by using the term “interests,” meant to exclude both prejudgment and post-judgment interest is unclear. The court apparently believed that an award of attorney’s fees and, presumably, interest and costs, would amount to a sanction which the court did not impose.

That assumption is based upon the court’s comment that “If I gave you attorney’s fees, it would be because I would find that this defendant had no basis to defend this case.” The issue of fees and costs being awards as a contractual right does not appear to have been considered by the court. The contractual provision relied on by Noyes states: All work will be completed in a workmanlike manner according to standard practices. It is agreed the contractor will retain title to any equipment and/or material furnished until payment is made in full. If payment is not made as agreed, contractor has the right to remove same and be held harmless for any damages resulting from the removal of equipment and/or material.

A one and one-half percentage (Vk%) finance charge per month will be added to Past Due accounts. Customer agrees to pay all reasonable collection ²⁸⁹ fees, attorney’s fees and court costs if such services are required and judgment is made against customer. Noyes raises six issues which can be condensed into whether a plaintiff seeking a liquidated sum under a contract is entitled to collection fees, attorney’s fees and costs when the contract provides for the payment of such expenses by the party in default. The remaining issues relate to a right to prejudgment interest, and to what extent the court may exercise discretion in awarding or denying collection fees, attorney’s fees, and costs incurred in the collection thereof.

Discussion What is allowable as a matter of law or what is allowable as a matter of discretion by the court in awarding damages does not always present a bright line distinction. On the one hand, parties have the right to make their contracts in what form they please, provided they consist with the law of the land, and it is the duty of the courts to construe them, if possible, as to maintain them in their integrity and entirety. Mortgage Investors of Washington v. Citizens Bank & Trust Co., 29 Md.App. 591, 594 , 349 A.2d 647 (1976), aff'd, 278 Md. 505, 509 , 366 A.2d 47 (1976) (quoting Maryland Fertilizing and Manufacturing Company v. Newman, 60 Md. 584, 588 (1883)). Conversely, and equally important, is the right of the court generally to protect the interests of the parties and others who may be affected by the resolution of the issues raised.

In Robert C. Herd Company v. Krawill Machinery Carp., 256 F.2d 946 , 952 (1958) (Fourth Cir. Md.), Chief Judge Sobeloff addressed the interest question as follows: Maryland recognizes a difference ... between suit on a contract to pay money on a day certain, as in the case of a bill of exchange or promissory note, or a contract for the payment of interest, in which cases the interest is due as a matter of right; and others in which the allowance of interest is ordinarily discretionary, “according to the equity ²⁹⁰ and justice appearing between the parties on a consideration of all the circumstances of the particular case.” The Court, in Herd, supra, acknowledged that the gulf between the two categories, where interest is allowed as a matter of right or where it is allowed as a matter of discretion, continues to narrow due to the tendency of the courts to treat interest as part of the just compensation due an injured party. As far back as Corner v. Mackintosh, 48 Md. 374, 389 (1878), a suit for trespass to chattels, the Court of Appeals said: The plaintiff is entitled to recover all the legal damages which he has sustained; and nothing less than the value of the property, with interest on the amount, would be legal or just compensation. Thus, where recovery is for elements of damage insusceptible of precise calculation, the award is presumed to be full compensation without an additional allowance of interest, but where valuation can be arrived at reasonably, full compensation is not rendered by granting the value of the property only and, in those cases, interest is allowable. In I.W. Berman Prop. v. Porter Bros., 276 Md. 1 , 344 A.2d 65 (1975), the Court of Appeals upheld the discretionary award of prejudgment interest to a contractor who had completed construction of an addition to a shopping center.

Under the terms of the contract between the parties, the contractor submitted monthly bills to the architect detailing the costs for the previous month. Upon approval by the architect, the contractor was reimbursed by the owner. Upon completion of the project, the contractor submitted a bill for final payment, which the owner refused to pay. The Court of Appeals held that the trial court could consider that under the terms of the contract the sums