APPEAL FROM THE SEBASTIAN COUNTY CIRCUIT COURT, FORT SMITH DISTRICT. NO. CV-2010-478. HONORABLE J. MICHAEL, FITZHUGH, JUDGE.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Marshall S. Ney and Holly M. Lar, for appellant.
Daily & Woods, PLLC, by: Jerry L. Canfield and Douglas M. Carson, for appellee.
BILL H. WALMSLEY, Judge. GLOVER and VAUGHT, JJ., agree.
BILL H. WALMSLEY, Judge
This dispute between appellant Southern Building Services, Inc., and the City of Fort Smith (the " City" ) returns to our court. See S. Bldg. Servs., Inc. v. City of Fort Smith, 2013 Ark.App. 306, 427 S.W.3d 763 ( Southern I ). The issues in this appeal are (1) determining the " prevailing party" for purposes of an award of attorney's fees and (2) entitlement to prejudgment interest. Southern argues that the circuit court erred in finding that the City was the prevailing party and awarding attorney's fees to the City. Southern also asserts that it is entitled to prejudgment interest on the funds owed to it by the City. We agree that Southern is the prevailing party and that it is entitled to prejudgment interest. Accordingly, we reverse and remand for further proceedings consistent with this opinion.
The facts of this case are set out in detail in Southern I. Briefly, this case involves a dispute between Southern and the City over Southern's failure to complete a construction project for the City. After the City terminated the contract for not timely completing the work, Southern filed suit for the remaining $183,701.22 that it claimed it was owed under the contract and for its attorney's fees. The City counterclaimed for liquidated damages and prejudgment interest it claimed under the contract.
After a bench trial, the circuit court awarded the City $134,250 in liquidated damages for Southern's failure to timely achieve substantial completion of the contract and 6% prejudgment interest. It also awarded the City $30,999, representing the City's costs to complete the project, and $51,262 in attorney's fees. The court denied the City's claim for liquidated damages based on Southern's failure to achieve final completion of the contract. There was no mention of Southern's claim for the $183,701. Southern appealed, and the City cross-appealed.
We affirmed the liquidated-damages award to the City because Southern did not achieve substantial completion; however, we found that the circuit court erred in awarding prejudgment interest from June 18, 2008. Southern I, at 8, 427 S.W.3d at 767-68. We also remanded to the circuit court to apply a set-off of $183,701, representing the sum due Southern against the $134,250 awarded to the City because the City admitted that it had possession of the funds that were due Southern since 2008. Id. We affirmed the cost-of-completion-damages award to the City. Southern I, at 9, 427 S.W.3d at 768. However, we vacated the award of attorney's fees, stating that the circuit court could redetermine who the prevailing party was on remand. Southern I, at 10, 427 S.W.3d at 768. On the City's cross-appeal, we held that the circuit court did not err in denying the City's claim for liquidated damages for Southern's failure to achieve final completion of the contract work because the City failed to mitigate its damages. Southern I, at 10-11, 427 S.W.3d at 769. The City filed a petition for review in the supreme court, which was denied on September 12, 2013.
On remand, Southern filed a motion seeking attorney's fees and prejudgment interest. In its supporting brief, Southern asserted that it was the prevailing party on the basis that, after applying the set-off, it was still owed money. Southern cited Marcum v. Wengert, 344 Ark. 153, 40 S.W.3d 230 (2001), as its primary authority. Southern also sought prejudgment interest accrued on the $183,701.22 since 2008.
The City renewed its motion for attorney's fees and responded to Southern's motion for fees and prejudgment interest. In its motion and supporting brief, the City acknowledged that, after applying the set-off, Southern was entitled to $18,451.26. The City also sought its original attorney's fees of $51,262. The City argued that it had successfully reduced Southern's claim by 90%, from $183,701.22 to $18,451.26. Ultimately, the City claimed that it was the prevailing party and sought a judgment in the amount of $32,810.74, representing the City's recovery of liquidated damages, completion damages, and ...