Court: Court of Appeals of Georgia; July 7, 1995; Georgia; State Appellate Court
Citadel Corporation initiated a legal action against Sun Chemical Corporation to recover funds from construction contracts for building a manufacturing plant and administration building. Sun Chemical counterclaimed, alleging breach of contract due to delays, defective floor coating, and damage to inventory, specifically XLR plates, which they claimed were damaged by defective roofing. In response, Citadel filed a third-party complaint against its roofing subcontractor, All-South Subcontractors, Inc., seeking indemnification for damages and attorney fees based on their subcontract's indemnification clause.
After a jury trial, the jury found that Citadel was entitled to damages against Sun Chemical, while Sun Chemical received no damages on its counterclaim, and Citadel also received no damages on its indemnification claim against All-South. Citadel appealed, arguing that the jury's denial of attorney fees was legally unsupported, claiming entitlement to reimbursements for attorney costs based on evidence presented. All-South countered in its cross-appeal, asserting that Citadel failed to demonstrate a specific entitlement to attorney fees under the indemnity agreement. The court noted that Citadel's reliance on billing statements without supporting testimony rendered the evidence hearsay, lacking probative value to establish the reasonableness of attorney fees claimed.
Citadel's billing statements, even if admissible, failed to differentiate between costs incurred for defending the XLR-plate counterclaim and those for enforcing the indemnity agreement. The indemnity clause in the roofing subcontract mandates that All-South indemnify Citadel for claims related to All-South's work but does not allow recovery of attorney fees for enforcing the indemnity agreement itself. Therefore, Citadel cannot recover these costs. To qualify for recovery under the agreement, Citadel must demonstrate that claimed fees are reasonable and provide detailed evidence to distinguish between recoverable and nonrecoverable fees. Attorney Ira Smotherman testified that he reviewed the billing statements and deemed the fees reasonable for construction litigation; however, he acknowledged failing to separate the fees related to the XLR-plate counterclaim from those for pursuing a third-party claim against All-South. Consequently, the jury lacked the evidence needed to determine the appropriate allocation of attorney fees, leading to a verdict of zero damages for Citadel. The appellate court affirmed this verdict, deeming it not erroneous. The court also noted that it did not address All-South's argument regarding the enforceability of the indemnity agreement under public policy since the primary issues had been resolved.
