Jury Finds City Acted in Bad Faith and Contractor Still Pays His Own Attorney’s Fees

Mar 21, 2017 | News, SJCC

Executive Summary:  Kevin McKeon, Senior Partner at Watt Tieder (McLean, Virginia), reported in their firm’s Fall 2016 newsletter on an interesting case in the Pennsylvania Supreme Court.  Despite the jury finding the City of Allentown acted in bad faith, the trial judge, at her discretion as permitted by law, did not award attorney’s fees and penalty to the Contractor when said award was clearly permissible (and maybe even encouraged).

Commonwealth court tried to do the right thing.  The City of Allentown knew about the possibility of contaminated soil, but did not disclose it to the Contractor.  That was the City’s sin.  And the jury called them on it.

I’m sure when A. Scott Enterprises, Inc. (Contractor) heard at trial that the jury found the City acted in bad faith, they were thinking that reimbursement for attorney’s fees and penalties would be easy.  After all, the law reads, in part (from Mr. McKeon):

Section 3935 of the Commonwealth Procurement Code. Section 3935(a) indicates that a court “may award” a 1% per month penalty on “the amount that was withheld in bad faith,” while Section 3935(b) indicates that the prevailing party “may be awarded a reasonable attorney fee” if the government “acted in bad faith.”

When the trial judge heard from the jury that the City acted in bad faith, she made the decision not to award attorney’s fees and penalties to the Contractor.

The Contractor was likely out of his mind and filed an appeal.  The appellate court made a fantastic simple and logical statement:

The purpose of the Procurement code is to “level the playing field” between   government agencies and contractors. It advances this goal by requiring a   government agency that has acted in bad faith to pay the contractor’s legal costs, as well as an interest penalty. Otherwise, the finding of bad faith is a meaningless exercise with no consequence for the government agency found to have acted in bad faith.

Unfortunately for the Contractor, this case was already concurrently in front of the Pennsylvania Supreme Court and their final decision was that awarding fees and penalties to the contractor was not mandatory; therefore, they overruled the appellate court which resulted in the upholding of the decision by the trial court judge.

Conclusion.  The jury found that the City of Allentown acted in bad faith.  The law allowed awarding of attorney’s fees and penalties to the party who behaved with integrity.  The trial judge determined that the honest party should not be reimbursed for attorney’s fees and penalties.

The City of Allentown got away with one.  Somehow they avoided a bullet which was aimed right between their eyes.

Although I don’t have the whole story, it sure seems shameful on the trial judge’s part.

My story.  I can’t really say that I’ve ever been seemingly unfairly treated by a judge, but I did have a mediator (an attorney in Seattle) look me straight in the face during a mediation negotiation and tell me exactly these words:  “sorry you’re getting &*cked here Scott”.

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