C & L Enterprises Inc. v. Citizen Band Potawatomi Tribe of Oklahoma , 73 O.B.A.J. 3612 ( 2002 )

OPINION

WATT, Viee Chief Justice.

T1 This appeal arises out of a roofing contract entered into in 1998 between plaintiff contractor, C & L Enterprises, Inc., and defendant, Citizen Potawatomi Tribe of Oklahoma. The roofing contract provided that any dispute between the parties would be resolved by arbitration. The contract also provided that construction was not to begin until "notice to proceed" was issued by the Tribe. The Tribe never issued a notice to proceed but, instead, re-let the contract to a new bidder using different specifications. In 1995, the contractor commenced the arbitration process based on its claim that the Tribe had breached the contract. The Tribe declined to participate in arbitration on the merits but did write letters to the American Arbitration Association, which was handling the arbitration. The Tribe claimed that the Tribe was not subject to the arbitration provision of the roofing contract because it was a sovereign Indian tribe and, therefore, immune from suit.

1 2 On June 30, 1995, the arbitrator awarded the contractor $25,400.00 in damages. The arbitrator also awarded the contractor attorneys' fees of $2,230.00, although the contract did not provide for such fees and the arbitrator's award did not explain why the arbitrator had awarded attorneys' fees.

3 The contractor brought suit in the District Court of Oklahoma County to confirm the arbitrator's award on August 7, 1995. The Tribe moved to dismiss the contractor's suit on the same grounds it had presented during the arbitration proceeding, tribal immunity, but the trial court denied its motion. Onee again, the Tribe declined to participate on the merits and the trial court entered judgment confirming the arbitrator's award, plus "a reasonable attorneys' fee to be determined upon the application of plaintiff." The trial court's judgment did not state its grounds for ordering attorneys' fees.

T4 The Tribe appealed the district court's judgment confirming the arbitration award, including the attorneys' fee award. The opinion of the Court of Civil Appeals before us today is the third opinion to be promulgated in this matter, although no mandate has ever been sent to the trial court. The first Court of Civil Appeals opinion, filed November 5, 1996, affirmed the trial court. That opinion was vacated and the matter remanded by the United States Supreme Court for further consideration of the issue of the Tribe's immunity by judgment dated June 1, 1998. We had granted the contractor's motion for appeal related attorneys' fees on January 27, 1997. Nevertheless, neither our order nor the Court of Civil Appeals' opinion ever became final, as we granted the Tribe's motion to stay the effectiveness of the mandate after the United States Supreme Court granted certiorari. We withdrew the mandate to the first Court of Civil Appeals opinion after the United States Supreme Court reversed that opinion.

T5 The second Court of Civil Appeals opinion, dated February 8, 2000, reversed the trial court judgment and held for the Tribe on the ground that the Tribe had not waived its sovereign immunity from suit,. 'We denied certiorari and issued a mandate to the second Court of Civil Appeals opinion, which, had it become final, would have reversed the trial court judgment and held for the Tribe on all counts, including the attorneys' fees issue. We stayed the effectiveness of our mandate to the second Court of Civil Appeals opinion, however, because the United States Supreme Court again granted certiorari. On April 30, 2001, the United States Supreme Court reversed the judgment and remanded the matter, based on its finding that the Tribe had waived its sovereign immunity when the Tribe consented to arbitration under the terms of its contract with the contractor. We withdrew our mandate to the second Court of Civil Appeals opinion after the United States Supreme Court reversed the judgment.

T6 After the second reversal by the United States Supreme Court, the Court of Civil Appeals issued a third opinion, which affirmed the trial court's judgment, including attorneys' fees. We granted certiorari to the third Court of Civil Appeals opinion on April 29, 2002. As indicated, the mandates to the two earlier Court of Civil Appeals opinions were both withdrawn. Thus, neither opinion became final.

T7 The Tribe complained about the attorneys' fee award in its opening appellate brief, filed in May 1996, but it did not urge the inapplicability of 12 O.S. § 986. For the reasons set out in this opinion, we hold that the record reflects that the contractor is not entitled to attorneys' fees under § 986, or on any other basis, because the contractor did not furnish "labor or materials" for which it had not been paid and the contract did not provide for attorneys' fees. The contractor moved for attorneys' fees on November 19, 2001, following the Court of Civil Appeals' third opinion. On December 4, 2001 the Tribe filed a response in which it did urge that the contractor's failure to have actually furnished labor or materials for which it had not been paid made § 936 inapplicable.

ISSUES

T8 Two issues are presented here:

I.

Does the Tribe have a due process right to have this matter remanded to the trial court to allow the Tribe to present evidence in support of its claim that a "valid contract" did not exist between the parties?

IL

Has the Tribe lost its right to claim that the contractor is not entitled to attorneys' fees under § 986 because the Tribe is prohibited from doing so under the "law of the case" doctrine?

We answer "no" to both Issues. -

DISCUSSION

I.

19 The Tribe claims that the arbitration award was entered by "default." Thus, argues the Tribe, it is entitled to have the matter remanded to the trial court for the purpose of allowing it to present evidence. We disagree, because neither the arbitration award nor the district court proceeding in which the arbitration award was confirmed was entered by default. The Tribe responded in writing to the contractor's demand for arbitration and asserted two defenses, the same defenses they raise here: (1) that the contract was not valid because it had not been approved pursuant to 25 U.S.C. § 81; and (2) that the contract was not binding on the Tribe because it had not been signed "with appropriate authorization under the Potawatomi Constitution." The Tribe, however, made a considered decision not to participate in the trial on the merits either in the arbitration or in the confirmation proceeding. Further, the record establishes that the contractor was required by the arbitrator to establish its claim through the submission of evidence, as mandated by the arbitration rules, and did so. Thus, it is clear that the Tribe did not have judgment entered against it "by default."

T 10 The Tribe claims that the contractor was improperly allowed to rely on inadequate proof in support of the contractor's contention that there was no "valid contract." In support of this claim the Tribe claims that it was denied its right to due process and relies on Eagle-Picher Mining & Smelting Co. v. Layton, 1938 OK 222, 77 P.2d 1137; Clark v. Board of Education, 2001 OK 56 T 8, 32 P.3d 851; Shamblin v. Beasley, 1998 OK 88, 967 P.2d 1200; Cate v. Archon Oil Company, Inc., 1985 OK 15, 695 P.2d 1352; Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); Shaffer v. Jeffery, 1996 OK 47, 915 P.2d 910; Burroughs v. Bob Martin Corporation, 1975 OK 80, 586 P.2d 339; and Sandusky v. Graham and Associates, Inc., 1988 OK CIV APP 14, 766 P.2d 370.

{11 The foregoing cases do not support the Tribe's claim that it was deprived of its right to due process, as none of the cited cases involved a procedural situation at all similar to that presented here. For example, in Eagle-Picher this Court reversed a jury verdict because of an erroneous instruction that placed the burden of proof on the defendant rather than the plaintiff, Further, the defendant fully participated in the trial. Thus, we fail to see the relevance of Hagle-Picher to this appeal.

112 Similarly, Clark Shamblin, Cate, Mathews, Shaffer, Burroughs, and Sandusky fail to support the Tribe's position. In Clark, we reversed the trial court for having failed to give the plaintiff an opportunity to have her motion to disqualify the trial judge heard and decided. In Shamblin, there was no hearing only because the trial court granted summary judgment, not because a party declined to participate. In Cate, we reversed an order confirming a sheriff's sale of an oil and gas lease because the only notice given to the owner of the lease had been by publication rather than by mail. In Mathews, the U.S. Supreme Court held that a recipient of Social Security disability benefits, whose benefits had been terminated, had no constitutional right to a hearing as a prerequisite to the termination of his benefits. In Shaffer, the trial court's judgment was reversed because it dismissed plaintiff's petition, rather than treating it as a motion to compel arbitration. In Burroughs, a trial court order setting aside default judgment on the ground that defendant had been prevented from appearing and defending due to "unavoidable casualty and misfortune" was affirmed. Finally, in Sandusky, the court reversed a summary judgment, which the trial court had granted after holding a hearing, although the appellant had not been given notice of the hearing.

T 13 It is clear that none of the foregoing cases involved a situation similar to the pivotal issue here: whether the decision of the Tribe not to participate on the merits nevertheless deprived it its right to present a defense. Because the Tribe was given a right to present evidence both before the arbitrator and in the trial court but voluntarily declined to do so, we hold that neither the arbitrator's award nor the trial court's judgment confirming the award can be said to have been entered by "default."

114 We are buttressed in our conclusion because the Tribe has not convincingly demonstrated that the contract was invalid. The Tribe argues generally that the contractor's petition created an "ambiguity" as to whether the contract with the Tribe was valid under federal law and whether the Tribe officials who signed it had "apparent authority" to do so. We find this argument unconvincing for two reasons: First, the Tribe does not dispute either the terms of the contract or that Tribe officials executed it. Hence, the contractor's proof of the contract made a prima facie case that the contract was valid. Second, the Tribe has not called to our attention any specific facts, which, even if it was given the opportunity to prove them, would relieve it of liability under the contract's terms.

15 The Tribe voluntarily declined to present evidence in its defense either before the arbitrator or in the trial court. Further, the Tribe has not convincingly demonstrated that, even if it were allowed to present proof of the invalidity of the contract, it would be entitled to prevail on the issue. For these reasons we hold that the Tribe has no right, at this late date, to present evidence disputing the validity of the contract.

IL

116 The Tribe claims that it should be relieved of the obligation to pay the contractor's attorneys' fees because such fees are not authorized under 12 0.8.2001 § 936.¹ We agree. It is undisputed that the contractor furnished neither labor nor services because of the Tribe's repudiation of the contract. In Russell v. Flanagan, 1975 OK 173, 544 P.2d 510, we held that § 936 authorizes attorneys' fees to the prevailing party in a suit on a contract for labor or services only where the plaintiff actually performed labor or furnished services. We have followed Russell in many cases. See, for example, Ferrell Construction Co., Inc. v. Russell Creek Coal Co., 1982 OK 24, 645 P.2d 1005; Kay v. Venesuelan Sun Oil Co., 1991 OK 16, 806 P.2d 648, and the additional cases cited for the proposition in Kay.

17 In its answer to the contractor's petition for certiorari, the contractor does not resist the Tribe's argument that § 986 does not authorize the award of attorneys' fees where, as here, the prevailing party performed no labor or services. Instead, the contractor urges us to ignore the inapplicability of § 986 because the Tribe failed to raise the issue in the trial court, or on appeal until after the third Court of Civil Appeals opinion was filed. Contractor claims that the affirmation of the attorneys' fee award in the first Court of Civil Appeals opinion and our order granting appeal related attorneys' fees bars the Tribe from asserting that such fees are not authorized under § 986 under the "law of the case" doctrine. We disagree.

1 18 The contractor relies on Morrow Development Corp. v. American Bank and Trust Co., 1994 OK 26, 875 P.2d 411 for the proposition that the "law of the case" doctrine bars the Tribe from relying on the inapplicability of § 986. In Morrow the plaintiffs failed to appeal from a jury's resolution of a disputed fact issue, that plaintiffs had entered into a valid contract for a deed in lieu of foreclosure with defendant bank. We held that plaintiffs' failure to appeal on this score barred them, under the "law of the case" doctrine, from asserting a right to tort damages against the bank. We.so held because the law bars any actions brought against a party to enforce its rights under a valid settlement contract.

119 Here, in contrast to Morrow, the undisputed facts show that the contractor was not entitled to the relief the trial court granted it, an attorneys' fee under § 986. Nevertheless, the contractor urges that the Tribe should have no right to defend against the contractor's § 986 attorneys' fee claim, although the contractor is clearly not entitled to such a fee under applicable law. Further, the Tribe did resist the contractor's attorneys' fee claim (although not on the ground that § 936 did not apply) and the Court of Civil Appeals' opinions and this Court's orders awarding the contractor attorneys' fees mever became final. Because of the lack of finality of the opinions and the orders the contractor relies on, the "law of the case" doctrine does not apply. Not until a final mandate stemming from appellate opinion and orders is issued and that mandate is spread of record does the "law of the case" apply. See Pyle v. Pennington Grocery Co., 1940 OK 176 10, 101 P.2d 847, in which the syllabus by the Court provided:

Where a cause has been presented to the trial court and the issues therein determined, and an appeal has been prosecuted to the Supreme Court and the mandate issued determining the controversy, it is the duty of the trial court to spread the mandate of record. When the mandate has been spread of record in accordance with the directions of the opinion, the law on appeal becomes the law of the case in all subsequent stages, and where the opinion has fully determined all of the issues presented in the trial of the cause and judgment has been entered in accordance with the opinion, there is nothing further to litigate, and the appeal from the order spreading the mandate of record will be dismissed.

[Emphasis added.]

T20 Even in cases in which a final mandate has issued and been spread of record, we have recognized that the law of the case doctrine may not be applied if,

. the Court is satisfied that gross or manifest injustice has been done, or that the mischief to be cured far outweighs any injury that may be done by overruling the prior opinion.

Cavett v. Peterson, 1984 OK 59 ¶ 14, 688 P.2d 52, quoting with approval, Severson v. Roberts, 1946 OK 94 ¶ 6, 168 P.2d 615. We hold that this is such a case. As discussed above, our jurisprudence stands for the proposition that attorneys' fees are not allowable under 12 0.8. § 936 where, as here, no labor or materials have been furnished under a contract for labor or materials.²

121 We conclude that to use the law of the case doctrine to impose attorneys' fees on the Tribe here, where they are clearly not authorized by law, would perpetrate a "gross or manifest injustice." Cavett v. Peterson, 1984 OK 59 at ¶ 14, 688 P.2d 52. We are buttressed in our conclusion by the fact that the attorneys' fee issue was an adjunct to the bitterly fought sovereign immunity issue, which has only now been finally decided. The contractor has demonstrated no prejudice resulting from the Tribe's failure to properly frame its defense to the attorneys' fee issue at an earlier time. Attorneys' fees follow only from a final judgment and the judgment upon which the contractor relies to support attorneys' fees is not yet final. Thus, only now are attorneys' fees the pivotal issue in the case.

CONCLUSION

1 22 The Tribe voluntarily declined to present evidence in its defense on the merits of its liability under the construction contract, either before the arbitrator or in the trial court. The Tribe has not convincingly demonstrated that, even if it were allowed to present proof of the invalidity of the contract, it would be entitled to prevail on the issue. Thus, the Tribe has no right, at this late date, to present evidence disputing the validity of the contract.

$23 The "law of the case" doctrine is inapplicable here, as there was never a final enforceable judgment spread of record below, as evidenced by a mandate from this Court. Further, Oklahoma law clearly prohibits an award of attorneys' fees under 12 0.8.2001 § 936 for nonpayment under a contract for labor or services where, as here, no labor or services were actually furnished under the contract. The contractor has shown no prejudice arising from the Tribe's failure to raise its § 936 defense at an earlier time. Under the cireumstances, to allow the contractor § 936 attorneys' fees would do "gross or manifest injustice" to the Tribe's rights.

CERTIORARI PREVIOUSLY GRANTED, COURT OF CIVIL APPEALS OPINION VACATED, JUDGMENT AFFIRMED IN PART AND REVERSED IN PART.

HARGRAVE, C.J., HODGES, LAVENDER, KAUGER, SUMMERS, BOUDREAU, JJ., concur. WINCHESTER, J., concurs in Part I; dissents from Part IL. OPALA, J., dissents.

1 . Title 12 0.$.2001 § 936 provides:

In any civil action to recover on an open account, a statement of account, account stated, note, bill, negotiable instrument, or contract relating to the purchase or sale of goods, wares, or merchandise, or for labor or services, unless otherwise provided by law or the contract which is the subject to the action, the prevailing party shall be allowed a reasonable attorney fee to be set by the court, to be taxed and collected as costs.

2 . It is undisputed that the contractor did no work under the terms of the roofing contract. The contractor claims, however, (without citation of supporting authority) that it should be relieved of the application of the rule that attorneys' fees are not awardable under § 936 because it had expended labor and expense in preparation for commencing the contract. We find the contractor's argument on this score unconvincing, as the labor and expenses the contractor incurred in preparing to execute the contract were expended for the contractor's benefit and did not directly benefit the Tribe. These preliminary expenses were clearly not compensable under the contract and so do not create a right to attorneys' fees under that contract.