Whiting-Turner Contracting Co. v. Guarantee Company of North America USA

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
March 21, 2019
2019COA44
No. 17CA2160, Whiting-Turner v. Guarantee Co. of N. Am. USA
— Construction Law — Suretyship and Guaranty —
Performance Bonds; Contracts — Condition Precedent
For the first time in Colorado, a division of the court of appeals
applies to surety bonds cases the contract law principles governing
a party’s satisfaction of conditions precedent. In addition, the
division considers the proper calculation of the “Balance of the
Contract Price,” which is a key term in the standard form of surety
bond used throughout the construction industry. The division
affirms the trial court’s finding that the general contractor satisfied
the conditions precedent in the surety bond and thus triggered the
surety’s obligation to perform.
COLORADO COURT OF APPEALS 2019COA44
Court of Appeals No. 17CA2160
City and County of Denver District Court No. 14CV34166
Honorable Andrew P. McCallin, Judge
Whiting-Turner Contracting Company,
Third-Party Plaintiff-Appellee,
v.
Guarantee Company of North America USA,
Third-Party Defendant-Appellant.
JUDGMENT AFFIRMED
Division II
Opinion by JUDGE LIPINSKY
Dailey and Furman, JJ., concur
Announced March 21, 2019
Husch Blackwell LLP, Jeffrey D. Whitney, Jeffrey M. Van der Veer, Denver,
Colorado, for Third-Party Plaintiff-Appellee
Woods & Aitken LLP, Kory D. George, Colin P. Baumchen, Denver, Colorado,
for Third-Party Defendant-Appellant
¶1 Performance bonds, like other forms of surety bonds, are
critical to managing the risk inherent in construction projects. If a
subcontractor fails to complete its work at a construction site, the
surety that underwrote the performance bond assumes
responsibility for the subcontractor’s obligations. Without
performance bonds, a construction project could come to a halt if a
single subcontractor walked off the job.
¶2 Performance bonds specify the actions that will trigger the
surety’s obligations. In this appeal, a surety, Guarantee Company
of North America USA (GCNA), and a general contractor, Whiting-
Turner Contracting Company, dispute whether Whiting-Turner
triggered GCNA’s obligations under a performance bond after a
subcontractor, Klempco Construction (2013) Inc., stopped work at
Whiting-Turner’s construction project. The parties’ disagreement
centers on whether Whiting-Turner paid GCNA the “Balance of the
Contract Price,” a key term in the performance bond, thereby
satisfying one of the bond’s conditions precedent.
¶3 Following a bench trial, the trial court entered judgment in
favor of Whiting-Turner and against GCNA. The trial court found
1
that Whiting-Turner had complied with the condition precedent set
forth in section 3.3 of the performance bond and that GCNA had
failed to perform its obligations under the bond.
¶4 On appeal, GCNA contends that the trial court applied the
wrong legal standard in determining whether Whiting-Turner
complied with section 3.3 of the performance bond, erred in finding
that GCNA had waived its argument regarding Whiting-Turner’s
compliance with section 3.3, erroneously found that Whiting-Turner
satisfied the condition precedent in section 3.3, awarded duplicative
damages to Whiting-Turner, and improperly awarded attorney fees
to Whiting-Turner.
¶5 We affirm.
I. Whiting-Turner’s Disputes with Klempco and GCNA
A. Klempco Signs a Subcontract for Work at Whiting-Turner’s
Project
¶6 Whiting-Turner served as the general contractor for an office
building construction project in Denver (the Project). Whiting-
Turner and Klempco entered into an agreement (the Subcontract)
for Klempco’s construction of an anchor system at the Project’s
underground parking garage. The anchor system was necessary to
2
keep the sides of the excavated site from collapsing during the
initial phases of construction. Klempco’s work included the
installation of sprayed concrete, known as shotcrete, to support the
anchoring system. Whiting-Turner and Klempco agreed to a
Subcontract price of $1,785,783.00.
B. GCNA Provides a Performance Bond and a Payment Bond
¶7 Whiting-Turner required Klempco to furnish a performance
bond and a payment bond. (A surety that underwrites a payment
bond is obligated to pay the sub-subcontractors if the
subcontractor fails to do so.) Klempco obtained the bonds from
GCNA. The bonds, which followed American Institute of Architects
form A312, incorporated the Subcontract by reference. See 4A
Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor on
Construction Law § 12:16, Westlaw (database updated June 2018)
(explaining that the A312 surety bond is a standard form in the
construction industry).
¶8 Section 3 of the performance bond specified the three
conditions precedent that Whiting-Turner would need to satisfy to
trigger GCNA’s obligations as surety:
3
• provide notice to Klempco and GCNA that Whiting-
Turner was considering declaring Klempco in default
(section 3.1);
• declare Klempco in default, terminate the Subcontract,
and notify GCNA of these actions (section 3.2); and
• “pay the Balance of the Contract Price in accordance
with the terms of the [Subcontract] to [GCNA] or to a
contractor selected to perform the [Subcontract]”
(section 3.3).
¶9 The performance bond defined “Balance of the Contract Price”
as “[t]he total amount payable by [Whiting-Turner] to [Klempco]
under the [Subcontract] after all proper adjustments have been
made, . . . reduced by all valid and proper payments made to or on
behalf of [Klempco] under the [Subcontract].” (Emphases added.)
C. Klempco Stops Work at the Project
¶ 10 Klempco fell behind schedule almost immediately and stopped
paying its sub-subcontractors. Klempco subsequently directed
Whiting-Turner to assume responsibility for the shotcrete
4
installation and to work directly with two of Klempco’s sub-
subcontractors.
¶ 11 Whiting-Turner sent Klempco and GCNA a letter declaring
Klempco in default under the Subcontract. In the letter, Whiting-
Turner stated that Klempco was incapable of completing its work at
the Project and “is apparently unable to complete payments to its
sub-subcontractors for previously completed work, and by its own
admissions is unable to cure such default.” Whiting-Turner
requested a meeting with Klempco representatives “to discuss the
details of Klempco’s request that Whiting-Turner take over its
work.” Whiting-Turner asked GCNA to attend the meeting “to
advise Whiting-Turner on how [GCNA] wishes for Whiting-Turner to
proceed in connection with the completion of Klempco’s work and
payment of its vendors.”
¶ 12 Representatives of Whiting-Turner, Klempco, and GCNA met
on April 30, 2014, to discuss, among other issues, Klempco’s
request that Whiting-Turner take over the shotcrete work and pay
Klempco’s sub-subcontractors directly. At the meeting, Whiting-
Turner and Klempco amended the Subcontract to reduce Klempco’s
5
payment by $553,707.00 — the price of the shotcrete work.
Whiting-Turner, Klempco, and GCNA agreed that the shotcrete sub-
subcontractor would invoice Whiting-Turner directly.
¶ 13 Two days later, Klempco notified Whiting-Turner that, because
Whiting-Turner had declared Klempco in default and was refusing
to pay Klempco, Klempco would demobilize from the Project.
Whiting-Turner asked GCNA how Whiting-Turner should proceed in
light of Klempco’s decision to leave the Project. GCNA did not
respond.
D. Whiting-Turner Terminates Klempco’s Subcontract
¶ 14 Whiting-Turner terminated the Subcontract after Klempco
failed to cure its default. GCNA did not respond to Whiting-
Turner’s repeated demands that, in light of the termination of the
Subcontract, GCNA honor its obligations under the performance
bond and advise Whiting-Turner how GCNA intended to proceed.
¶ 15 On June 24, 2014, Whiting-Turner provided GCNA with its
calculation of the “Balance of the Contract Price.” Whiting-Turner
said that it had paid $1,064,919.00 of the “Balance of the Contract
Price” to Klempco and its sub-subcontractors, leaving a balance of
6
$720,819.00. Whiting-Turner deducted certain expenses from this
balance:
• $256,897.90 for Whiting-Turner’s payments to five
unpaid sub-subcontractors who had recorded, or were
threatening to record, mechanic’s liens against the
Project; and
• $553,707.00 for the shotcrete work for which Whiting-
Turner had assumed responsibility.
These adjustments resulted in a negative “Balance of the Contract
Price.”
E. The Trial Court Enters Judgment Against Klempco and GCNA
¶ 16 Klempco filed suit against Whiting-Turner claiming, among
other allegations, that Whiting-Turner had breached the
Subcontract by failing to pay sums due to Klempco. Whiting-
Turner asserted a counterclaim for breach of the Subcontract.
Whiting-Turner also filed third-party claims against GCNA for
breach of the performance bond and the payment bond.
¶ 17 GCNA argued that Whiting-Turner had failed to comply with
the condition precedent set forth in section 3.3 of the performance
7
bond and, therefore, never trigged GCNA’s obligations under the
bond. Specifically, GCNA asserted that Whiting-Turner
miscalculated the “Balance of the Contract Price” and,
consequently, failed to pay the correct sum to GCNA pursuant to
section 3.3.
¶ 18 The case proceeded to a bench trial. In its findings of fact and
conclusions of law, the trial court found that Klempco had breached
the Subcontract. In addition, the trial court found that Whiting-
Turner had complied with the condition precedent set forth in
section 3.3 of the performance bond. The trial court further found
that GCNA had breached the performance bond and the payment
bond. The trial court held that GCNA was jointly and severally
liable with Klempco for Whiting-Turner’s damages.
¶ 19 Alternatively, the trial court found that GCNA had waived its
arguments regarding Whiting-Turner’s compliance with section 3.3
by failing to respond to Whiting-Turner’s repeated requests for
guidance after Klempco stopped performing under the Subcontract.
¶ 20 The trial court found that, as a consequence of GCNA’s breach
of the performance bond, Whiting-Turner had incurred $798,248.93
8
in damages, including $124,146.95 in prejudgment interest. The
trial court calculated Whiting-Turner’s damages by first determining
how much Whiting-Turner had paid the sub-subcontractors to
complete the work specified in the Subcontract. The trial court
subtracted from this number the sum that Whiting-Turner had
agreed to pay Klempco in the original Subcontract.
¶ 21 The trial court later revised its damage calculations to reflect
two adjustments to the $798,248.93 figure: (1) a reduction of
$3,322.90 for unrecoverable overhead and (2) additional
prejudgment interest in the amount of $37,334.21. The trial court
awarded Whiting-Turner $832,260.24 in damages against Klempco
and GCNA, jointly and severally.
¶ 22 Whiting-Turner moved for an award of attorney fees and costs
against Klempco and GCNA under the Subcontract; Colorado’s
mechanic’s lien statute, section 38-22-128, C.R.S. 2018; and the
performance and payment bonds. GCNA opposed Whiting-Turner’s
request for attorney fees and argued, in the alternative, that GCNA
was liable only for those fees attributable to Whiting-Turner’s
claims against GCNA. GCNA contended that it was not liable for
9
Whiting-Turner’s fees attributable to its defenses to Klempco’s
claims, Whiting-Turner’s claims against Klempco, or Whiting-
Turner’s claim against GCNA for breach of the payment bond.
¶ 23 The trial court found that it could not apportion Whiting-
Turner’s fees among the various claims and defenses litigated in the
case, however, because “all of the claims of both parties ar[o]se out
of the same operative facts.” The trial court held Klempco and
GCNA jointly and severally liable to Whiting-Turner for $504,785.27
in attorney fees and costs and $18,990.14 in interest.
¶ 24 GCNA appeals the trial court’s post-trial rulings on damages
and attorney fees. (The trial court subsequently increased the
amount of attorney fees awarded to Whiting-Turner. GCNA did not
file an amended notice of appeal to obtain review of this decision,
however. We therefore address the two appealed orders only. See
Baldwin v. Bright Mortg. Co., 757 P.2d 1072, 1074 (Colo. 1988)
(holding that attorney fees award is separately appealable from
judgment on the merits).)
10
II. The Record Does Not Indicate that the Trial Court Applied an
Incorrect Legal Standard in Analyzing Whether Whiting-Turner
Complied with Section 3.3 of the Performance Bond
¶ 25 GCNA contends that the trial court erred in finding that
Whiting-Turner was required only to substantially comply, rather
than strictly comply, with the condition precedent set forth in
section 3.3 of the performance bond. GCNA asks us to hold that
contractors must strictly comply with the conditions precedent in a
performance bond and, therefore, reverse the trial court’s finding
that Whiting-Turner complied with section 3.3.
¶ 26 The record does not support GCNA’s contention, however.
Because the trial court did not find that Whiting-Turner only
substantially complied with section 3.3, we need not address in this
context the proper legal standard for determining whether a
contractor satisfied a condition precedent in a performance bond.
See Zingone v. Zingone, 136 Colo. 39, 43, 314 P.2d 304, 306 (1957)
(holding that appellate court may not consider a party’s version of
what transpired in the lower court that does not appear in the
record).
11
¶ 27 GCNA’s argument regarding the substantial compliance
standard rests on a single sentence in the trial court’s discussion of
Whiting-Turner’s compliance with the notice provision in the
payment bond. The trial court said that “only substantial
performance with bond notice requirements is required . . . .”
¶ 28 This is a correct statement regarding the standard for
compliance with the notice provision in a surety bond. Brighton
Sch. Dist. 27J v. Transamerica Premier Ins. Co., 923 P.2d 328, 334
(Colo. App. 1996), aff’d, 940 P.2d 348 (Colo. 1997). But this case
does not concern Whiting-Turner’s compliance with a notice
requirement.
¶ 29 GCNA does not point to anything in the record demonstrating
that the trial court found that Whiting-Turner was required only to
substantially comply with the condition precedent in section 3.3 of
the performance bond. Moreover, GCNA does not contend that the
trial court found that Whiting-Turner only substantially complied,
and did not strictly comply, with section 3.3.
¶ 30 We therefore decline to address this argument.
12
III. We Need Not Address GCNA’s Waiver Argument
¶ 31 GCNA contends that the trial court erred in finding that GCNA
waived its argument that Whiting-Turner failed to satisfy the
condition precedent set forth in section 3.3. The trial court inserted
a single sentence regarding waiver in the midst of its extensive
discussion of Whiting-Turner’s compliance with section 3.3,
however.
¶ 32 The trial court’s ruling in favor of Whiting-Turner rested not
only on waiver but also on the trial court’s thorough analysis of the
merits of Whiting-Turner’s claims. The trial court’s reference to
waiver therefore reflected, at most, an alternative basis for its
findings of fact and conclusions of law.
¶ 33 We need not address whether GCNA waived its arguments
concerning Whiting-Turner’s compliance with section 3.3 because,
as we explain in Part IV below, we agree with the trial court that
Whiting-Turner properly triggered GCNA’s obligations under the
performance bond. See Archuleta v. Gomez, 140 P.3d 281, 285
(Colo. App. 2006) (declining to address the trial court’s alternative
ruling when the record supported the trial court’s findings and
13
verdict on the claim). We therefore now turn to the merits of
GCNA’s argument regarding section 3.3.
IV. The Trial Court Did Not Err in Finding that Whiting-Turner
Satisfied the Condition Precedent Set Forth in Section 3.3 of
the Performance Bond
¶ 34 GCNA contends that the trial court erred in finding that
Whiting-Turner satisfied the condition precedent in section 3.3 of
the performance bond. GCNA asserts that Whiting-Turner did not
comply with section 3.3 because it miscalculated the “Balance of
the Contract Price” and did not pay the correct amount to GCNA.
GCNA specifically argues that Whiting-Turner improperly reduced
the “Balance of the Contract Price” by
• the amount of Whiting-Turner’s anticipated payments to
five unpaid sub-subcontractors that had recorded, or
were threatening to record, mechanic’s liens against the
Project;
• the $553,707.00 reduction in the “Balance of the
Contract Price” to which Whiting-Turner and Klempco
agreed at the April 30 meeting (which GCNA also
attended); and
14
• a back charge of $30,702.00.
Lastly, GCNA asserts that we should adopt the reasoning of an
unpublished New York state trial court decision that, according to
GCNA, supports its position that Whiting-Turner failed to comply
with section 3.3.
¶ 35 The record supports the trial court’s finding that Whiting-
Turner satisfied the condition precedent in section 3.3 of the
performance bond.
A. Standard of Review
¶ 36 We review de novo questions of law, such as the interpretation
of a provision in a surety bond. See Brighton Sch. Dist. 27J, 923
P.2d at 333. We review a court’s findings of fact for clear error. Id.
A factual finding is clearly erroneous if nothing in the record
supports it. Loveland Essential Grp., LLC v. Grommon Farms, Inc.,
251 P.3d 1109, 1117 (Colo. App. 2010).
15
B. The Trial Court Did Not Err in Finding that Whiting-Turner
Correctly Calculated the “Balance of the Contract Price”
1. Whiting-Turner Properly Deducted from the “Balance of the
Contract Price” Its Payments to the Five Unpaid Sub-
Subcontractors
¶ 37 GCNA contends that the trial court erred in finding that
Whiting-Turner properly reduced the “Balance of the Contract
Price” by the $256,897.90 that Whiting-Turner paid to the five
unpaid sub-subcontractors. We disagree.
¶ 38 The Subcontract authorized Whiting-Turner to pay Klempco’s
unpaid sub-subcontractors and to subtract those payments from
the “Balance of the Contract Price.” Under the Subcontract,
Klempco was required to “. . . take any and all necessary actions to
keep the Project free and clear of all claims for liens . . . .” If
Klempco failed to take the “necessary actions,” Whiting-Turner
could “take all actions which it deems reasonable or necessary to
protect the Project from liens and claims and the costs of any such
actions . . . shall be deducted from amounts payable by [Whiting-
Turner] to [Klempco]” under the Subcontract.
¶ 39 Despite this language, GCNA asserts that the “Balance of the
Contract Price” became fixed in place as of the moment Whiting-
16
Turner terminated the Subcontract. Therefore, according to GCNA,
Whiting-Turner’s post-termination payments to Klempco’s unpaid
sub-subcontractors, who were clamoring for payment and
threatening to record liens against the Project, could not reduce the
“Balance of the Contract Price.”
¶ 40 No language in either section 3.3 or the Subcontract barred
Whiting-Turner from reducing the “Balance of the Contract Price”
by the amount of its post-termination payments to unpaid sub-
subcontractors, however. The five sub-subcontractors had already
completed their work on the Project and had either recorded or were
threatening to record liens against the Project. Thus, Whiting-
Turner paid Klempco’s sub-subcontractors “to protect the Project
from liens and claims . . . .”
¶ 41 GCNA cites to several cases to support its assertion that none
of Whiting-Turner’s payments postdating the termination of the
Subcontract properly reduced the “Balance of the Contract Price.”
These cases do not assist GCNA, however. They hold that, when a
general contractor hires a replacement subcontractor without the
surety’s consent, the general contractor has failed to satisfy the
17
conditions precedent in the performance bond. Under those
circumstances, the general contractor cannot reduce the “Balance
of the Contract Price” by the amount of its payments to replacement
subcontractors. See LaSalle Grp., Inc. v. JST Props., L.L.C., No. 10-
14380, 2011 WL 3268099, at *6 (E.D. Mich. July 29, 2011) (“[T]he
hiring of a replacement contractor fails to satisfy the requirement of
paragraph 3.3 [of a form A312 bond].”) (emphasis added); Enter.
Capital, Inc. v. San-Gra Corp., 284 F. Supp. 2d 166, 177 (D. Mass.
2003) (explaining that the “notice requirement in the Construction
Contract exists precisely to provide the surety an opportunity to
protect itself against loss by participating in the selection of the
successor contractor”) (emphasis added); Sch. Bd. v. TIG Premier Ins.
Co., 110 F. Supp. 2d 1351, 1354 (N.D. Fla. 2000) (obligee “could not
contract with another party . . . prior to giving [the surety] notice”)
(emphasis added); Solai & Cameron, Inc. v. Plainfield Cmty. Consol.
Sch. Dist. No. 202, 871 N.E.2d 944, 954 (Ill. App. Ct. 2007)
(“[R]eplacement is a form of mitigation available only to [the surety]
under the provisions of [the performance bond].”) (emphasis added).
18
¶ 42 None of the sub-subcontractors Whiting-Turner paid was a
replacement contractor. Klempco had selected all five of the sub-
contractors. Accordingly, we conclude that the $256,897.90
Whiting-Turner paid to the five unpaid sub-subcontractors after the
termination of the Subcontract properly reduced the “Balance of the
Contract Price.” (GCNA also contends that the trial court
improperly reduced the “Balance of the Contract Price” by
$99,901.65 that Whiting-Turner paid to sub-subcontractors. The
record reflects, however, that these payments were included within
the $256,897.90 Whiting-Turner paid to the five sub-
subcontractors.)
2. Whiting-Turner Properly Subtracted from the “Balance of the
Contract Price” the $553,707.00 Reduction in Its Payment to
Klempco
¶ 43 GCNA also contends that the trial court improperly reduced
the “Balance of the Contract Price” by the $553,707.00 reduction in
the price payable to Klempco under the Subcontract for the
shotcrete work. We conclude that the trial court did not err by
reducing the “Balance of the Contract Price” by this amount.
19
¶ 44 The trial court found that, at their April 30 meeting with
GCNA, Whiting-Turner and Klempco agreed to reduce the amount
payable to Klempco by the $553,707.00 specified in the
Subcontract for the shotcrete work. Whiting-Turner advised GCNA
and Klempco in letters dated May 2, 2014, and May 9, 2014, that it
intended to incur the expense of completing the shotcrete work.
When Whiting-Turner asked GCNA in a May 2, 2014, email if it was
acceptable for Whiting-Turner to pay for the shotcrete work directly,
GCNA responded “Yes.” GCNA therefore at least tacitly consented
to reduction of the “Balance of the Contract Price” by $553,707.00.
¶ 45 Whiting-Turner and Klempco had the right to amend their
agreement memorialized in the Subcontract, and did so when they
reduced Klempco’s payment by $553,707.00. Accordingly, we
conclude that the trial court did not err in finding that Whiting-
Turner properly reduced the “Balance of the Contract Price” by the
$553,707.00 reduction in the Subcontract price.
3. Whiting-Turner Correctly Subtracted the Back Charge from
the “Balance of the Contract Price”
¶ 46 GCNA lastly contends that the trial court improperly reduced
the “Balance of the Contract Price” by a back charge of $30,702.00
20
because the trial court disallowed the amount of the back charge as
an item of damages. (GCNA fails to acknowledge that the trial court
adjusted the amount of the back charge to $5,915.00.) We
disagree.
¶ 47 As GCNA notes, the trial court reduced Whiting-Turner’s
damages by the amount of the back charge. GCNA provides no
explanation, beyond a one-sentence, conclusory statement, to
support the proposition that, because Whiting-Turner could not
recover the amount of the back charge as a component of its
damages, the payment could not also reduce the “Balance of the
Contract Price.” We decline to address an undeveloped argument
without legal support. See Holley v. Huang, 284 P.3d 81, 87 (Colo.
App. 2011) (declining to address “bald assertions of error”
unsupported by legal authority).
4. The New York Trial Court Decision on Which GCNA Relies
Does Not Support GCNA’s Argument that Whiting-Turner
Failed to Satisfy the Condition Precedent in Section 3.3
¶ 48 We are not persuaded that the New York unpublished trial
court decision cited by GCNA supports its argument that Whiting-
Turner failed to comply with the condition precedent in section 3.3.
21
¶ 49 In East 49th Street Development II, LLC v. Prestige Air &
Design, LLC, 938 N.Y.S.2d 226, 2011 WL 4599708 (N.Y. Sup. Ct.
Oct. 6, 2011) (unpublished table decision), the contractor failed to
tender the balance of the contract price to the surety, even though
the balance of the contract price was positive, in violation of section
3.3 of the form A312 performance bond. Id. at *9. The East 49th
Street court explained that an offer to pay the contract balance,
even if the balance was negative, was sufficient to satisfy section
3.3 of the performance bond. Id. at *10.
¶ 50 Unlike the contractors in East 49th Street, Whiting-Turner
acknowledged in its June 24, 2014, letter that it was required to
pay GCNA the remainder of the “Balance of the Contract Price.”
Based on Whiting-Turner’s tender of the “Balance of the Contract
Price” to GCNA — albeit a negative balance — the trial court
correctly found that Whiting-Turner had satisfied section 3.3 of the
performance bond.
¶ 51 The law supports this conclusion. See U.S. Fid. & Guar. Co. v.
Braspetro Oil Servs. Co., 369 F.3d 34, 59 (2d Cir. 2004) (“[T]he
relevant inquiry is whether the Obligees actually agreed to pay the
22
Balance of the Contract Price — not, as the Sureties urge, whether
the Obligees agreed with the Sureties’ assessment of what the
respective Balances were at the time of the declarations of
default.”). Accordingly, East 49th Street does not support GCNA’s
argument that Whiting-Turner failed to comply with section 3.3.
V. The Trial Court Did Not Award Duplicative Damages to
Whiting-Turner
¶ 52 GCNA contends that “Whiting-Turner essentially ‘triple-
dipp[ed]’ in that it sought the very same dollars in three ways” by (1)
reducing the “Balance of the Contract Price” payable to GCNA; (2)
seeking payment of the same amount under the performance bond;
and (3) attempting to recover this sum under the payment bond.
¶ 53 The record does not reflect that the trial court awarded
Whiting-Turner any duplicative damages, however. The trial court
reduced the amount of the judgment to permit Whiting-Turner to
recover only under the performance bond. In doing so, the trial
court correctly subtracted from the judgment the sum that Whiting-
Turner would have been required to pay Klempco had Klempco not
breached the Subcontract.
23
¶ 54 Therefore, the trial court’s judgment did not reflect “triple
dipping.” GCNA appears to acknowledge this fact in both its
opening and reply brief. Accordingly, we disagree with GCNA that
the trial court awarded duplicative damages to Whiting-Turner.
VI. The Trial Court Properly Awarded Whiting-Turner Its Attorney
Fees
¶ 55 GCNA lastly contends that the trial court erroneously awarded
attorney fees to Whiting-Turner under the performance bond.
GCNA asserts that, because Whiting-Turner did not satisfy the
condition precedent in section 3.3, Whiting-Turner could not
recover attorney fees. Alternatively, GCNA argues that the trial
court improperly failed to segregate the fees awardable to Whiting-
Turner for its claim against GCNA from the fees attributable to
Whiting-Turner’s other claims and defenses. We disagree with both
contentions.
A. Standard of Review
¶ 56 When awarding attorney fees and costs under a contractual
fee-shifting provision, “[t]he determination of which party prevailed
is committed to the discretion of the trial court and is subject to an
abuse of discretion standard of review on appeal.” Dennis I. Spencer
24
Contractor, Inc. v. City of Aurora, 884 P.2d 326, 328 n.6 (Colo. 1994)
(citing Smith v. Freeman, 921 F.2d 1120, 1122 (10th Cir. 1990)).
A court abuses its discretion when its decision is manifestly
arbitrary, unreasonable, or unfair, or when it is based on an
erroneous view of the law. Zeke Coffee, Inc. v. Pappas-Alstad P’ship,
2015 COA 104, ¶ 12, 370 P.3d 261, 265. We will not disturb such
a decision if it is supported by the record. Double Oak Constr.,
L.L.C. v. Cornerstone Dev. Int’l, L.L.C., 97 P.3d 140, 151 (Colo. App.
2003).
B. The Law Governing Attorney Fees
¶ 57 “[I]f the parties agree, in a contract clause known as a fee-
shifting provision, . . . the prevailing party will be entitled to recover
its attorney fees and costs.” S. Colo. Orthopaedic Clinic Sports Med.
& Arthritis Surgeons, P.C. v. Weinstein, 2014 COA 171, ¶ 10, 343
P.3d 1044, 1047.
¶ 58 A party can recover all of its attorney fees for a lawsuit
containing “multiple claims ‘involv[ing] a common core of facts’ or
‘based on related legal theories,’ [when] counsel’s efforts on an
individual claim [cannot] be distinguished from work on the whole
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of the litigation . . . .” Rocky Mountain Festivals, Inc. v. Parsons
Corp., 242 P.3d 1067, 1073 (Colo. 2010) (quoting Hensley v.
Eckerhart, 461 U.S. 424, 435 (1983)). However, when the party
“presented ‘distinctly different claims for relief that [were] based on
different facts and legal theories,’” the party may recover only those
legal fees attributable to the claims on which the party prevailed.
Id. (quoting Hensley, 461 U.S. at 435).
C. Discussion
1. The Trial Court Properly Awarded Attorney Fees to Whiting-
Turner Under the Performance Bond
¶ 59 Because Whiting-Turner complied with section 3.3, we agree
with the trial court that Whiting-Turner had the right to recover
attorney fees under the performance bond. The performance bond
bound Klempco and GCNA, “jointly and severally, . . . to [Whiting-
Turner] for the performance of the [Subcontract], which is
incorporated herein by reference.” The Subcontract required
Klempco to pay “[t]he amount of completion costs, as well as any
other costs, damages, or expenses, including [Whiting-Turner’s]
legal fees and expense[s], incurred as a result of [Klempco’s]
default . . . .” The Subcontract also required Klempco to indemnify
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Whiting-Turner “against any and all claims, suits, liens, judgments,
damages, losses and expenses, including, but not limited to,
attorney’s fees, arising in whole or in part and in any manner for
the acts or omissions of [Klempco] . . . in the performance of the
[Subcontract] . . . .”
¶ 60 The language of the Subcontract demonstrates that Klempco
and Whiting-Turner intended that Klempco would pay any legal fees
that Whiting-Turner incurred as a consequence of Klempco’s
default. See Powder Horn Constructors, Inc. v. City of Florence, 754
P.2d 356, 365 (Colo. 1988) (language of the contract determines
intent (citing Gen. Ins. Co. of Am. v. City of Colorado Springs, 638
P.2d 752, 757 (Colo. 1981))). Because the performance bond
provided that GCNA was jointly and severally liable with Klempco
for all sums that Klempco owed Whiting-Turner under the
Subcontract, GCNA was liable to Whiting-Turner for the attorney
fees that Klempco owed to Whiting-Turner. We therefore conclude
that the trial court did not abuse its discretion in awarding attorney
fees to Whiting-Turner under the performance bond.
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2. The Trial Court Did Not Err in Not Segregating the Fees
Awarded to Whiting-Turner
¶ 61 GCNA challenges the lack of segregation between Whiting-
Turner’s fees attributable to Whiting-Turner’s claims against GCNA
arising under the performance bond and Whiting-Turner’s fees
relating to the other claims and defenses in the case. The trial
court found, however, “that it is improper[ ] to segregate out
Whiting-Turner defense costs against Klempco versus the cost and
fees that [Whiting-Turner] incurred in bringing its claims against
Klempco for completion of the [P]roject.” The trial court explained
that “all of the claims of both parties arise out of the same operative
facts . . . .” (Emphasis added.)
¶ 62 To prosecute its claim for breach of the performance bond,
Whiting-Turner had to prove its compliance with each of the three
conditions precedent set forth in the performance bond: (1)
notification to Klempco and GCNA that Whiting-Turner was
considering declaring Klempco in default; (2) notification to GCNA
that Whiting-Turner had declared a default and terminated the
Subcontract; and (3) payment of the “Balance of the Contract Price”
to GCNA or a designated replacement subcontractor. Whiting-
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Turner therefore could not prove its claim under the performance
bond unless it established, among other facts, that it had properly
declared Klempco in default and terminated the Subcontract.
¶ 63 All the claims in the case, including Whiting-Turner’s claim
under the performance bond, therefore “involv[ed] a common core of
facts.” Rocky Mountain Festivals, Inc., 242 P.3d at 1073 (quoting
Hensley, 461 U.S. at 435). We discern no error in the trial court’s
finding that Whiting-Turner’s attorney fees could not be
apportioned amongst Whiting-Turner’s claims against GCNA, claims
against Klempco, and defenses to Klempco’s claims, as all such
claims and defenses were intertwined. The trial court thus correctly
held that, under the performance bond, GCNA was liable to
Whiting-Turner for all of Whiting-Turner’s attorney fees incurred in
the litigation.
¶ 64 For these reasons, we conclude that the trial court did not
abuse its discretion in awarding Whiting-Turner its attorney fees
incurred in this litigation or in calculating the amount of such fees.
VII. Conclusion
¶ 65 The judgment is affirmed.
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JUDGE DAILEY and JUDGE FURMAN concur.
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