|
IS A CLAIM FOR PENALTY INTEREST AND
ATTORNEYS’ FEES UNDER THE CONTRACTOR AND
SUBCONTRACTOR PAYMENT ACT
TO BE
DECIDED BY THE JUDGE OR BY JURY?
Jack W. Plowman*
The case of Mishoe v. Erie Insurance Co., 2003 WL 2125590, 824 A.2d
1153 (Pa. S. Ct. 2003) decided the question as to whether the Court or
the jury is to decide whether a party is to receive punitive damages,
and attorneys’ fees. While the Mishoe case concerned extra damages
under the bad faith provisions of the Judiciary Code, 42 Pa. C.S.
§8371, its reasoning, in denying a jury trial to the plaintiff, may
well be applicable to the Contractor and Subcontractor Payment Act, 73
P.S. §501 (Supp. 2003).
In Mishoe, the plaintiff had been denied uninsured motorist benefits
by his insurer, Erie. Arbitrators awarded very substantial damages to
Mishoe, who then brought suit against Erie, claiming Erie had acted in
bad faith, and demanded a jury trial. The demand for a jury trial was
stricken by the trial court. The Superior Court reversed and, on
appeal to the Supreme Court, was itself reversed and the denial of a
jury trial by the trial court was affirmed.
The rationale behind the decision is equally applicable to the award
of damages under the Contractor and Subcontractor Payment Act. Just
as Section 8371 of the Judiciary Code provides that:
“In an
action under an insurance policy, if the court finds that the
insurer has acted in bad faith toward the insured, the court
may take all of the following actions:” 824 A.2d at 1155 (Emphasis
added).
The Contractor and Subcontractor Payment Act provides in Section 512:
“(a) …the arbitrator or court shall
award…a penalty equal to 1% per month of the amount that was
wrongfully withheld…
(b) …the substantially prevailing
party in any proceeding to recover any payment…shall be awarded a
reasonable attorney fee in an amount to be determined by the court or
arbitrator,…” (Emphasis added).
The Court compared Section 8371 with the terms of the Pennsylvania
Human Relations Act (PHRA) and concluded that the silence of the
legislation permitting bad faith damages, like the PHRA, indicated a
legislative intent that liability should be determined by the court,
and therefore that a claimant was not entitled to a trial by jury.
“The ‘court’ means judges who…are authorized…to exercise the powers of
the court in the name of the court,” (824 A.2d at 1159) and that “the
legislature specifically includes the term ‘jury’ in a statute when it
wants the jury to serve as decision maker.” The Supreme Court went on
to hold that “we see nothing wrong with construing ‘court’ and ‘judge’
as essentially synonymous….” 824 A.2d at 1158.
What does this mean for a claimant seeking punitive damages and
attorney fees under the Contractor and Subcontractor Payment Act?
Certainly, a claimant is still entitled to a trial by jury on the
question as to whether the Act has been violated, and the amount of
the liability for breach of contract. But, after such a
determination, it will be up to the court, i.e., the judge, to decide
whether the punitive damages and attorney fees, which may be awarded
under Section 512 of the Act, should be awarded and, if so, the amount
of such extra contractual damages.
*Of counsel, Bentz Law Firm, P.C.; fellow, American
College of Trial Lawyers; member, American Bar Association Forum on
the Construction Industry; member, American Bar Association Fidelity
and Surety Committee; Member, National Bond Claims Association;
Adjunct Professor, Emeritus, Duquesne University School of Law,
Author, Pennsylvania Mechanics’ Liens (Professional Education Systems,
1989); Author, with K.W. Lee, Construction Contracting for Public
Entities in Pennsylvania (Lorman Education Services, 2002).
|