Company allowed to fight loss of $25K bond in dispute with Town of Clay

CHARLESTON - The state Supreme Court reversed in part and remanded a lower court decision in which a construction company in a dispute with the Town of Clay was ordered to forfeit a $25,000 bond it put up for an injunction that it later voluntarily dismissed.

In an Oct. 4 per curiam decision, the high court stated that the lower court’s award of the $25,000 bond to the Town of Clay for attorneys fees incurred in defending itself from a claim by Multiplex Inc. was improper because the plaintiffs weren’t granted an opportunity to dispute the court’s assessment.

The appellate case stems from a dispute that arose between Multiplex, a construction company contracted to provide renovations for a water treatment plant, and the Town of Clay.

In its initial lawsuit, Multiplex alleged that it was unable to proceed with work at the plant because a project engineer had not provided it with required information and that there were issues of delayed compensation.

In response, the Town of Clay alleged that Multiplex walked away from the job without cause.

In December, 2010, Multiplex filed for a preliminary injunction in the Circuit Court of Clay County against the Town to prevent it from declaring default against the company.

The court granted a temporary injunction against the town requiring Multiplex to put up a $25,000 bond, of which only 10 percent needed to be posted.

The court eventually referred the matter to a special commissioner for mediation. Shortly after, the plaintiffs voluntarily dismissed the case and the court lifted the injunction against the Town.

Less than a week later, the Town of Clay filed a motion seeking to forfeit the injunction bond and recover money for attorneys fees and sanctions totaling $47,186.08, alleging that Multiplex’s lawsuit was brought in bad faith.

As the matter proceeded before the special commissioner, Multiplex sought invoices and checks laying out the attorneys costs and payments, which the Town resisted, citing attorney-client privilege and the work product doctrine.

The special commissioner then required the Town to provide itemized invoices.

After reviewing the invoices, the special commissioner recommended to the court that “any recompense to the Town of Clay should be limited to the amount of the Multiplex injunction bond, as Multiplex has not been shown to have acted in bad faith that additional sanctions should be imposed beyond that said bond.”

The circuit court adopted the recommendations and ordered the bond forfeited. Multiplex appealed the decision.

In its review, the state Supreme Court wrote that “because there was no hearing either before the special commissioner or the circuit court, and therefore no way for the petitioners to cross examine or otherwise meaningfully contest the Town’s proffered evidence, there was nothing on which either the commissioner or the court could base findings of fact sufficient to permit meaningful review. Accordingly, the case must be remanded for the taking of evidence and the resolution of any material issues of fact.”