In a decision with far-reaching effects on the construction industry, the Kentucky Court of Appeals issued its opinion in D.W. Wilburn, Inc. et al. v. The Painting Company et al. on April 12, 2019. The opinion addressed several issues, including the award of attorney fees and costs pursuant to Kentucky’s Fairness in Construction Act (KRS 371.400 et seq.) where the losing party is deemed to have acted in bad faith. McBrayer attorneys Jon Woodall and Brendan Yates represented The Painting Company (a national commercial painting contractor based in Columbus, Ohio) in its attempt to recover monies due from D.W. Wilburn, Inc. for additional work performed on a large commercial construction project in Lexington, Kentucky. Following a one week bench trial, the Fayette Circuit Court entered a judgment (and post-judgment order) in favor of The Painting Company, including, among other things, an award of its costs and attorney fees based on its finding that D.W. Wilburn, Inc. had acted in bad faith in failing to pay The Painting Company for the extra work performed on the project. D.W. Wilburn, Inc. appealed the lower court’s decision.
The Court of Appeals affirmed the lower court’s award of costs and attorney fees to The Painting Company. In affirming the lower court’s decision, the Court of Appeals acknowledged that Kentucky’s Fairness in Construction Act does not define “bad faith” for purposes of the Act; however, it held that the definition of “dishonesty of belief or purpose” as imputed by several unpublished opinions was the applicable standard. It determined that the lower court had not abused its discretion in finding that D.W. Wilburn, Inc. had acted in bad faith and, thus, affirmed the lower court’s decision.
The Court of Appeals’ holding is significant in that there are few cases or legal precedent interpreting and/or applying the provisions of Kentucky’s Fairness in Construction Act. This published opinion will provide guidance to the construction community with regard to enforcement of the Act and its costs and attorney fee provision in particular.