Attorney
Lawsuits are expensive. They can get even more expensive when one party is required to pay the attorney’s fees for the other side. The general rule, also called the “American rule,” is that each party pays their own attorney’s fees and costs regardless of which party wins. This “American rule” allows for a plaintiff to bring claims without fear that they may have to pay attorney’s fees in the event that they lose. Most U.S. jurisdictions use the American rule as a default. However, this default rule can be modified by statute or by contract.
In a contract, parties can agree that one side will pay the other’s attorney’s fees in specified circumstances. For example, parties can include an indemnity provision in their contract where one party will pay the attorney’s fees of the other party in the event that the latter party is involved in a lawsuit with a third party.[1] Determining whether a contract includes an award of attorney’s fees requires a thoughtful analysis.
In addition to an award by contract, statutes can modify the general rule that each side pays its own attorney fees. These statutes are generally enacted based on public policy. For example, in Florida, there is statutory basis under residential landlord tenant law for attorney fees although there is no statutory basis under commercial landlord tenant law for attorney fees. In this context, the purpose of these statutes is to ensure that the average home lessee who has no significant legal negotiating experience can adequately protect his/her rights under a residential lease agreement. Commercial agreements do not have a similar default rule.
Another example of statutory basis for attorney fees is Fla. Stat. Ann. § 57.105:
(1) Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:
(a) Was not supported by the material facts necessary to establish the claim or defense,
Etc.
Under this statute, a court may award attorney’s fees to the prevailing party if the other side makes a frivolous claim and knew or should have known that the claim was frivolous (ie., not based on necessary material facts).
Under Florida law, to receive an award of attorney’s fees by statute, a party must be the prevailing party. A mere dismissal of a case does not create a prevailing party for purposes of attorney’s fees. A prevailing party must prevail on the merits. Prevailing on the merits means that the case was not simply dismissed for reasons other than the substance of the litigation. Determining whether a party is a prevailing party for purposes of attorney’s fees requires a thorough scrutiny of the facts and the law.
Parties must be careful when filing a lawsuit. A party’s claim may be based in law that awards attorney’s fees to the opposing side, in contract that includes a provision for attorney’s fees, or may be a frivolous claim. Determining whether a party may be subject to opposing party attorney’s fees requires a careful analysis. If you have a question regarding your rights under Florida Law and your contractual documents, contact Boatman Ricci for assistance at 239-330-1494.
[1] – Indemnity provisions are normally only applied to third-party claims and not to claims between the initial parties.
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