Florida Court Reviews Entitlement to Attorney’s Fees
No one wants to be involved in a lawsuit. Guaranteed to not only be a real drain on time and elevate stress levels all around, litigation can rack up enormous legal fees for both the plaintiff and the defendant. A well-known strategy for companies is to include wording in contracts that allows a prevailing party to be awarded attorneys’ fees in a dispute between the contracting parties. Prevailing party fee provisions are meant to dissuade frivolous lawsuits and encourage settlements rather than the pursuit of a costly court trial.
A recent Florida case, Waverly at Las Olas Condominium Association, Inc. v. Waverly Las Olas, LLC, has resulted in a ruling that now allows a prevailing party to not only recover attorneys’ fees for time spent on the case, but also for the time spent litigating the final amount of fees to be awarded post-judgment because the contract was broad enough to include “any litigation” which would include litigating the amount of fees. Until this decision, Florida courts have not permitted a prevailing party to recover attorneys’ fees spent litigating the amount of fees unless authorized by statute or as a sanction.
How does a prevailing-party fee provision work and what are the benefits of including this type of language in a contract?
A prevailing party fee provision is a clause in a contract that requires a losing party to pay the winning party’s legal fees in a dispute between the contracting parties. The “dispute” can include claims resolved by arbitration and/or a lawsuit depending on the language. The clause is typically included in contracts to deter a party from bringing frivolous or questionable claims, encourage alternative dispute resolution and foster other tactics for solving differences.
Is going to court to litigate the amount of awarded fees a common legal tactic?
Before Waverly, no. After Waverly, maybe. Before Waverly, Florida courts refrained from awarding attorneys’ fees for litigating the amount of fees to be awarded to the prevailing party in a dispute between contracting parties. As a result, there was no need to demand or fear this type of award since most cases settle and the settlements typically do not include attorneys’ fees.
After Waverly, going to court to litigate the amount of fees awarded may become a common legal tactic, now that a losing party may have to pay this type of award in addition to the prevailing party’s fees expended in winning the case. Litigating the amount of fees to be awarded can be time consuming and expensive for both parties as it may involve expert retention, discovery and multiple court hearings which can delay finalizing the case for months, even years. Demanding these fees, or fear of having to pay this type of award, is now an additional factor to be considered by counsel and clients when formulating litigation strategies or evaluating settlement.
Can you elaborate on the Court’s reasoning for arriving at this decision?
Other than the contractual language ‘any litigation’ being broad enough to encompass fees for time spent litigating the amount of fees to be awarded, the Court did not offer additional insight. And, to be clear, the court did not expressly hold in Waverly that all prevailing parties are now permitted to recover attorneys’ fees for time spent litigating the amount of fees to be awarded. This additional basis of recovery is only implied from the court’s decision. Interpreting the Court’s holding, one can now argue these particular fees are recoverable in cases where a broad contractual prevailing party fee provision is involved. Of course, contract language that explicitly permits or excludes recovery of fees for fees would likely prevail.
What should companies keep in mind when reviewing contracts?
Avoid entering into a contract (including a settlement agreement/release) with a broad prevailing-party fee provision that does not specify the causes of action and the types of reasonable attorney’s fees recoverable. Limiting the language of a clause can dramatically reduce the legal costs that may be incurred by both parties to the dispute and assist them in amicably solving differences. The Waverly case demonstrates a broad prevailing party clause can result in a losing party paying unanticipated and significant legal fees. Companies must carefully review contracts and include language that protects them from a similar eventuality.