Recovery of Attorneys’ Fees in Florida: Is it in Your Contract?
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The recovery of attorneys’ fees is an important consideration prior to initiating litigation. Under Florida law, a party can only recover its attorneys’ fees if there is a statutory or contractual basis for doing so. Trytek v. Gale Industries, Inc., 3 So. 3d 1194 (Fla. 2009). This posting focuses on a “prevailing party’s” contractual right to recover attorneys’ fees and a suggestion to improve contract language to recover all attorneys’ fees should you find yourself in litigation.
Many contracts provide for “prevailing party” attorney fees to the party who wins in the litigation. Even for contracts that provide attorneys’ fees for only one specific party, Florida Statute Section 57.105 makes the obligation bilateral (meaning the other party will also be able to recover its attorneys’ fees). In performing the analysis to determine the prevailing party, Florida courts will use the “significant issues” test, rather than the “net judgment” rule. Under the net judgment rule, the party who recovers the greater award is the prevailing party and entitled to its attorneys’ fees. Casavan v. Land O’Lakes Realty, Inc., 542 So. 2d 371 (Fla. 5th DCA 1989). The significant issues test, on the other hand, is a more flexible rule that allows courts to look at more than just who obtained the largest award at trial. While the net judgment obtained by a party will be one factor in the significant issues analysis, it is not the only factor. Trytek v. Gale Industries, Inc., 3 So. 3d 1194 (Fla. 2009); Schoenlank v. Schoenlank, 128 So. 3d 118 (Fla. 3rd DCA 2013).
Despite inclusion of a contractual prevailing party attorneys’ fee provision, there is still the possibility a court will find there is no prevailing party. See Trytek v. Gale Industries, Inc., 3 So. 3d 1194 (Fla. 2009); Schoenlank v. Schoenlank, 128 So. 3d 118 (Fla. 3rd DCA 2013). Indeed, the Florida Supreme Court in Trytek stated: “there is no mandatory requirement that the trial court determine that one party is the single ‘prevailing party’.” Indeed, the determination of attorneys’ fees is “within the sound discretion of the trial court and will not be disturbed absent an abuse of discretion.” The Waverly at Las Olas Condominium Association, Inc. v. Waverly Las Olas, LLC, 88 So. 3d 386 (Fla. 4th DCA 2012).
Although parties may attempt to fashion their own definition of “prevailing party” in the contractual fee provision, at least one Florida court has held this type of provision violates public policy and is unenforceable. Port-A-Weld, Inc. v. Padula & Wadsworth Construction, Inc , 984 So. 2d 564 (Fla. 4th DCA 2008). However, one way of dispensing with the uncertainty of who will deemed to be the prevailing party, is to draft the fee provision without the phrase “prevailing party” and simply provide that the party is entitled to its attorneys’ fees if it is required to enforce or collect on the agreement or if the other party breaches the agreement. RJ & RK, Inc. v. Spence, 855 So. 2d 642 (Fla. 1st DCA 2003).
Another issue to consider is whether the contractual attorneys’ fee provision is broad enough to entitle the party to get its “fees for litigating fees.” Unless the other party stipulates to the amount of fees to be awarded, the prevailing party will have to prove the amount (quantum) of the fee to be awarded. This process can be costly and, until recently, the fees incurred in proving the amount of fees was not recoverable. Recently, however, one Florida court found that a party could recover its fees for litigating the amount of fees owed by the non-prevailing party. The Waverly at Las Olas Condominium Association, Inc. v. Waverly Las Olas, LLC, 88 So. 3d 386 (Fla. 4th DCA 2012). The court in The Waverly focused on the contractual attorneys’ fee provision that allowed fees for “any litigation.” This language, according to the court, was broad enough to allow for the award of fees for litigating the amount of fees. Therefore, it is imperative that parties include such broad language in the contractual attorneys’ fees provision to better ensure recovery of “fees for litigating fees.” The contract provision should also spell out that recovery of fees also includes those fees incurred in litigating the amount of fees incurred.