March 25, 2004
In a lawsuit? Who's paying the lawyers?
By BOB MARCONI
When litigation is necessary, it is critical for contractors to consider whether they can collect attorney's fees and costs from the adverse party if they win. Contractors must also know if they could be at risk to pay attorney's fees and costs if they lose.
Washington follows the “American Rule” concerning the right to recover attorney's fees and costs in litigation. Under the rule, attorney's fees and costs may be awarded only if authorized by contract, statute, or one of a few other narrow exceptions.
Construction contracts often contain clauses stating that attorney's fees and costs will be awarded to the prevailing party. Absent a fee provision in the contract, some statutes in Washington provide one or more parties the right to recover attorney's fees and costs. The following sets forth ways a contractor may obtain attorney's fees and costs in public and private project disputes.
There may be additional theories that can be advanced to attempt to recover attorney's fees and costs. When determining how to proceed in any dispute, always consider the issue of attorney's fees and costs.
On a public project, attorney's fees may be awarded to the prevailing party under the following circumstances:
If attorney's fees are due to the prevailing party for any of the above reasons, the court has discretion to determine the “reasonable” amount of fees to be awarded.
On a private project, attorney's fees may be awarded to the prevailing party under the following circumstances:
Contractors who prevail in an action to foreclose on a private lien pursuant to RCW 60.04.181, may or may not receive an award of attorney's fees. The decision is left to the discretion of the court. If a contractor is the prevailing party in a contractor registration bond action pursuant to RCW 18.27.040, attorney's fees are mandated but the total amount of damages and attorney's fees cannot exceed the nominal amounts set forth in the statute ($12,000 for general contractors and $6,000 for subcontractors.)
RCW 60.04.081, also known as the “frivolous lien” statute, allows a party to challenge the validity and/or amount of a lien. In such an action, if the court determines that a lien is frivolous and/or clearly excessive, the court must award reasonable attorney's fees and costs to the prevailing party. Similarly, if the court rules that a lien is neither frivolous nor clearly excessive, the court is require to award attorney's fees and costs to the lien claimant.
Pursuant to RCW 4.84.185, the prevailing party in any lawsuit in Washington may obtain attorney fees if the lawsuit was frivolous and brought without a basis in law or fact. Unfortunately, frivolous lawsuits are a reality in this and other jurisdictions.
This statute serves as an important deterrent to filing meritless lawsuits for no other purpose than to harass. The award of fees for a frivolous lawsuit is discretionary with the court.
Statute reciprocating contract fee provisions
Another important statute for contractors to be aware of is RCW 4.84.330. This statute cures the situation where a contract fee provision allows only one party the right to recover fees in an action to enforce the contract. The statute requires that any court applying such a fee provision interpret it as though it is reciprocal and afford both parties the benefit of obtaining their attorney's fees if they are the prevailing party in the suit.
Construction litigation is expensive. Unfortunately, contractors occasionally are forced to pursue claims and lawsuits in order to receive fair compensation for work performed. The ability to collect attorney's fees and costs is a critical factor when determining whether or not to initiate legal action. The right to collect attorney's fees can also be used as a tool to encourage early settlement of construction disputes.
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