We advise owners to insert prevailing party attorney's fee clauses in construction and repair contracts, as it is more likely that you as owner will pursue a claim against the contractor then vice versa. But does the clause that is inserted cover all possible attorney's fees? Maybe not. In a case just decided by the Florida Third District Court of Appeal in Miami, Pardo v. Kaplan, attorney's fees for an appeal, as opposed to the main case, were disallowed because the note being enforced did not specifically provide for appellate attorney's fees in the event of enforcement. The clause in question provided:
Collection: In the event this note shall be in default and placed for collection, then the undersigned agree to pay all reasonable attorney's fees and cost of collection.
The Third District determined that "all reasonable attorney's fees" did not include attorney's fees on appeal. What should the clause have provided in order for appellate attorney's fees to be awarded?
Collection: In the event this note shall be in default and placed for collection, then the undersigned agree to pay all reasonable attorney's fees, including attorney's fees and costs on appeal, and cost of collection.
Turning to a second quirk, it is not uncommon if as owner you signed the contractor's form contract to confront a clause which provides for attorney's fees to be awarded to the contractor in the event the contractor is required to pursue legal action to collect what is owed under the contract. As an owner's lawyer, we looked kindly upon such clauses because Florida has a reciprocal attorney's fee statute. F.S. 57.105(7) provides that if a contract contains a unilateral attorney's fee provision, the court has authority to award attorney's fees to the other party in the event the other party prevails. Consequently, when pursuing contractors for recovery for defects in the work where such a contract provision was in play, for example, we would typically seek an award of attorney's fees per F.S. 57.105(7).
Unfortunately, last year the Fourth District Court of Appeal in Ft. Lauderdale created "a fly in the ointment" in the case of Florida Hurricane Protection and Awning v. Pastina, 43 So.3d 893 (Fla. 4th DCA en banc 2010). The owner had hired a shutter company to install hurricane shutters. The contractor walked off the job forcing the owner to hire another contractor to complete the work. The contract with the original contractor provided for attorney's fees in the event the contractor pursued a collection action. The owner sought attorney's fees against the contractor per F.S. 57.105(7) citing the unilateral attorney's fee clause in the contract.
The Fourth District unfortunately determined that since the contractor's attorney's fee clause was limited to the collection of money due under the contract, F.S. 57.105(7) did not apply to the owner's breach of contract action. Thus, the owner was left with no recourse for attorney's fees. Lesson to be learned: Be sure to insert a broad prevailing party attorney's fee clause in your contracts.
Disclaimer: The decisions reported are not necessarily the law in other appellate districts in Florida. To determine the law in the Second District Court of Appeal (Tampa Bay and Southwest Florida) on these points, specific research would need to be done on the decisions of the Second District.
Written by Alan E. Tannenbaum
This article first appeared on the Florida Community Association Construction Law blog
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