What You Should Know About Attorney Fee Awards Before Litigation
As mentioned in our previous post “Can I Afford an Attorney?,” there are several statutes that require the losing party in a lawsuit to pay the attorney fees of the prevailing party. While this is true, and makes it possible for attorneys to take cases on a contingency basis, these statutes further emphasizes the importance of hiring a competent and experienced attorney. Especially with more complex cases, application of these statutes can get a bit complicated and if you aren’t careful in your attorney selection, you could end up footing a bill, even if you “win” your case. Take for example, the following scenario:
The Pathway that Started it all
Imagine you hire a landscaper to install pavers in a pathway adjacent to your fence line. Before starting work, the landscaper has you sign a contract stating that full payment is due on completion of the project. The contract also includes an attorney fee provision stating that “the prevailing party” will be awarded their attorney fees in any suit brought to enforce the terms of the contract.
One day while shoveling dirt to clear a path for the pavers, the landscaper loses control of their Track Loader, plows through your prize vegetable garden, and knocks down the fence that separates you and your neighbor’s backyard. Your neighbor, who was already upset about the construction noise, is now furious with you, and demands that you get a new fence put up a once, and that you pay for all of the costs.
In an effort to keep peace with your neighbor, you agree to pay for the damage. You get an estimate for the work needed to repair the fence and it comes out to $3,000.
Meanwhile, the landscaper, despite having difficulty driving heavy machinery, is an extremely fast worker and has completed the project. He hands you a bill for $5,000 and expects to be written a check. However, due to the damage of your fence you decide to only pay the landscaper $2,000 (The cost of installing the pavers minus the cost to repair the fence). After all, he did knock over your fence.
Instead of trying to negotiate with you, the landscaper immediately files a civil lawsuit for breach of the construction contract with $3000 in damages, plus attorney fees. In response you bring a counter claim for the $3,000 it cost you to repair your fence and $4,000 for the destruction of your prize vegetable garden during peak harvest season.
After months of contentious litigation, a judgment is issued in your case. You have prevailed on your $3,000 counter claim for damage to your fence, but the judge wasn’t very sympathetic with respect to the destruction of your veggies, and awards no damages.
You have incurred $10,000 in attorney fees. Your landscaper has incurred $15,000 in attorney fees. It seems like you’ve won your case, which leads you to ask: “Can’t I just send the bill to my landscaper?”
What are the claims?
The first step of the analysis is to separate the lawsuit out into individual claims and determine which of those claims are fee bearing, meaning which of those claims attorney fees can be collected from.
In this situation we have 3 claims: (1) landscaper suing you for full payment, and (2) you suing the landscaper for damage to your fence and (3) damage to your vegetable garden.
Here, the landscaper is able to claim attorney fees under the construction contract and under ORS 20.082 (attorney fees for small contract claims), and you are able to claim attorney fees under ORS 20.080 (attorney fees for certain small tort claims).
Rather than thinking of a lawsuit as having one winner and one loser, the court has made it clear that attorney fees can be awarded on a per claim basis to the “prevailing party” on each claim.
In 2014, an Oregon appellate case confirmed that the “prevailing party” means the “party that received a favorable judgment on a claim, which is determined by ‘weigh [ing] ‘what was sought by each party against the result obtained.’'” 16TH Grp., LLC v. Lynch Mech. Constr., LLC, 265 Or.App. 217, 334 P.3d 988 (Or. App., 2014) (citing Beggs, 221 Or.App. at 538–39, 191 P.3d 747 (quoting Lawrence v. Peel, 45 Or.App. 233, 243, 607 P.2d 1386 (1980))).
As a result, where an action involves multiple claims, such as the example above, the court must determine prevailing party and attorney fee award on claim-by-claim basis rather than using net judgment approach. Robert Camel Contracting, Inc. v. Krautscheid, 205 Or App 498, 134 P3d 1065 (2006).
Using the per claim approach, it appears that you have prevailed on your claim for damage to the fence and that the landscaper has lost. This means that the landscaper would have to pay for the cost of your attorney fees for the fence damages counter claim, but not for any attorney fees incurred in bringing the claim for vegetable destruction.
Of your $10,000 attorney fee bill, lets say that the cost to bring the fence counter claim was $6,000. That would mean that you would still end up paying your attorney $4,000 in attorney fees, which is greater than the damages award paid by the landscaper.
What you should take away from this hypothetical scenario is not that you should avoid litigation at all costs. What you should take away, is that choosing your battles is an art form, best left to a professional who understands how to balance your likelihood of success on the merits against the cost to pursue your claim.
If you have questions about a potential claim, or want to learn more about the services we provide, please feel free to contact our office at: (503) 204-6401.