Prevailing Party Attorney’s Fees

The prevailing party for the purpose of a contractual attorney’s fee provision is the party that prevails on the significant issues in the litigation. The test for determining if a party is “prevailing” is whether it was successful on “any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit”.

The trial judge determines who is the prevailing party, based on a determination from the record as to which party has, in fact, prevailed on the significant issues tried before the court. (“…the fairest test for a determination of the prevailing party is to allow the trial judge to determine from the record which party in fact prevailed on the significant issues tried before the court”).

Focus on Results

In making its determination as to which party prevailed, the trial court should focus on the “result obtained”.  As such it is result, not procedure, which governs the determination of who is a prevailing party.

As such, just because a party may have obtained some economic benefit as a result of the litigation does not necessarily mean that it is a prevailing party.

“Simply because a party has obtained some economic benefit as a result of litigation, does not necessarily mean that party has succeeded on the major issue in the case”.

Additionally, because a trial court may properly find that neither party has prevailed in a contract action, under compelling circumstances it is possible that there will be no attorney fee award in litigation involving a contractual provision for prevailing party’s attorney’s fees. For instance, there is no prevailing party when a settlement occurs.  However, where there is a functional equivalent of a judgment, the fact that a final judgment was not entered is not controlling in the determination of a prevailing party.

Finally, there appears to be a slight variance in the cases to the extent they discuss “significant issues” versus the “major issue”. To the extent that “significant” and “major” may be ascribed different meanings, and because one phrase is plural while the other is singular, this variance in language may eventually be of crucial importance in the determination of whether a party is the prevailing party for the purpose of an attorney’s fee statute.

Who is Prevailing Party?

Construction contracts and construction-related statutes generally provide the prevailing party with recovery of its incurred attorneys’ fees.  However, the prevailing party, normally defined as the party who prevailed on the significant issues tried before the court, is not always easily determined, especially in a suit involving several claims or even counter-claims.

When a mechanic’s lien claimant obtains any amount of judgment, the claimant is the prevailing party for the purposes of the attorneys’ fees provision within Florida Statutes § 713.29 but a successful defendant may be able to obtain attorneys’ fees for successfully defending a mechanic’s lien claim.

It Could be the Contractor

A contractor may be the prevailing party if it does not recover pursuant to the mechanic’s lien, but nevertheless obtains judgment for damages pursuant to a contract or equity.  Coined a “net judgment rule”, it allows contractors a recovery of attorneys’ fees pursuant to contractual or equitable principles but only if the contractor’s judgment is a net recovery.  Moreover, a party may be the prevailing party entitled to mechanic’s lien statute attorneys’ fees, where the case is dismissed for lack of prosecution.

Further explaining the prevailing party attorneys’ fees, a Florida court recently awarded a contractor attorneys’ fees subsequent to his recovery of damages under his mechanic’s lien claim. Although the owner prevailed on his breach of contract claim, the contractor recovered a net judgment after all of the set-offs for construction defects.  In conclusion, when a claimant in a mechanic’s lien action recovers a judgment in any amount, the trial court will generally find the claimant the prevailing party and award him attorneys’ fees pursuant to statute.

The right to recover attorney’s fees

A party’s right to recover attorney’s fees incurred over the course of litigation hinges directly on whether one is deemed by the court to be the “prevailing party” at the conclusion of the case.   Previously, the focus of the courts in deciding who was the prevailing party was based solely on the claim of the lien holder and whether he was ultimately awarded damages pursuant to his lien claim.

In the event that a lienor collected even a single dollar of his lien claim, he was treated as the winner – the prevailing party under Florida Statute 713.29, and was entitled to recover his reasonable attorney’s fees.  This narrow interpretation became a significantly disputed issue and has been reviewed and broadened by the Florida Supreme Court.

Unfortunately for contractors, no longer is the result of the lien claim the only basis for reaching the determination of who won.  In one case, the Florida Supreme Court decided that the main issue before it was not the contractor’s lien claim, but the amount of setoff that the owners had claimed in opposition to the lien.  While the contractor in that case was awarded some money under his lien claim, the owners obtained almost the entire amount of setoff that they had sought and for that reason the Court determined that the owners, not the contractor, were the prevailing party and the ones entitled to recover attorney’s fees.

Courts are now applying what is commonly referred to as the “significant issues” test.  This requires weighing all claims and the ruling made on each to determine which party, if any, truly prevailed in the litigation.

All contractors need to be aware of this development, especially since most lien claims are generally met with a setoff defense.  This means that even if a contractor wins a portion of his lien amount, he may be the ultimate loser, and not only see his claims for attorney’s fees defeated but worse, also be on the hook for the other side’s legal fees and costs.