Attorney's Fees For The Prevailing Party

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IS IT REALLY UN-AMERICAN TO AWARD LEGAL FEES TO THE PREVAILING PARTY?

 

The short answer is yes.

In New York, and indeed, in the rest of the country, the longstanding “American Rule” precludes the prevailing party from recouping legal fees from the losing party except where authorized by statute, agreement or court rule.”  See U.S. Underwriters Ins. Co. v. City Club Hotel, LLC, 3 N.Y.3d 592, 597, 789 N.Y.S.2d 470, 822 N.E.ed 777 (2004).

Indemnification provisions in contracts have spurred the ingenuity of attorneys who parse the language of such provisions with an eye to extracting the essence of a right to attorney’s fees for the winning side.  New York, however, has been distinctly inhospitable to such claims; in fact, in the leading case of Hooper Assoc. v. AGS Computers, 74 N.Y.2d 487, 492, 549 N.Y.S.2d 365 (1989), the Court of Appeals rejected a claim for attorney’s fees under an indemnification clause because the language of the the clause did not make it “unmistakably clear” that the winning side should be awarded such fees.

In New York, an indemnification provision must meet the exacting Hooper, supra, test of unmistakable intention to form the basis of an award of attorney’s fees for the prevailing party.

February 2014