{"id":1265,"date":"2012-09-26T13:48:00","date_gmt":"2012-09-26T13:48:00","guid":{"rendered":"https:\/\/www.sherin.com\/real-estate\/2012\/09\/26\/be-careful-and-wordy-in-drafting-prevailing-party-clauses\/"},"modified":"2023-11-08T18:35:27","modified_gmt":"2023-11-08T18:35:27","slug":"be-careful-and-wordy-in-drafting-prevailing-party-clauses","status":"publish","type":"post","link":"https:\/\/www.sherin.com\/real-estate\/2012\/09\/26\/be-careful-and-wordy-in-drafting-prevailing-party-clauses\/","title":{"rendered":"Be careful (and wordy) in drafting \u201cPrevailing Party\u201d clauses"},"content":{"rendered":"<p>It\u2019s an oft-repeated complaint \u2013 the sheer cost of litigating a claim, regardless of its merits, makes it difficult or impossible to assert a right or recover damages for breach of a contract \u2013 and frequently it is undeniably true.\u00a0 Under the general \u201cAmerican rule\u201d, each party typically pays its own litigation costs and expenses unless the parties have otherwise previously agreed or there is a controlling statute allocating these expenses.\u00a0 One form of such an agreement is a \u201cprevailing party\u201d clause embedded in the contract itself, which entitles the party who prevails in the litigation to recover from the losing party its cost of litigating the matter.\u00a0 These clauses are generally enforceable in commercial real estate contracts.\u00a0 But what exactly do they entitle the \u201cprevailing party\u201d to recover?<\/p>\n<p>A recent Massachusetts federal court decision, <em><a title=\"Specialty Retailers, Inc. v. Main Street NA Parkade, LLC, et. al.\" href=\"http:\/\/dockets.justia.com\/docket\/massachusetts\/madce\/3:2009cv12134\/126358\/\" target=\"_self\" rel=\"noopener\">Specialty Retailers, Inc. v. Main Street NA Parkade, LLC, et. al.<\/a>, <\/em>considered a fairly standard \u201cprevailing party\u201d clause contained in a lease, which entitled the prevailing party to recover \u201creasonable attorneys\u2019 fees and court costs\u201d from the other party to the litigation.\u00a0 After awarding to the successful defendant most of the attorneys\u2019 fees it claimed, the court focused on the $105,000 of costs the defendant sought to recover, of which $100,000 were expert fees relating to the issue of whether the defendant landlord had breached the plaintiff tenant\u2019s exclusive use clause.<\/p>\n<p>The landlord argued that the court should interpret the phrase \u201ccourt costs\u201d broadly, so as to include expert fees, in light of the parties\u2019 intent through the \u201cprevailing party\u201d clause to indemnify the prevailing party from financial harm incident to successfully asserting a legal right under the lease.\u00a0 The tenant argued that the phrase \u201ccourt costs\u201d in the lease was unambiguous and did not include expert fees.\u00a0 In ruling that the expert fees were <em>not<\/em> recoverable under the lease clause before it, the court relied on decisions from a number of other jurisdictions indicating that the phrase \u201ccourt costs\u201d is limited to costs directly related to interactions with the court (e.g., filing fees) and does not include expert fees.\u00a0 Interestingly, the court cited one decision where the phrase \u201call court costs\u201d <em>was<\/em> held to include expert fees simply because of the additional word \u201call\u201d.<\/p>\n<p>There is a clear lesson for attorneys drafting contracts (real estate-related or otherwise):\u00a0 if a prevailing party clause is to be included, do not rely on shorthand descriptions of the scope of costs and expenses intended to be covered \u2013 use language like <b>\u201cany and all costs and expenses incurred with respect to such litigation or other proceeding, including without limitation, reasonable attorneys\u2019 fees, disbursements and costs, and experts\u2019 fees and costs\u201d.<\/b><\/p>\n<p>A final observation \u2013 although the court did not award expert fees to the prevailing party, the court had no difficulty including in its award of attorneys fees pursuant to the \u201cprevailing party\u201d lease clause the fees charged by the defendant\u2019s attorneys in preparing the expert witness for trial!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It\u2019s an oft-repeated complaint \u2013 the sheer cost of litigating a claim, regardless of its merits, makes it difficult or impossible to assert a right or recover damages for breach of a contract \u2013 and frequently it is undeniably true.\u00a0 Under the general \u201cAmerican rule\u201d, each party typically pays its own litigation costs and expenses [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1767,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-1265","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - 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