CONTRACT PROVISIONS FOR ATTORNEY’S FEES: FLORIDA’S RECIPROCITY LAW AND THE AMERICAN RULE

The “American rule” holds that each party to a lawsuit will pay for his or her own attorney’s fees regardless of who prevails in the case. Unless a statute or contractual provision says otherwise, Florida courts will apply the American rule. For that reason, contracts oftentimes contain provisions stating that if litigation arises under the contract, the losing party must pay the prevailing party’s attorney’s fees.

Florida statutory law, however, requires reciprocity. In other words, if “a contract contains a provision allowing attorney’s fees to a party when he or she … enforce[s] the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails … with respect to the contract.” Fla. Stat. § 57.105(7). For example, the following contractual provision is not reciprocal: “Buyer shall pay for Seller’s attorney’s fees if Seller prevails in a claim against Buyer.” The terms of the contract grant only Seller, not Buyer, the right to attorney’s fees upon prevailing. However, because Florida law requires reciprocity, Florida courts generally will read that contractual provision as also granting Buyer a right to attorney’s fees upon prevailing in a suit to enforce the contract.

In Fla. Hurricane Prot. & Awning, Inc. v. Pastina, 43 So. 3d 893 (Fla. 4th DCA 2010), a homeowner entered into a contract with a contractor to install shutters. The contract included the following provision: “Purchaser [i.e., the homeowner,] is responsible for all costs of collection including Attorney’s fees.” Fla. Hurricane Prot. & Awning, Inc., 43 So. 3d at 894. The contractual provision is not reciprocal, i.e., it grants only the contractor the right to recover attorney’s fees from the homeowner. After the contractor failed to install the shutters, the homeowner sued for breach of contract and prevailed. Relying on Florida’s reciprocity statute, the homeowner sought attorney’s fees from the contractor. While the trial court agreed with the homeowner and awarded her attorney’s fees, the appellate court disagreed.

The appellate court in Fla. Hurricane Prot. & Awning, Inc. found that the contract between the homeowner and the contractor allowed the contractor to recover attorney fees only in relation to a “collection” action, not a general breach of contract action. As the court found, Florida’s reciprocity law “is designed to even the playing field, not expand it beyond the terms of the agreement.” Fla. Hurricane Prot. & Awning, Inc., 43 So. 3d at 895. Had the contractor brought a collection action against the homeowner and lost, Florida’s reciprocity law would have required that the homeowner be entitled to her attorney’s fees. However, because the homeowner brought suit alleging a breach of contract, the contractual attorney’s fees provision was never triggered. In the absence of a contractual provision holding otherwise, the American rule controls, and the homeowner must pay for her own attorney’s fees. As the court found, “[t]o rule otherwise would be tantamount to re-writing the contract between the parties. This we will not do.” Fla. Hurricane Prot. & Awning, Inc., 43 So. 3d at 895-96.

Florida’s reciprocity law will grant reciprocity, nothing more. As the above case demonstrates, courts will not use Florida’s reciprocity rule to rewrite or expand a contract. As with many contractual disputes, proper drafting is key.

Peter T. Mavrick represents businesses in commercial litigation, labor/employment law, and trade secret and non-competition covenant litigation. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311; Email: peter@mavricklaw.com.