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HERE THE LANGUAGE OF THE CONTRACT DID NOT MAKE IT “UNMISTAKABLY CLEAR” THAT THE LOSER WOULD PAY THE WINNER’S ATTORNEY’S FEES; THEREFORE THE FEE AWARD WAS REVERSED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the plaintiffs, who prevailed in this contract action (based upon a license to repair damage to plaintiffs’ property), were not entitled to have the defendants pay their attorney’s fees because the contract did not explicitly so provide:

“Under the general rule, attorney’s fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule” … . “It is not uncommon, however, for parties to a contract to include a promise by one party to hold the other harmless for a particular loss or damage and counsel fees are but another form of damage which may be indemnified in this way” … . “When a party is under no legal duty to indemnify, a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed” (id.). “The promise should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances” .. . “Inasmuch as a promise by one party to a contract to indemnify the other for attorney’s fees incurred in litigation between them is contrary to the well-understood rule that parties are responsible for their own attorney’s fees, the court should not infer a party’s intention to waive the benefit of the rule unless the intention to do so is unmistakably clear from the language of the promise” … .

Here, the license did not provide for attorney’s fees for the instant litigation. Neither of the paragraphs in the license regarding attorney’s fees provided for attorney’s fees in litigation between the parties over alleged breaches of the license. Because the parties did not make “unmistakably clear” in the license that they intended to depart from the general rule that the losing party is not responsible for the winning party’s attorney’s fees, the Supreme Court erred in granting that branch of the plaintiffs’ motion which was for an award of attorney’s fees … . Giannakopoulos v Figame Realty Mgt., 2023 NY Slip Op 04364, Second Dept 8-23-23

Practice Point: The general rule is each party pays its own attorney’s fees. Any contract to the contrary must be “unmistakably clear,” not the case here.

 

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