{"id":901135,"date":"2023-05-04T15:01:00","date_gmt":"2023-05-04T21:01:00","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901135"},"modified":"2023-05-03T15:08:19","modified_gmt":"2023-05-03T21:08:19","slug":"indemnity-clause-attorney-fees-rejects-shifting","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/indemnity-clause-attorney-fees-rejects-shifting\/","title":{"rendered":"The American Rule Stands: Court Rejects Fee-Shifting Under Indemnity Clause"},"content":{"rendered":"\n<p>John Mark Goodman | <a href=\"https:\/\/www.buildsmartbradley.com\/2023\/04\/the-american-rule-stands-court-rejects-fee-shifting-under-indemnity-clause\/?utm_source=Bradley+Arant+Boult+Cummings+LLP+-+BuildSmart&amp;utm_campaign=1a4c7867bd-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_b504caf31b-1a4c7867bd-78863422\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">BuildSmart<\/a><\/p>\n\n\n\n<p>The \u201cAmerican Rule\u201d on <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/attorneys-fees-construction-disputes\/\" target=\"_blank\" rel=\"noreferrer noopener\">attorneys\u2019 fees<\/a> is that each party pays its own lawyers, even if you win.\u00a0As with almost any rule, there are exceptions. Sometimes there is a statute that requires the losing party to pay the prevailing party\u2019s fees. For example, many states have enacted Prompt Pay laws that include a fee-shifting provision which applies to construction contracts. Sometimes contracting parties agree to include such a provision in their contract. Those provisions generally say that if there is a dispute, the parties agree that the loser pays the winner\u2019s fees.\u00a0<\/p>\n\n\n\n<p>Other times, there is no statute or contract provision on point, so clever lawyers may resort to more creative arguments to try and stick the other side with their client\u2019s fees.&nbsp;Such was the case earlier this month in&nbsp;<em>Menard v. DiPaolo Industrial Development<\/em>, 2023 WL 2854291 (Ohio Ct. App., April 10, 2023).&nbsp;That case involved a dispute between two contracting parties: an owner and demolition contractor.&nbsp;The owner prevailed at trial and was awarded $274,000, including $180,000 for attorney fees. Although the contract between the parties did not have a fee-shifting provision, it did include an indemnity clause that was arguably broad enough to require the contractor to pay the owner\u2019s fees.&nbsp;That clause required the contractor to indemnify the owner \u201cfrom any and all liability, damages, expenses, claims, damages, actions or cause of action,&nbsp;<em>including attorney fees, arising out of the performance of the Contract Documents, Agreements, and\/or Work hereunder<\/em>.\u201d&nbsp;It also specified the owner\u2019s rights if the contractor failed to step in and defend against an indemnified claim.<\/p>\n\n\n\n<p>The trial court relied upon this clause in awarding attorney fees to the owner, who prevailed on the underlying claims.\u00a0In reversing the trial court\u2019s award of fees, the appellate court applied the normal rules of contract interpretation to conclude that, taken as a whole, the indemnity clause only applied to claims brought by third parties.\u00a0The indemnity clause did not apply to or allow for fee-shifting in disputes between the contracting parties.\u00a0This means the owner will recover less than $100,000 and is stuck paying its own attorney fees of $180,000.\u00a0 Application of the American Rule therefore means the owner in this particular case will have a negative net recovery despite being the prevailing party.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>John Mark Goodman | BuildSmart The \u201cAmerican Rule\u201d on attorneys\u2019 fees is that each party pays its own lawyers, even if you win.\u00a0As with almost any rule, there are exceptions. Sometimes there is a statute that requires the losing party to pay the prevailing party\u2019s fees. For example, many states have enacted Prompt Pay laws&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/indemnity-clause-attorney-fees-rejects-shifting\/\">Continue reading <span class=\"screen-reader-text\">The American Rule Stands: Court Rejects Fee-Shifting Under Indemnity Clause<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,528,224,9288],"class_list":["post-901135","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-attorney-fees","tag-construction-contract","tag-indemnity-clause","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The American Rule Stands: Court Rejects Fee-Shifting Under Indemnity Clause - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"description\" content=\"\u201cAmerican Rule\u201d on attorneys\u2019 fees is that each party pays its own lawyers, even if you win. 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