Can we recover our attorney fees on this Alabama contract?
Only if something authorises it. Alabama follows the American rule, whereby attorney fees may be recovered if they are provided for by statute or by contract or if they are called for by special equity, such as in proceedings where the attorney's efforts create a common fund out of which fees may be paid (Jones v. Regions Bank, quoting City of Bessemer v. McClain). Two statutes fix fee outcomes regardless of the clause. In a civil action under the construction prompt-payment chapter, the party in whose favour judgment is rendered is entitled to recover reasonable attorneys' fees, court costs and reasonable expenses from the other party (Ala. Code § 8-29-6). In a consumer-credit transaction, a contract with an original amount financed of $300 or less may not provide for the debtor to pay attorney's fees after default, and one above $300 may provide for reasonable fees not exceeding 15 percent of the unpaid debt after default and referral to an attorney who is not a salaried employee of the creditor. The same section deals with an open-end credit plan separately (no attorney's fees while the unpaid balance is $300 or less, reasonable attorney's fees after default once it exceeds $300, with no percentage cap stated), and it lets a creditor require the debtor to pay attorney's fees before default, at the closing of or an amendment or modification to the transaction, where the original amount financed exceeds $10,000 or the transaction is secured by real property, provided the attorney is not a salaried employee of the creditor (Ala. Code § 5-19-10).
The trap
A fee clause is the usual route, and without one there is no fee award unless a statute or a recognised special equity supplies it. Two drafting traps follow from the statutes. First, in a closed-end consumer-credit transaction a fee clause above the 15 percent ceiling, or in a transaction at or below $300, is not what § 5-19-10 permits, but read which sentence of that section governs, because an open-end credit plan has its own rule and no percentage cap is stated for it. Second, in a construction contract within the prompt-payment chapter the fee award under § 8-29-6 runs to whichever party wins, so a one-way clause does not keep the other side's fees off you in that action, and check first that the chapter reaches the contract at all, because § 8-29-7 puts residential homebuilders, improvements to real property intended for residential purposes consisting of 16 or fewer residential units, contracts of $10,000 or less, and contracts with the State or an Alabama local government outside it.
5 authorities
The words that state the rule
Alabama follows the "American rule," whereby attorney fees may be recovered if they are provided for by statute or by contract or if they are called for by special equity, such as in proceedings where the attorney's efforts create a "common fund" out of which fees may be paid.
The words that state the rule
Its February 20, 2007, order is affirmed to the extent it denies the plaintiffs' motion for an attorney fee incurred in defending the appeal and is reversed to the extent it denies the plaintiffs' motion for postjudgment rental damages. The case is remanded for proceedings consistent with this opinion. AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
- statuteAla. Code § 8-29-6enactment date not established
The words that state the rule
A contractor, subcontractor, or sub-subcontractor may file a civil action solely against the party contractually obligated for the payment of the amount claimed to recover the amount due plus the interest accrued in accordance with this chapter. If the court finds in the civil action that the owner, contractor, or subcontractor has not made payment in compliance with this chapter, the court shall award the interest specified in this chapter in addition to the amount due. In any such civil action, the party in whose favor a judgement is rendered shall be entitled to recover payment of reasonable attorneys’ fees, court costs and reasonable expenses from the other party.
- statuteAla. Code § 8-29-7enactment date not established
The words that state the rule
This chapter does not apply to the following: (1) Residential homebuilders. (2) Improvements to real property intended for residential purposes which consist of 16 or fewer residential units. (3) Contracts, subcontracts, or sub-subcontracts in the amount of ten thousand dollars ($10,000) or less. (4) Contracts with the state or local governments of the State of Alabama.
- statuteAla. Code § 5-19-10enactment date not established
The words that state the rule
A contract for a consumer credit transaction with an original amount financed not exceeding three hundred dollars ($300) may not provide for payment by the debtor of attorney’s fees after default by the debtor. A contract for a consumer credit transaction with an original amount financed exceeding three hundred dollars ($300) may provide for the payment by the debtor of reasonable attorney’s fees not exceeding 15 percent of the unpaid debt after default and referral of the contract to an attorney who is not a salaried employee of the creditor. An open-end credit plan may not provide for attorney’s fees when the unpaid balance does not exceed three hundred dollars ($300), but may provide for reasonable attorney’s fees after default by the debtor when the unpaid balance exceeds three hundred dollars ($300). In a consumer credit transaction contract where the original amount financed exceeds ten thousand dollars ($10,000) or the credit transaction is secured by real property, the creditor may require the payment by the debtor of attorney’s fees prior to default by the debtor in connection with the closing of, amendment to, or modification of the credit transaction, provided that the attorney is not a salaried employee of the creditor.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.