Can the prevailing party recover attorney fees in this South Dakota contract dispute, or does the contract have to say so?
South Dakota leaves attorney fees to the parties' own agreement outside a short list of specific statutory contexts. SDCL 15-17-38's first sentence states the default: "The compensation of attorneys and counselors at law for services rendered in civil and criminal actions and special proceedings is left to the agreement, express or implied, of the parties." Stern Oil Co. v. Brown states the baseline and the exception together. The baseline is the American rule: "South Dakota follows the American rule of attorneys' fees, which provides that each party is responsible for their own fees." The parties' agreement is what displaces it: "But an award of attorneys' fees is allowed when authorized by the parties' agreement or by statute." "Thus, even if no statute authorizes an award of attorneys' fees, 'they are recoverable if the parties' contract so provides.'"
The trap
SDCL 15-17-38's remaining sentences give the court DISCRETION to award fees, and only in a narrow list of proceedings: “The court, if appropriate, in the interests of justice, may award payment of attorneys' fees” (divorce, annulment, paternity, custody, visitation, separate maintenance, support or alimony, trust administration, probate and guardianship, and mortgage foreclosure), and that list does not include ordinary commercial contract litigation. The same section also carries the general route most fee statutes actually run through (“attorneys' fees may be taxed as disbursements if allowed by specific statute”), so “no fee clause” does not by itself mean “no fees” if some other statute allows them. Outside those listed proceedings, a party with no fee clause in its contract and no other specific fee statute on point recovers no attorney fees at all in South Dakota regardless of who prevails; Stern Oil's holding that fees are "recoverable if the parties' contract so provides" is also, read the other way, a statement that they are NOT recoverable if it does not. A drafter relying on a general "prevailing party" norm from another state should not assume South Dakota has a background statute that reaches a commercial dispute the way, for example, a mandatory commercial-transaction fee statute does elsewhere: no such general commercial fee-shifting statute was located for South Dakota in the research for this rule.
5 authorities
- statuteSDCL § 15-17-38enactment date not established
The words that state the rule
The compensation of attorneys and counselors at law for services rendered in civil and criminal actions and special proceedings is left to the agreement, express or implied, of the parties.
- statuteSDCL § 15-17-38enactment date not established
The words that state the rule
However, attorneys' fees may be taxed as disbursements if allowed by specific statute. The court, if appropriate, in the interests of justice, may award payment of attorneys' fees in all cases of divorce, annulment of marriage, determination of paternity, custody, visitation, separate maintenance, support, or alimony. The court may award the fees before or after judgment or order. The court may award attorneys' fees from trusts administered through the court as well as in probate and guardianship proceedings. Attorneys' fees may be taxed as disbursements on mortgage foreclosures either by action or by advertisement.
The words that state the rule
But an award of attorneys’ fees is allowed when authorized by the parties’ agreement or by statute.
The words that state the rule
South Dakota follows the American rule of attorneys’ fees, which provides that each party is responsible for their own fees.
The words that state the rule
Thus, even if no statute authorizes an award of attorneys’ fees, ‘they are recoverable if the parties’ contract so provides.’