Will a Virginia court make the losing side pay our fees under the contract's fee clause?
Yes, but only what you prove: the clause gets you past the American rule and no further. "Under the so-called 'American rule,' a prevailing party generally cannot recover attorneys' fees from the losing party" (Ulloa v. QSP, Inc.). Where a contract does provide for fees but does not fix the amount, "a fact finder is required to determine from the evidence what are reasonable fees under the facts and circumstances of the particular case" (Mullins v. Richlands National Bank). Chawla v. BurgerBusters puts the burden on the claimant and states its content twice: "The party claiming the legal fees has the burden of proving prima facie that the fees are reasonable and were necessary", and on remand "each party will have the burden of establishing, as an element of its prima facie case, that the attorneys' fees it seeks are reasonable in relation to the results obtained and were necessary. Neither party shall be entitled to recover fees for duplicative work or for work that was performed on unsuccessful claims." What "reasonable" contains is a list, not a conclusion: following Seyfarth, Shaw v. Lake Fairfax Seven Ltd. Prtnrshp., 253 Va. 93 (1997), "a fact finder may consider, inter alia, the time and effort expended by the attorney, the nature of the services rendered, the complexity of the services, the value of the services to the client, the results obtained, whether the fees incurred were consistent with those generally charged for … similar services, and whether the services were necessary and appropriate". And Chawla read a two-way clause two ways: of a lease saying "Tenant shall pay to Landlord and Landlord shall pay to Tenant all costs and expenses, including attorney fees, incurred . . . in exercising any of their rights or remedies hereunder or in enforcing any of the terms, conditions or provisions hereof", the Court held it does not "limit recovery of attorneys’ fees solely to the plaintiff". The DEFENDANTS’ successful defence counted, and "To the extent, therefore, that the Chawlas were successful in the litigation, they were entitled under the lease to recover their reasonable attorneys’ fees."
The trap
The Virginia trap is evidentiary, not drafting. A fee clause does not make the number in the invoice the recoverable amount; the claimant must carry a prima facie case on BOTH limbs, reasonable AND necessary, and Chawla reverses a trial court that had put the burden on the party resisting the fee. Two further deductions come out of Chawla's own remand instruction and are easy to miss when budgeting: nothing for duplicative work, and nothing for work on claims that did not succeed, which reaches the losing counts of a suit you otherwise won.
12 authorities
The words that state the rule
Under the so-called “American rule,” a prevailing party generally cannot recover attorneys’ fees from the losing party. Lee v. Mulford, 269 Va. 562, 565, 611 S.E.2d 349, 350 (2005). However, parties are free to draft and 12 adopt contractual provisions shifting the responsibility for attorneys’ fees to the losing party in a contract dispute.
The words that state the rule
Where, as here, the contracts provided for attorney’s fees, but did not fix the amount thereof, a fact finder is required to determine from the evidence what are reasonable fees under the facts and circumstances of the particular case. See Beale v. King, 204 Va. 443, 446 , 132 S.E.2d 476, 478 (1963). In determining a reasonable fee, the fact finder should consider such circumstances as the time consumed, the effort expended, the nature of the services rendered, and other attending circumstances. See id. Ordinarily, expert testimony will be required to assist the fact finder.
The words that state the rule
The party claiming the legal fees has the burden of proving prima facie that the fees are reasonable and were necessary.
The words that state the rule
Upon remand, each party will have the burden of establishing, as an element of its prima facie case, that the attorneys’ fees it seeks are reasonable in relation to the results obtained and were necessary. Neither party shall be entitled to recover fees for duplicative work or for work that was performed on unsuccessful claims.
The words that state the rule
We hold, therefore, that the trial court erred in placing upon the Chawlas the burden of proving that the attorneys’ fees claimed by BurgerBusters were unreasonable. V For the reasons stated, we will reverse the trial court’s judgment and remand the case for a new trial.
The words that state the rule
Recently, in Seyfarth, Shaw v. Lake Fairfax Seven Ltd. Prtnrshp., 253 Va. 93, 96, 480 S.E.2d 471, 473 (1997), decided after the trial court’s decision in the present case, we held that “[a]n attorney who seeks to recover legal fees . . . must establish, as an element of the attorney’s prima facie case, that the fees charged . . . are reasonable.” In determining whether a party has established a prima facie case of reasonableness, a fact finder may consider, inter alia, the time and effort expended by the attorney, the nature of the services rendered, the complexity of the services, the value of the services to the client, the results obtained, whether the fees incurred were consistent with those generally charged for 9 similar services, and whether the services were necessary and appropriate.
The words that state the rule
based upon the following provision in the lease: Tenant shall pay to Landlord and Landlord shall pay to Tenant all costs and expenses, including attorney fees, incurred . . . in exercising any of their rights or remedies hereunder or in enforcing any of the terms, conditions or provisions hereof.
The words that state the rule
In the present case, we do not read the lease provision to limit recovery of attorneys’ fees solely to the plaintiff; rather, we think both the plaintiff and the defendants may exercise rights and remedies under the lease and enforce its terms, conditions, or provisions. Here, BurgerBusters, in exercising its rights and remedies under the lease, claimed that a bank was not a “retail” establishment, and the Chawlas claimed that it was. On that issue, the trial court was in equipoise and ruled that the bank could remain in the shopping center as a “retail” concern. Therefore, the Chawlas prevailed on that issue. They also prevailed when the trial court denied BurgerBusters’ claim for monetary damages. To the extent, therefore, that the Chawlas were successful in the litigation, they were entitled under the lease to recover their reasonable attorneys’ fees.
The words that state the rule
Thus, because nothing in the record supports the awarded fee, it is not reasonable.
The words that state the rule
We are of opinion, however, that QSP’s misappropriation of trade secrets claim does not qualify as “any action relating” to the parties’ contract as contemplated by the contract’s fee-shifting provision.
The words that state the rule
The amount of the fee award rests within the sound discretion of the trial court, and we give deference to the judgment of the trial court upon appellate review.
The words that state the rule
However, we have stated that under contractual provisions such as these a party is not entitled to recover fees for work performed on unsuccessful claims.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.