By Bruce Jervis
Public works statutes frequently authorize contractor recovery of attorney fees and costs if the contractor is the prevailing party in a claim for additional compensation or other relief. Private construction contracts also often contain clauses calling for the prevailing party in a dispute to recover attorney fees and costs from the other party. There is a problem, however. These statutes and contracts seldom define the term “prevailing party.” Courts and other decision makers are left to their own devices.
In a recent Indiana case, a subcontractor was awarded 2.1% of the total amount it had demanded from a prime contractor. The prime contractor said it was the prevailing party, as it had prevailed on 97.9% of the sub’s claim. An appellate court ruled, however, that the sub – not the prime – was the prevailing party. The prime contractor had breached the subcontract; the subcontractor had not. The determination of a “prevailing party” is not based simply on a numerical evaluation of the damages awarded.
With so much at stake, shouldn’t the term “prevailing party” be defined? Judicial precedent is all over the landscape regarding what is or is not required in order to prevail. There is no need for a uniform definition. But the statutes and contract clauses that use the term could each attempt an objective definition. Is that too much to ask? Your comments are welcomed.