Chapter 17 - § 17.15 • ATTORNEY FEES PROVISIONS

• Jurisdiction: Colorado

§ 17.15 • ATTORNEY FEES PROVISIONS

In most construction disputes that proceed to litigation, attorney fees are likely to be a critical element regardless of whether the matter goes to court or to arbitration. In either event, each of the parties is probably looking at substantial fees. Under the Colorado adoption of the "American Rule," those fees are not recoverable unless provided for by contract, by statute, or in the event that either the claims or defenses are determined, by a court, to be frivolous or groundless.⁹¹

Accordingly, parties entering into contracts should consider whether they should provide for recovery of attorney fees by the prevailing party should litigation proceed. Simply providing that the prevailing party will recover attorney fees may not work in a typical construction case because there are likely to be claims by both parties. For instance, a contractor may be seeking the contract balance, while an owner is claiming delay damages. If the contractor wins half of its claims and the owner recovers some, but not all, of the delay damages claims, who prevails for purposes of attorney fee recovery? That question may be left to contract language permitting either the judge or the arbitrator, as the case may be, to make that call, or to chance.

Accordingly, this author has attempted to construct attorney fee contract language designed to accomplish three objectives: (1) to define "prevailing party," (2) to limit parties from making claims in excessive dollar amounts, and (3) to devise a vehicle to accomplish settlement of claims modeled, in part, upon Colorado's offer of settlement statute, C.R.S. § 13-17-202.⁹²

The suggestion is:

Attorney Fees. In the event that it becomes necessary for either party to enforce the provisions of this Agreement or to obtain redress for the breach or violation of any of its provisions, whether by litigation, arbitration, or other proceedings, the prevailing party shall be entitled to recover from the other party all costs and expenses associated with such proceedings, including reasonable attorney fees. For these purposes "prevailing party" shall mean the party who is most successful in the proceedings as determined by the trial judge or arbitrator, as the case may be. To be the "most successful party" would require that the party claiming money damages recovers a judgment or award of not less

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