Under Construction – Legal Fees and Costs Recovery and Dispute Resolution Clauses

Letter from the Editor

by James J. Sienicki

Welcome to the Summer 2014 edition of Under Construction. This season’s issue tackles two important dispute-related issues affecting the construction industry throughout the Mountain West and southwestern United States: legal fees and costs recovery, and dispute resolution clauses.

Jill Casson Owen and Cindy Schmidt open our newsletter with an explanation of the “American Rule” governing the recovery of fees and costs arising out of construction-related disputes. Jill and Cindy note that in Arizona, where the award of litigation expenses and attorneys’ fees in many construction-related contexts may be left to the discretion of a court or arbitrator, parties can increase their opportunity to recover legal fees and costs by including clear provisions in their contracts. Scott Sandberg follows with a discussion of legal fees and costs recovery in Colorado, where litigants—including prevailing parties—are often responsible for paying their own litigation expenses unless both parties have signed an agreement providing for the payment of fees.

Josh Grabel picks up the discussion of dispute-related fees and costs recovery by examining the statutes governing such situations in New Mexico. Josh notes that, subject to limited exceptions and reasonable terms, New Mexico courts will usually enforce contractual provisions relating to legal fees and costs recovery. Lindsey Martínez then urges that contractual provisions also matter significantly in the California court system; California also generally follows the “American Rule,” where each party to a lawsuit is responsible to pay its own fees and costs, unless otherwise provided by statute or contract. Paul Shakespear’s article on Utah law regarding attorneys’ fees and costs rounds out the discussion on the various ways different jurisdictions within our firm’s footprint address these issues and again emphasizes the need for well drafted and precise attorneys’ fees provisions in construction contracts.

Brett Johnson and Eric Spencer contribute to our discussion of legal fees and costs recovery by reviewing the issue as it applies to federal contracting disputes. Brett and Eric emphasize that legal fees and costs recovery often depends on the forum in which the claim is brought, as well as the substantive nature of the claim. They then look specifically at the law governing legal fees and costs recovery in the U.S. Court of Federal Claims, the U.S. Government Accountability Office, the U.S. and Civilian and Armed Services Boards of Contract Appeals, and the U.S. Federal District Courts.

Jason Ebe concludes our summer issue with an important review of dispute resolution clauses in design and construction contracts. Jason asserts that the significance of these clauses in construction-related disputes warrants their close examination and consideration when drafting, negotiating and signing contracts. Thus, parties (along with knowledgeable construction counsel) should consider making every reasonable effort to tailor dispute resolution clauses to their specific contexts and intentions.

We hope you will enjoy our discussion of these key contractual and dispute-related issues as they uniquely—and at times, consistently—apply to construction and design professionals associated with construction projects governed by Arizona, New Mexico, Utah, Colorado or California law. As always, we welcome your questions, comments and ideas for future editions of our newsletter! Keep cool this summer.

Sincerely,
Jim Sienicki

[Read the full newsletter.]