After oral argument before the Rhode Island Supreme Court, KSP attorneys Jackson Parmenter and Sean Klammer recently secured a unanimous Decision reversing the Superior Court’s refusal to award attorneys’ fees and costs to a demolition contractor under a contractual “fee shifting” provision. The issues on appeal were two-fold: 1) Whether a demolition contractor who secured a judgment in its favor after a trial before the Superior Court constituted a “prevailing party” under the contractual fee shifting provision to whom reasonable attorneys’ fees and costs should be awarded; and 2) whether the contractor’s successful prosecution of claims for extra work on the project fell within the confines of the fee shifting provision such that fees and costs should be award relative to the extra work claims. Deciding in favor of the KSP’s client, the Supreme Court articulated a new standard to be applied by the courts when determining whether a particular party is a “prevailing party” under a contractual fee shifting provision (i.e. a contract provision which states, in general terms, something similar to the following: “the prevailing party to any dispute regarding this contract shall be entitled to its reasonable attorneys’ fees and costs”).
The victory secured by KSP is an important one. Not only did the Decision address novel issues of first impression under Rhode Island law, the Decision established the appropriate methodology that must now be employed by Rhode Island courts in determining whether a particular party “prevailed” under a contractual fee shifting provision. Many of our construction clients routinely include fee shifting provisions in their contracts. This Decision has now crystalized the specific analysis that courts must employ. As a result, parties to a fee shifting provision can be better suited to balance the costs and benefits associated with litigating a contract dispute subject to similar fee shifting provisions.
If you have questions regarding the impact this Decision has on any fee shifting provisions contained with your existing contracts, or would like to include a fee shifting provision in your contracts, please contact Jackson Parmenter, Esq. at our office.
