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Recovery of Attorney's Fees and Costs in Virginia Civil Actions - January 2016

January 19, 2016

By Michael E. Ornoff, Esq.

Litigants in civil lawsuits frequently ask if they will recover their attorney’s fees and costs if they win a civil suit which they initiate or which has been brought against them. Where they are recoverable, potential liability for such fees and costs can become a consideration as important as the amount of the underlying claim in balancing the risks versus benefits in initiating the action and in assessing whether to settle a case or take it to trial. Recovery of attorney’s fees by a prevailing party is not the norm in most cases because Virginia follows the “American Rule” which provides that “[g]enerally, absent a specific contractual or statutory provision to the contrary, attorney’s fees are not recoverable by a prevailing litigant from the losing litigant.” REVI, LLC v. Chicago Title Ins. Co., 290 Va. 203, 213, 776 S.E.2d 808, 813 (2015) (citing Mullins v. Richlands Nat’l Bank, 241 Va. 447, 449, 403 S.E.2d 334, 335 (1991)) (bold italics added).

In the context of the “statutory exception” to the “American Rule,” it appears that legislative authorization for such fee recovery must be clear, express and unambiguous. Last month, the Virginia Supreme Court addressed the recovery of attorney’s fees under Va. Code §55-332 which allows a landowner to recover “any directly associated legal costs incurred by the owner” in seeking redress for a trespasser’s severance or removal of timber or trees from his land. In Chacey v. Garvey, 2015 Va. LEXIS 185 (Dec. 30, 2015), the Court determined that “directly associated legal costs” recoverable under that statute did not include attorney’s fees. The Court noted that the legislature’s authority for awarding either “costs” or “attorney’s fees” is in derogation of common law and, for that reason, such authority was “subject to strict interpretation.” In its opinion, the Court cited an earlier case, Advanced Marine Enterprises, Inc. v. PRC Inc., 256 Va. 106, 501 S.E.2d 148 (1998), in which it had interpreted the legislature’s inclusion of “costs” under other statutes to be limited only those “costs essential for the prosecution of the suit, such as filing fees or charges for service of process.” Costs under such statutes, however, did not include expert witness fees, express mail expenses, messengers, meals, computer research, photocopies, transcripts and other expenses incurred.

Further, in Chacey, the Court noted that in more than 200 other instances the General Assembly had expressly allowed for recovery of attorney’s fees, but did not provide such right of recovery in the particular statute under consideration. While the Court agreed “any directly associated legal costs incurred by the owner of the timber as a result of the trespass . . . means more than the costs necessary for the prosecution of the suit,” it did not include the right to recover attorney’s fees.

Interestingly, the Court did not attempt to define the meaning of “any directly associated legal costs incurred by the owner of the timber as a result of the trespass,” but remanded the case back to the trial court for such determination. The important point of Chacey seems to be that, in order for attorney’s fees to be recoverable by statute, the General Assembly must clearly, precisely and unambiguously declare its intention to do so.

Chacey may also have application to the other exception to the “American Rule” where the right to recover attorney’s fees and costs is established pursuant to a contractual provision. If the parties to a contract intend for a prevailing party to recover attorney’s fees arising out of a contractual dispute, Chacey suggests that such intention be clearly articulated in express language. Moreover, given the holding in Advanced Marine limiting the meaning of “costs,” contracting parties intending to implement comprehensive fee and cost shifting provisions in the event of litigation should include language more specific than merely “recovery of attorney’s fees and costs,” which might foreclose recovery costs other than those “essential for the prosecution of the suit.” Instead, fee and cost shifting provisions in a contract should include an extensive enumeration of those costs and should specify that such enumeration is intended by the parties to be “by way of example only and not construed as a limitation upon the types of costs incurred incidental to the litigation.”

Michael E. Ornoff focuses his practice on eminent domain/condemnation, general civil and business litigation, federal tort claims and alternative dispute resolution. For more information, contact him at mornoff@pendercoward.com or (757) 502-7340.