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As a general rule, attorneys fees that one party expends in litigation cannot be recovered from another party in the absence of an express contractual provision requiring it. But is there a different result when a defendant in a case is required to pay damages to a plaintiff and that defendant is entitled to recover in indemnity from a third party? Can he recover legal costs from the third party which he was required to pay to the plaintiffs pursuant to a trial court judgment in favor of the plaintiff?

In the case of Toufic Nassif v. Sunrise Homes, Inc. Coast Quality Construction Company, 739 So. 2d 183, 1999 LA LEXIS 1705 (1999), the court held that where the third party was required to indemnify the defendant in the trial court action, that party was also required to indemnify the defendant for the attorneys fees that the trial court awarded to the plaintiff. This case in interesting in that it explains the principles of indemnification quite well. The court explained that indemnity “in its most basic sense means reimbursement, and may lie when one party discharges a liability which another rightfully should have assumed. It is based on the principle that everyone is responsible for his own wrongdoing, and if another person has been compelled to pay a judgment which ought to have been paid by the wrongdoer, then the loss should be shifted to the party whose negligence or tortious act caused the loss.”

A party that is not actually at fault but whose liability results from the faults of others, may recover by way of indemnity from such others. This is so even if there is not contractual requirement to do so. The duty arises at common law. It is an imposed liability that is variously called “technical, constructive, vicarious and derivative.” Such indemnity has been allowed a contractor from his subcontractor and/or supplier, so long as the exclusive fault producing liability has been that of such subcontractor and/or supplier. The basic principle behind indemnity from the party that is a fault is that “no one ought to enrich himself at the expense of another.”

In considering whether attorneys fees should be treated differently from other damages, the court considered a situation where the jury returns a verdict in favor of the contractor against a subcontractor for the full amount that had been awarded against the contractor to the plaintiff homeowner in the original trial. In such a situation, the contractor would not be entitled to recover the attorneys fees it incurred in pursuing the third-party claim against the subcontractor in the absence of express contractual language permitting the recovery of attorneys fees by the prevailing party. On the other hand, the court stated that the contractor would be entitled to recover from the subcontractor the attorneys fees that the plaintiffs recovered from the contractor in the original trial court action, since the contractor had been compelled to pay those attorneys fees as part of the plaintiffs’ “damages.”

An action for indemnity is, therefore, deemed by the court to be a separate substantive cause of action, independent of the underlying wrong, and is, therefore, distinct from an action for attorneys fees. “In light of the foregoing concepts, we conclude that the equitable principle of restitution applies in an action for indemnity to allow a defendant who is only technically or constructively liable for a plaintiff’s loss to recover from the party actually at fault the attorneys fees it was compelled to pay the plaintiff, even in the absence of a statute or contract of indemnification.”

Copyright 1999, ConstructionRIsk.com, LLC

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 1, No. 6 (Sep 1999)