The court granted plaintiff’s motion for attorneys fees after reducing certain amounts. In doing so, the court denied the defendant (Flatiron’s) request for an evidentiary hearing to probe the fees and question the Plaintiff (AECOM’S) expert, because the court stated there is no need to do so when a record has been fully developed through briefs, affidavits, and depositions. The dispute arose out of a Teaming Agreement whereby AECOM was hired by Flatiron to serve as lead designer for the C-470 Express Lanes project in Colorado. AECOM filed suit against Flatiron for $5.3 million in unpaid fees, and Flatiron countersued — alleging negligent misrepresentation and breach of the subcontract. Flatiron claimed damages of $263 million based on AECOM’s alleged “Botched [ ] bid design” for the project. The court granted summary judgment to AECOM on Flatiron’s negligent misrepresentation claim and breach of subcontract claim. Having ruled against Flatiron on the counterclaims the court ordered Flatiron to pay AECOM’s attorneys’ fees and litigation costs in defending against the Flatiron claims pursuant to the fee-shifting provision in the subcontract. After a four-week jury trial, the jury found in favor of AECOM on all claims and awarded it over $5 million in compensatory damages. Under the prevailing party attorneys’ fees clause of the contract, AECOM was entitled to its costs of defending against the Flatiron claim but not the costs of pursuing its affirmative claims for damages against Flatiron. AECOM sough almost $10 million in attorneys fees, and the court ultimately awarded it $8,293,733.56.
AECOM Tech. Servicesk Inc. v. Flatiron/AECOM, LLC, 2025 U.S. Dist. LEXIS 40755 (Colorado 2025).
The Fee-Shifting Provision or prevailing party clause provided the following:
“If the Party submitting the claim prevails on more than half of the claims it makes, then each party shall pay its own costs of such litigation. If the Party submitting the claim to litigation prevails on less than half of the claims it makes, then the Party submitting the claim to litigation shall pay both Parties’ costs of such litigation, including reasonable attorneys’ fees.”
AECOM agreed to withdraw from its attorneys’ fees claim those costs associated with making its affirmative claim as a plaintiff. Flatiron argued that the court should deny the AECOM fee motions. One reason asserted by Flatiron was that AECOM should not be permitted to fees incurred from litigating its fees and costs motions – i.e., “fees on fees.” The court rejected that reason because the Ten Circuit Court generally allows recovery of fees for an attorney’s work in seeking attorney’s fees. Having concluded that AECOM was entitled to recover attorneys fees the court analyzed the amounts claimed to determine that they were reasonable. In doing so, the court stated:
“Of course, “[t]his does not mean [] that the trial court should simply award the full amount billed by the prevailing party’s attorneys.” W. States Mechanical Contractors, 834 F.2d at 1548. While “the trial court is not responsible for independently calculating a ‘reasonable’ fee,” it retains “discretion to adjust or even deny a contractual award of fees if such award would be inequitable or unreasonable.” Id. at 1548-49. “The district court may choose to use” “the familiar factors from the federal cases awarding fees in a statutory context” “not to compute a reasonable fee, but to assist in determining if the fees claimed are unreasonable or inequitable.” Id. at 1550.”
With these principles in mind, the Court proceeded to address various fee reductions advocated by Flatiron. The hourly fees for the 18 AECOM attorneys were significant – up to $765/hr. The court revised two of the attorneys down to a lower effective hourly rate but did not question the rates charged by the others.
Comment:
This case demonstrates the significance of including a prevailing party attorneys’ fees clause in a contract. If a firm is required to pay fees because the contract mandates it, those fees are not insured damages. They are created by “contractual liability” and are excluded from coverage pursuant to the contractual liability clause in the insurance policy.
When reviewing design professional contracts, our office routinely either deletes the prevailing party clause completely, or in the alternative we revise the clause to read something like the following:
“Prevailing party is the party who recovers greater than 67% of its total claims in the action or who is required to pay no more than 33% of the other party’s total claims in the action when considered in the totality of claims and counterclaims, if any. In claims for monetary damages, the total amount of recoverable attorney’s fees and costs shall not exceed the net monetary award of the Prevailing Party.”
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 ConstructionRisk 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 Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 27, No. 7 (November 2025).
Copyright 2025, ConstructionRisk, LLC
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