House and Senate Bills Will Allow Attorneys Fees on Public Construction Projects

Several days ago I wrote an entry on HB 1121 and SB 1245, which if passed will have a significant impact on state construction projects. In addition to the impact on an project owner's right to withhold retainage, both bills include a "prevailing party" provision under which the prevailing party in a lawsuit under N.C. Gen. Stat. 143-134.1 would be permitted to recover its reasonable attorneys fees. "Prevailing Party" is defined as the party that is awarded 50% or more of its claim (for a plaintiff) or is made to pay less than fifty percent (50%) (for a defendant) of the original amount sought.

One can only imagine the likely result with the institution of prevailing party language in state construction projects. In a hotly contested court battle over millions of dollars in claims for extra work performed by a subcontractor and a counterclaim for defective work by an owner or general contractor, if either party receives one dollar ($1) over fifty percent (50%) of the amount of its claim and prevails by a margin of 51% to 49%, it also receives a possible windfall by receiving its attorneys fees. Note, however, that North Carolina Courts have a history of interpreting “reasonable attorneys fees” as not exceeding 15 percent of the amount in dispute. (This entry published by Culley Carson, a member of Womble Carlyle's Construction Law Group.)