Following the construction industry and related legal topics in the United States.


Friday, June 15, 2007

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.)

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