Attorney’s fees’ provisions are common in construction contracts.  They are an important provision if you want to create a contractual entitlement to recover your attorney’s fees in the event there is a contractual dispute.  Presuming you prevail on the significant issues of your dispute and are entitled to attorney’s fees, there is an evidentiary hearing as to the reasonableness of attorney’s fees — both as to the reasonableness of the hours expended and of the hourly rates.   Generally, the attorney’s fees incurred in litigating the amount of attorney’s fees is not recoverable.  This is oftentimes referred to as “fees on fees.”  With that said, such fees on fees can be recoverable if the contractual provision is drafted broad enough to allow the prevailing party to recover reasonable attorney’s fees including fees incurred in litigating the reasonable amount of fees.   If you want to recover fees on fees, you will want to include this language in your construction contract.  For more information on this issue, please check this article.   



Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.



On October 1, 2019, a modification to existing law (Florida Statute s. 627.756) will take place that allows general contractors to have a statutory basis to recover attorney’s fees against its subcontractor’s performance bond.     (Obviously, the subcontractor will need to be properly defaulted pursuant to the terms of the performance bond and incorporated subcontract.)  Now, while some manuscript subcontractor performance bonds already give the general contractor a contractual right to recover attorney’s fees against the performance bond, this right will also exist by statute for performance bonds issued on or after October 1, 2019.  This modification is good news for contractors that require certain subcontractors to obtain a performance and payment bond (as opposed to enrolling the subcontractor in a subcontractor default insurance program).  Irrespective of this modification, it is still good practice for a contractor requiring a subcontractor to provide a performance and payment bond to also ensure a contractual right exists to recover attorney’s fees under a bond claim.  However, with this modification, a contractor defaulting a bonded subcontractor will also seek to recoup its attorney’s fees against the performance bond under this statute.   Good news for contractors.  Perhaps, not so good news for sureties and subcontractors required to indemnify their sureties.  


Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.




Many subcontracts contain a provision in the default section that reads something to the effect:


Upon any default, Subcontractor shall pay to Contractor its attorney’s fees and court costs incurred in enforcing this Subcontract or seeking any remedies hereunder.” 


Oftentimes, a party may wonder as to the enforceability of the provision and how it is applied in the context of a dispute between a contractor and its subcontractor where both parties have asserted claims against the other.   


In an opinion out of the Middle District of Georgia, U.S. f/u/b/o Cleveland Construction, Inc. v. Stellar Group, Inc., 2019 WL 338887 (M.D.Ga. 2019), a subcontractor and prime contractor on a federal construction project each asserted claims against the other in the approximate amount of $4 Million, meaning there was a potential $8 Million swing in the dispute.


The subcontract contained a provision entitling the contractor to recover attorney’s fees incurred in enforcing the subcontract or seeking remedies under the subcontract upon any default, identical to the provision above. 


The case proceeded to a jury trial and a general verdict form was presented to the jury that did not differentiate between the claims each party sought.  The jury found the contractor was liable to the subcontractor for approximately $2.5 Million and the subcontractor was liable to the contractor for approximately $1.3 Million, leaving a net verdict in favor of the subcontractor for approximately $1.2 Million.


The contractor, however, sought its attorney’s fees (and costs) pursuant to the default provision since the jury found the subcontractor was liable to it for approximately $1.3 Million.   The subcontract provided that upon a default, the contractor is entitled to attorney’s fees incurred in (i) enforcing the subcontract or (ii) seeking remedies under the subcontract.  But, to be entitled to fees, there had to be a subcontractor default. 


The trial court found the subcontract was unclear as to the actual connection that needed to exist between the default and what is actually recoverable at trial.  In other words, it was unclear whether there needed to be a relationship between the default and the recoverable attorney’s fees or whether the contractor could recover attorney’s fees upon any default regardless of whether the attorney’s fees incurred related to that specific default.  The trial court did not interpret the default attorney’s fees provision that broadly and held the contractor must show a causal connection between the default, the enforcement of the subcontract or remedies sought under the subcontract, and the attorney’s fees incurred.  “Under the [subcontract] enforcement prong, [Contractor] would be expected to show that the fees it incurred related to the successful pursuit of the claim for default.  Similarly, under the remedies [sought under the subcontract] prong, [Contractor] would only be entitled to fees incurred in the actual obtaining of a remedy for [Subcontractor’s] default.”  Stellar Group, 2019 WL at *2.  


This is not an easy feat, and here lies the problem.    Based on a general jury verdict form, the jury was not asked to make specific findings as to facts that could support the issues relating to the default or the claims prevailed on.  Thus, allocating those attorneys’ fees incurred to the default and enforcement of the subcontract it prevailed on is taking a shot in the dark.


Notwithstanding, there are lessons learned from this case.  First, the trial court did not find the attorney’s fees provision unenforceable even through the net judgment went in favor of the subcontractor,  That is promising.  Second, for purposes of a jury trial, had the contractor objected to a general verdict form and requested special interrogatories in the verdict form relating to this issue, the contractor may have been able to allocate certain attorney’s fees incurred to the claims or issues it prevailed on at trial.  And, third — perhaps the most important — this subcontract language can be revisited to make the entitlement and application of attorney’s fees more clear in favor of the contractor.   With that said, the trial court’s interpretation that the fees incurred should have a causal connection to the default and enforcement / remedies under the subcontract prevailed on is not an unreasonable application by any means. 


Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.



shutterstock_195189626Does a CGL policy cover attorney’s fees and costs in property damages claims, to the extent there is a contractual or statutory basis to recover attorney’s fees? Naturally, you need to review the policies and this is not a clear-cut issue, but there is law to argue under.  


A case I have argued in support of CGL policies providing for coverage for attorney’s fees as a component of property damage claims when there is a contractual or statutory basis is Assurance Co. of America v. Lucas Waterproofing Co., Inc., 581 F.Supp.2d 1201 (S.D.Fla. 2008).  In this case, the following applied:


-The policy provided coverage for “those sums that the insured becomes legally obligated to pay as damages of… ‘property damage’….

– Property damage was defined as “physical injury to tangible property, including all resulting loss of use of that property.”

-The term damage, in of itself, was not defined in the policy.


The trial court looked at whether  attorneys’ fees and costs are damages arising because of ‘property damage’ to which the insurance policy at issue applies.  


If an insurer may defend against a claim that is covered by the policy without taking into account potential attorneys’ fees and costs that will be awarded if the opposing party prevails, the insurer creates an externality whereby, in the course of seeking to minimize its own liability, it imposes potential costs on the insured at no additional cost to itself.  This externality undermines the very reason why an insurer can at once possess a duty and a right to defend, which is that the interests of the insured and the insurer are presumed to be aligned with respect to a claim for damages covered by the policy.  Every dollar of liability for a covered claim for which the insured cannot be held liable is a dollar saved by the insurance company.  If, however, when defending against a claim that is covered by the policy, an insurer can increase the liability of the insured while simultaneously decreasing its own liability, the interests of the insurer and insured are no longer aligned, giving rise to a conflict between the insurer and insured and making the coexistence of the right and duty to defend untenable. 


Therefore, this Court finds that attorneys’ fees and costs that an insured becomes obligated to pay because of a contractual or statutory provision, which are attributable to an insurer’s duty to defend the insured against claims that would be covered by the policy if the claimant prevails, constitute damages because of ‘property damage” within the meaning of a CGL policy.

Assurance Co. of America, 581 F.Supp.2d at 1214-15. 


In July of 2018, the Ninth Circuit Court of Appeals reached a similar conclusion in Association of Apartment Owners of Moorings, Inc. v. Dongbu Insurance Co., Ltd., 731 Fed.Appx. 713 (9thCir. 2018). The issue on appeal was whether the liability insurer was required to indemnify its insured for attorneys’ fees its insured was ordered to pay against a third-party that prevailed on a water damage claim.  Similar to above, the policy did not define the term “damage” and the Ninth Circuit explained:


The policy provides coverage for damages Moorings [insured] must pay “because of” covered property damage.  This phrase, which is undefined, connotes a non-exacting causation requirement whereby any award of damages that flows from covered property damage is covered, unless otherwise excluded.  The Bradens [third-party claimant] were awarded fees…because their home incurred water damage, and they incurred additional loss in order to recover for this damage.  The fee award is thus properly considered an award of damages that Moorings must pay “because of” that covered property damage and is not otherwise excluded. 

Association of Apartment Owners of Moorings, Inc., 731 Fed.Appx. at 714.





Please contact David Adelstein at or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.