When construction projects become construction disputes, contractors and suppliers start thinking about how to recover their attorney’s fees and other legal costs. Massachusetts follows the “American Rule” for recovery of legal expenses that states each party must pay their own attorney’s fees. There are a few exceptions within the American Rule: where a law or Court rule awards legal fees to a prevailing party or the parties’ contract provides for the recovery of legal fees. Here are the most common circumstances in which parties who prevail in construction disputes can recover their attorney’s fees and other legal costs.
- Prevailing on a claim for payment on a payment bond required for public construction projects under M.G.L. c. 149, § 29. Pursuant to the statute, a judgment for a payment bond claimant “shall include reasonable legal fees based on the time spent and the results accomplished…” A Massachusetts Appeals Court decision from 2016 confirmed that an award of fees is mandatory and not subject to a court’s discretion. (Unlike a payment bond claim, a party cannot recover their attorneys’ fees for prevailing on a mechanic’s lien claim under M.G.L. c. 254.)
- Prevailing on a claim for unfair and deceptive trade practices under M.G.L. c. 93A. The bar is set high for unfair and deceptive practices between two businesses, but if a business obtains a judgment on its M.G.L. c. 93A claim, the Court shall award reasonable attorneys’ fees and costs, notwithstanding the amount of the judgment.
- Where the parties’ contract provides for the recovery of legal fees. The contract language does not need to be elaborate. It is sufficient to state that a party “is entitled to recover its legal fees, including attorneys’ fees and costs, arising from a breach of this contract.” What is necessary is that this agreement is in place as part of the parties’ contract and not simply added to documents sent by the parties later, such as an invoice or statement.
If these circumstances do not apply, you may still be able to recover some amounts over your principal damages if you win your claim. Massachusetts statutory interest applies if the contract does not set the rate of interest that accrues on past due amount. By law, interest will accrue at 12% per year (1% per month) from the date the debt was due until it is paid in full. Additionally, Massachusetts law allows a party that prevails in court to recover limited out-of-pocket costs, such as filing and service fees and certain trial costs. While this does not allow recovery of attorney’s fees, it gives a prevailing party some recoupment of their legal costs.
Construction disputes can be complex and pursing your rights is difficult without a solid understanding of the law. For questions or assistance with your Massachusetts construction dispute, contact Jessica Murphy at (508) 791-8500 or another member of Mirick O’Connell’s experienced Construction Group.