Under the American Rule, each litigant pays its own attorneys fees. I have been practicing civil litigation for over twenty years, and nothing seems to anger clients more about the American legal system than when they are forced to pay thousands of dollars in attorneys fees and costs simply to prove that they didn’t do anything wrong. Fortunately, under Hawaii law, in certain commercial cases, the prevailing party may recover some or all of its attorneys fees from the losing party. HRS § 607-14, states as follows:
§ 607-14 Attorneys’ fees in actions in the nature of assumpsit, etc. In all the courts, in all actions in the nature of assumpsit . . . there shall be taxed as attorneys’ fees, to be paid by the losing party and to be included in the sum for which execution may issue, a fee that the court determines to be reasonable . . . . The court shall then tax attorneys’ fees, which the court determines to be reasonable, to be paid by the losing party; provided that this amount shall not exceed twenty-five per cent of the judgment.
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The above fees provided for by this section shall be assessed on the amount of the judgment exclusive of costs and all attorneys’ fees obtained by the plaintiff, and upon the amount sued for if the defendant obtains judgment.
Haw. Rev. Stat. § 607-14 (emphasis added).
There are certain key points regarding this statute about which each client should be made aware, including the following:
1. Plaintiff’s recovery of attorneys fees is capped at twenty five percent (25%) of the judgment awarded. Thus, for example, if the plaintiff is awarded a judgment of $100,000, the plaintiff’s recovery is capped at 25% of $100,000 or $25,000.
2. The defendant’s recovery is capped at 25% of the damages unsuccessfully sought by plaintiff. Thus, for example, if the plaintiff seeks $100,000, the defendant’s potential award is capped at $25,000.
3. If the plaintiff doesn’t specify the amount that he is seeking and it is impossible for the Court to determine the damages sought by the plaintiff, the prevailing defendant may be awarded all of its reasonable attorneys fees. Thus, the plaintiff is highly encouraged to specify early in the case the damages that plaintiff is seeking to ensure that if the plaintiff is unsuccessful, the attorneys fees award is capped.
4. The Hawaii Supreme Court has held that the attorneys fees award under HRS § 607-14 is not discretionary. The Court must award attorneys fees to the prevailing party.
5. The statute only applies to cases concerning “assumpsit” damages. The Hawaii Supreme court has defined an “assumpsit” case as a claim “for the recovery of damages for the non performance of a contract . . . as well as quasi contractual obligations.” Schulz v. Honsador, Inc. 67 Haw. 433 (1984). Although this law only applies to matters of “assumpsit,” it has been applied to various types of litigation including breach of contract, breach of fiduciary duty, and legal malpractice so long as they concern (i) an attempt to recover damages and (ii) a contractual arrangement.
Unfortunately, Hawaii does not have a similar attorneys fee provision in personal injury cases. Moreover, although HRS § 607-14 is not the only Hawaii law that allows for the recovery of attorneys fees. Therefore, when analyzing a case, a Hawaii attorney should also explore other theories that may allow the recovery of attorneys fees. Those theories will be discussed in subsequent entries of this blog.