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Posted: September 7, 2017

Appellate Court’s Costs Award Does Not Bar Application for Fees Under Contract

On August 31, 2017, Justice Ostrager of the New York County Commercial Division issued a decision in Lin Shi v. Alexandratos, 2017 NY Slip Op. 31836(U), holding that an appellate court’s award of costs did not preclude a later application for an award of attorneys’ fees under the parties’ contract, explaining:

[The plaintiff] correctly argues that the Appellate Division, First Department denied his appeal “without costs.” Plaintiff argues that this Court cannot, thereafter, grant additional costs and legal fees. Plaintiff also correctly argues that the Court of Appeals denied his motion for leave to appeal “with one hundred dollars costs and necessary reproduction disbursements.” [The plaintiff] asserts that the defendants did not move for those costs, have waived them, and are now estopped from seeking to recover them.

However, the cases plaintiff cites in support of this argument are all distinguishable because, in part, they do not involve a contract that expressly requires the indemnification of a party’s costs and attorney’s fees, as does the Contract here. Nor does plaintiffs memorandum of law and supporting papers raise any facts relating to those cases not apparent from the decisions themselves.

In a recent federal, but analogous case, a District Court denied attorney’s fees and costs, relying principally on the Circuit Court’s instruction in a prior appeal that each side “bear its own costs”. Noting that the District Court had erroneously concluded that the Circuit Court’s language “foreclosed the possibility of an award of attorneys’ fees” despite that attorneys’ fees were permitted by the governing statute 42 USC ยง 1988, the Second Circuit held that the American rule that attorney’s fees ordinarily are not among the costs that a winning party may recover is not absolute; it yields to a federal statute authorizing an award of attorneys’ fees to a prevailing party. As such, the Second Circuit vacated the District Court order and remanded for a determination of the amount of fees incurred in both the underlying case and later appeal. In the instant case, there is no controlling statute, but there is the controlling Contract that explicitly provides for indemnification of attorney’s fees incurred by Triades.

Shi argues that it is well-established that the successful party in a lawsuit may not recover attorneys’ fees from the losing party unless such an award is authorized by agreement between the parties or by statute or court rules. However, as previously indicated, the Contract in this case contains precisely that form of authorization by agreement between the parties. Moreover, Shi does not address why the attorney’s fees sought in this motion would not be authorized by the same contractual language relied upon by the Court when attorneys’ fees and costs were previously awarded in this case. Accordingly, the Court holds that Triades is entitled to recover all costs and expenses, including reasonable attorney’s fees, as expressly covered by the Contract.

(Internal quotations and citations omitted).

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