June 16, 2022
Your client is getting sued for breach of contract, but the contract doesn’t provide for fee shifting to the prevailing party and there’s no insurance or indemnification to which your client could look to cover his or her defense costs. Is it still possible to shift some defense costs to the other side if your client prevails?
As our Client Q&A column explained a few years ago, the short answer is yes—at least to some extent.
Under C.P.L.R. 3220, a party against whom a claim for breach of contract is asserted can make an offer to liquidate damages conditionally, meaning that this party can offer to settle the amount of damages, if this party loses on liability, for a set amount. If the other side rejects this offer but ends up doing no better (or worse, including losing altogether) at trial, then the party against whom the contract claim is asserted can recover his or her attorneys’ fees incurred in litigating the issue of damages at trial.
In the final segment in this three-part series, Schlam Stone & Dolan co-Managing Partner Jeffrey M. Eilender explains how this oft-overlooked section of the C.P.L.R. can become an important tool in a party’s arsenal.