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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 7, 2019

Mixed Result Meant that Neither Plaintiff Nor Defendant Was Prevailing Party for Award of Attorneys’ Fees Purposes

On January 31, 2019, the First Department issued a decision in Blue Sage Capital, L.P. v. Alfa Laval U.S. Holding, Inc., 2019 NY Slip Op. 00699, holding that a mixed result meant that neither party was a prevailing party for the purposes of awarding attorneys’ fees, explaining:

Given the mixed results of this case, the court properly concluded that neither party had substantially prevailed on the central claims advanced and that therefore neither was entitled to attorneys’ fees.

Alfa Laval argues correctly that its victory need not have been total for it to have been the prevailing party. However, it failed to show that the two misrepresentations in its breach of contract claim on which the jury ruled in its favor — the Imcopa Contract and the earnings forecasts — were central to its case against Blue Sage or were any more significant than the remaining five alleged misrepresentations on which the jury ruled against it. The court thus properly determined that because Alfa Laval prevailed on only two of the seven subparts of its claim, it was not the prevailing party. To the extent the court did not account for Alfa Laval’s successful defense against Blue Sage’s claims, the omission is harmless; Blue Sage also thwarted a significant portion of Alfa Laval’s litigation goals.

Alfa Laval argues that it is the prevailing party because a “net judgment” was entered in its favor, citing Matter of Wiederhorn v Merkin (98 AD3d 859, 862-863 [1st Dept 2012], lv denied 20 NY3d 855 [2012]). However, Wiederhorn further defines “prevailing party” as the party that prevails with respect to the central relief sought.

Alfa Laval also argues that the court erred in considering the amount of money it won relative to the amount it sought in determining in the first instance whether it was the prevailing party. However, in Matsumura v Benihana Natl. Corp. (2014 WL 1553638, *5, 2014 US Dist LEXIS 54404, *16-18 [SD NY Apr. 17, 2014]), on which Alfa Laval otherwise relies, in determining that the defendant was the prevailing party, the court noted that the plaintiffs’ “relatively modest gain” was “even further dwarfed by the amount of damages plaintiffs sought in their complaint.”

(Internal quotations and citations omitted).

Litigating for fees can be hard–both because of the high burden you sometimes must meet to be entitled to fees and because it is important to avoid the pitfall of getting an award of fees that is less than what it cost to move for fees. And as this decision shows, it sometimes is unclear who the prevailing party is for the purposes to deciding whether the court can award fees at all. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are litigating an attorney fee award.

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