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Holiday Organization Inc. v. Builder Mt Inc.
Citation: 334 F. App'x 370Docket: Nos. 08-2644-CV (L), 08-2928-CV (CON)
Court: Court of Appeals for the Second Circuit; June 8, 2009; Federal Appellate Court
Builder MT appeals the district court's dismissal of its counterclaim for attorneys’ fees and costs against the plaintiffs-appellees, collectively referred to as Holiday. The dismissal was based on an oral ruling made on April 28, 2008, prior to trial, and a subsequent order dated June 5, 2008, which denied Builder MT's post-trial motion for the same relief. The court emphasized the American Rule, which states that parties are generally responsible for their own attorneys’ fees unless there is clear evidence of intent to waive this rule. Builder MT failed to demonstrate such intent in the language of the contract. The burden to persuade the court to deviate from the American Rule rests with the party seeking fees, and an award is deemed improper even if a contractual clause is open to multiple interpretations. The court found that the attorneys’ fees clause in the agreement allowed for fees only if a suit or action was initiated to enforce Holiday's obligations. Builder MT contended that its motions to enforce provisions of the agreement entitled it to fees, but the court ruled that the term “suit or action” does not encompass motions made in defense of a lawsuit initiated by Holiday. Furthermore, Builder MT's argument regarding its counterclaim, which alleged Holiday breached a clause regarding consequential damages, was rejected. The court determined that this clause was exculpatory, limiting Builder MT’s liability rather than creating an obligation that would support a claim for attorneys’ fees. Consequently, the court affirmed the district court's decision, concluding that Builder MT's counterclaim for attorneys’ fees did not fall within the contractual language governing such awards. Remaining arguments presented by Builder MT were also considered and deemed without merit.