Attorney Fee Awards under Prompt Payment Act are not Dependent Upon the Amount Recovered by the Contractor where the Fees are Otherwise Reasonable
In a published decision from September of 2021, the Appellate Division reversed a trial court’s award of $12,250.40 in attorney fees, opening the door for the Plaintiff to possibly recover the full $104,670.51 in attorney fees and costs that were incurred. The Plaintiff subcontractor had filed a Prompt Payment Act claim for $30,500, which the Defendant fought for two years all the way to trial. In accordance with prosecuting its case through to a trial, the Plaintiff incurred over $100,000 in attorney fees and costs. However, the trial judge reduced this figure to $16,375.73, finding that a fee award of over $100,000 would be unreasonable where the amount recovered was only $30,500.
The Appellate Division reversed this finding, and remanded to the trial court to revisit the attorney fee award. In doing so, the appellate court emphasized that to drastically reduce the amount of attorney fees to be recovered would work against the public policy behind the Prompt Payment Act in the first place stating:
The statute's salutary goals of ensuring that contractors and subcontractors are fully and promptly paid for their work are thwarted when such plaintiffs fully prevail on a suit to vindicate their rights under the Act but net little or nothing owing to the costs of the litigation. … Without the court's unstinting enforcement of the statutory fee-shifting provision, contractors and subcontractors with relatively small claims would win only a Pyrrhic victory against defendants who failed to discharge their statutory obligations to pay promptly what they owe. Instead of deterring owners and contractors from delaying payment or stiffing their subs as the Legislature intended, it would be the stiffed contractors and subcontractors who would be deterred from suing to vindicate their statutory rights.
(JHC Industrial Services LLC v. Centurion Companies Inc.)
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Peter J. Vazquez, Jr.