Why Contractors Should Have A Well Written Contract
In a recent decision (Woensdregt v. Handyman), the Arizona Court of Appeals (1st division), ruled that when a party seeks an award of attorney’s fees based on contract, rather than A.R.S. § 12-341.01, the Court will enforce the provision according to terms. The Court determined that the lower Court’s decision to reduce based on hardship to the unsuccessful party was an abuse of discretion.
In ASSOCIATED INDEM. CORP. v. WARNER, the Court set out four factors when considering an application for attorney’s fees pursuant to A.R.S. § 12-341.01. One of which is the hardship the fee award would cause the unsuccessful party.
In Woensdregt the Court held that when the party request fees per a contract clause, the Warner factors are not applicable. Rather the Court will consider fee requests made pursuant to a contract as reasonable; unless there is evidence of it is not reasonable. The party who contest the reasonableness of the fees has the burden of proving they were unreasonable.
Whether the attorney fee application is based on contract or statute, the party still has to follow the requirements set forth in China Doll. Those requirements include a breakdown of fees and costs with contemporaneous records kept by attorneys and paralegals.
This holding reinforces the need to have well drafted contracts in the area of construction.
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