A number of my clients ask the same question regarding the enforcement of contracts, particularly the collection of debt. The question is, “Can I get my attorney fees and cost of collection.” A recent Eleventh Appellate district case, the court discussed this topic in a succinct manner.
The case Somerset Synfuel No. 1, L.L.C. v. Resource Recovery International Corp, 188 Ohio App.3d 368, involved a number of convoluted issues one of which was the defendant’s failure to pay the attorney fees to the successful party in a promissory note issue. In its opinion, the court stated:
As a general rule, the costs and expenses of litigation, other than the usual court costs, are not recoverable under Ohio law, Freeman v. Crown City Mining, Inc., 90 Ohio App.3d 546, 630 N.E.2d 19. Ohio has long adhered to the “American rule” with respect to recovery of attorney fees. A prevailing party in a civil action may not recover attorney fees as part of the costs of litigation, Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306. However there are exceptions to this rule. Attorney fees may be awarded when a statute or an enforceable contract specifically provides for the losing party to pay the prevailing party’s attorney fees, Nottingdale Homeowners’ Assoc., Inc. v. Darby, 33 Ohio St.3d 32, 514, N.E.2d 702.
O.R.C. 1301.21(B) authorizes the award of attorney fees regarding contracts of indebtedness if 1) the contract includes the commitment to pay attorneys’ fees and2) if the contract is enforced through judicial proceedings.
Therefore, in order to obtain attorney fees or other costs of litigation, you must:
1. Have a written agreement authorizing the payment of attorney fees, etc. in the event of default, and
2. Be successful in enforcing the contract.
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You forgot to mention that the statute in 1301.21(C) and (D) requires the contract of indebtedness must be for more than $100,000.00 and the contract must limit attorneys fees to collection of "reasonable" attorneys fees. Without those two requirements met, you cannot enforce an attorney fee provision in a contract of indebtedness. Make sure you read and inform on the whole statute; failure to do so leaves a very misleading picture of the law.
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ReplyDeleteI would clarify "Anonymous" that the $100,000 requirement only applies to contracts which are primarily personal, family, or household related, i.e. this restriction does not apply to commercial or business to business contracts.
ReplyDeleteActually "Anonymous 2", if you read the statute it says a contract of indebtedness means an obligation "other than" an indebtedness that is primarily personal, family or household related. So, the statute actually only applies to commercial and busienss transactions. The first Anonymous post is correct. Please read the statute carefully! Here is the applicable section of the statute: "(1) “Contract of indebtedness” means a note, bond, mortgage, conditional sale contract, retail installment contract, lease, security agreement, or other written evidence of indebtedness, other than indebtedness incurred for purposes that are primarily personal, family, or household."
ReplyDeleteA recent Eleventh Appellate district case, the court discussed this topic in a succinct manner.Keep reading it.Thanks for sharing it.
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