Supreme Court Abrogates Fourth Circuit Rule on Time to Appeal Contractual Attorney’s Fee Award

By Steve Klepper

Until this morning, the following rule prevailed in the Fourth Circuit:

[A] claim for legal costs based on a contractual provision that is not limited to expenses incurred during the underlying litigation is an element of damages to be proved at trial under the substantive law governing the action, see Fed.R.Civ.P. 54(d)(2), 58(c), and that a judgment that leaves open such a claim is not final and appealable.

Carolina Power & Light Co. v. Dynegy Marketing & Trade, 415 F.3d 354 (2005)

No more. This morning, the Supreme Court cited Carolina Power as standing on one side of a circuit split, and the Court unanimously went the other way: “Whether [a] claim for attorney’s fees is based on a statute, a contract, or both, the pendency of a ruling on an award for fees and costs does not prevent, as a general rule, the merits judgment from becoming final for purposes of appeal.” Ray Haluch Gravel Co. v. Central Pension Fund, __ U.S. __ (Jan. 15, 2014).

Anyone litigating contract actions in the Fourth Circuit should take note. Decisions from the Third, Eighth, and Eleventh Circuits also were cited on the losing side of the circuit split.

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2 responses to “Supreme Court Abrogates Fourth Circuit Rule on Time to Appeal Contractual Attorney’s Fee Award”

  1. Kevin Arthur says :

    Maryland law is different. If the claim for attorneys’ fees derives from a statute (such as a provision of the Family Law Article) or a rule (such as Rule 1-341), the issue of attorneys’ fees is considered to be “collateral” to the merits. Hence, the pendency of an unresolved claim for attorneys’ fees does not deprive a ruling on the merits of its status as a final judgment as long as the fees are based on a statute or rule. See, e.g., Blake v. Blake, 341 Md. 326, 336-38 (1996) (statutory claim for fees under Family Article Article); Johnson v. Wright, 92 Md. App. 179, 181-82 (1992) (claim for fees under Rule 1-341). On the other hand, if the claim for attorneys’ fees is based on a contractual provision, the fees are considered to be part of the damages in the case. Hence, the court will not have entered a final judgment (and the aggrieved party will not be required to appeal) until the court has adjudicated the claim for fees. G–C P’ship v. Schaefer, 358 Md. 485, 488 (2000); Mattvidi Assocs. Ltd. P’ship v. Nationsbank of Virginia, N.A., 100 Md. App. 71, 78 n.1, cert. denied, 336 Md. 277 (1994).

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