Prevailing Party Clauses and Recovery of Attorney Fees

"Like the U.S. Supreme Court, the Supreme Court of Texas has taken a very broad view of what constitutes a prevailing party and has held that in order to recover attorney fees, a party must gain something. Intercontinental Group P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 652 (Tex. 2009).

Texas adheres to the American Rule with respect to recovery of attorney’s fees. Under the American Rule, a party can only recover attorney fees if authorized by statute or the parties’ contract, such as with a well-written “prevailing party” clause. In Epps v. Fowler, 351 S.W.3d 862 (Tex. 2011), the Supreme Court of Texas reversed and held that a defendant was a prevailing party with respect to a prevailing party contract clause and may be entitled to attorney’s fees when a plaintiff non-suited a case with prejudice to avoid an unfavorable ruling on the merits when Defendant had a pending motion for sanctions. Epps v. Fowler, 351 S.W.3d 862, 864 (Tex. 2011). The Supreme Court of Texas opinion stressed that the Court’s primary concern is to construe the parties’ written contract to ascertain the parties’ true intentions as expressed in the contract pointing out again, the importance of well drafted contract clauses.

The Supreme Court of Texas also stated again that it finds “federal cases focusing on the meaning of prevailing party instructive,” and therefore, the U.S. Supreme Court’s recent opinion in Lefemine v. Wideman, 568 U.S. __ (Nov. 5, 2012) may be useful in Texas litigation on this issue. See Epps v. Fowler, 351 S.W.3d 862, 866 (Tex. 2011), citing, Intercontinental Group P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650 (Tex. 2009)." "