Opinion ID: 552797
Heading Depth: 3
Heading Rank: 2

Heading: G.E.'s Claims: Curbing The Attorneys' Fee-ding Frenzy.

Text: 69 For its part, G.E. challenges the district court's award of attorneys' fees to both Nathaniel and LGS. The district court held that attorneys' fees were recoverable by Nathaniel and LGS because they were foreseeable damages resulting from G.E.'s breach of its warranty of workmanlike performance, citing the general Fifth Circuit rule permitting recovery for such damages. In reaching this result, the district court relied on recent circuit precedent that in fact misconstrues the actual rule for recovery of attorneys' fees. To explain the district court's error, we must re-examine the genesis and scope of the rule in this circuit. 70 In 1963, this circuit, in Strachan Shipping Co. v. Koninklyke Nederlandische S.M., 41 created an exception to the traditional American Rule that attorney's fees were generally not recoverable, holding that indemnification for attorney's fees were recoverable as foreseeable damages for breach of a warranty of workmanlike performance from a stevedore to a shipowner for the costs of defending against a claim by a third party. 42 This indemnity rule did not, however, extend to recovery of fees for litigation against the party in breach to actually determine liability. 43 In some cases, the rule was abbreviated to the simple formula that attorneys' fees were recoverable as foreseeable damages resulting from a breach of WWLP, but each of these cases involved claims for fees for defending against claims by third parties; 44 the rule nevertheless remained that attorneys' fees against the defendant to establish liability were not themselves recoverable. 45 71 So matters stayed until 1982, when, in Todd Shipyards Corp., 46 this court relied on the general statement of the rule to authorize recovery of attorneys' fees by a shipowner against its contractor and subcontractor for the litigation that established their liability. 47 This general formulation of the rule was repeated by a later appellate panel after the case was remanded, 48 but this time the only issue was whether such damages were an integral part of the scope of relief for jurisdictional purposes; as with the earlier citations of the short form of the rule, the court did not have to consider against whom, and when, such damages might be recovered. 49 72 Careful examination of the precedents relied upon by the first Todd Shipyards court makes it clear that the court mistakenly changed a specific rule of indemnification into a general rule of admiralty damages, without overruling the holding of the earlier cases that attorneys' fees were not recoverable for suits to establish liability between the indemnitee and the indemnitor. In such a situation of conflicting rules, our choice is clear: [u]nder the principle of stare decisis, the older case law must control. 50 Thus, even if we were to conclude that Todd Shipyards effected a conscious expansion of the Strachan rule, or that the expanded rule was in fact more efficient, we must consider ourselves bound by the more narrow formulation of the rule, under which neither Nathaniel nor LGS may recover its attorneys' fees from G.E. We therefore must reverse the district court's award of fees as to both Nathaniel and LGS.