Opinion ID: 2570261
Heading Depth: 3
Heading Rank: 4

Heading: Award of Full Attorney's Fees and Costs

Text: The lease in this case gave either party the right to recover prevailing-party attorney's fees and costs any time the party needed to hire counsel to enforce its rights under the terms of th[e] agreement. Relying on this provision, the superior court awarded Penco the full attorney's fees and costs it incurred after Tufco sent Penco the original notice of default. [10] Tufco separately challenges the amounts awarded for fees and for costs.
In challenging the award of attorney's fees, Tufco does not dispute that the lease allowed recovery of full reasonable fees rather than the limited fees set out under Civil Rule 82. But Tufco contends that some of the attorney's fees awarded reflected charges for matters beyond the scope of the action at issue. In Tufco's view, the superior court should only have awarded fees for charges incurred in defending against Tufco's complaint for eviction. [11] Penco responds that Tufco's reading of the lease is unduly narrow; because it was pursuing the enforcement of its rights under the terms of the lease, Penco argues, it was entitled to recover the fees it reasonably incurred in response to Tufco's notice of default, before Tufco actually filed its complaint for eviction. We have previously recognized that a prevailing party may recover its full reasonable attorney's fees when a contract provides for prevailing-party fees. [12] In Ursin Seafoods, Inc. v. Keener Packing Co., Inc., for instance, we held that a contract provision allowing a prevailing party to recover its reasonable attorney's fees trumped Civil Rule 82's provision for partial fees because the parties specifically contracted for the full-fee provision. [13] Here Tufco sent Penco a notice in November 2002 accusing Penco of breaching the lease by storing hazardous materials on Tufco's property. After its initial discussions with Tufco failed, Penco hired counsel in January 2003 to assist in enforcing its rights under the lease. Penco's counsel responded to Tufco's notice of default on January 22, 2003. On February 4, 2003, Tufco's attorney notified Penco that Tufco had terminated Penco's lease as of January 31, 2003, but was willing to agree to a new lease. Over the next four months, the parties' counsel continued to discuss the lease but ultimately failed to settle the dispute. Tufco then filed its eviction action on May 2, 2003. The superior court found that the parties should reasonably have understood the lease's fees-and-costs provision to cover all attorney's fees incurred in enforcing their rights under the contract, not just the fees incurred after a complaint was actually filed. This decision finds strong support in the text of the lease, which allows recovery of fees any time a prevailing party has hired counsel to enforce its rights under the terms of this agreement. Even Tufco appears to have read the provision this way: Tufco's pre-complaint letter notifying Penco that it had terminated the lease referred to the fees provision and demanded that Penco pay $1,400 in fees and costs that Tufco had spent in preparing its notice of default. Given these circumstances, we hold that the superior court did not err in interpreting the lease to cover costs and fees reasonably incurred before the eviction action was formally filed and that the court did not abuse its discretion in awarding Penco its full reasonable attorney's fees from the date of Tufco's notice of default.
Tufco separately challenges the superior court's award of costs, arguing that the award should have been limited to costs allowed under Civil Rule 79(f). Penco responds that the costs provision in the lease agreement is not limited by Rule 79(f), just as the attorney's fees provision was not limited by Rule 82. We agree. The lease provided that the prevailing party shall be entitled to recover attorneys' fees and costs incurred  in enforcing its rights. (Emphasis added.) As we concluded above, the superior court correctly awarded Penco its full attorney's fees even though Civil Rule 82 ordinarily allows prevailing parties to be awarded only partial fees and even though Penco incurred some of its fees before Tufco filed its eviction action. We reach a similar conclusion as to costs. The language of the lease does not limit prevailing-party costs to those awardable under Civil Rule 79 or to costs incurred after a formal action has been filed. To be sure, the lease requires that incurred costs be reasonable; yet the record discloses nothing unreasonable in the costs actually awarded. The superior court awarded Penco its costs for obtaining an expedited transcript of the first day of trial and for copying documents at a rate modestly exceeding the one allowed under Rule 79. But Penco's transcript costs appear justified by the expedited nature of Tufco's eviction action. And the fact that Penco's copying costs exceeded the amount allowed under Rule 79(f) hardly compels the conclusion that those costs were excessive. Having reviewed the record, we cannot say that the superior court's decision to award these costs was arbitrary, capricious, or manifestly unreasonable. We conclude that the superior court did not abuse its discretion in awarding Penco its full costs.