Opinion ID: 2337387
Heading Depth: 3
Heading Rank: 3

Heading: Attorney's Fees under the lease agreement

Text: Even if attorney's fees could not be awarded to PKT Housing Corporation under Ark.Code Ann. § 16-22-308 due to the inclusion of the tort claim in the award, attorney's fees can still be due under the language of the lease agreement. In Griffin v. First National Bank, 318 Ark. 848, 888 S.W.2d 306 (1994), the supreme court held that where the parties entered into a written contract that specifically provides for the payment of attorney's fees incurred in the enforcement of the contract, the agreement is enforceable according to its terms, independent of the statutory authorization set forth in Ark.Code Ann. § 16-22-308. The lease agreement in this case contained a provision for the payment of attorney's fees and costs in the event an action was instituted to enforce the lease. The language of the clause stated: 16. ATTORNEY'S FEES: In the case suit should be brought for recovery of the premises, or for any sum due hereunder, or because of any act which may arise out of the possession of the premises, by either party, the prevailing party shall be entitled to all costs incurred in connection with such action, including a reasonable attorney's fee. Clearly, this language is very broad, and provides that the prevailing party would recover reasonable attorney's fees and costs. Furthermore, this lease term does not limit the recovery of attorney's fees to a contract matter alone, but provides instead for recovery for any action arising from the lease or from the occupation or control of the premises. In addition, this lease term includes the term shall when discussing entitlement to attorney's fees and costs. This is quite different from the statutory entitlement to fees under Ark.Code Ann. 16-22-308, which leaves the award of fees to the discretion of the trial court. This lease term, however, appears to anticipate that the award of fees and costs shall be mandatory. When interpreting statutory language, for example, this court has found that the word shall in the statute indicates mandatory compliance with the statute's terms unless compliance would result in an absurdity. See, e.g., Ramirez v. White County Circuit Court, 343 Ark. 372, 38 S.W.3d 298 (2001). Furthermore, the words of a contract are to be taken and understood in their plain meaning. First Nat. Bank of Crossett v. Griffin, 310 Ark. 164, 832 S.W.2d 816 (1992), cert. denied, 507 U.S. 919, 113 S.Ct. 1280, 122 L.Ed.2d 673 (1993), appeal after remand, 318 Ark. 848, 888 S.W.2d 306 (1994); Farm Bureau Mut. Ins. Co. of Arkansas, Inc. v. Milburn, 269 Ark. 384, 601 S.W.2d 841 (1980). It appears here that the word shall in the attorney's fee section of the lease agreement required a finding by the trial court of the prevailing party in the action and then required a mandatory award of reasonable attorney's fees and costs to that party. Marcum and Capo were not parties to the lease agreement, and they are not entitled to attorney's fees and costs under the lease agreement. Again, the trial judge never exercised his discretion because he failed to find that any party was the prevailing party to this lawsuit. Here, the case should be reversed and remanded for the trial judge to award reasonable attorney's fees and costs to PKT Housing Corporation pursuant to the lease agreement.