Opinion ID: 1292284
Heading Depth: 1
Heading Rank: 4

Heading: analysis

Text: Parkert contends that a provision in the trust deed requiring the payment of a lender's attorney fees as part of the costs of collection is against public policy. Relying on cases where we disallowed provisions requiring fees to be paid to the opposing party in litigation, he argues that the rule should also extend to nonjudicial proceedings. We disagree. [4,5] We have stated that the general rule in this jurisdiction is that attorney fees may be recovered only when provided by statute, or where the uniform course of procedure has been to allow recovery. Quinn v. Godfather's Investments, 217 Neb. 441, 348 N.W.2d 893 (1984). We have additionally held that a contract provision requiring that in the event of litigation the prevailing party will be entitled to attorney fees is contrary to public policy and void. Id. See First Nat. Bank v. Schroeder, 218 Neb. 397, 355 N.W.2d 780 (1984). This rule is derived from what is often referred to as the American rule. The American rule focuses on contractual provisions allowing attorney fees in judicial proceedings. Holt County Co-op Assn. v. Corkle's, Inc., 214 Neb. 762, 336 N.W.2d 312 (1983). Although we have applied the American rule to invalidate contracts providing for fees to prevailing parties in judicial proceedings, we have never applied the rule to nonjudicial proceedings. [6,7] In determining whether to apply the American rule to nonjudicial proceedings, we recognize a strong policy favoring the parties' freedom to contract. See OB-GYN v. Blue Cross, 219 Neb. 199, 361 N.W.2d 550 (1985). `It is not the province of courts to emasculate the liberty of contract by enabling parties to escape their contractual obligations on the pretext of public policy unless the preservation of the public welfare imperatively so demands.' Occidental Sav. & Loan Assn. v. Venco Partnership, 206 Neb. 469, 480, 293 N.W.2d 843, 849 (1980). Here no such demand exists. Thus, in the light of a strong policy allowing parties the freedom to contract, we decline to extend the rule to nonjudicial proceedings. Accordingly, we hold that in a nonjudicial proceeding, a contract provision requiring payment of a reasonable attorney fee is not against public policy. Here, Parkert did not allege that the fee provision is ambiguous, nor has he alleged that the fee was unreasonable. Because the fee was not collected in a judicial proceeding, the contract provision was valid. Thus, Parkert could not state a claim for conversion or violation of the Consumer Protection Act and the district court correctly dismissed. Accordingly, we affirm. AFFIRMED.