Court Opinion

ID: 9632013
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:58:44.223585+00
Date Added: 2024-06-11T12:31:03.866516
License: Public Domain

HOWE, Justice
(dissenting).
I dissent. I would delay the award of attorney fees until after the adjudication of defendant’s counterclaims. I cannot subscribe to the restriction adopted by the majority that a plaintiff’s contractual right to attorney fees can only be defeated by successful counterclaims which arise out of the same transaction. The only authority cited by the majority which adopts such a restriction is Wagonmaster, Inc. v. Parrot, 713 P.2d 417 (Colo.App.1985). The issue of imposing such a restriction was not raised or adjudicated in that case. The restriction was merely recited in the court’s statement of its rule. None of the cases cited by the Colorado court in support of its decision impose the restriction in stating the rule denying fees. Neither do any of the cases cited by the majority. While in some cases, such as those cited by the majority, the counterclaim did arise out of the same transaction, in other cases it did not. Wagner v. Chisholm, 246 S.W. 1044 (Tex.Civ.App.1923); Morgan v. Virginia-Carolina Chemical Co., 213 Ala. 551, 106 So. 136 (1925).
Our cases of Sugar v. Miller, 6 Utah 2d 433, 315 P.2d 862 (1957), and Nalder v. Kellogg Sales Co., 6 Utah 2d 367, 314 P.2d 350 (1957), do not restrict the rule denying attorney fees to cases where the defendant’s counterclaim arises out of the same transaction as the contract or note upon which the plaintiff brings suit. While there may be certain types of counterclaims which a defendant might interpose which should not defeat a plaintiff’s right to attorney fees, the restriction adopted by the majority is much too limiting. The instant case is a prime example of where all of the claims of the two parties should be adjudicated before attorney fees are awarded to either side. Both plaintiffs and defendant are engaged in the construction business. Over a short period of time, they entered into three separate contracts with each other, all of which involved construction at military bases of the United States government. One was in Alaska, one in Montana, and one on the island of Midway. *1324Plaintiffs brought suit to recover a balance owing on the Alaska contract. Defendant counterclaimed for amounts allegedly owing to it on the Montana and Midway contracts. It makes eminent sense to me to delay the award of attorney fees on all of the contracts until the conflicting claims of the parties arising from their contracts have been resolved. When that resolution has been made, an appropriate attorney fee can be awarded to the party who emerges from the suit with a net judgment. This practice accords with the reasoning of this Court in Sugar v. Miller that a note or contract is paid when the holder of the note is indebted to the maker in a greater amount than the sum due on the note. See the annotation at 41 A.L.R.2d 677, where numerous cases are cited in support of the rule without the restriction adopted by the majority.
Under the restriction adopted by the majority, the maker of a note or the obligor in a contract would be compelled to pay any balance owing, even though he may hold a valid counterclaim arising from a course of dealing between the parties. This may be grossly unjust in cases where the prospect for later collection of any recovery on the counterclaim is dubious. Under the restrictive rule adopted by the majority, the payee of a promissory note or the obligee of a contract, instead of endeavoring to negotiate settlement of any claims of the maker or obligor, will be well-advised to immediately file suit on the note or contract when it falls due so as to become entitled to attorney fees as a hedge against the defendant’s potential counterclaim.
In addition to the foregoing argument, the contractual language used by the parties in the instant case would seem to preclude the award of attorney fees to either party until the suit has been concluded. The contract sued upon by plaintiffs contained the following provision:
In the event either contractor or subcontractor institutes suit in court against the other party or against the surety of such party, in connection with any dispute or matter arising under this agreement, the party which prevails in that suit shall be entitled to recover from the other its attorney fees in reasonable amount....
(Emphasis added.) Thus, the parties by their express agreement have made attorney fees determinative upon one or the other prevailing in the suit. A “suit” embraces claims stated in the complaint and in the counterclaim. In an annotation at 66 A.L.R.3d 1115, dealing with the award of costs to the “prevailing party,” it is stated that “courts have generally expressed the view that costs should be awarded to the party in whose favor the final judgment was entered.” Id. at 1118-19. The same rule should be followed with regard to the award of attorney fees to the “prevailing party.” Had the parties to this action intended by their contractual language that attorney fees should be awarded strictly on the basis as to which party prevailed on claims arising from the contract sued upon by plaintiffs, they could have used appropriate contractual language to achieve that result. See Highland Construction Co. v. Stevenson, 636 P.2d 1034 (Utah 1981), discussing Utah Code Ann. § 14-1-8 (1953), which provides for the award of attorney fees to “the prevailing party, upon each separate cause of action.” 1 (Emphasis added.) No such restrictive language was used by the contracting parties in the instant case, and I would withhold the award of any attorney fees until the litigation between them which arises out of the course of their business dealings has been finally determined. At that time, an award of attorney fees can be made to the “prevailing party,” which will be the party emerging with the net judgment.
HALL, C.J., concurs in the dissenting opinion of HOWE, J.

. Sections 14-1-5 to -12 were repealed by 1980 Utah Laws ch. 75, § 5.