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The American Rule

Maryland’s highest court has re-affirmed the adherence to the American Rule regarding attorneys’ fees.  In Bainbridge St. Elmo Bethesda Apartments, LLC v. White Flint Express Realty Group Limited Partnership, LLLP, the Court stated,Maryland follows the common law American Rule, which states that, generally, a prevailing party is not awarded attorney’s fees.” Bainbridge p. 10.

Exceptions to the rule exist, but are limited:

There are four exceptions to the American Rule where a prevailing party may be awarded attorney’s fees: “(1) the parties to a contract have an agreement to that effect, (2) there is a statute that allows the imposition of such fees, (3) the wrongful conduct of a defendant forces a plaintiff into litigation with a third party, or (4) a plaintiff is forced to defend against a malicious prosecution.” Nova Research, 405 Md. at 445, 952 A.2d at 281 (quoting Thomas v. Gladstone, 386 Md. 693, 699, 874 A.2d 434, 437 (2005)).

Bainbridge at p. 12.

In Bainbridge, the dispute centered on interpretation of the contract between the parties, more specifically the obligations of Bainbridge for damage caused as a result from a construction project.  The Court rejected Bainbridge’s arguments that the ruling in Nova Research, Inc. v. Penske Truck Leasing Co., 405 Md. 435, 935 A.2d 275 (2008) applied. 

In Nova Research, the Court determined that attorneys’ fees in establishing the right to indemnification were not recoverable because the contract in that matter did not include a general prevailing party attorneys’ fees provision for first-part actions.  In Bainbridge the Court explained that “whether first-party attorney’s fees are covered under the contract is determined by basic contract interpretation principles in order to determine the scope of the indemnification provision and whether the clause covers first-party enforcement rights”.  Bainbridge p. 12.  The contract in Nova Research contained no prevailing party attorneys’ fee provision, but did contained indemnification language, interpreted to cover only defense of third party claims.   

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