One of the first questions we are asked at the outset of litigation on behalf of a condominium association is whether the attorneys’ fees we will generate are recoverable from the opposing party. The answer to that question depends on a number of factors because Illinois is what is called an “American Rule” jurisdiction. The American Rule provides that each party to litigation pays for his or her own attorneys’ fees. There are, however, two exceptions to the American Rule that are often implicated in association litigation.

 

First, attorneys’ fees are recoverable if a statute allows for their recovery. Examples of statutes that might come into play involving your condominium association include eviction actions under the Forcible Entry and Detainer Act or actions based on a unit owner’s default under your condominium association’s declaration, for which fees are typically recoverable under Section 9.2 of the Illinois Condominium Property Act. Lawsuits involving condominium associations can also implicate potential violations of the Consumer Fraud and Deceptive Practices Act or various civil rights statutes. It should be noted that, in those latter instances, it is generally easier for plaintiffs to recover their fees than defendants. That is because statutes that allow for recovery of attorneys’ fees for violations of these statutes are often considered “remedial” in nature and therefore tend to favor the plaintiff when it comes to evaluating the circumstances giving rise an award of attorneys’ fees.

 

Second, attorneys’ fees can also be recoverable if the litigants are parties to a contract that contains a provision known as a “prevailing party provision” and the litigation involves a purported breach of the contract. This contractual provision typically states that any reasonable attorneys’ fees and costs that are incurred to enforce the contract will be recoverable by the prevailing party. Most (but not all) condominium declarations, which are contracts, permit recovery of attorneys’ fees only by the association – and not the unit owner – if the association is the prevailing party.

 

Whether or not a party is “prevailing” depends on a number of factors. Sometimes courts will consider whether the general purpose for bringing the litigation has been accomplished. Other times, courts will determine on how many counts of a complaint the winning party prevailed and will apportion the fees to be awarded accordingly. The courts are directed by case law to construe the prevailing party provision strictly, in accordance with its precise terms, because prevailing party provisions are contrary to the common law. Thus, while there is sometimes a “prevailing party provision” in the parties’ contract, the type of litigation brought or the precise question it poses may not technically fall within the purview of the prevailing party provision. In such circumstances, the courts may properly refuse to award attorneys’ fees to the prevailing party.

 

Outside the circumstances permitting recovery of attorneys’ fees under the two exceptions to the American Rule are motions for sanctions. These motions are appropriate where an opposing party or her attorney, in a State-Court lawsuit, has engaged in conduct that violates Illinois Supreme Court Rule 137 or Rule 219. Rule 137 penalizes a party or her attorney where the complaint or other pleadings or motions signed by the party or the attorney reveals that they failed to engage in an objectively good-faith investigation into the truth of the representations in the pleading or motion before it was filed. Sanctions under Rule 137 may also be imposed where a party signs and files a document with the court that does not adhere to existing law or does not seek a good-faith extension of existing law. Finally, sanctions may also be imposed under Rule 137 where a party files pleadings for an improper purpose, such as to harass, increase the costs of litigation, or to cause delay.

 

Sanctions under Rule 219 are addressed solely to improper conduct occurring during the discovery phase of the litigation. Such sanctions may take a variety of forms, including the dismissal of certain portions of a party’s case, barring a party from relying on certain evidence, or monetary awards arising from time wasted trying to enforce requested discovery.

 

In all instances where attorneys’ fees are recoverable, the amount of fees to be recovered must be presented to the court as admissible evidence, whether in the form of an attorney affidavit or testimony at an evidentiary trial (as the court determines) for the court’s consideration of a number of factors. Such factors include, among other things, whether the attorney’s hourly rate is reasonable for the type of work involved, whether the amount of time spent is reasonable, the complexity and/or novelty of the issues involved, that the work performed was necessary, and the stature of the attorney performing the work. The court is vested with considerable discretion to determine and award the amount of fees it finds to be reasonable under the circumstances. It is relatively unusual for a court to award all requested attorneys’ fees and costs. Whatever the amount of the award, they are typically difficult to overturn on appeal given the breadth of the trial court’s discretion to make such an award.

 

In conclusion, lawsuits brought to enforce the terms of your association’s declaration or the Condominium Property Act frequently allow your condominium association to recover at least a portion of its attorneys’ fees if it is the prevailing party. If lawsuits are brought for other types of actions, attorneys’ fees are otherwise not recoverable unless they fall into one of the exceptions to the American Rule identified above or your opposing party violates Rule 137 or Rule 219.

 

If you have association has questions regarding litigation, please contact Kovitz Shifrin Nesbit at 855-537-0550 or visit www.ksnlaw.com.