By: Tim Faith

Holding: The fee shifting provision, when strictly construed by courts to effectuate its intention, permitted the defendant to recover its reasonable attorney’s fees based on the provision’s language that permitted any party to so recover that successfully enforced their rights under the easement agreement.

Opinion by: J. Nazarian

Facts: The Robinsons brought an action for trespass and breach of easement against their neighbors, the Brookses, alleging that the defendants had violated an easement agreement because a portion of the defendants’ garage allegedly encroaches on their shared driveway. After a bench trial, the circuit court entered judgment for the defendants, who subsequently filed a motion for attorney’s fees of $28,435 based on a fee-shifting provision of the easement agreement.

The fee shifting provision in the easement agreement provided that “in addition to all other remedies at or in equity, any party successfully enforcing its rights hereunder in a court of competent jurisdiction shall be entitled to reimbursement of reasonable attorney fees and actual reasonable costs.” (emphasis added in opinion). Based on the language, the trial court found that the defensive actions of the Brookses did not qualify for an award of attorney’s fees for successfully defending the lawsuit. On appeal, the Appellate Court of Maryland reversed.

Analysis: Maryland’s conventional rules of contract interpretation apply to easement agreements. “Maryland courts follow the objective theory of contract interpretation” based on what a reasonable person in the position of the parties would have interpreted the terms of the agreement. Fee shifting agreements are strictly construed by courts to avoid inferring duties not intended to be created by the parties.

The plaintiffs here, in opposing the award of fees, argued that the phrase “successfully enforcing its rights” under the agreement did not include successfully defending a breach of the agreement. However, the Court reasoned that the defendants, prevailed on both claims made by the plaintiffs because of the rights established under the easement agreement which the defendants vindicated at trial where the trial court found that the defendants’ garage was in fact a part of the easement itself.

The Court concluded that “fee-shifting clauses are meant to deter frivolous or borderline litigation” but using the plaintiff’s interpretation would undermine this purpose, as it would permit a plaintiff to unsuccessfully litigate a claim but avoid the risk of a judgment for attorney’s fees for defending the suit.

As a result, the Court reversed the circuit court’s judgment as to the fee shifting provision so that the trial court could determine if the amount sought by the defendants was reasonable.

Opinion HERE | MSBA Business Law Section Blog HERE

Tim Faith is a practicing business law and estates planning attorney, and also an associate professor at The Community College of Baltimore County, where he teaches business law, legal writing, and torts.

Tim also serves as the chair of the Maryland Business Law Developments blog, a service of the Business Law Section of the MSBA.