Under the so-called “American Rule,” a party that prevails in litigation typically is not entitled to recover the costs, expenses and legal fees it has to expend to secure a judgment in its favor. As such, many business contracts include a “fee-shifting” provision, requiring a defendant to reimburse a prevailing plaintiff for the reasonable legal fees it incurs to obtain a judgment in its favor – and courts routinely enforce such provisions. Sometimes, a fee-shifting provision is part of a much broader indemnification agreement. While doing so is perfectly appropriate, care needs to be taken in expressing the fee-shifting obligation, or it may not be enforceable. Indeed, that is precisely the unfortunate position in which the plaintiff found itself in Harris v. Imaging Advantage, LLC.
Five years ago, the plaintiffs in Harris initiated their suit against Imaging Advantage in the Business Litigation Session of the Superior Court. In December of 2021, the plaintiffs were awarded summary judgment on two different contract claims, the first of which related to a License and Services Agreement. According to Section 15.1 of the LSA:
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Each Party … agree[d] to defend, indemnify and hold harmless the other Party … from and against any