• Time to Update the Attorneys’ Fees Provision in Your Contracts and Loan Documents
  • October 12, 2011 | Authors: E. Hutchinson Robbins; Derek P. Roussillon; Scott R. Wilson
  • Law Firm: Miles & Stockbridge P.C. - Baltimore Office
  • Contracts and loan agreements commonly provide for an award of the cost of collection of a debt in addition to other available damages. Nonetheless, Maryland law limits contractual attorneys’ fees to a reasonable amount actually paid, or certain to be paid, as of the date of judgment. All too frequently, otherwise prevailing parties spend more on attorneys’ fees enforcing a judgment than they did obtaining the judgment. As a result, the prevailing party is left with significant unrecouped costs and is foreclosed, under the doctrine of merger, from pursuing a second judgment for these post-judgment costs.

    Last Friday, the Court of Special Appeals of Maryland addressed this disparity. In Suntrust Bank v. Frank J. Goldman, et al., No. 803, September Term 2010, the Court provided, among other things, that parties seeking to capture post-judgment costs of collection through contractual attorneys’ fees provisions must clearly state in their contracts that the fee provision shall not merge into the judgment. While the Court reserved for a later date whether any limitation would apply to non-merger language, the clear upshot of this decision is that parties entering into contracts with attorneys’ fees provisions should revise those provisions immediately.

    For parties suing on contracts omitting non-merger language, there remain strategies available to capture post-judgment costs of collection, but those strategies will vary contract to contract, client to client.