Tenant Is 'Prevailing Party' Under Fee-Shifting Provisions

Facts: A retail lease provided that attorney’s fees and expenses would be awarded to the prevailing party in “any dispute” between the owner and tenant arising out of the use or occupancy of the space. The owner later sued the tenant for several claims involving lease violations. After the tenant successfully defended itself against one of the owner’s claims—forcible-entry-and-detainer—it was allowed to continue occupying its space; it didn’t prevail on the other claims. The trial court awarded the tenant the full amount of its attorneys’ fees and expenses. The owner appealed the portion of the court’s decision awarding legal fees.

Decision: An Ohio appeals court upheld the lower court’s decision.

Reasoning: The tenant asked for reasonable attorney’s fees and costs under the “fee-shifting” provisions in the lease. Those provisions specified that, in any dispute between the parties “arising out of Tenant’s use or occupancy of the Premises,” the prevailing party’s reasonable costs and expenses (including fees of attorneys and experts) would be paid or reimbursed by the unsuccessful party.

On appeal, the owner argued that the trial court erred in determining that the tenant was a “prevailing party.” Rather, it asserted that the tenant wasn’t a prevailing party, because it didn’t prevail on a majority of its claims and issues in the case, just one claim.

The appeals court noted that Ohio courts follow the so-called “American rule,” which requires that each party involved in litigation pay its own attorney’s fees. There is an exception to the rule for contracts that provide for “fee shifting.”

Here, the lease expressly provided that attorney’s fees and expenses may be awarded to the prevailing party. The appeals court stressed that a party may be a prevailing party for fee-shifting purposes even if it obtains only some of the relief originally sought. In this case, the tenant was a prevailing party because it had obtained some relief by successfully defending the owner’s forcible-entry-and-detainer action, even though many of its other claims had been denied. A judgment in the tenant’s favor, ordering retention of the premises, was sufficient for it to be a prevailing party for fee-shifting purposes, the appeals court concluded.

• Hustler Cincinnati, Inc. v. Elm 411, LLC, December 2014