When are attorney fees incurred on appeal recoverable?

By Micah S. Echols, Esq.

Often an appeal can be just as lengthy and expensive as an entire case in District Court litigation. So, once your client becomes the prevailing party on appeal, you should be aware of the ability to recover attorney fees incurred on appeal. In District Court litigation, we are all aware that attorney fees can be recovered against an opposing party whenever there is a relevant contract provision, statute, or rule. See, e.g., Von Ehrensmann v. Lee, 98 Nev. 335, 647 P.2d 377 (1982). However, what rules apply for recovering attorney fees incurred during an appeal to the Supreme Court of Nevada? And, in which Court should the request for fees be made? This article will examine the ability to recover attorney fees incurred on appeal through a contract provision, statute, or rule. This article will also provide guidance as to which Court the application for fees incurred on appeal should be made.

Recovering attorney fees incurred on appeal through a contract provision

Of the different avenues for recovering fees and costs incurred on appeal, a contract provision is by far the best. Commenting on general attorney fee provisions for the prevailing party, the Supreme Court of Nevada has held, “The purpose of such contractual provisions, to indemnify the prevailing party for the full amount of the obligation, is defeated and a party's contract rights are diminished if the party is forced to defend its rights on appeal at its own expense.” Musso v. Binick, 104 Nev. 613, 764 P.2d 477 (1988). But, Musso also found that the determination of a reasonable attorney fee is a question of fact that must first be determined by the District Court. So, motions for fees incurred on appeal based upon a contract provision should first be made in the District Court, and the resulting order itself then becomes appealable as a special order entered after judgment. NRAP 3A(b)(2); Thomas v. City of N. Las Vegas, 122 Nev. 82, 127 P.3d 1057 (2006). Also, as pointed out in Musso, nothing prohibits a party from filing a motion for attorney fees post-judgment in the District Court and a second motion post-appeal for the additional fees incurred on appeal when there is an authorizing contract provision.

The Supreme Court’s approval of attorney fees awarded pursuant to a contract provision even extends to situations where the contract has been rescinded since it would be unjust to preclude the prevailing party from recovering attorney fees that were contemplated by the contract. Mackintosh v. Cal. Fed. Sav. & Loan Ass’n, 113 Nev. 393, 935 P.2d 1154 (1997). But, one caveat from Musso and Mackintosh is that the attorney fee provision must be sufficiently general that it does not restrict an award of fees to a certain forum or some other condition.

In summary, motions for attorney fees on appeal should be made before the District Court, and attorney fee provisions in contracts should be general.

Recovering attorney fees incurred on appeal through a statute

NRS 18.010 allows for a recovery of attorney fees incurred in the District Court when the recovered amount is less than $20,000 or when the litigation is maintained without reasonable ground. See also NRS 7.085. However, this statute does not apply to attorney fees incurred on appeal. The Supreme Court explained that NRS 18.010 is silent as to attorney fees incurred on appeal, and since the statute does not specifically authorize the recovery of fees incurred on appeal, the prevailing party could not recover its fees on appeal according to this statute. Bobby Berosini, Ltd. v. People for the Ethical Treatment of Animals, 114 Nev. 1348, 971 P.2d 383 (1998); see also Bd. of Gallery of History, Inc. v. Datecs Corp., 116 Nev. 286, 994 P.2d 1149 (2000) (finding that the District Court does not have authority pursuant to NRS 18.010 to award fees incurred on appeal through a post-appeal motion). So, the Court’s policy of indemnification for attorney fees incurred on appeal applies to contract provisions and does not extend to requests for fees based upon NRS 18.010. Bobby Berosini points out, nevertheless, that a party can make a request for attorney fees to the Supreme Court according to NRAP 38 when an appeal is frivolous and vexatious. However, fees awarded according to NRAP 38 are somewhat rare and usually do not include the entire amount of attorney fees incurred on appeal. See, e.g., Holiday Inn Downtown v. Barnett, 103 Nev. 60, 732 P.2d 1376 (1987) ($2,500 plus double costs incurred on appeal); In re Estate of Herrmann, 100 Nev. 149, 679 P.2d 246 (1984) ($1,000).

If you do not have a governing attorney fee provision in a contract, be aware that NRS 18.010 is not a proper basis for recovering attorney fees incurred on appeal, and consider using an offer of judgment instead.

Recovering attorney fees incurred on appeal through a court rule

When you do not have a contract provision authorizing the recovery of attorney fees incurred on appeal, the next best thing is an offer of judgment. The text of NRS 17.115(4)(d)(3) allows for the recovery of reasonable attorney fees “incurred by the party who made the offer for the period from the date of service of the offer to the date of entry of the judgment.” And, the text of NRCP 68 similarly permits the recovery of a reasonable attorney fee “from the time of the offer to the time of entry of the judgment.” However, the Supreme Court of Nevada has not yet issued a published opinion on whether the offer of judgment survives and applies to attorney fees incurred on appeal.

It would seem that attorney fees incurred on appeal would be recoverable, assuming the offer of judgment amounts apply, since an appeal simply challenges a judgment, and the final disposition of the appeal would relate back to the “entry of the judgment.” Federal cases construing FRCP 68 regarding offers of judgments, which can be made only by defendants, have held that once an offer of judgment is made, the offer remains operative through an appeal and even subsequent trials until there is eventually a final judgment. Payne v. Milwaukee County, 288 F.3d 1021 (7th Cir. 2002); see also Pouillon v. Little, 326 F.3d 713 (6th Cir. 2003) (explaining that an offer of judgment did not need to be renewed after remand in order to allow recovery of costs on the basis of the rejected offer). The contrary, yet weaker, argument would be that NRS 17.115 and NRCP 68 are silent as to an award of attorney fees incurred on appeal, such that the Bobby Berosini and Datecs rule should apply equally to the offer of judgment. While some District Courts will be reluctant to award attorney fees incurred on appeal, the more reasoned approach is to give meaning to the offer of judgment and allow recovery of the additional fees. Otherwise, any non-prevailing party at trial can appeal to the Supreme Court and get over the hurdle of a frivolous appeal as defined by NRAP 38—all at the expense of the prevailing party who will have essentially no recourse for the additional fees incurred on appeal. By analogy to Musso, the motion for fees should be made in the District Court post-appeal. And, the order itself becomes appealable, and possibly reversible if the order does not state the grounds upon which the attorney fees are granted after consideration of the factors set forth in Brunzell v. Golden Gate National Bank, 85 Nev. 345, 455 P.2d 31 (1969). See Henry Prods, Inc. v. Tarmu, 114 Nev. 1017, 967 P.2d 444 (1998) (requiring a stated basis in the order granting fees); see also Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 124 P.3d 530 (2005) (explaining that whatever method is employed for determining the reasonableness of fees, the Brunzell factors must be considered).

While it is not yet law in Nevada, it seems that you can recover attorney fees incurred on appeal based upon an offer of judgment. However, due to the absence of a ruling from the Supreme Court on this issue, wherever possible, include a contract provision authorizing the recovery of fees.

Conclusion

It is not impossible to recover attorney fees incurred on appeal, but you should be aware of the relative strengths and weaknesses of relying upon the various avenues available for recovering the fees. Contract provisions will almost always allow recovery of fees incurred on appeal to a prevailing party. NRS 18.010 is unavailable to recover fees incurred on appeal. A request for fees based upon NRAP 38, which is made to the Supreme Court of Nevada, is difficult due to a very high threshold for a finding that an appeal is frivolous. Finally, although uncertain in Nevada, the reliance upon an offer of judgment to recover attorney fees incurred on appeal should provide a positive alternative to a contract provision.