BILL NUMBER: S8803

SPONSOR: BONACIC
 
TITLE OF BILL:  An act to amend the civil practice law and rules, in
relation to motions for attorney's fees

This is one of a series of measures being introduced at the request of
the Chief Administrative Judge upon the recommendation of his Advisory
Committee on Civil Practice.

This measure would add a new section 8405 to the CPLR to establish a
uniform procedure to govern applications for attorney's fees incurred by
a prevailing party in an action where a statute, court rule, or agree-
ment of the parties authorizes "fee shifting," i.e., an award of fees
against another party in the action.

A uniform statutory procedure to postpone applications for attorney's
fees until after a final judgment, i.e., "a judgment that is final and
not appealable," would have three benefits. It would:

(1) enable the court to review a fee application based on the outcome of
the litigation, rather than review multiple applications in duplicative
or piecemeal fee litigation; (2) eliminate procedural anomalies; and (3)
              

ensure that New York courts apply Federal fee-shifting statutes consist-
ently with the U.S. Supreme Court precedent.

This measure would reinforce New York's historical treatment of attor-
ney's fees as costs in an action rather than as an element of a cause of
action. It also would align New York's practice with the procedures in
Federal courts of waiting until the parties have litigated and resolved
the underlying dispute before requiring a party to submit an application
for attorney's fees. See Fed. R. Civ.  P. 54(d); see also Ray Haluch
Gravel Co. v. Cent. Pension Fund of the Int '1 Union of Operating
Eng'rs, 134 S. Ct. 773 (2014).

The measure would apply only to procedural issues about the timing and
nature of a motion for fees, and would not change the substantive law
governing whether a party would be entitled to fees.

 
BACKGROUND TO FEE AWARDS

New York law historically has held that attorney's fees in a litigation
are costs that are "incidents of litigation," even when the parties
agree to fee shifting in some form. E.g., Mount Vernon City Sch. Dist.,
19 N.Y.3d 28, 39 (2012); see Roe v. Smyth, 278 N.Y. 364 (1938); In re
Low, 208 N.Y. 25, 32 (1913) (striking "allowances for counsel fees and
disbursements" except as statutorily permissible as "costs" under Code
of Civil Procedure); cf Osterneck v. Ernst & Whinney, 489 U.S.  169, 175
(1989) (at common law, attorney's fees "were regarded as an element of
costs and therefore not part of the merits judgment").  Attorney's fees
are not damages that are part of a cause of action.  See, e.g., Avalon
Const. Corp. v. Kirch Holding Co., 256 N.Y. 137, 145 (1931) (stating
that any attorney's fees should be assessed in a bill of costs, not as
damages to be recovered); Lurman v. Jarvie, 82 App. Div. 37 (1st Dep't
1903) (stating that fees are costs governed by statute and ordinarily
cannot be awarded as damages), aff'd on op.  below, 178 N.Y. 559 (1904).

This historical practice relating fees to costs or expenses is reflected
in many statutory fee-shifting provisions that allow attorney's fees to
be awarded at the conclusion of the litigation.  For example, the
State's Equal Access to Justice Act directs that certain parties may
submit a fee application within thirty days after a final judgment,
i.e., "a judgment that is final and not appealable." See CPLR 8601(b),
8602(c); see also Agriculture & Markets Law § 308-a(2)(b) (thirty days);
Tax Law § 3030 (same); cf.  CPLR 8303(a)(4) (after exhaustion of
appeals). The law governing class actions similarly anticipates that a
fee application would be filed post-judgment. See CPLR 909. In addition,
U.S. Supreme Court precedent holds that a fee award under Federal law is
not an element of damages; the award is separate from the merits. See
White v. N.H.  Dep't of Employment Sec., 455 U.S. 445, 452 (1982).

But some cases have categorized attorney's fees under fee-shifting
provisions as "damages" that are an "integral part" of a cause of
action. See, e.g., Burke v. Crosson, 85 N.Y.2d 10, 17 (1995) (fee award
under 42 U.S.C.  § 1988) (citing Manko v. City of Buffalo, 294 N.Y. 109
(1945)). Under this approach, the parties must resolve a fee application
before they can exhaust appellate review of the merits through the Court
of Appeals. This approach creates an anomaly: fees cannot be assessed
until action on the merits is complete.

 
BENEFITS OF PROPOSED AMENDMENT

Determining eligibility for and the amount of a fee award while the
merits of the claims remain subject to further review is an inefficient
use of judicial resources. The better practice would be to enable the
court to consider the substantive merits of a fee application based on
the outcome of the litigation, i.e., after the merits judgment is final
and not appealable. Accordingly, courts and parties would benefit from
predictability and consistently treating attorney's fees as incidental
to the litigation, regardless of the basis for fee shifting.

By postponing a motion for attorney's fees (and other costs or expenses)
incurred by a party in that action until after a final judgment, the
amendment would mitigate problems of prematurely litigating fees in the
face of uncertain outcomes on the merits. If a judgment is overturned in
whole or in part-perhaps with an expectation of further trial court
proceedings-then a previously litigated fee motion would be either in
vain, or subject to significant revisions after applying the same analy-
sis to the same billing records a second time. And even if a judgment
were affirmed, then the parties would return to the trial court to liti-
gate the fees incurred during appellate proceedings. This CPLR amendment
would also ensure that New York State courts follow binding U.S. Supreme
Court precedent interpreting Federal law.

This amendment would not affect the law governing an application for
attorney's fees from a fund (e.g., a structured settlement) or based on
a contingency agreement. See CPLR arts. 50-A, 50-B. Nor would this
amendment affect an application under laws that expressly contemplate an
award of fees during an action not based on a final determination of the
merits of a complaint or petition. See, e.g., Domestic Relations Law §
237 (award of fees to enable party to litigate); Rules of the Chief
Admin. (22 N.Y.C.R.R.) § 130-1.1(a) (sanctions for frivolous liti-
gation).

This amendment also would not affect, for example, an action to recover
attorney's fees incurred in a prior litigation. It would apply only to
fees incurred within an action.
This measure, which would have no meaningful fiscal impact on the State,
would take effect immediately.

 
LEGISLATIVE HISTORY:

None. New proposal.