The American Rule for Payment of Attorney's Fees

Coming out of the Court of Appeals of Tennessee at Nashville is a decision on whether the phrase "cost and expenses" in enforcing a declaration of easements and restrictions includes the recovery of attorneys' fees. The court says NO.

Cracker Barrel sued their neighbor alleging that the neighbor's plan to expand their building violated the declaration of reciprocal rights and easement and restrictive covenant. This declaration governed the use of the Cracker Barrel property and the neighbor's property. Cracker Barrel ended up winning. The provision in the declaration stated: "All costs and expenses of any suit or proceeding shall be assessed against the defaulting party."

The Tennessee Court pointed out that Tennessee "follows the 'American Rule' which provides that litigants must pay their own attorney's fees unless there is a statute or contract providing otherwise." The court goes on to cite a case that the rule in Tennessee requires that the statute or contract specifically provides for the recovery of attorneys' fees.

The dissenting judge found that the use of "all cost and expenses" should be given its ordinary meaning and would include attorney's fees. After all the biggest cost of a "suit or proceeding" is going to be attorneys' fees.

You can follow these links for the decision in Cracker Barrel Old Country Store, Inc., et al. v. Richard Epperson, et al. (M2006-02424-COA-R3-CV) and the dissent.

Remember to always include the words "attorney's fees" when drafting a contract provision for the recovery of costs and expenses.

In the first draft of this post I failed to thank Mike Frisch of The Legal Profession Blog for pointing out this case.

Massachusetts Document Recording Standards

Massachusetts is finally jumping on the formatting standard bandwagon. The registries had originally planned to implement the requirement on January 1, 2007. Now the new deadline is January 1, 2008.

Documents recorded after January 1, 2008 must meet the following requirements:

1. Be on white paper of sufficient weight to reproduce in registry scanners.

2. All document pages and attachments must be on paper that is no larger than 8.5 inches by 14 inches.

3. Printing on one side only; double-sided pages will not be accepted.

4. Documents that contain printing, writing or other markings must be sufficiently dark in appearance to be legibly reproduced on standard registry scanners.

5. All printing and writing on a document must be of sufficient size to be legibly reproduced on standard registry scanners.

6. Margins on all sides of all document pages must be of sufficient size to be legibly reproduced on standard registry scanners.

7. The first page of all documents must contain a “recording information area” in the upper right hand corner measuring three inches from the top edge of the document and three inches from the right edge of the document that is free from all writing or printing.

8. Documents that do not comply with Formatting Standard 7 above may still be recorded when attached to an official registry Document Cover Sheet or through the use of some other method adopted by the registry.

I was surprised that the registrars did not set more bright-line tests like half inch margins. I am also surprised that they are taking legal sized documents.

Thanks to Dick Howe of the Essex South Registry of Deeds for pointing this out.

Reasonable Efforts versus Best Efforts

Ken Adams, author of A Manual of style for Contract Drafting, published this article in The Practical Lawyer: Understanding Best Efforts and Its Variants.

I particularly liked his chart of the different "effort" phrases used in contracts filed with the SEC in 2004: