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Contract ‘legal costs’ did not mean fees

A contract calling for payment of “legal costs” did not authorize a trial court to award attorney’s fees, the 4th U.S. Circuit Court of Appeals has held.

On Feb. 19, the appeals court vacated an award of $547,518 that included attorney’s fees in a dispute over a coal contract.

Abingdon U.S. District Judge James P. Jones interpreted the contract language to cover prejudgment interest, attorney’s fees, expert witness fees and certain witness travel expenses, for an award of over a half-million dollars in “legal costs.”

Under the governing law of New York, it was not clear the parties intended to shift legal fees, according to the 4th Circuit’s unpublished opinion by Judge G. Steven Agee. The phrase “legal costs” was “unmodified and undefined,” he wrote, and could encompass a range of fees associated with the underlying litigation.

Recovery of expert witness fees and travel expenses was a “closer call,” Agee said, but ultimately not clearly included in the contract. He directed the trial court, on remand of the damages award, to recalculate “legal costs” under the guidelines outlined in Traxys N.A. LLC v. Concept Mining Inc.
–Deborah Elkins

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