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Contract Waived Immunity to Attorneys' Fee Awards

Sovereign immunity did not preclude an award against the government under a contract's attorneys' fees provision, according to the Court of Federal Claims, because the government's authority to contract includes the authority to enter into fee-shifting agreements. After the court found the government breached the right-of-entry for construction contract by never building a road and then repudiating its obligation ( 55 CCF 79,669), the contractors filed a motion for reconsideration seeking an award of attorneys' fees. The contract allowed a party prevailing in any litigation to recover "all reasonable costs including attorney fees as provided by law." Under the American Rule, each party in litigation must bear its own legal costs. However, there is an exception where a statutory fee-shifting provision authorizes an award of attorneys' fees, and in the government contracts context, the provision must also waive statutory immunity.

Contract Negotiations Revisited

According to the court, the government did not need separate, express authority to waive its immunity to fee awards because its specific, statutory authority to contract includes the authority to enter into fee-shifting agreements like the one here. The government argued that even if it could waive sovereign immunity through contractual fee-shifting, it did not do so here on account of the "as provided by law" language. But an attorney who represented the government in contract negotiations testified this language was added so the question of entitlement could be litigated or argued later. The court would "not indulge the [g]overnment's whipsaw here, encouraging [the contractors] to punt the attorneys' fees issue until after litigation, only then to urge [the contractors'] disqualification for punting." The government's argument would also render the language meaningless or superfluous. The "as provided by law" language simply meant the contract conditioned an award of fees on the sovereign immunity analysis conducted by the court. ( International Industrial Park, Inc., et al. v. U.S., FedCl, 56 CCF 79,709)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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