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Feb 9, 2015

Prevailing-party agents entitled to attorney's fees

ABSTRACT: An agent may recover attorney's fees when enforcing a principal's contract if: the agent is granted the express authority to enforce the contract in the contract itself, the contract contains an attorney's fees provision, and the agent is the prevailing party.

In Curo Enterprises, LLC v. Dunes Residential Services, Inc., No. 111,191, 2015 Kan. App. LEXIS 1 (Kan.App. January 2, 2015), Curo, in its capacity as DPW’s agent, brought suit against Dunes, in its capacity as DPW’s property manager, in order to terminate DPW’s agreement with Dunes.

DPW, the owner of an apartment complex, contracted with Curo to manage its assets. In 2006, DPW contracted with Dunes to manage DPW’s apartment complex. This contract, which the parties referred to as a “Management Agreement”, contained two relevant provisions. First, it provided that either DPW or Dunes could terminate the Management Agreement by giving the other party 30 days advance written notice, with or without cause. Second, it stated: "This Agreement shall be enforceable by [Curo] on behalf of [DPW] without any action or consent necessary from the Managing Member of [DPW]."

Curo, the asset manager for DPW, notified Dunes in writing of its intent to terminate the management agreement between DPW and Dunes. Dunes rejected the termination, and Curo filed suit seeking:  (1) a declaratory judgment that Dunes was no longer manager of the property; (2) an order compelling Dunes to step down as property manager; and (3) an order awarding Curo attorney fees and costs pursuant to a fee-shifting provision in the management agreement. Five days before trial, Dunes submitted a notice of termination of the management agreement. The District Court then found the trial moot and ordered Dunes to turn over all records and allowed another property manager to assume control. The Court left open each parties right to seek an award of legal fees and costs. Curo sought attorney’s fees and costs as the prevailing party under the management agreement.

On Curo’s motion, the District Court refused to grant Curo attorney’s fees, holding it brought the action to terminate Dunes in its capacity as a third party beneficiary of the Management Agreement, and not as DPW’s agent. The Court of Appeals disagreed, holding, Curo brought suit under its express authority to enforce the contract. The court held that a disclosed agent who has the express authority under a contract between third parties to enforce that contract on behalf of the principal signatory may bring suit under its own name to enforce the rights of the principal, because the principal is known to the agent.

Having decided Curo was an express agent, the court moved to evaluate the attorney’s fees provision of the contract. The contract stated, “In the event that either party hereto brings an action…the prevailing party in any such action shall recover from the non-prevailing party its attorneys’ fees…regardless of whether such action proceeds to final judgment.” The court, in quite limiting language, held that an agent granted written express authority in the contract at issue can claim attorney’s fees even when the language limits those fees to the party or, in this case, “either party.”

Finally, the court determined Curo was a prevailing party under Kansas law, because the court did not dismiss the action pursuant to a settlement agreement between the parties, but instead entered what was “more in the nature of a consent decree,” because it required the court’s jurisdiction, continuing supervision, and enforcement. The Court of Appeals remanded the case to the District Court to determine attorney’s fees.