You can recover legal fees to defend your lease rights if your lease says so. That’s the lesson on Lamar Advertising Southwest, Inc “Lamar” v Grandview Realty, LLC “Grandview”  Here are the facts.

• Lamar had a three year lease for four billboard structures on property owned by Grandview.  The lease required Grandview to indemnify Lamar from “any and all damages, liability, cost, and expenses, including attorneys fees, resulting from any… non-fulfillment of any obligations” under the lease.
• In 2019 Grandview ordered a construction company to take down the billboards over Lamar’s objections and despite the fact that the lease was still in effect.
• In March 2021 Lamar filed suit for damages, including legal fees.
• In January 2022, Lamar and Grandview agreed to settle the case for a payment of $145,000 plus a court decision on a motion for attorneys fees in an amount of up to $55,000.
• Grandview argued in court that it was not required to indemnify Lamar for legal fees because (1) The lease agreement contained a one-sided provision that is unconscionable on its face. (2) Lamar’s legal fees were unreasonable in that they involved three times as many billable hours as Grandview’s. (3) Lamar’s legal fees were inequitable because they included expenses for an associate to conduct research and attend a settlement conference.
• US District Court of New Mexico awarded Lamar $55,000 in legal fees.   The Court ruled (1) Legal fee reimbursement  is not unconscionable: “Unless there is an affirmative showing of mistake, fraud or illegal, illegality, the fact that some of the terms of an agreement resulted in a hard bargain… Does not render a contract unconscionable. Defendants have not made such an affirmative showing of mistake, fraud, or illegality…“(2) The court concluded that Grandview had not met the burden to show that a legal fee award of $55,000 was unreasonable even though Lamar devoted more hours to the case: “...although Plaintiff was billed for 120.5 hours more of attorney time overall than were Defendants…this disparity alone does not render billing unreasonable.  Such imbalances are frequent in litigation.. After reviewing the billing information submitted by plaintiffs council, the court was not left with the impression that council overworked the file, exalted form of substance, or spent unreasonable amounts of time with any individual litigation task.”  (3) The court agreed with Grandview that Lamar was not entitled to associate attorney legal fees: “the court finds the associate’s participation at the settlement conference is not reimbursable because it was superfluous and inessential.  While the the settlement conference was no doubt an important learning opportunity for the associate…lead counsel’s participation was plenty sufficient. Requiring…Grandview to underwrite the professional education of plaintiffs’s counsel’s  associate would be inequitable.”   The court noted however that Lamar had incurred $66,770 in actual  legal fees so that Grandview must still pay Lamar $55,000 in legal fees even after $9,429 in unreasonable legal fees.

Billboard Insider’s take:  Makes sense to have a provision in your leases which allows you to recover your legal fees and expenses when the other party breaches a lease.

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