The Supreme Court of Virginia issues one opinion today in which it clarifies that Rule 3:25(b), which requires that a party seeking attorney fees must “demand them” in the appropriate pleading and “identify the basis upon which the party relies,” is a pleading requirement, not a notice requirement.
Premier Homes subcontracted flooring work to Pinnacle under three subcontracts, each containing a default clause in Section 8(b) entitling Premier to reasonable attorney fees. After Pinnacle sued for nonpayment, Premier counterclaimed for defective work and asked the court to “award it those attorney’s fees incurred by it in prosecuting this matter.” Importantly, it did not cite Section 8(b) or even mention that the subcontracts were the basis for the attorney fee claim. It did, however, incorporate the paragraphs of Pinnacle’s complaint, to which Pinnacle had attached as exhibits the three subcontracts.
Pinnacle raised the Rule 3:25(b) defect in its answer and a motion to strike. The parties agreed to bifurcate the fee issue, but not before Premier’s counsel twice emailed Pinnacle’s counsel identifying Section 8(b) as the basis for Premier’s claim and offering to amend the counterclaim. Premier’s counsel left that decision “in [Pinnacle’s] court.”
Premier prevailed at trial, but the circuit court denied its request for fees for noncompliance with Rule 3:25(b). The Court of Appeals reversed on a pure notice theory, finding that the demand plus the incorporated contracts put Pinnacle on notice, and a reasonable litigant would have recognized the contract’s lone fee provision.
But the Supreme Court rejected that theory. Notice, the Court explained, is something Rule 3:25 provides; it is not what the rule requires. Compliance comes from one thing only: affirmatively identifying the contractual or statutory basis for the fee request in the demand itself. The Court acknowledged that a reasonable litigant in Pinnacle’s position perhaps should have understood that Section 8(b) was the basis but held that it did not matter. Whether the contracts were attached (the Court assumes without deciding that Premier appropriately incorporated the subcontracts into its counterclaim), whether Pinnacle should have known, whether Pinnacle actually knew was all “irrelevant” because the question under Rule 3:25(b) is what the pleading says, not what the opponent understood.
The Court distinguished Online Resources Corp. v. Lawlor primarily because that case affirmed a trial court’s discretion to allow amendment of a deficient pleading where the defendant conceded knowledge of the basis; but it never held that knowledge substitutes for pleading. Premier, which never moved to amend, was simply not in Lawlor’s posture.
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