Litigants are generally responsible to pay their own attorneys’ fees and costs (this is called the “American Rule,” as opposed to the “British Rule”).  But many contracts include a provision like the following: 

Attorneys’ Fees.  In the event of a dispute between the parties with respect to this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and costs.

Even if a contract doesn’t contain an attorneys’ fee provision, in some cases an applicable statute may impose such a provision (such as Florida Statutes Section 542.335(1)(k), in the case of non-competition agreements). The text of such a contractual or statutory provision must be strictly construed.  So, who is a “prevailing party” entitled to attorneys’ fees and costs?

In order to be a “prevailing party,” one must succeed on the merits of a significant issue in the litigation.  The Florida Supreme Court stated: “[T]he fairest test to determine who is the prevailing party is to allow the trial judge to determine from the record which party has in fact prevailed on the significant issues tried before the court.”  Moritz v. Hoyt Enter., Inc., 604 So. 2d 807, 810 (Fla. 1992).  The court’s decision on a preliminary matter–such as a request for preliminary injunction or dismissal without prejudice for lack of jurisdiction or some other procedural reason–is not a final determination on the merits of an issue in the litigation, so it does not give rise to an award of attorneys’ fees and costs.  There must be some end to the litigation on the merits so that the court can determine whether the party requesting fees has prevailed.  Until then, there is no judicially sanctioned change in the legal relationship of the parties, and therefore no “prevailing party.” 

Voluntary dismissal by the plaintiff is an exception to the general rule that there must be a final determination before an award of attorneys’ fees and costs.  This exception recognizes that, in many cases, the plaintiff’s voluntary dismissal is tacit admission that the defendant would prevail.  The exception is also needed to avoid the unfair result where a plaintiff vigorously litigates his or her case up until it becomese clear that he or she will lose and then voluntarily dismisses the case in an attempt to deny the defendant’s prevailing party attorneys’ fees and costs.