Bolton v. McKinney

This morning, the Supreme Court of Virginia recognized yet another exception to the American rule.  In Bolton v. McKinney, the parties signed a settlement agreement with a covenant not to sue.  The agreement contained no fee-shifting clause.  McKinney then proceeded to sue the Boltons three times, causing the Boltons to incur more than $80,000 in attorney's fees.

After those suits were resolved in the Boltons' favor, they sued McKinney for breaching the settlement agreement and covenant not to sue, seeking their $80,000 in attorney's fees as damages.  The trial court dismissed the Boltons' claim because there was no contractual or statutory provision that authorized them to recover attorney's fees.

In its opinion, the Supreme Court noted that different courts have reached different results on this issue.  Some courts reason that a covenant not to sue, standing alone, is meant to be a shield, not a sword.  Thus, while it allows a party to obtain dismissal of a barred claim, it does not allow that party to recover damages.  Other courts recognize that, when a party breaches a covenant not to sue, the attorney's fees incurred by the injured party are the damages directly and consequentially caused by the breach.  Those courts allow for the recovery of attorney's fees as damages, even if the covenant not to sue is unaccompanied by a fee-shifting clause.

Ultimately, the Supreme Court agreed with the latter view and reversed the trial court's ruling.  In Virginia, a party may recover, as damages, the attorneys' fees they incur because another party breached a covenant not to sue.

You Don't Have to Pay Unnecessary Legal Fees, Even if You Win Your Litigation 

Here at The Mottley Law Firm, we handle a variety of litigation matters, from estate and trust disputes, to business disputes, to cases involving traumatic brain injuries and other serious personal injuries. If you're facing the prospect of litigation, don't wait to protect your rights. Give us a call today.

Benjamin P. Kyber
Richmond Appellate Law Attorney Serving Virginia, Henrico County.
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