Should we accept contractual prevailing party fee provisions?

The business world is driven by contracts.  Religious organizations are not insulated from this reality.  If a synagogue needs a new roof, if a church has a hole in the parking lot that needs repair, if a loan is necessary to construct a new Buddhist temple, each of these events will require a written contract.

Parties can agree that if they end up in a lawsuit over the contract, the party who loses the case will pay the winning parties’ reasonable attorney’s fees. But should a religious organization agree to a prevailing party fee provision?

What should be considered when faced with this question is which party has more to lose from a prevailing party fee provision. For example, if a well-funded religious organization contracts with a small contractor who has limited resources, the religious organization agreeing to a prevailing party provision may not make sense.  The only party in that example who has the means to pay the other party’s attorney’s fees is the religious organization. Conversely, if a modest religious organization is contracting with a major financial institution, then the religious organization agreeing to the fee provision makes more senses.  In litigation, a prevailing party fee provision can become the rock that brings down Goliath.  Prevailing party fee provisions level the playing field for the smaller party: if the smaller party wins, it can recoup the financial burden of going through the courts.

It is also important to understand that in Florida, a religious organization does not eliminate the risk of paying an opposing party’s fees by entering into a contract that only allows the religious organization to recover fees.  Florida statute permits the award of prevailing party fees to a party who wins a case under a contract that expressly provides only the opposing party may recover fees.

Therefore, careful thought should be given to the economic realities of the contracting parties when considering a prevailing party fee provision.  The attorneys at GrayRobinson can counsel religious organizations on the best strategies for these, and other, contract terms.

Florida’s Unincorporated Not-For-Profit Religious Associations

Many churches, synagogues, and other places of worship in Florida are unincorporated.  What does it mean to be an unincorporated religious association in Florida?

The simple answer is unincorporated not-for-profit religious associations have no legal standing in Florida.  These associations cannot sue or be sued.  This means these associations also cannot enter into enforceable contracts.  The Florida Supreme Court found “such a society or association has no legal existence, and it can neither contract nor sue or be sued in its own name.”

Florida courts have repeatedly held that until the legislature passes laws (as other states have done) recognizing an unincorporated association’s ability to sue and be sued, these associations will continue to lack any legal rights.  Florida’s First District Court of Appeal stated: “[U]nincorporated associations whose functions are fraternal or social…are a legal enigma in Florida. Although we can talk about them, define them, pledge allegiance to them and contribute money to them…, we cannot sue them. We can only attack their members.” As evidenced by the comments of the Appellate Court, existing as an unincorporated association exposes the religious association’s members to being sued.  Some courts have even stated the only way to sue an unincorporated not-for-profit association is to sue all of its members.

Religious groups in Florida should therefore consult legal counsel to determine the best strategy for their existence: incorporate and assume the ability to contract, sue and be sued; or, exist as an unincorporated association and enjoy protection against suit, while exposing the association’s members to possible liabilities.  The attorneys in GrayRobinson’s Religious Organizations practice group can counsel religious organizations through this decision.