Contract Interpretation: “All Collection Costs”

Does a contract provision allowing for “all collection costs”include attorneys’ fees? No, accordingto a recent Illinois appellate decision.

Pursuant to a contract, a cleaning company performed servicesfor an apartment building. When thebuilding did not pay for the services, the cleaning company tried tocollect. Eventually, after repeatedcollection efforts, the building paid for the services. However, the parties went to court overattorneys’ fees. The contract, which wasprepared by the cleaning company, included a provision stating, “If the undersigned fails to pay for services rendered andcollection efforts become necessary, the undersigned agrees to be responsiblefor all collection costs incurred.” (emphasis added).

The cleaning company argued that the contract provisionallowing for “all collection costs” included attorneys’ fees. On the other hand, the building argued thatthe contract did not specifically provide a basis for awarding attorneys’ fees. The court agreed with the building, holdingthat, because Illinois is an “American Rule” jurisdiction, the “all collection costs” provision wasnot sufficiently specific to encompass attorneys’ fees.

Negro Nest, LLC, v. Mid-Northern Management, Inc. (Dec. 1,2005 Ill. App.4 Dist.)

[Meredith R. Miller]