HB981 would limit the amount of accrued attorneys’ fees and costs that a plaintiff’s attorney may recover in matters arising from construction-defect disputes. For settled disputes, the bill caps those fees and costs at 25% of the recovery amount. For court actions alleging construction defects, it directs the court not to award accrued attorneys’ fees and costs to a prevailing plaintiff’s attorney in excess of 25% of the recovery amount. The bill defines a construction defect broadly to include deficiencies arising from design, specifications, surveying, planning, construction, supervision, or observation of construction of a building or structure.
The bill’s stated purpose is to preserve more of a plaintiff’s recovery so that settlement proceeds or damages awards are sufficient to pay for repairs. The legislature’s findings note that attorney’s fees and costs can substantially reduce a plaintiff’s net recovery, potentially leaving a homeowner or property owner unable to fix the defect and in a worse position after litigation than before it began.
Impact
HB981 would add new statutory provisions to chapters 605 and 607 of the Hawaii Revised Statutes governing attorney compensation in construction-defect disputes. It would create a specific fee limitation for plaintiff-side attorneys in both settlements and litigated actions, overriding other laws to the contrary, while preserving existing contracts and not applying retroactively to matured rights, incurred penalties, or already-begun proceedings. The practical effect would be to constrain fee recovery in construction-defect cases and shift more of any settlement or judgment to the injured property owner rather than counsel.
Sentiment
The bill’s stated policy rationale is consumer- and homeowner-protective, and its framing suggests support for plaintiffs who need funds for repairs after construction defects are disclosed. However, the available legislative history shows the House Judiciary and Hawaiian Affairs Committee recommended deferral, indicating the measure did not advance at that stage. No vote record or transcript is provided, so the broader sentiment appears cautious or unresolved rather than clearly favorable.
Contention
The main point of contention is the 25% cap on attorneys’ fees and costs, which may be viewed by supporters as necessary to ensure plaintiffs can actually repair defective property, but by opponents as an interference with fee arrangements and litigation economics in construction-defect cases. Another likely issue is the bill’s broad definition of “construction defect,” which could affect a wide range of disputes involving building design and construction. The inclusion of non-impairment and non-retroactivity language suggests concern about constitutional and contractual challenges, especially for existing fee agreements and pending cases.