Reported / Citable
Background
The case grew out of a real estate dispute over an 80-acre Livermore parcel held by tenants in common. The DeLimas owned a 50 percent interest and lived on the property; the Petersons owned the remaining 50 percent. Real estate agent Stephen Marc Chess and prospective buyer Edmund Jin sought to acquire the entire property to develop a polo field. When the DeLimas refused to sell, the buyers and their agent decided to acquire the Petersons’ interest and force a partition.
A tenants-in-common agreement gave the DeLimas a right of first refusal. The DeLimas exercised the right and assigned their rights to Guinnane Construction Co., Inc. The defendants nonetheless continued working with the Petersons and ultimately closed a sale of the Petersons’ interest to Jin’s designee, with an indemnification provision targeting Guinnane’s pending litigation. Guinnane sued the Petersons for specific performance and prevailed after a bench trial; the court ordered the Petersons (through Jin’s designee) to convey the interest to Guinnane.
Guinnane then sued Chess and Jin in a separate “tort of another” action seeking the attorney fees it had incurred in the specific performance action against the Petersons, on the theory that the tortfeasors’ intentional interference forced Guinnane into that litigation. The trial court awarded those fees. Guinnane then sought an additional award for the attorney fees it incurred in prosecuting the tort of another action itself, often called “fees on fees.” The trial court denied the request and Guinnane appealed.
The Court’s Holding
The First District Court of Appeal, Division Two, affirmed. The court held that the tort of another doctrine does not allow a plaintiff to recover the attorney fees it incurs in prosecuting the tort of another action itself. While prior California decisions have applied the doctrine and alluded to its boundaries, none has authorized fees on fees, and the cases that touch on the issue all point in the opposite direction.
The court explained that the tort of another doctrine is a narrow exception to the American Rule, which generally requires each party to bear its own attorney fees in litigation. The doctrine allows a plaintiff who has been forced into litigation against a third party because of a defendant’s tort to recover the fees incurred in that third-party litigation as part of the damages caused by the tort. But once the plaintiff sues the tortfeasor directly, the litigation becomes a two-party dispute governed by the American Rule. Allowing recovery of fees on fees would effectively transform the tort of another doctrine into a general fee-shifting rule, which the Legislature has not authorized.
The court rejected Guinnane’s analogy to fees on fees recoveries under the private attorney general statute and other fee-shifting statutes. Those statutes embody specific legislative policy choices about how to incentivize particular categories of litigation. The tort of another doctrine, by contrast, is a common-law remedy compensating for actual economic injury caused by a tort, and the fees in the tort action are not part of that injury. The court closed by acknowledging the burden of meritless tactics by some defendants, but observed that the proper response is to use existing sanction tools or to ask the Legislature to revisit the American Rule.
Key Takeaways
- The tort of another doctrine allows a plaintiff to recover attorney fees incurred in litigation against a third party caused by the defendant’s tort, but does not authorize recovery of fees incurred in the tort action itself.
- Fees on fees in the tort of another context would convert the doctrine into a general fee-shifting rule, contrary to the American Rule.
- Plaintiffs facing aggressive defense tactics in tort of another actions must rely on existing sanction provisions like Code of Civil Procedure section 128.5 and discovery sanctions, not on broadened fee recovery.
- Statutory fees on fees provisions, such as those tied to the private attorney general doctrine, do not by analogy support common-law fees on fees.
- Litigants seeking expanded fee recovery in tort cases should direct their arguments to the Legislature.
Why It Matters
This decision draws a clear line for future tort of another claims in California. Plaintiffs who win against a third party because of a defendant’s tortious conduct can recover the fees from that third-party litigation, but cannot recover the additional fees of pursuing the tortfeasor. Plaintiffs’ lawyers should plan litigation budgets and settlement positions accordingly, and should consider whether contingent or alternative fee structures make economic sense given that direct recovery of attorney fees from the tortfeasor will be limited.
For defense counsel handling tort of another claims, the case provides strong authority against expansive fee awards. Defendants should still be mindful that aggressive tactics can lead to sanctions under sections 128.5 and 2023.030, but the underlying tort of another judgment will generally not include the attorney fees of pursuing the tort of another suit itself.