Recovery of Attorneys’ Fees – Part III: Common Law Exceptions that Provide for the Recovery of Attorneys’ Fees

This blog post is part III in a series of blogs posts discussing the recovery of attorneys’ fees.  Part I explored some considerations in the recovery of attorneys’ fees when the recovery is by virtue of a contractual provision.  Part II discussed the statutory entitlement to fees and issues related to entitlement.  This blog post will discuss common law exceptions to the general rule that generally requires a contractual or statutory basis for the recovery of attorneys’ fees.  Specifically, this blog post will discuss four general common law exceptions that may provide a basis for the recovery of attorneys’ fees: (1) wrongful act doctrine; (2) inequitable conduct doctrine; (3) creation of a common fund; and (4) attempt to preserve assets in a trust.

The wrongful act doctrine is a seemingly narrow exception to permit the recovery of attorneys’ fees where a defendant has committed a wrong toward the plaintiff, and the wrongful act has caused the plaintiff to litigate with third persons.  The wrongful act doctrine permits the plaintiff to recover, as an additional element of damages, plaintiff’s third party litigation expense. Horowitz v. Laske, 855 So. 2d 169, 174 (Fla. 5th DCA 2003).  As the fees awarded pursuant to this doctrine are special damages, the attorney must specifically plead for the attorneys’ fees.  Robbins v. McGrath, 955 So. 2d 633, 634 (Fla. 1st DCA 2007).

You may be thinking that the wrongful act doctrine and inequitable conduct doctrine seem to be the same.  However, these doctrines have separate applications.  The purpose of the inequitable conduct is to essentially award fees where an attorney acts in such a manner that would subject him or her to sanctions, with these sanctions being an award of fees.  The inequitable conduct doctrine was developed in the Florida Supreme Court decision of Bitterman v. Bitterman, 714 So. 2d 356 (Fla. 1998), cert. denied, 525 U.S. 1187 (1999).  In Bitterman, a co-personal representative raised worthless objections to standard petitions for the administration of estate assets and opposed any compromise. The Court found the co-personal representative’s acts were in bad faith and imposed an award of attorneys’ fees under the inequitable conduct doctrine.  As with any remedy, the courts are reluctant to award fees where there is not a clear basis for such an award.

The common fund doctrine permits an award of attorneys’ fees where counsel has been employed to obtain or to create a fund for the joint benefit of the parties.  Courts have been using this doctrine for hundreds of years.  Dating back to 1881, the United States Supreme Court recognized the use of the common fund doctrine to award fees.  Unlike the fee-shifting nature of a statutory or contractual basis for an award of fees, the common fund doctrine requires the members of the class to pay their attorney out of the fund.  The common fund doctrine requires:

1. The existence of a fund;
2. The commencement of litigation by one party which is terminated successfully;
3. The existence of a class which received substantial benefit as a result of the litigation;
4. The creation, preservation, protection, or increase of the fund as a direct and proximate result of the efforts of counsel for that party; and
5. A reasonable relationship between the benefit established and the fees incurred.

In essence, all of those who benefit from the fund share proportionately in the payment of attorneys’ fees.

Finally, courts have commonly awarded fees for suits initiated to preserve trust funds.  The preservation of funds may occur in actions where someone petitions the court to remove a guardian where the guardian was acting in such a manner that did not protect trust funds.  In that instance, the individual who initiated the action would be entitled to recover their attorneys’ fees.  Another instance in which the court may award fees is where a trustee seeks attorneys’ fees for bringing a declaratory judgment action against the beneficiary of a testamentary trust.

Crafty litigants shouldn’t get bogged down in the general rule that only finds a basis for fees based on statute or contract as you may miss out on fees that you are entitled to receive.  However, as stated in the earlier blog posts, the courts judicially scrutinize the basis for entitlement to fees, which requires practitioners to take care to ensure that they have satisfied the conditions or requirements for the award of fees.