Second District, Division 6 Affirms Substantial Fees As Damages, Minus An Offset.
Substantial fee awards do not necessarily always arrive in the form of postjudgment costs awards. Rather, they can be, and often are, awarded as damages by a trier of fact in certain actions, especially malicious prosecution lawsuits.
Saby v. Louks, Case No. B209906 (2d Dist., Div. 6 Nov. 23, 2009) (unpublished) is a good example of when fees are awarded as damages.
There, neighbors were engaged in quite a donnybrook. Briefly stated, neighbors with dogs believed their other neighbors “ratted” them out to local animal control authorities, causing wife of the dog owners—who worked at Blue Cross—to hack into the health insurance records of one of the other neighbors and then threatening to cancel that health insurance through actions outside of the employment authority of the Blue Cross employee. Litigation and a related arbitration ensued, with dog owners eventually dismissing their action against other neighbors with prejudice. Non-dog neighbors brought a malicious prosecution and abuse of discretion suit against dog-owning neighbors and their litigation attorney, with the attorney settling with non-dog neighbors for a pretrial amount of $17,500 and non-dog owners “lighting” up their neighbors with an award of $305,106.04 in economic damages (consisting of attorneys fees paid by non-dog owners to their counsel in the prior proceedings and malicious prosecution suit) and $25,000 in economic damages. Among other things, losing neighbors appealed the award of economic damages to non-dog owners as attorney’s fees and argued that the judgment had to be offset by the $ 17,500 settlement paid by their attorney.
On appeal, both sides did get something.
Dog owners lost the challenge to the $305,106.04 in economic damages. Legal fees incurred in the prior underlying proceedings and the malicious prosecution action were properly awarded as damages in the malicious prosecution suit brought by non-dog neighbors. However, the $17,500 settlement by losing neighbors’ attorney should have been allowed as an offset under Code of Civil Procedure section 877(a). So, a substantial award was sustained on appeal, minus a prior settlement offset, in favor of non-dog-owning neighbors. (BLOG OBSERVATION—Co-contributor Mike cannot comment on the merits, because Labrador Riffle does not bark very much, unless she is not getting enough Milk Bones.)
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