Counting on Recovering Attorney Fees? Why You Should Reconsider.
It makes logical sense that any person considering litigation would be emboldened, possibly even motivated, by learning that a relevant statute allows for an award of attorney’s fees to the “prevailing party.” A common misconception is that such an award will automatically follow a favorable outcome in a lawsuit. As is often the case, Washington law is not so clear cut. A recent Court of Appeals decision highlights exactly how speculative recovering attorney’s fees can be. Even when a party prevails on the merits and relies on multiple statutory bases for a fee award, they may still be forced to walk away without recovering their attorney’s fees. The case discussed below should serve as a cautionary tale for anyone preparing to litigate. No matter how clear the basis for a fee award may seem prior to bringing a lawsuit, the possibility of recovering your attorney’s fees should not be a primary motivator nor driving force when ultimately deciding to file a lawsuit.
The Washington Court of Appeals decision, Pace v. Hall, No. 40769-1-III, arose following dispute between neighboring property owners in Okanogan County. W. and M. Pace owned property abutting property owned by M. Hall. After the Paces built a new barbed-wire fence, Hall claimed that four of his fence’s T-posts were missing and had been incorporated into the Paces’ fence. Hall then chose to dismantle the Paces’ fence and reclaim the T-posts. This resulted in the disassembling of approximately 350 yards of the Paces’ fence, with posts still in place but the wire laying on the ground. Hall also cut large portions of the Paces’ fence and pulled the wire away from the posts. As a result, the Paces sued Hall asserting claims for quiet title, injunctive relief, waste, and intentional infliction of emotional distress.
Following a bench trial, the court found that Hall intentionally entered the Paces’ land and damaged their improvements, which violated RCW 4.24.630, Washington’s “waste” statute. The court awarded the Paces $2,500 in damages. With respect to liability, the Paces prevailed. With respect to damages, the Paces prevailed. By all accounts, the Paces were clearly the prevailing party. As such, the Paces moved for recovery of their attorney fees.
Three different theories formed the substance of the Paces’ fee request. First, the Paces asserted that the claims and defenses raised by Hall were frivolous under RCW 4.84.185. The trial court did not agree and found that Hall’s claims were not entirely frivolous. Second, the Paces sought fees pursuant to RCW 7.28.083, which concerns adverse possession. But the trial court found that such an award would not be equitable. Third, the Paces relied on RCW 4.24.630 itself.
RCW 4.24.630 provides that a person who wrongfully damages property “is liable” not only for treble damages, but also for the injured party’s reasonable attorney fees and litigation costs. Despite the clear language of the statute, the trial court again declined to award the Paces their attorney fees. The trial judge focused on proportionality but curiously reasoned that although the attorney fees requested by the Paces were not unreasonable, the court was not inclined to make Hall responsible for that amount. The Paces timely appealed.
On appeal, in relevant part, the Paces argued that they should have been entitled to fees under RCW 4.84.185 and RCW 4.24.630. The Court of Appeals agreed and found that the Paces were entitled to an award of attorneys’ fees under RCW 4.24.630. However, the Court of Appeals affirmed the trial court and held that the trial court did not abuse its discretion in declining to award the Paces their attorney fees under the RCW 7.28.083 due to Mr. Hall’s intransigence. This is because those bases are discretionary and properly within the purview of the trial court. Whether or not a party’s asserted position is ultimately successful does render their position frivolous from the start.
Here, RCW 4.24.630 was different. The Court of Appeals held that once liability under RCW 4.24.630 is established, attorney fees are mandatory, not discretionary. The statute’s use of the phrase “is liable” means legally obligated. The trial court’s concern about the size of the fee award relative to the damages did not permit it to deny fees altogether. Proportionality may factor into the reasonableness of total amount of a fee award, but it does not permit the trial court to disregard the statutorily granted entitlement. The Court of Appeals reversed the denial of fees under RCW 4.24.630 and sent the case back to the trial court to award the Paces their reasonable attorneys’ fees under RCW 4.24.630.
The lesson to be learned from Pace v. Hall is that statutory permission to seek attorney fees and statutorily mandated attorney fees are very different concepts. By and large, most fee shifting statutes are permissive and discretionary. Meaning the prevailing party can ask, but it is within the court’s discretion to decide whether to award fees at all, and the amount of the award. Fee shifting statutes that are grounded in equity, frivolousness, or intransigence provide courts with wide ranging support to justify limiting or declining to grant a fee award. Even when there is no debate as to the identity of the “prevailing party,” a fee award is not guaranteed. The Paces’ reliance on RCW 4.24.630 made all the difference. Had the Paces chosen to rely only on discretionary fee award theories, they would likely have left with only judgment and significant legal expenses. The Paces’ damages award, $2,500, was most likely far short of the total amount of legal expenses they incurred to obtain it. In layman’s terms, it does not always make a lot of sense to spend $50,000 to win $2,500.
The larger takeaway from Pace v. Hall is that attorney fee issues can be as significant as the issue of liability itself. It is all too common for parties to incur far more in legal expenses than they could ever hope to recover in damages or an award of attorneys’ fees. Charging forward under the wrong fee award theory can result in a court win that is actually a large financial loss. Winning the case is altogether different from obtaining an award of attorney fees, and sometimes that distinction is realized only once it is too late.
Here at Beresford Booth, we help clients evaluate potential claims with a clear understanding of both the legal merits and the financial risks involved, including whether attorney fees are discretionary or mandatory, so there are no surprises after the case is over.
Please do not hesitate to contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100 so that we can answer any questions you may have regarding the information above.