No Fee-Shifting in Tort-of-Another Suit

Friday, March 27, 2026

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No Fee-Shifting in Tort-of-Another Suit—C.A.

Justices Say American Rule Has Applicability, Rejecting Plea for Exception

By a MetNews Staff Writer

Div. Two of the First District Court of Appeal held yesterday that where a buyer was forced to sue the sellers for specific performance as the result of third parties interfering with the sale, attorney fees that were incurred in that action may be recovered in a subsequent lawsuit under a tort-of-another theory, but may not be awarded in connection with that follow-up litigation.

Guinnane Construction Co., Inc. had contracted to buy a 50% interest in real property in Livermore, a city in Alameda County. Stephen Chess and Edmund Jin, who desired to purchase a 100% interest, caused the sellers— Russ Peterson, Janet Peterson, and Christie Hibner—to back out of the deal with Guinnane.

In the action against the sellers, Guinnane prevailed—but only after incurring expenses of more than $1.3 million. It then sued Chess and Jin for tortious interference with contract, gaining an award of $1,286,888 in compensatory damages and $ 512,106 in prejudgment interest.

But in order to secure that judgment, it expended about $840,000 in fees and costs, and wanted a recovery of that amount. Alameda Superior Court Judge Victoria Kolakowski denied that request, and Guinnane appealed.

Appellant’s Argument

It argued in its opening brief:

“Guinnane brought a post-trial motion for attorneys’ fees, seeking attorneys’ fees under California precedent awarding fees incurred in litigating fee-related matters. In the absence of such fees, Guinnane cannot be made whole for the injuries caused by Respondents’ tortious interference. However, the trial court erroneously denied Guinnane’s motion, stating that ‘Guinnane did not carry its initial burden of persuasion that grounds exist for an award of attorneys’ fees in this case.’ The Court should reverse the trial court’s order and remand to the trial court for a determination of the reasonable amount of attorneys’ fees to be awarded to Guinnane. The tort of another doctrine was created pursuant to the courts’ inherent equitable powers as an exception to the rule that attorneys’ fees may only be recovered where authorized by contract or statute….”

The appellant noted that Chess and Jin caused it to incur hefty fees, including a fruitless appeal from the denial of their anti-SLAPP motion, denied by Div. Two on Dec. 22, 2020, in an opinion by Stewart.

It maintained:

“If attorneys’ fees for litigation caused by the tort of another are recoverable…, there is no reason that the fees for recovering those fees are not excepted as well. Indeed, the failure to do so renders hollow the tort of another doctrine….The broad reach of recovery under the tort of another doctrine derives from its essential purpose as an equitable remedy and should extend here to recovery of fees incurred in this action.”

Stewart’s Opinion

Presiding Justice Therese M. Stewart authored the opinion affirming the postjudgment order. She wrote:

“[A]ttorney fees incurred in an action against the tortfeasor to recover fees awarded under the underlying tort of another doctrine do not fall within any recognized exception to the general rule that each party must bear their own legal fees. Guinnane has cited no authority holding that the tort of another doctrine permits recovery not only of fees incurred in prosecuting or defending an action against a third party, but also of fees incurred in an action against the tortfeasor itself, and our own research has yielded none. On the other hand, several cases have declined to include fees incurred in tort of another litigation to recover from the tortfeasor. In addition, under the American Rule, codified in Code of Civil Procedure section 1021, absent a statute or contract providing otherwise, attorney fees are to be paid by the party hiring the attorney.”

That section says:

“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs….”

The presiding justice added:

“Absent express statutory or contractual exceptions, tort plaintiffs cannot recover attorney fees in litigation against the tortfeasor to recover for the injuries they suffer. Courts have adhered to this rule even where the defendant’s conduct caused catastrophic and lifelong injury, and the plaintiffs suffering was profound….[A]ttorney fees are not compensated in tort actions, no matter how great the injury suffered or whether their recovery fails to make them whole.”

Sympathetic to Concern

Stewart commented:

“Guinnane points out in its brief that defendants ‘made litigating this action costly,’ and the prior appeal from the meritless anti-SLAPP motion, not to mention the amount of attorney fees Guinnane expended, are some indication that this may be somewhat accurate….[W]e are sympathetic. There are some remedies for meritless actions, such as sanction awards for bad faith or frivolous litigation actions or delay tactics and misuse of the discovery process….But the bar for those remedies is high. Whether a case can be made to the Legislature to revisit the longstanding American Rule in the tort of another context or in tort litigation more generally is not clear. Regardless, this court is not at liberty to depart from current law.”

The case is Guinnane Construction Co. v. Chess, A172999.