Officially released August 27, 2019.
In Short: a detailed review of the bad faith exception to the American Rule and considerations of a reasonable attorney’s fee; where an appeal has no colorable merit, an award of counsel fees under the bad faith exception can be warranted.
The parties were married in 1998, had one child in 2000 and were divorced after trial in 2007. Defendant appealed the trial court’s Judgment permitting Plaintiff to relocate to Virginia for employment and lost on appeal. Defendant later learned that Plaintiff had lost the position she relocated for and had obtained different employment in Virginia. Defendant filed a motion to open the judgment on the basis of fraud alleging Plaintiff had a continuing duty to disclose her job situation after the Judgment while the appeal of the Judgment was pending. That motion was denied, and Defendant appealed. The Appellate Court denied that appeal, holding, inter alia, that Plaintiff had no continuing duty to disclose her loss of employment as a matter of law after final judgment entered.
While that last appeal was pending, Plaintiff filed a motion seeking counsel fees to defend that appeal, which order of counsel fees is the subject of this appeal. A hearing on that motion was continued until after the appeal was resolved. The hearing was then concluded, and the trial court issued a memorandum of decision granting Plaintiff’s motion for attorney’s fees based on the bad faith exception to the American Rule.
The trial court found that Defendant had acted in bad faith in taking an appeal as his appellate claims were entirely lacking in color and awarded sanctions against Defendant, as opposed to his attorney. The appeal for which fees were awarded had been based on two claims: (1) that the trial court improperly held a portion of the hearing off the record, and (2) that the trial court abused its discretion by ruling on the motion to open without hearing testimony or taking evidence. As to the first claim, the trial court found there was no evidence to support it, the record was clear as to each instance where any business was conducted in chambers as to purpose and content, and no objection was made. As to the second claim, the trial court found that the procedure, including bifurcation and briefing with factual stipulation in lieu of an evidentiary hearing was agreed to by all parties and counsel.
Defendant appealed the award of fees and the Appellate Court held that the trial court abused its discretion in awarding attorney’s fees because it lacked the “high degree of specificity” required under the bad faith exception as to its finding that Defendant’s appeal was entirely without color. The Appellate Court further held that the trial court improperly applied the standard to the lawyer rather than the party. Plaintiff petitioned for certification which was granted.
The Supreme Court set forth the standard governing application of the bad faith exception to the American Rule in detail. The Supreme Court Held that the trial court’s subordinate findings were sufficiently specific to support its ultimate finding that Defendant acted in bad faith in knowingly bringing appellate claims that were entirely lacking in color. Further, Defendant was present to observe the lack of evidence to support his claims. The Supreme Court further held that the amount of fees awarded was not abuse of discretion, after engaging in a detailed review of the law regarding calculation of a reasonable attorney’s fee.