Attorneys Fees Can Be Significant

            Be careful what you wish for.

There’s a lot of pent up frustration these days in the housing market.  It’s clear that all kinds of people are frustrated – buyers, sellers, borrowers, lenders, real estate agents, and others.  It’s just a difficult time (for many reasons).

But frustration can lead to action.  Some of the key factors that can lead to litigation are surprise, frustration, disappointment.  When someone comes out of a transaction and is surprised by something they didn’t expect – they may end up calling a lawyer.  This can likewise happen when someone is disappointed or frustrated with the results of a transaction.

In some situation, litigation may be the best – or only – alternative.  But even though someone may have experienced a loss, or even though they may be frustrated, careful evaluation and analysis should always be used before proceeding with a formal lawsuit.  Following is a case in point.

Several individual plaintiffs sued a title company and an individual defendant. The individual defendant apparently acted as an agent for a mortgage brokerage firm.  The plaintiffs claimed that the individual defendant wrongfully and fraudulently induced the plaintiffs into refinance their real estate loans by doing such things as misrepresenting the loan terms and failing to disclose various loan features (including payments that the brokerage firm would receive).  At trial the evidence showed that the individual defendant also induced some of the plaintiffs to make improper payments to his telemarketing company, and the evidence showed other wrongful acts by this individual defendant. The plaintiffs alleged that the title company facilitated the fraud by failing to require title company supervision when the individual defendant got signatures from the plaintiffs on the loan documents.

The lawsuit went all the way through a jury trial.  The jury found the individual defendant liable to the plaintiffs.  However, with one small minor exception, the jury didn’t find the title company to be liable to the plaintiffs.  This meant there was a mixed result – the plaintiffs succeeded with their claims against the individual, but they lost their claims against the title company.

The escrow instructions apparently provided for an award of attorneys fees in the event of litigation.  After the trial was over, the title company asked the trial court to award the title company its attorneys fees.  The plaintiffs asked the court to discount any attorneys fees award due to the plaintiffs limited ability to pay.  The Court found that an awarding of the substantial fees requested would be “ruinous” to the Plaintiffs. The trial court apparently considered the negative financial impact on the Plaintiffs that a fee award would have.  After considering the negative affect of a fee award on the Plaintiffs, the Court entered a fee award in favor of the title company and against the Plaintiffs in the amount of $884,036.62.

On appeal, the title company claimed that the negative impact of a fee award on a losing party should not be considered.  The Court of Appeal agreed.  The Court of Appeal reversed the decision of the trial court, and sent the matter back so the trial court could enter a fee award without taking into consideration the impact of the award on the losing Plaintiffs.

The amount of the fee award requested by the title company?  Over two million dollars.  Certainly a difficult day for the Plaintiffs when they lost their case against the title company. The final amount of the fee award is not given in the reported opinion, but it may be higher, or maybe considerably higher, than the initial award. The case is reported as Walker v. Ticor Title Company (2012) DJDAR 3467.

Litigation involves many complex considerations.  Litigation can be expensive, difficult, and time-consuming.  Persons involved with potential or actual litigation matters should seek the assistance of competent, qualified legal counsel.

Copyright 2017 ROBERT B. JACOBS