$217,590 Fee Recovery Went POOF!, And Compensatory Damages Will Get Scaled Down For Fees Recovered As Malicious Prosecution Damages.
The Fifth District in Smeed v. Galtar, LLC, Case No. F067110 (5th Dist. Aug. 19, 2014) (unpublished) considered a plaintiff/former defendant seller who won a malicious prosecution case against defendant/former buyer arising from a prior dismissed action involving claims for breach of contract and fraud for a failed real estate deal. In the prior suit, defendant/former buyer (who was a plaintiff) dismissed without prejudice, and the plaintiff/former seller (defendant) never sought attorney’s fees after the dismissal. However, plaintiff in the malicious prosecution suit won compensatory damages of $28,074.82 (representing the attorney’s fees spent in the dismissed real estate action), punitive damages of $100,000, and additional costs of $217,590 (representing the attorney’s fees spent in successfully prosecuting the malicious prosecution action), all prompting an appeal by the losing defendant in the malicious prosecution case.
Defendant did well to appeal.
The appellate court determined that the breach of contract claim in the prior dismissed action was not maliciously prosecuted so that a remand was needed to re-determine the compensatory damages (prior fees expended) allocable to the non-contract claims (which also meant the punitive damages award had to be relooked at).
With respect to the $217,590 fee award as costs, that one went away altogether. The reviewing panel found that the real estate purchase agreement fees clause was very narrow, dealing solely with enforcement or interpretation of the contract. It did not extend to broader “relating to” or “arising out of” subjects such as a malicious prosecution tort action involving the real estate purchase agreement.