Monday, January 6, 2014

Plaintiffs on the Hook for Attorneys Fees Even If Defendant's Litigation Costs Are Covered By An Insurer

In Worsham v. Greenfield, the Court of Appeals of Maryland were asked to decide whether a civil defendant may be awarded attorney’s fees in cases where attorney’s fees were typically paid by the defendant’s insurance company.  The court affirmed the decisions of the Harford County Circuit Court and Court of Special Appeals, holding that attorney’s fees may be awarded in cases where the plaintiff filed a suit in bad faith or without sufficient justification.

The case originated over a decade ago between neighbors Michael C. Worsham (“Worsham”) and Robert and Romulda Greenfield (collectively “the Greenfields”).  In 2000, Mr. Greenfield filed criminal malicious destruction of property and second-degree assault charges against Worsham.  Worsham was ultimately acquitted of the malicious destruction of property, and the jury could not reach a verdict on the second-degree assault charge, resulting in a mistrial.

Worsham, an attorney, subsequently filed a civil suit against the Greenfields for malicious prosecution, defamation, false light/invasion of privacy, civil conspiracy, and aiding and abetting.  The Circuit Court for Harford County granted summary judgment to the Greenfields for all claims except malicious prosecution.  The claim for malicious prosecution was decided in favor of the Greenfileds on a motion for summary judgment following Worsham’s case-in-chief.  Worsham appealed, but the Court of Special Appeals affirmed the lower court and the Court of Appeals denied certiorari.

Thereafter, the Greenfields moved to collect over $40,000 in attorney’s fees and costs, pursuant to Maryland Rule 1-341.  The Circuit Court of Harford County granted the motion, only with respect to Romulda Greenfield, finding that she had been joined without substantial justification.  As such, the court awarded $3,613.13 in fees.

After the Court of Special Appeals affirmed the lower court’s ruling, Worsham appealed to the Court of Appeals, arguing that the Greenfields did not actually incur attorney’s fees because they were borne by the Greenfields insurance carrier.  The Court of Appeals disagreed, holding that parties compelled to defend themselves from abusive litigation may recover associated litigation costs, despite whether those casts were paid by the defending party, an insurance company, or by a third person on behalf of the defending party.  The court opined that Maryland Rule 1-341’s goals of awarding attorney’s fees for suits brought in bad faith and deterring frivolous litigation would be undermined if plaintiff’s could avoid paying attorney’s fees simply because they were already covered by an insurance company.  Accordingly, the award of attorney’s fees was affirmed.

The Court of Appeals decision in Worsham v. Greenfield is noteworthy as it expands the scope of Maryland Rule 1-341 to require payment of attorney’s fees for plaintiffs filing actions in bad faith or without substantial justification, even in situations where the defending party’s legal fees are covered by an insurer.

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