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Wrongful Act Doctrine (Schwartz v. Bloch)

Posted on: June 8, 2012

Independent Expert Testimony Not Required Where Attorneys’ Fees are Claimed an Element of Compensatory Damages pursuant to the Wrongful Act Doctrine

Mayan Schwartz v. Stuart E. Bloch, et al., No. 4D10-742 (Fla. 4th DCA June 6, 2012)

The subject case came up on appeal after plaintiff, Mayan Schwartz, appealed a final judgment entered in favor of the defendants, attorney Stuart Bloch and the law firm of Bloch, Minerley & Fein, P.L. The plaintiff’s underlying action alleged legal malpractice and breach of fiduciary duty claims. The jury returned a verdict finding in favor of plaintiff with respect to certain entities in connection with which damages were claimed, but found in favor of defendants as to other entities. The jury awarded $125,000 in damages for each of the entities (in connection with which plaintiff prevailed), for a total of $500,000. Additionally, the jury awarded $250,000 as reasonable and necessary attorneys’ fees, costs or expenses recoverable under the wrongful act doctrine; this award was based upon fees incurred by plaintiff in prosecuting certain claims against his family and his former accountant which claims arose as a consequence of certain advice provided by the defendants in connection with assignment of plaintiff’s assets to his father for no consideration.

The defendants filed post-trial motions arguing that plaintiff failed to present expert testimony as to the reasonableness of his attorneys’ fees, and that plaintiff failed to prove his damages with respect to the loss of his business interests. The trial court granted relief on these grounds and vacated the damages awards, and entered final judgment in favor of the defendants. Plaintiff appealed.

On appeal, the Fourth District Court of Appeal reversed as to the trial court’s post-trial order that set aside the jury’s award of $250,000 in attorneys’ fees or costs.The Fourth District Court of Appeal held that independent expert testimony was not required for fees which the plaintiff incurred in the litigation with his family and sought as an element of compensatory damages under the wrongful act doctrine

The wrongful act doctrine provides that where “the wrongful act of the defendant has involved the claimant in litigation with others, and has placed the claimant in such relation with others as makes it necessary to incur expenses to protect its interest, such costs and expenses, including reasonable attorney’s fees upon appropriate proof, may be recovered as an element of damages.” SchwartzcitingMartha A. Gottfried, Inc. v. Amster, 511 So. 2d 595, 598 (Fla. 4th DCA 1987). This is an exception to the rule that attorneys’ fees are not recoverable in the absence of a statute, contract, or rule authorizing such award. Id.

The court further explained that although the general rule in Florida is that independent expert testimony is required where a party seeks to have the opposing party in a lawsuit pay for attorneys’ fees in that same action, this rule is not applicable to the wrongful act doctrine where the fees are sought as an element of damages, and thus distinguishable from a situation where there is a first-party fee dispute between an attorney and a former client, or a situation in a fee-shifting case where a party is required by statute or contract to pay the attorneys’ fees of the adverse party. Id.

To read the entire opinion, click here.