The Wrongful Act Doctrine in Florida
In Florida civil actions parties are not entitled to recover their attorney fees unless the claim is predicated upon a contract between the parties that provides otherwise or the claim is based on a statute that authorizes the recovery of attorney fees to the prevailing party. See e.g., Trytek v. Gale Indus., Inc., 3 So. 3d 1194, 1198 (Fla. 2009) (“It is well-settled that attorneys’ fees can derive only from either a statutory basis or an agreement between the parties.”). This general rule on attorney’s fees is known as the “American Rule” and is followed by the majority of states.
The wrongful act doctrine is a narrow exception to the American Rule. See Reiterer v. Monteil, 98 So. 3d 586, 588 (Fla. 2d DCA 2012) (noting that the wrongful act doctrine is “a narrow exception to the rule that attorney’s fees are recoverable only when authorized by statute or contract”); Fla. Patient’s Comp. Fund v. Rowe, 472 So. 2d 1145, 1148 (Fla. 1985) (“This state has recognized a limited exception to this general American Rule in situations involving inequitable conduct.”).
The wrongful act doctrine is a judicially created equitable principle that permits the recovery of attorneys’ fees when a defendant’s acts or omissions cause a party to incur attorneys’ fees in maintaining or defending a lawsuit with a third party. See State Farm Fire & Cas. Co. v. Pritcher, 546 So. 2d 1060, 1061 (Fla. 3d DCA 1989) (“Where a defendant has committed a wrong toward the plaintiff, and the wrongful act has caused the plaintiff to litigate with third persons, the wrongful act doctrine permits the plaintiff to recover, as an additional element of damages, plaintiff’s third party litigation expense.”).
The Wrongful Act Doctrine as Applied
As mentioned, Florida’s Courts “have recognized the ‘wrongful act doctrine’ which permits a plaintiff to recover third-party litigation expenses as special damages where the defendant’s wrongful act caused the plaintiff to litigate with the third-party.” Winselmann v. Reynolds, 690 So. 2d 1325, 1328 (Fla. 3d DCA 1997).
Specifically, that doctrine provides that: “[W]here the wrongful act of the defendant has involved the claimant in litigation with others or placed him (or her) in such relation with others as makes it necessary to incur expenses to protect his interest, such costs and expenses, including attorney’s fees, should be treated as the legal consequences of the original wrongful act and may be recovered as damages.” Winselmann, 690 So. 2d at 1328 (quoting Behar v. Jefferson Nat’l Bank at Sunny Isles, 519 So. 2d 641, 643 (Fla. 3d DCA 1987)).
An excellent example of the application of the wrongful act doctrine in Florida is Pony Express Courier Corp. v. Zimmer, 475 So. 2d 1316 (Fla. 2d DCA 1985). There, former employees and a competitor allegedly conspired to disrupt Pony Express’ business by disseminating false accusations that it had violated federal antitrust law. Id. The allegations triggered a federal grand jury investigation against Pony Express. Id. The court found that Pony Express was entitled to recover from the defendants the fees and costs associated with defending “the threat of civil or criminal antitrust litigation flowing from the [defendants’] false accusations.” Id. at 1318.
Requirements for the Wrongful Act Doctrine
In short, application of the wrongful act doctrine in Florida depends upon (a) the existence of some wrongful or tortious act by the defendant; (b) that naturally and directly caused the plaintiff to needlessly incur attorneys’ fees and costs maintaining or defending itself; (c) in litigation with a third party.
The Need for a “Wrongful” Act
For the wrongful act doctrine to apply, the actions or omissions of the defendant must be genuinely “wrongful.” See Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1261 (11th Cir. 2014) (noting that fees under the wrongful act doctrine could only be awarded if the defendant’s conduct was indeed wrongful, which was an issue for the jury to decide).
The nebulous use of “wrongful” suggests that the presence of good faith on the part of the defendant may preclude an award of attorneys’ fees. For example, in Assoc. Electric & Gas Ins. Srvcs, Ltd. v. Ranger Ins. Co., 560 So. 2d 242, 243 (Fla. 3d DCA 1990), the court refused to award attorneys’ fees to a primary insurance carrier against the excess carrier in a declaratory judgment action finding the excess insurer had “operated under the good faith belief that it was not required to provide coverage” for bodily injury and property damage claims.
However, the “wrongful” act giving rise to the claim for attorneys’ fees could be criminal, fraudulent, or garden-variety tortious conduct. Florida courts have applied the wrongful act doctrine to a myriad of fact patterns and causes of action. For example:
- Winselmann v. Reynolds, 690 So. 2d 1325, 1328 (Fla. 3d DCA 1997) (civil trespass to real property);
- Canadian Universal Ins. Co. v. Empl’rs Surplus Lines Ins. Co., 325 So. 2d 29, 31 (Fla. 3d DCA 1976) (bad-faith case by excess insurer against primary insurer);
- Auto-Owners Ins. Co. v. Hooks, 463 So. 2d 468, 477–78 (Fla. 1st DCA 1985) (wrongful replevin of an automobile);
- De Pantosa Saenz v. Rigau & Rigau, P.A., 549 So. 2d 682, 685 (Fla. 2d DCA 1989) (rescission/fraud case against an attorney arising out of a real estate transaction);
- Arling v. State, 559 So. 2d 1274, 1275 (Fla. 2d DCA 1990) (criminal case involving a stolen wedding ring sold to a jewelry store)
- Behar v. Jefferson Nat’l Bank at Sunny Isles, 519 So. 2d 641, 643–44 (Fla. 3d DCA 1987) (trade secret/intentional interference with business relationships case);
- Glace & Radcliffe, Inc. v. City of Live Oak, 471 So. 2d 144, 145–46 (Fla. 1st DCA 1985) (suit on a construction performance bond);
- Gunster, Yoakley & Stewart, P.A. v. McAdam, 965 So. 2d 182, 183–84 (Fla. 4th DCA 2007) (wrongful appointment of a corporate fiduciary charged with administering an estate); and
- Regions Bank v. Kel Title Ins. Grp., Inc., No. 3:12-cv-118, 2012 WL 5381510, at *4 (N.D. Fla. Nov. 1, 2012) (legal malpractice arising out of a real estate transaction).
Causation and Recoverable Damages
The aggrieved party may recover attorney fees and other damages flowing from the wrongful conduct, which arose during litigation with third parties. See Restatement (Second) of Torts § 914(2) (recognizing that recovery under the wrongful act doctrine may include “reasonable compensation for loss of time, attorney fees and other expenditures thereby suffered or incurred in the earlier action”). However, attorneys’ fees and costs are recoverable under the wrongful act doctrine only to the extent they were incurred as a natural and direct result of the wrongful act of the defendant.
Therefore, the party seeking attorneys’ fees must demonstrate a causal nexus between the wrongful act and the fees incurred. Fees that are unrelated to the wrongful act or incurred in furthering the party’s own self-interests are not recoverable under this doctrine. See Auto-Owners Ins. Co. v. Hooks, 463 So. 2d 468, 478 (Fla. 1st DCA 1985) (party claiming attorneys’ fees under the wrongful act doctrine could only recover fees associated with defending a breach of title warranty claim brought by a third party and not for fees associated with pursuing its own claims for malicious prosecution and negligence); Canon Latin Am., Inc. v. Lantech (C.R.) S.A., No. 08-21518-CIV, 2011 WL 240684 at *16 (S.D. Fla. Jan. 24, 2011) (where the wrongful conduct—alleged fraudulent transfer of assets—occurred after the filing of litigation, the court found that the wrongful conduct did not cause the plaintiff to become involved in litigation with third parties and refused to award attorneys’ fees under the wrongful act doctrine).
Moreover, the wrongful act doctrine only authorizes attorneys’ fees as an element of damages arising from the wrongful acts of a party that caused the party to incur unnecessary fees in litigation with a third party. The doctrine, however, does not permit recovery of attorneys’ fees incurred during the prosecution of the claims against the wrongdoer. See e.g., Auto-Owners Ins. Co. v. Hooks, 463 So. 2d 468, 477–78 (Fla. 1st DCA 1985) (“[R]easonable expenses incurred in the primary litigation created by the wrongful acts of another may be recoverable but the expenses incurred in litigation with the actual wrongdoer are not ….”); Tew v. Chase Manhattan Bank, N.A., 728 F. Supp. 1551, 1561 (S.D. Fla. 1990) (“In a direct action by the wronged party against the defendant who caused involvement in the litigation with the third party, the American Rule applies.”).
Litigation with Third Parties
Application of the wrongful act doctrine requires the existence of litigation with third parties. The doctrine does not allow a party to recover attorneys’ fees incurred in a direct action against the party who perpetrated the wrongful conduct. See Johnson Law Grp. v. Elimadebt USA, LLC, No. 09-CV-81331, 2010 WL 2035284 at *8 (S.D. Fla. May 24, 2010) (“The wrongful act doctrine, however, only applies to costs of litigation with third parties, not subsequent litigation with the defendants who committed the wrongful act.”); CC-Aventura, Inc. v. Weitz Co., LLC, No. 06-21598-CIV, 2008 WL 5143248 at *6 (S.D. Fla. Dec. 5, 2008) (“[T]he cases where attorney’s fees were recovered under the wrongful act doctrine involved claims or defenses against third parties.”).
For example, in Tallahassee v. Blankenship, 736 So. 2d 29 (Fla. 1st DCA 1999), a contractor submitted a bid to the city for a natural gas pipeline project and provided the city with documentation to pre-qualify for the project. Before the bids were opened, the city informed the contractor that it did not qualify because of lack of experience with the particular piping needed for the project. Id. The contractor appealed the city’s decision using the city’s bid protest procedure. Id. When the bid protest was rejected, the contractor filed suit. Id. The trial court ruled in favor of the contractor and ordered the city to reimburse the contractor for its fees incurred during the bid protest. Id. On appeal, the court reversed the award of attorneys’ fees to the contractor under the wrongful act doctrine because the suit did not “involve[ ] the claimant in litigation with others.” Id. at 30 (quotation omitted) (emphasis added).
Pleading Requirements
The wrongful act doctrine is not an independent cause of action. Rather, the doctrine is a form of special damages that is dependent upon a sufficiently pled cause of action. Southland Constr., Inc. v. Greater Orlando Aviation, 860 So. 2d 1031, 1038 n.4 (Fla. 5th DCA 2003) (“The wrongful act doctrine does not create a separate cause of action, however. It is simply an additional element of damage available where liability already exists.”).
As a consequence, if the cause of action fails, the demand for attorneys’ fees under the wrongful act doctrine also dies. This point is illustrated in Horowitz v. Laske, 855 So. 2d 169 (Fla. 5th DCA 2003). There, a group of investors filed a class action lawsuit against a broker alleging that the broker promoted the sale of worthless notes in violation of securities laws. Id. The broker, in turn, filed a third-party complaint against a Michigan attorney and his law firm alleging that the attorney negligently responded to regulatory inquiries and negligently drafted loan documents. Id.
The appellate court found that the broker had not stated valid causes of action against the lawyer and his law firm. Horowitz, 855 So. 2d at 174. In addition to failing to properly plead a cause of action for legal malpractice, the broker also improperly included a separate cause of action for attorneys’ fees under the wrongful act doctrine: “We conclude that this [the wrongful act doctrine] is a claim for damages, including special damages, for legal malpractice. Because Wendt has not alleged a factual basis for legal malpractice claim, as discussed above, count IX [wrongful act doctrine] also fails.” Id.
On a related note, in Florida, special damages must be pled with specificity. See Fla. R. Civ. P. 1.120(g) (requiring all special damages to be pled with specificity). Since the wrongful act doctrine is viewed as an element of special damages, a party seeking fees under the doctrine must specifically plead such damages. Failing to properly plead attorneys’ fees under the wrongful act doctrine will result in a waiver of such claim. See e.g., Robbins v. McGrath, 955 So. 2d 633 (Fla. 1st DCA 2007) (reversing the trial court’s award of attorneys’ fees because the claim for attorneys’ fees under the wrongful act doctrine was never pled).