Third Party is Liable For Attorney Fees to Party Damaged by Fraudulent Conveyance

more+
less-

In Cardinale v. Miller, 2014 DJDAR 252 (2014), the California Court of Appeal for the First Appellate District decided a unique civil procedure issue arising out of an attorney fee award to a judgment creditor. The court granted an award to a creditor for fees incurred in enforcing a judgment.

The case arose out of contentious litigation regarding alleged improper consumer loans. The plaintiff filed suit to enforce judgments she had previously won against the defendants in a fraud case. The plaintiff alleged that the defendants were engaged in a Ponzi scheme to shield their assets from collection of the judgment. She further alleged that specified third parties aided the attempts to hide the potentially recoverable assets. After trial, the jury found in favor of the plaintiff.

The jury awarded compensatory damages of $2,170,593, in addition to $900,000 in punitive damages, and $293,937.50 in attorney fees to the plaintiff against the direct defendant and the third party. The third party argued that he should not be required to pay attorney fees, because he was not found culpable as a judgment debtor.

The court cited to Code of Civil Procedure Section 685.040 in support of the award. The court of appeal noted that the statute authorizes a judgment creditor to recover fees incurred in enforcing a judgment, if the underlying judgment included an award of fees as costs. Two prerequisites must be met before a motion for an award of attorney fees is appropriate:

  1. The fees must have been incurred to enforce a judgment, and
  2. The underlying judgment must have included an award of attorney fees. 

Here, the court noted that the plaintiff’s action satisfied both of the necessary criteria.

The court stated that it did not matter that the third party was not the “original judgment debtor.” Because the statutory language did not prohibit the plaintiff from recovering attorney fees from the culpable third party, this court saw no reason to impose such a limitation. The court of appeal concluded that the attorney fees award against both defendants was appropriate under the circumstances.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hinshaw & Culbertson LLP | Attorney Advertising

Written by:

more+
less-

Hinshaw & Culbertson LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×