Court Gives Guidance On Procedure For Pursuing “Tort Of Another” Damages

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In 1963, the California Supreme Court adopted the “tort of another” doctrine in the seminal case Prentice v. North American Title Guaranty Corporation  (1963) 59 Cal.2d 618.  According to the doctrine, any party who is required to act in the protection of his interests, as a result of the tort of another, by bringing or defending a lawsuit against a third person is entitled to recover reimbursement for resulting attorney’s fees and other costs.  While California’s default rule is that each party is required to bear its own attorney’s fees, the theory of recovery under the tort of another doctrine is that attorney’s fees are recoverable as damages resulting from a tort in the same way that medical expenses would be part of the damages in a personal injury action.

Until recently, the proper procedure for pursuing and proving a tort of another claim has been somewhat unclear and unsettled in California.  However, in the recent case Mai v. HKT Cal, Inc. (2021) 66 Cal.App.5th 504, the court gave clarity and provided a roadmap for future tort of another claims.

Facts of Mai v. HKT Cal, Inc.

Hue Thi Dang Mai was sued for breach of contract by a prospective purchaser of the apartment building she owned—a suit brought about by the fraudulent conduct of Mai’s real estate agent which led the buyer to believe he had actually already purchased the property from Mai.  In litigation, Mai invoked the “tort of another” doctrine in cross-complaining against her real estate agent and the agent’s employer to recover the attorney’s fees she spent in defending the breach of contract action.

After successfully defending the buyer’s case and securing a dismissal, the cross-claims then proceeded to trial.  At trial, Mai attempted to testify about the attorney’s fees she had incurred and sought to offer her attorney’s invoices as further evidence of her damages; however, the defendants objected, and the trial court concluded that Mai could not testify about her redacted attorney’s invoices or offer them into evidence because of hearsay concerns under California evidence law.  Mai also attempted to introduce evidence of the work her attorney had done on her behalf by asking the trial court to take judicial notice of documents that had been prepared by her attorney and filed in court.  Similarly, the court reluctantly concluded that it would not take judicial notice of the records for this purpose because of hearsay concerns.  Making matters worse, Mai was not able to prove her claim through her attorney’s testimony, because he had not been disclosed as a witness prior to trial.

Therefore, despite concluding that the real estate agent had committed fraud and that Mai had spent approximately $200,000 defending the breach of contract lawsuit brough by the prospective buyer, the trial court concluded that it could not award any “tort of another” damages to Mai because of her failure to present evidence of the damages.  In doing so, the court admitted some confusion about the tort of another doctrine and admitted that he felt the decision was unfair, but concluded that prior California precedent compelled this outcome.  The trial court even went so far as to encourage Mai to appeal the decision, which she did.

Case Outcome

The appellate court analyzed the history of case law dealing with the “tort of another” doctrine and proving attorney’s fees as damages, and ultimately reversed the trial court’s decision.  Summarizing the ultimate issue before it as—“What is the minimum amount of evidence necessary to sustain an award of attorney’s fees as damages?”—the court explained that Mai should have been permitted to testify and present her attorney’s invoices at trial.  The party seeking attorney’s fees as damages can testify (based on personal knowledge) that a bill in a particular amount was received and paid, and can then introduce the invoice itself to support the party’s testimony and show the amount was reasonable.  In other words, while a party cannot read the detailed entries of bills as evidence to prove specific repairs or services rendered, the invoices can be offered for the limited purpose of corroborating testimony that certain amounts were paid and were reasonable.

Beyond showing that fees were incurred, paid, and were reasonable, Mai was also obligated to provide some evidence of the work that was performed on her behalf.  To that end, the trial court was permitted to take judicial notice of documents prepared on her behalf and filed in court.  The appellate court explained that hearsay was not a barrier because the filed documents were not being offered to prove the truth of the statements made therein.  Instead, the filed documents were merely evidence that work had been performed.

Lessons

The Mai case presents an important roadmap for how to approach “tort of another” claims.  Before trial, the party pursuing “tort of another” should evaluate whether, when, and how to produce in discovery any redacted attorney invoices or attorney work product that they plan to use as evidence at trial.  Moreover, the party should consider which witnesses will need to testify at trial, including potentially the person who paid for the attorney’s bills, the attorney themself, and anyone from the attorney’s office who assisted in preparing the bills.  Given the sensitive nature of attorney invoicing, these are critical decisions that must be balanced with the ultimate goal of prevailing in the case.

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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.

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