California Legal Brief

The Rule of Guinnane Construction Co. v. Chess is that the tort of another doctrine does not permit recovery of attorney fees incurred in litigating against the tortfeasor to recover fees awarded as damages, under circumstances where the plaintiff seeks to recover fees spent pursuing the tort action itself rather than fees incurred in third-party litigation necessitated by the tort.

Appeal from posttrial order denying motion for attorney fees in Alameda County Superior Court.

Plaintiff Appellant was Guinnane Construction Co., Inc. — the construction company that was assigned rights to purchase property and was forced into specific performance litigation due to defendants' interference.

Defendants Respondents were Stephen Marc Chess, Edmund Jin, and Chess Connect — the real estate agent, buyer, and brokerage firm who intentionally interfered with Guinnane's contract to purchase the Peterson interest in an 80-acre Livermore property.

The suit sounded in intentional interference with contractual relations and inducing breach of contract. No cross-claims were identified.

The key substantive facts leading to the suit were that defendants explored purchasing an 80-acre property, learned the DeLimas (who owned 50% and lived on the property) wouldn't sell, so offered to purchase the Petersons' 50% interest for $1.2 million subject to the DeLimas' right of first refusal. After the DeLimas exercised this right and assigned it to Guinnane, defendants continued communicating with the Petersons and ultimately purchased their interest for $1.5 million in July 2017, forcing Guinnane to file a specific performance action against the Petersons which Guinnane won after over a year of litigation.

The procedural result leading to the Appeal: The trial court denied Guinnane's postjudgment motion for attorney fees incurred in the tort action against defendants, ruling that the tort of another doctrine does not permit recovery of fees incurred in litigation against the tortfeasor itself, only fees incurred in third-party litigation necessitated by the tort.

The key question on Appeal: Whether the tort of another doctrine permits recovery of attorney fees incurred in an action against the tortfeasor to recover fees that were awarded as damages under the tort of another doctrine.

The Appellate Court held that the tort of another doctrine does not extend beyond recovery of fees incurred in prosecuting or defending actions against third parties to encompass fees incurred in the action against the tortfeasor, as such fees constitute ordinary attorney fees in a two-party lawsuit prohibited by Code of Civil Procedure section 1021, and the doctrine serves only as a remedial measure for compensatory damages rather than a policy-driven fee-shifting mechanism.

The case is inapplicable when the plaintiff seeks to recover fees incurred in litigation against a third party (rather than the tortfeasor), when there is a statutory or contractual basis for fee recovery, or when the case involves private attorney general doctrine claims serving important public policy enforcement.

The case leaves open whether the Legislature might revisit the American Rule in the tort of another context, and does not address the availability of sanctions for bad faith or frivolous litigation conduct as alternative remedies.