Goznar v. Goknar

A brother and two sisters were involved in litigation over a family trust. An arbitration order instructed all parties to return $100,000 each to the trust, but the brother did not comply. The sisters filed a motion for contempt.

Thereafter, the trial court approved and adopted the arbitrator’s order and also ordered the brother to return the $100,000 to the trust within 60 days. The judge reserved ruling on the motion for contempt. The brother defied the judge’s order. The trial court put out an order to show cause and one of the sisters sought the brother’s financial records to show he could pay the money back. Before a hearing, the brother repaid the money to the trust, but it was long after the 60-day mark.

The trial court still ordered the brother to produce the financial records, and after a hearing, the trial court still found the brother in contempt because he waited so long to pay. The judge also awarded fees to the sisters for having to litigate the matter.

Part of the fee award included amounts for litigating the appropriate AMOUNT of fees. In fact, the “vast majority” of the fees awarded were for time periods that came after the date of the order finding the brother in contempt (which was also after the date that he had repaid the trust). Awarding attorney’s fees for time spent litigating over the appropriate amount of a fee award is termed “fees for fees.” While litigating the AMOUNT of fees is not ordinarily something that can be awarded to the opposing party, the trial court held that it was awarding “fees for fees” under the inequitable conduct doctrine.

The inequitable conduct doctrine permits the award of attorney's fees where one party has exhibited egregious conduct or acted in bad faith. The doctrine is rarely applicable. It is reserved for those extreme cases where a party acts in bad faith, vexatiously, wantonly, or for oppressive reasons. Before exercising its inherent authority to impose sanctions, a trial court must provide to the parties notice and an opportunity to be heard—including the opportunity to present witnesses and other evidence. Fees as sanctions must be based upon an express finding of bad faith conduct and must be supported by detailed factual findings describing the specific acts of bad faith conduct that resulted in the unnecessary incurrence of attorneys' fees. And the amount of the award of attorneys' fees must be directly related to the attorneys’ fees and costs that the opposing party has incurred as a result of the specific bad faith conduct. “Fees for fees” may be awarded where one party had exhibited an egregious recalcitrant and/or callous attitude.