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Plaintiffs Awarded Attorney Fees for Defendants "Egregious" Conduct

April 20, 2010 | Posted in : Ethics & Professional Responsibility, Expenses / Costs, Fee Award, Fee Shifting, Fees as Damages

A recent article, “Del. Chancery Court Awards Plaintiffs Fees Based on Defendants’ Pre-litigation Conduct” reports that Delaware Chancery judge ordered defendants to pay their opponents’ attorney fees and costs and part of their expert witness fees.  The underlying litigation dates back to 2003, involving a contested sale of a motel.  In a letter ruling in Saliba v. William Penn Partnership, Chancellor William B. Chandler III wrote “Because defendants conducted the sale in a clearly conflicted manner that resulted in a breach of fiduciary duty, I find and conclude that it would be unfair and inequitable to require plaintiffs to shoulder the costs incurred in demonstrating the unfairness of this sale process.  For that reason, I award plaintiffs all of their attorneys’ fees and the portion of costs that they have paid in connection with the court-appointed expert witness.”

Although it’s not unprecedented for the Delaware chancery court to award legal fees for egregious pre-lawsuit conduct, “it is rare,” said Francis Pileggi, a litigation partner at Philadelphia’s Fox Rothschild who isn’t involved in the case.  “Parties involved in U.S. litigation generally pay their own attorney fees unless a statute or agreement dictates otherwise or the case is a class action or a derivative case with a common fund to pay the legal costs,” Pileggi added.