Wednesday, November 30, 2016

Imposition of Attorney’s Fees Unavailable For Undue Influence Absent a Fiduciary Duty

Imposition of Attorney’s Fees Unavailable For Undue Influence Absent a Fiduciary Duty New Jersey applies the American Rule when it comes to attorney fees. The American Rule states that each party to litigation pays its own fees. There are certain exceptions outlined by New Jersey Court rules and a few judicially mandated exceptions as well where fee shifting is appropriate. The most well known judicial exception is the imposition of fee shifting for a successful litigation for attorney malpractice. Saffer v. Willoughby, 143 N.J. 256 (1996) The New Jersey Supreme Court in Estate of Folcher, 224 N.J. 496 (2016) has recently proclaimed in a 5-1 decision (Justice Fernandez-Vina did not participate) that an award of reimbursement of attorney fees is not permitted against a tortfeasor who commits the pernicious tort of undue influence but is not a fiduciary. In re Niles Trust, 176 N.J. 282 (2003) had held that an award of attorney’s fees is available against a fiduciary who commits undue influence. Folcher refused to extend the Niles fee shifting to persons who are not fiduciaries. Folcher relied heavily on the American Rule in reaching its result. “New Jersey is an ‘American Rule’ jurisdiction meaning we have a strong public policy against shifting counsel fees from one party to another.” Folcher at 506-07. While the Folcher court was certain to point out that the tortfeasor was particularly perfidious in that case with very strong proofs of undue influence, it still refused to extend the attorney fee award in that case. Rather, the Supreme Court remanded the case back to the trial court to determine whether punitive damages should have been awarded. The sole dissenter, Justice Albin, felt that the award of attorney fees was appropriate but he was the only one willing to extend the attorney fee shifting to undue influence committed by someone who was not a fiduciary.

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