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Grubbs v. Knoll4/15/2005
attorney's fees incurred in other litigation with a third person, if he became involved in that litigation as a result of a ... tortious act by the present defendant.'" Id. at 294-95 (quoting In re Estate of Lash, 169 N.J. 20, 31 (2001)). Under that rationale, the Court concluded that the trustee's breach of his fiduciary duty rendered him responsible for the "significant damages" incurred by the estate in the form of counsel fees for the estate's beneficiaries and the guardian ad litem:
As a result of [the trustee's] tort, the estate incurred significant damages in the form of counsel fees that were not surcharged against [the trustee or his cohort] as tortfeasors. The counsel fees incurred for representation of those third parties represent consequential damages to the estate proximately caused by [the trustee's] breach of his fiduciary duty. "But for" [the trustee's] tortious conduct, the litigation that was the wellspring from which all counsel fees flowed would not have been necessary. Therefore, it follows that all counsel fees charged to the estate for representation of third parties in the litigation should be reimbursed by tortfeasor [trustee]. To hold otherwise would mean that [the trustee] has shifted a substantial portion of the economic burden of his misdeeds to the victims -- the beneficiaries of the trusts.
[Id. at 295-96.]
Relying upon Niles, the Knolls contend that Chapman's negligence caused their need to litigate with the "defrauding parties" and, as such, he should be responsible for all legal fees incurred by the Knolls in proceeding against Stevens and the Grubbs. The fallacy in the Knolls' attempt to expand Niles is evident from their own description of the situation: they incurred legal fees in "litigation with defrauding parties." The fact that the Knolls were defrauded by Stevens and the Grubbs, and concededly had an independent basis for litigating against them in a separate action, renders this case readily distinguishable from Niles, where the legal fees for representation of estate beneficiaries and a guardian ad litem were solely a function of the trustee's egregious breach of his fiduciary duty.
Dorofee v. Planning Bd. of Pennsauken Tp., 187 N.J. Super. 141 (App. Div. 1982), also cited by the Knolls, is equally distinguishable. There, a planning board was awarded counsel fees against a co-defendant, a seller of real estate , for legal fees incurred in defending itself against claims brought by the plaintiffs, proposed purchasers of property, as a result of fraudulent misrepresentations made by the co-defendant to both the purchasers and the planning board. Id. at 145. This court observed that, "although attorneys fees are not ordinarily included as damages in a fraud action, one who is forced into litigation with a third party as a result of another's fraud may recover from the tortfeasor the expenses of that litigation, including counsel fees, as damages flowing from the tort." Id. at 144. Here, in contrast, there is no contention that Chapman engaged in fraud. The litigation against Stevens and the Grubbs was the direct result of their intentional tortious conduct, not a "forced" outcome of Chapman's negligence.
To apply Niles in the manner advocated by the Knolls would effectively create a new theory of fee-shifting, at odds with the prevailing "American Rule," applicable to any negligent defendant who is argued to be the first actor in a chain of successive tortious events causing a unitary injury. For example, the Knolls' position would appear to require the defendant restaurant in Blazovic, supra, to bear the legal fees incurred by the injured plaintiff in proceeding against the intentional tortfeasors who assaulted him
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