AWARDING ATTORNEY’S FEES AND COSTS AS A SANCTION WITHOUT A FINDING OF BAD FAITH CONSTITUTES AN ABUSE OF DISCRETION

In Goldman v. Estate of Goldman, 2015 Fla. App. LEXIS 9222 (Fla. 3d DCA 2015), the Third DCA reversed the trial court, holding that it abused its discretion in imposing attorney’s fees and costs as a sanction where there was no bad faith found. In the subject case, Richard Goldman, Kenneth Goldman, Mitchel Goldman, Ethan Goldman, and Andrea Carless (“Appellants”) appealed the trial court’s order awarding attorney’s fees and costs in favor of Jonathan Lewin (“Appellee”). The Third DCA reversed the order without prejudice because the trial court failed to make a finding of bad faith.

In the fall of 2007, attorney Liz Consuegra (“Consuegra”) served as court-appointed Guardian Ad Litem for Aaron Goldman (“Goldman”) in his guardianship proceedings. During which, Consuegra reviewed Goldman’s confidential financial and medical information, in his guardianship file. Consuegra retained the file after signing a Stipulation of Confidentiality.  In March 2008, the trial court found the file was confidential.  On September 15, 2010, Consuegra inadvertently sent the guardianship file to Paul Cowan, Esquire (“Cowan”), Richard Goldman’s new attorney. Cowan then issued ten subpoenas to financial institutions requesting information regarding Goldman’s accounts. On September 28, 2010, Cowan filed a petition seeking the court’s permission to review the confidential guardianship file. Appellee then moved for the imposition of sanctions against Appellants, contending that they had obtained confidential information from the guardianship file in violation of the trial court’s confidentiality order.

The trial court held a hearing regarding sanctions and concluded that Consuegra sent the file inadvertently and not in bad faith. The trial court determined that imposition of sanctions against the Appellants was appropriate, but made no findings supporting bad faith conduct as to Cowan or the Appellants.

The issue addressed on appeal was whether the trial court abused its discretion when it awarded attorney’s fees and costs as a sanction against a litigant, under its inherent authority to do so, without an express finding of bad faith conduct. The Third DCA held that the trial court did abuse its discretion, citing Moakley v. Smallwood, 826 So.2d 221, 226 (Fla. 2002), in which the Florida Supreme Court held that a trial court has “the inherent authority to impose attorneys’ fees against an attorney for bad faith conduct.” However, this sanction must be based on “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.” Id. at 227. Moreover, 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 of the attorney,” and this sanction “is appropriate only after notice and an opportunity to be heard – including the opportunity to present witnesses and other evidence.” Id. The Florida Supreme Court has also noted that nothing limits the application of this inherent authority “to a party rather than the party’s attorney.” Id. at 224.

Appellants argued that the trial court did not comply with Moakley because neither the sanctions order nor the entitlement to fees and costs order contained any express finding of bad faith conduct or provide detailed factual findings describing specific acts of bad faith. As support for this argument, Appellants pointed to the trial court’s finding that the disclosure of the guardianship file was inadvertent and accidental, and the fact that the trial court did not sanction either of the attorneys involved in the disclosure and use of that material.

Appellee argued noted that Moakley only requires a finding of bad faith when the award of attorney’s fees is against counsel, rather than against a party. Appellee pointed to language in Moakley expressing a concern for “ensuring that attorneys will not be deterred from pursuing lawful claims, issues, or defenses on behalf of their clients”. The Third DCA disagreed noting as the Fourth District Court of Appeal held in T/F Systems, Inc. v. Malt, 814 So. 2d 511, 513 (Fla. 4th DCA 2002) that although Moakley involved the imposition of fees against an attorney, the procedures described in the case are equally applicable to the assessment of fees against a party. Thus, the trial court’s failure to make specific findings of bad faith conduct as to each party required reversal.

If you or anyone you know is in need of representation in actions involving Guardianship, Probate and/or Trust Disputes, or questions pertaining to such proceedings, please contact The Law Offices of Glenn M. Mednick, P.L., at (954) 315-1154 or gmednick@mednicklawgroup.com.