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By Daniel B. Stanton

Contrary to courts across the pond, rare is the case in American courts where attorneys’ fees are awarded to the prevailing party. This notion is often referred to as “the American rule” of each party bearing its own costs. But in Dr. George T. Moench, et al. v. M/V Salvation, et al., no. 12-1536 the United States District Court for the Western District of Louisiana, recently decided to buck the trend and awarded the prevailing party attorneys’ fees and costs in an amount equal to 90% of the underlying judgment. The facts of the case are simple and all too common. At the time of the allision, the M/V SALVATION was standing by awaiting further instructions from Berwick Traffic Control. The SES EKWATA was moored nearby at the facilities of Basin Fleeting, Inc. While standing by, the captain of the M/V Salvation lost control of the vessel, and before he could regain control, the M/V SALVATION and its tow struck and severely damaged the SES EKWATA. The owner of the SES EKWATA brought suit against the owner of the M/V SALVATION.

Unable to settle their differences amicably, the owners of the two vessels proceeded to trial where liability and damages were contested. At the conclusion of trial, the court found the M/V SALVATION to be solely at fault, and because the SES EKWATA was determined to be a constructive total loss, the court awarded its owners what the court determined to be the market value of the vessel and its appurtenances, approximately $322,000.  But in a remarkable move, the court then awarded the owner of the SES EKWATA approximately $295,000 in attorneys’ fees and costs.

In support of its ruling, the court noted that it had the authority to award reasonable attorneys’ fees and costs where the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. And as representative of this behavior, the court cited what it deemed insufficient expert testimony and unrealistic defenses to liability offered by the owner of the M/V SALVATION. Specifically, the court concluded that the owners of the M/V SALVATION “knew the extent of its liability based on the circumstances of the case and the actions of its captain.” The court also chastised the party for the presentation of expert witnesses to testify to the value of the SES EKWATA that were less than qualified in the court’s eyes. Taken together, the court found the defenses presented and expert testimony offered by the owner of the M/V SALVATION to be “disingenuous and abusive to the legal process.”

Whether the district court’s decision stands remains to be seen as it has been appealed to the United States Fifth Circuit. But regardless of the outcome on appeal, the opinion serves as a reminder of the inherent powers of district court. And as part of that power, a district court may grant the successful party attorneys’ fees and costs regardless of the prevailing American rule. While this power is infrequently exercised, it should not be forgotten.