Can a party recover attorney fees and costs that were paid on its behalf by a third party?

attorney fees

Logan v. Abe (Nev. Supreme Ct. – June 4, 2015)

A party who makes an unimproved-upon offer of judgment — an offer that is more favorable to the opposing party than the judgment ultimately rendered by the district court — is entitled to recover costs and reasonable attorney fees incurred after making the offer of judgment. The issue is whether a party can recover these expenses if they were paid by a third party on the party’s behalf.

Robert and Jamie Logan sued Calvin J. Abe, Abe Pacific Heights Properties, LLC (Abe Properties), and Ron Martinson for personal injuries that Robert Logan suffered when he was shot by an employee of a hotel. The Logans alleged that Abe Properties owned the hotel, Abe operated the hotel, and Martinson was the hotel’s general manager.

Before trial, Abe, Abe Properties, and Martinson made an offer of judgment to the Logans in which they offered to pay $55,000 to settle the Logans’ claims. The Logans did not accept this offer, and the case proceeded to a jury trial.

After the jury returned a verdict in their favor, Abe, Abe Properties, and Martinson made a motion for attorney fees and costs, which had been paid by their insurer. The Logans opposed the motion. Reasoning that Abe, Abe Properties, and Martinson were entitled to attorney fees and costs under NRS 17.115 and NRCP 68 because the Logans failed to improve upon their offer of judgment, the district court awarded $71,907.50 in attorney fees and $24,812.60 in costs, including $7,290 for the fees of an expert witness who did not testify. The Logans appealed the award of attorney fees and costs.

The Logans argued that NRS 17.115 and NRCP 68 only allow recovery of attorney fees and costs that a party actually pays or has a legal duty to pay. Thus, they contended that Abe, Abe Properties, and Martinson were not eligible to recover attorney fees and costs because their insurer paid these expenses.

Citing United Servs. Auto Ass’n v. Schlang, 111 Nev. 486, 490, 894 P.2d 967, 969 (1995), the Nevada Supreme Court explained that an expense can only be incurred when one has paid it or becomes legally obligated to pay it. The Court extended Schlang and held that a party can incur an expense that was paid on its behalf if the party would have been liable for the expense regardless of the third party’s payment.

NRS 17.115 and NRCP 68 each authorize a party to recover the reasonable attorney fees and costs that it incurs after it makes an offer of judgment that is not improved upon. Because the statutes are limited to the costs incurred rather than the party who pays them, the Court held that NRS 17.115 and NRCP 68 allow a party to recover qualifying attorney fees and costs that were paid on its behalf by a third party. Thus, Abe, Abe Properties, and Martinson were eligible to recover the post-offer costs and reasonable attorney fees that their insurer paid on their behalf.

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