The Four Types of Attorney Fees Sanctions
In general, a prevailing party may not recover attorney fees unless such an award is authorized by statute or contract. But four sources of authority permit a court to award attorney fees or other costs in a situation where one party has been uncooperative and failed to comply with discovery requests and court orders.
First, a court may properly award to a party the fees the party incurred as a result of the opposing party’s contemptuous behavior. Section 78B-6-311 of the Utah Code provides that “[i]f an actual loss or injury to a party in an action or special proceeding is caused by the contempt, the court … may order the person proceeded against to pay the party aggrieved a sum of money sufficient to indemnify him and to satisfy his costs and expenses.” This statute permits courts to award attorney fees in cases where one party’s contemptuous behavior necessitated the proceedings— and thus necessitated the fees. Bradshaw v. Kershaw, 627 P.2d 528, 533 (Utah 1981)
Second, rule 37 of the Utah Rules of Civil Procedure provides that a court “may impose appropriate sanctions for the failure to follow its orders, including … order[ing] the party … to pay the reasonable expenses, including attorney fees, caused by the failure.” Accordingly, so long as ” the district court has made a factual finding that the party’s behavior merits sanctions,” an award of discovery sanctions will be upheld unless the trial court abused its discretion. Kilpatrick v. Bullough Abatement, Inc., 2008 UT 82, ¶ 23.
Third, a court may award equitable attorney fees. “[A] court has inherent equitable power to award reasonable attorney fees when it deems it appropriate in the interest of justice and equity. Indeed, the power to award such fees is part of the original authority of the chancellor to do equity in a particular situation.” Stewart v. Utah Pub. Serv. Comm’n, 885 P.2d 759, 782 (Utah 1994). Additionally, “[c]ourts have exercised that inherent power in several categories of cases,” including situations where “a party acts in bad faith, vexatiously, wantonly, or for oppressive reasons.” A court making an equitable award of attorney fees “must ascertain whether the equities of a given case justify the use of its inherent and discretionary power to award fees.” Hughes v. Cafferty, 2004 UT 22, ¶ 22.
Finally, a court may be able to award attorney fees as a sanction under its inherent sanction powers. It is well established that courts have inherent powers to sanction attorneys, which can include attorney’s fees. Additionally, the Utah Court of Appeals has expressly held that, under the court’s inherent sanction power, courts may properly award attorney fees that were caused by the opposing party’s misbehavior.
Thus, a court’s authority to impose an award of fees as a sanction against a party who has been obstructive or contemptuous is derived from several statutes and common law doctrines. But none of those statutes or doctrines permit the amount of the award to exceed the amount of fees, costs, or injury that the other party actually incurred. Specifically, the amount of fees and costs awarded under the Contempt Statute cannot exceed the amount of “actual loss or injury” suffered by the other party. And sanctions imposed under rule 37 of the Utah Rules of Civil Procedure are limited to the amount of fees and expenses “caused by the failure” to follow the court’s orders. Similarly, a court’s award of equitable attorney fees, by its nature, is limited to the amount of fees incurred by the other party. Finally, the amount of fees and costs awarded under the court’s inherent sanction power is designed to compensate the other party for the expense resulting from the sanctionable behavior and must be ” related to the nature of the misconduct and the resulting prejudice.” Accordingly, when a court imposes an award of fees or costs as a sanction, its award must be limited to the amount actually incurred by the other party.
The foregoing attorney fees analysis was set forth by Supreme Court of Utah in Goggin v. Goggin, 299 P.3d 1079 (Utah 2013).