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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNIONAMERICA INSURANCE CO.,

LIMITED, Successor-ininterest to ST. PAUL

REINSURANCE,

Plaintiff(s),

v.

THE FORT MILLER GROUP, INC.,

THE FORT MILLER CO. and

BEECHE SYSTEMS CORP.,

Defendant(s).

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No. C05-1912 BZ

ORDER DENYING PLAINTIFF’S

MOTION FOR ATTORNEY’S FEES

 Before the Court is plaintiff Unionamerica Insurance

Company’s (“Unionamerica”) motion for attorneys’ fees. 

Plaintiff seeks $249,945.00 in attorneys’ fees it spent

prosecuting its rescission claim against The Fort Miller

Group, Inc., The Fort Miller Co., and Beeche Systems Corp.

(collectively “Fort Miller”), in which judgment was entered

in favor of plaintiff on March 16, 2009.

Unionamerica contends that California Civil Code § 1692

permits courts to award attorneys’ fees as consequential

damages in order to afford a prevailing party complete

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1 Unionamerica also cites to Audre Recognition System

v. Casey, 210 B.R. 360 (Bankr. S.D. Cal. 1997) and Gibson v.

Rotunno, an unpublished case in which a fraudulently induced

contract with an attorney’s fee provision was rescinded, No.

96-4076, 1996 U.S. App. LEXIS 33324 (10th Cir. Dec. 20, 1996). 

Neither case stands for the proposition that Unionamerica

asserts.

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relief, citing Kass v. Weber, 261 Cal.App.2d 417 (1968). 

This case is not instructive, as it not only involved a cause

of action for rescission of an agreement which had been

fraudulently induced - a claim that Unionamerica did not

allege– but it also upheld an award of consequential damages

to the plaintiff for its attorney fees in a “prior action”

that the plaintiff was forced to litigate because of the

defendant’s fraudulent acts. The court stated that

“[r]ecovery in an action for deceit for fraudulently inducing

a contract includes the expense of other litigation incident

to the contract as part of consequential damages.” Id. at

423 (emphasis in original). Here, Unionamerica did not

claim, and the court did not find, fraud by Fort Miller and

Unionamerica is not seeking fees for a “prior action” it had

to litigate because of defendant’s fraud. Other than Kass,

Unionamerica provides no authority for its contention that

attorneys’ fees may be awarded as consequential damages

pursuant to § 1692.1

Unionamerica also asserts that it is entitled to an

award of attorneys’ fees based on Fort Miller’s litigation

conduct, which it contends was “vexatious, wanton, and

unreasonable.” “Under the ‘American rule,’ attorney’s fees

may not be awarded absent statutory or contractual

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authorization, or a finding of bad faith.” Gotro v. R & B

Realty Group, 69 F.3d 1485, 1487 (9th Cir. 1995) (citing

Alyeska Pipeline Serv. Co. v. Wilderness Soc., 421 U.S. 240,

257 (1975)). Fees may be awarded “ . . . when the losing

party has acted in bad faith, vexatiously, wantonly, or for

oppressive reasons.” Dollar Systems, Inc. v. Avcar Leasing

Systems, Inc., 890 F.2d 165, 175 (9t Cir. 1989) (citations

and quotations omitted); see also Allmerica Fin. Life Ins. &

Annuity Co. v. Dalessio, No. 96-0385, 2006 U.S. Dist. LEXIS

8994 at *24 (N.D. Cal. Feb. 20, 2006); United States v.

Standard Oil Co., 603 F.2d 100, 103 (9th Cir. 1979) (“An

award of attorneys’ fees for bad faith “is punitive, and the

penalty can be imposed ‘only in exceptional cases and for

dominating reasons of justice.’”) (quoting 6 J. Moore,

Moore’s Federal Practice para. 54.77[2] (2d ed. 1972)).

This litigation was bitterly contested and I regularly

cautioned both parties regarding their litigation tactics. 

But neither Unionamerica nor Fort Miller acted vexatiously or

in bad faith to the degree that would support an award of

fees.

I find no need for argument and VACATE the hearing

scheduled for May 20, 2009. IT IS ORDERED that 

Unionamerica’s motion for attorneys’ fees is DENIED. 

Dated: April 24, 2009

 

 Bernard Zimmerman

 United States Magistrate Judge

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