Fleming v Quigley [2003] GUSC 4; 2003 Guam 04 (28 February 2003)

IN THE SUPREME COURT OF GUAM

URSULA U. FLEMING,
Plaintiff-Appellee,

v.

MARY ANN F. QUIGLEY AND JAMES R. QUIGLEY,
Defendants-Appellants.

OPINION

Filed: February 28, 2003

Cite as: 2003 Guam 4

Supreme Court Case No.: CVA01-021
Superior Court Case No.: CV1117-96

Appeal from the Superior Court of Guam
Argued and submitted on September 5, 2002
Hagåtña, Guam

Appearing for Plaintiff-Appellee: Joaquin C. Arriola, Jr., Esq. Arriola, Cowan & Arriola 259 Martyr St., Ste. 201 Hagåtña, Guam 96910

Appearing for Defendant-Appellant David J. Highsmith, Esq. The Law Office of David J. Highsmith, P.C. Ste. 209, Union Bank Bldg. 194 Hernan Cortes Ave. Hagåtña, Guam 96910

BEFORE: PETER C. SIGUENZA, JR., Chief Justice[1]; F. PHILIP CARBULLIDO, Associate Justice; JOHN A. MANGLONA, Designated Justice.

CARBULLIDO, J.:

[1] The Plaintiff-Appellee, Ursula U. Fleming (AFleming@), filed an action in the Superior Court of Guam against the Defendants-Appellants, Mary Ann F. Quigley and James R. Quigley (AQuigleys@), for fraud and breach of fiduciary duties. Fleming sought damages and rescission of a Deed of Gift to real property, as well as attorney=s fees and costs. The Superior Court found in favor of Fleming on her fraud and breach of fiduciary duties claims, and ordered that the Deed of Gift be rescinded, and that the property be transferred back to Fleming. Furthermore, the lower court ordered that money be paid to the Quigleys, which represented a set-off for amounts expended by the Quigleys for improvements made to the property against amounts expended by Fleming for improvements and attorney=s fees and costs Fleming incurred in the suit. The Quigleys appeal the lower court=s award of attorney=s fees, arguing that the award of fees was made in contravention of the American Rule governing attorney=s fees. We agree and therefore reverse that part of the lower court=s judgment.

I.

[2] Fleming sued the Quigleys for fraud and breach of fiduciary duties. The suit arose out of a land transfer between the parties. In 1976, Fleming executed a Deed of Gift in favor of the Quigleys, transferring ownership of property in Barrigada to the Quigleys. The Quigleys thereafter constructed a home on the property. Fleming resided in the home. In 1995, the Quigleys attempted to evict Fleming from the property, claiming ownership by virtue of the 1976 Deed of Gift. Fleming then sued the Quigleys, claiming that the 1976 transfer via the Deed of Gift was procured through fraud and breach of fiduciary duties on the part of the Quigleys. Fleming ultimately sought to have the Deed of Gift rescinded and sought compensatory and exemplary damages, and attorney=s fees and costs.

[3] The trial court found for Fleming on her fraud and breach of fiduciary duties claims and ordered that the Deed of Gift be rescinded, and that the property be transferred back to Fleming. Furthermore, the lower court awarded the Quigleys $19,044.16, which represents amounts expended by the Quigleys for improvements made to the property minus amounts expended by Fleming for her improvements, as well as attorney=s fees and costs incurred by Fleming in the suit. This appeal followed. The Quigleys appeal only the lower court=s award of attorney=s fees.

II.

[4] This court has jurisdiction over the appeal of the underlying final judgment pursuant to Title 7 GCA ' 3107(b) (1994).

III.

[5] The subject of the instant appeal is the award of attorney=s fees to Fleming. The issue in this case is whether the trial court erred in awarding Fleming attorney=s fees in an action to rescind a deed of gift based on fraud and breach of fiduciary duties.

A. The Parties Arguments.

[6] The Quigleys contend that under the American Rule, attorney=s fees are not allowed unless authorized by contract or statute. The Quigleys argue that the award of attorney=s fees was erroneous because it was awarded in contravention of the American Rule. In contrast, Fleming asserts that the lower court=s award of attorney=s fees was proper because various Guam statutes, interpreted through case law, allow the lower court to award attorney=s fees in fashioning an equitable remedy or, in the alternative, as damages in a tort action alleging fraud and breach of fiduciary duties.

B. The American Rule.

[7] The award of attorney=s fees in United States jurisdictions is governed by what is commonly referred to as the AAmerican Rule.@ Under the American Rule, parties bear their own litigation expenses, including attorney=s fees.[2] Alyeska Pipeline Serv. Co. v. Wilderness Soc=y, 421 U.S. 240, 247, 95 S. Ct. 1612, 1616 (1975) (AIn the United States, the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys= fee from the loser.@); see Guam Radio Servs. v. GEDA, 2000 Guam 23 at & 9 (ATraditionally, a court did not have the power to grant the prevailing party attorney=s fees unless lawmakers specifically provided them with such authority in a statute.@) (citing Alyeska Pipeline, 421 U.S. at 247, 95 S. Ct. at 1616). There are several recognized exceptions to the American Rule. If an exception applies, fee-shifting is allowed. The exceptions to the American rule include where attorney=