Justices strip award of attorney fees in Utica billboard dispute

The Indiana Supreme Court on Friday threw out an award of more than $237,000 in attorney fees in a lawsuit over seven billboards outside Utica, Indiana. Justices found the Clark Circuit Court lacked a basis for awarding fees to the parties who sued a regional development entity that sought to restrict billboards along State Road 265 just north of Louisville.

The unanimous ruling in River Ridge Development Authority v. Outfront Media, LLC, David Watkins, No Moore, Inc., the Schlosser Family Limited Partnership, the Town of Utica, and the Utica Board of Zoning Appeals, 19S-PL-645, found the trial court abused its discretion in its award of fees in a case dating to 2017.

After Outfront Media LLC received local zoning permission to put up seven billboards along the roadway, River Ridge Development Authority sued to block the signs. While the litigation was pending, the Indiana Department of Transportation designated the road a scenic byway, which restricted billboards. River Ridge voluntarily dismissed its suit after the scenic byway designation.

Outfront and the other defendants moved to recover attorney fees. The trial court granted them $237,440.63 in fees, finding the award of fees warranted under a common-law obdurate behavior exception to the American Rule, Indiana’s statutory General Recovery Rule and the court’s inherent authority to sanction parties.

But the justices agreed with the Indiana Court of Appeals, which previously also reversed the award of fees.

“… (O)n this record, the parties seeking fees failed to show that any exception applied,” Chief Justice Loretta Rush wrote for the court. “We thus find that the trial court’s decision to award attorney’s fees was an abuse of discretion and reverse.”

In doing so, the court held that the obdurate behavior exception and the General Recovery Rule do not allow an award of attorney fees when a party voluntarily dismisses its complaint. And while courts have inherent authority to award fees against a party as a sanction, defendants didn’t show River Ridge’s conduct warranted an award of fees.

“The common-law obdurate behavior exception and the General Recovery Rule cannot authorize a trial court to award attorney’s fees when a party voluntarily dismisses its suit with prejudice. But a court can, at any point in litigation, exercise its inherent authority to sanction a party’s bad behavior by shifting fees,” Rush wrote.

“Still, the guardrails of zealous advocacy are set wide, while exceptions to the American Rule are narrow. A party must clear a high hurdle to show that a court could exercise its inherent authority to award attorney’s fees. Here, the hurdle was not cleared because the record lacks evidence that RRDA acted outside the boundaries of acceptable advocacy. Therefore, the trial court’s findings in this regard were clearly erroneous and its conclusions unsupported. It thus abused its discretion when awarding attorney’s fees, and we reverse.”

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