Nebraska Courts still unwilling to punish frivolous lawsuits with attorney fee sanctions

Nebraska courts are still unwilling to punish frivolous lawsuit or frivolous defenses with attorney fee awards. Harrington v. Farmers Union Co-Op. Ins. Co., 13 Neb. App. 484 Filed May 10, 2005. No. A-03-958. A party who lost property in a fire brought suit against the insurer when it denied the claim for arson. The jury found in the insurance company’s favor and answered special verdict interrogatories to hammer home the jury’s prevailing opinion that the suit was fraudulent and frivolous. The Court of Appeals denied Farmers’ Union Insurance Company’s contention that Nebraska Civil Procedure law required an attorney fee award in its favor. “The purpose of § 25-824 is ostensibly to discourage claims and defenses that are frivolous or made in bad faith. In light of this § 25-824 in pari materia with § 25-824.01, “shall” in § 25-824(2) (has a) directory rather than a mandatory meaning.” “Therefore… the trial court should exercise its sound discretion in determining whether to award attorney fees, and whether a claim or defense was made in bad faith is but one factor to be considered by the trial court. § 25-824.01” Even the jury’s special findings that the case was fraudulent did not take away from the trial court its discretion to award attorney fees under § 25-824(2). “[To] award attorney fees on [an] outcome basis in fraud or misrepresentation cases, or in situations in which the defendant prevails on an affirmative defense, would be tantamount to allowing any party who prevails in litigation to obtain attorney fees from the opposing party.” After reviewing “the totality of the evidence” presented at trial, the trial court concluded that Harrington’s claims and defenses were neither frivolous nor made in bad faith. Probably the sounder method to obtain attorney fees would have the party alleging a frivolous case or defense to make a counter or cross claim for such fees.