Eastern Shore Title Co. v. Ochse, 160 A.3d 1238

Background

In 2001 Steven and Shari Ochse purchased a 5‑acre lot; a gravel roadbed across the lot was shown on a plat as a “driveway.”
Eastern Shore Title Company (ESTC), as agent for Chicago Title, performed the title search and prepared the deed and owners’ binder; ESTC failed to discover a 1919 deed conveying a 30‑foot county road across the parcel.
The Ochses later sued the Henrys (sellers) to clear title (the “Henry litigation”); a contractual fee‑shifting clause in the sale contract ultimately produced an award of attorney’s fees to the Ochses, which the Henrys paid.
The Ochses separately sued ESTC and Chicago Title for negligence and breach of contract, seeking as damages the attorney’s fees they incurred in the Henry litigation under the collateral litigation doctrine.
The trial court found ESTC negligent and awarded the Ochses attorney’s fees equal to the Henry litigation award, but then reduced the award by the amount the Henrys had paid; the question reached the Maryland Court of Appeals on whether collateral‑litigation damages and the collateral‑source rule permit recovery when the fees were satisfied by a fee‑shifting contract.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the collateral litigation doctrine permits recovery of attorney’s fees as damages	Ochse: ESTC’s negligence proximately caused the Henry litigation, so fees from that separate litigation are recoverable as compensatory damages	ESTC: Plaintiffs failed to show proximate cause and other elements for the doctrine	Yes, collateral litigation doctrine can permit recovery of fees that were the proximate, necessary, in good faith, and reasonable consequence of defendant’s wrongful act, but only if plaintiff actually incurred them
Proper method to calculate collateral litigation damages (judicial notice vs. independent lodestar)	Ochse: Trial court should independently calculate fees (e.g., lodestar) rather than rely on the prior award	ESTC: Trial court may use the Henry litigation award (parties stipulated record) and exercise discretion	Trial court did not abuse discretion in taking judicial notice of the Henry court’s awarded fees and using that amount; lodestar not required here
Whether the collateral source rule bars offsetting damages by payment from sellers under a fee‑shifting contract	Ochse: The collateral source rule prevents defendants from reducing liability by showing a third‑party satisfaction of plaintiff’s fees	ESTC: Payment by the Henrys is not a collateral source under the Restatement and may offset damages because plaintiff did not actually incur the fees	Collateral source rule does not apply; fees satisfied by the Henrys cannot be recovered again from ESTC because the plaintiff did not actually incur the expense
Whether plaintiff suffered compensable injury when fees were satisfied by another	Ochse: Awarded fees show injury and should be compensated by ESTC	ESTC: Because Henrys paid the fees under contract, Ochses suffered no uncompensated loss	No recoverable injury as to those fees; plaintiff must have actually incurred the fees to recover under the doctrine

Key Cases Cited

McGaw v. Acker Merrall & Condit Co., 111 Md. 153 (1909) (formulation of the collateral litigation doctrine permitting recovery of litigation expenses caused by a defendant’s wrongful act)
Empire Realty Co. v. Fleisher, 269 Md. 278 (1973) (recognizing collateral litigation doctrine as basis for awarding legal expenses)
100 Investment Ltd. Partnership v. Columbia Town Center Title Co., 430 Md. 197 (2013) (title company owes tort duty when conducting a title search)
Lockshin v. Semsker, 412 Md. 257 (2010) (statement of Maryland collateral source rule permitting recovery of full provable damages despite unrelated third‑party payments)
Haischer v. CSX Transp., Inc., 381 Md. 119 (2004) (discussion of collateral source rule policy and limits)
Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (2015) (restatement of the American Rule that each litigant pays own attorney’s fees absent statute or contract)
Petrini v. Petrini, 336 Md. 453 (1994) (trial court’s discretion governs attorney’s‑fee awards)
Myers v. Kayhoe, 391 Md. 188 (2006) (reasonableness of attorney’s fees is a factual determination for the trial court)