Worsham v. Greenfield
78 A.3d 358
Md.2013Background
- Maryland Rule 1-341 sanctions may be awarded for bad faith or lack of substantial justification in defending or maintaining a proceeding.
- Worsham was plaintiff; Greenfield and others were defendants in a defamation/related case arising from a 2000 neighbor dispute.
- Erie Insurance paid substantial portions of the defendants’ attorney fees and costs incurred in defending the suit.
- The Circuit Court awarded Mrs. Greenfield and denied Mr. Greenfield; the Court of Special Appeals affirmed the award against Mrs. Greenfield for costs incurred.
- The core issue is whether a party incurs costs for Rule 1-341 purposes when those costs are paid by an insurer or third party on the party’s behalf.
- The Court held that incurring costs occurs when the party becomes liable for the expenses, regardless of who ultimately pays.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of incur under Rule 1-341 | Worsham: incurring requires direct payment by the party. | Greenfield: insurer payment means no incurrence by the party. | Incur means liable for costs, regardless of payment source. |
| Does insurance payment negate incurrence | Incur is unaffected by third-party payment; deter frivolous litigation. | Payment by insurer should avoid recovery since not personally incurred. | Insurance payment does not defeat incurrence; costs incurred remain recoverable. |
| Deterrent purpose of Rule 1-341 | Rule deters abusive litigation regardless of who pays. | Payment through insurer undermines deterrence. | Deterrence preserved; outcome not dependent on payer. |
| Relation to prior cases and statutory analogies | Earlier cases support reimbursement when costs are incurred for the adverse party. | Contends distinctions from other contexts limit incurrence. | Consistent with prior authorities; insurer payment does not change incurrence. |
| Timeliness and review of Rule 1-341 motion | Timeliness was properly assessed; delay did not prejudice. | Timeliness was defective. | Timeliness issue resolved in favor of the movant; no prejudice shown. |
Key Cases Cited
- Dutta v. State Farm Insurance Co., 363 Md. 540 (Md. 2001) (incurred costs when insured and insurer interact; PIP context)
- Weichert Co. of Md., Inc. v. Faust, 419 Md. 306 (Md. 2011) (attorney’s fees incurred on client’s behalf even if paid by third party)
- Pelletier v. Zweifel, 987 F.2d 716 (11th Cir. 1993) (sanctions awards despite insurer payment; incurred costs protection)
- Peddlers Square, Inc. v. Scheuermann, 766 A.2d 551 (D.C. 2001) (sanctions based on incurred costs notwithstanding insurer payment)
- Ed A. Wilson, Inc. v. General Services Administration, 126 F.3d 1406 (Fed. Cir. 1997) (incurred legal fees when insurer pays; EAJA context)
- Shanafelt v. Allstate Ins. Co., 217 Mich. App. 625 (Mich. Ct. App. 1996) (definition of incur under state motor vehicle protection statute)
- Henriquez v. Henriquez, 413 Md. 287 (Md. 2010) (fee-shifting in child custody cases; non-incur context)
- Zdravkovich v. Bell Atlantic-Tricon Leasing Corp., 323 Md. 200 (Md. 1991) (sanctions deterrence purpose of Rule 1-341)