This appeal arises from a judgment for legal malpractice in favor of appellant David D. Dalo against his attorneys, appel-lees Kivitz and Liptz. Dalo challenges the refusal of the trial court, as trier of fact, to award him attorney’s fees as damages, punitive damages, and certain compensatory damages. 1 Only the third claim has merit, necessitating a partial remand for further proceedings.
I.
During the summer of 1988 Dalo, a real estate developer, negotiated a real estate contract to purchase property in the District of Columbia known as “Greystone” for $3,765,000. Pursuant to an assignment agreement, Dalo assigned his right to buy Greystone to J. Eugene Wills, also a real estate developer. Under the terms of the assignment agreement, if Wills purchased Greystone, he owed Dalo $435,000; if Wills through no fault of Dalo’s failed to purchase Greystone, he owed Dalo $87,000, that sum to be held in escrow. The closing on the transaction was scheduled for October 4, 1988.
Meanwhile Dalo’s attorneys, law partners Kivitz and Liptz, 2 arranged a joint venture among themselves, Dalo, and another client, banker Charles J. D’Arco. The purpose of the venture was to split the $435,000 Dalo expected to earn from the Greystone transaction. When entering this business venture with the clients, Kivitz and Liptz failed to advise either client about the potential conflicts of interest that existed among the parties to the joint venture agreement.
On October 3, 1988, Kivitz, Liptz and D’Arco learned that Dalo intended to renege on his promise to split the money. On October 4, therefore, Kivitz, Liptz and D’Arco sued Dalo, the title company for the Greystone deal, and the stakeholders of the money held in escrow. They requested a declaratory judgment of the validity of the joint venture agreement and claimed their shares of Dalo’s proceeds from the Grey- *37 stone transaction, scheduled to close that day. Upon filing the lawsuit, Kivitz and Liptz terminated their attorney-client relationship with Dalo, withdrew from representing him in all pending litigation, and retained possession of Dalo’s files as a lien for over $17,000 in outstanding attorney’s fees. For reasons unrelated to the lawsuit brought by the attorneys, Wills neyer purchased Greystone. The stakeholders for the transaction froze the escrow account pending the outcome of the lawsuit. Ultimately, Dalo lost the opportunity to collect the $87,000 due under the assignment agreement with Wills.
Dalo responded to the lawsuit by filing a nine-count counterclaim against Kivitz, Liptz and D’Arco for injuries he sustained from the conduct of his attorneys regarding the Greystone deal, including the filing of the lawsuit against him. 3 Dalo requested compensatory damages, punitive damages against Kivitz and Liptz, the return of his legal files, and attorney’s fees.
The trial judge entered summary judgment against Kivitz, Liptz and D’Arco on the merits of their contract claims against Dalo, concluding that the joint venture agreement was void because Kivitz and Liptz, as Dalo’s attorneys, had engaged in a business deal with Dalo while failing to discharge their fiduciary duties owed him in the attorney-client relationship. That ruling was indisputably correct.
4
See
Rule 1.8, Rules of Professional Conduct;
Fielding v. Brebbia,
After a bench trial on Dalo’s counterclaims, Judge Taylor determined that Kiv-itz and Liptz had committed legal malpractice in the form of numerous violations of ethical standards. 5 On appeal, this malpractice liability is undisputed. However, the judge awarded Dalo damages only in the amount of $737.50 for “costs associated with reconstructing [Dalo’s] files that Kiv-itz and Liptz failed and refused to turn over to Dalo.” On appeal, Dalo challenges the denial of additional damages in three respects.
II.
Dalo first seeks attorney’s fees as an element of his damages, contending he should be compensated for successfully defending against the contract claims by Kiv-itz and Liptz and also for prosecuting his own successful malpractice claims against the attorneys.
Dalo takes no issue with the American Rule under which, as interpreted in this jurisdiction, “every party to a case shoulders its own attorneys’ fees, and recovers from other litigants only in the presence of statutory authority, a contractual arrangement, or certain narrowly-defined common law exceptions.”
Synanon Found., Inc. v. Bernstein,
The exception has specific requirements: Where a plaintiff seeks in a separate action to recover attomey[’s] fees incurred by him in earlier litigation with a third person arising out of the tortious act of the defendant, ... if the natural and proximate consequences of the defendant’s tortious act were to involve the plaintiff in litigation with a third person, reasonable compensation for attorney’s fees may be recovered as damages against the author of the tortious act.
Auxier,
Dalo seeks attorney’s fees from Kivitz and Liptz for all of his litigation with them. Because this claim is based on expenses incurred in the lawsuit between the same parties and not litigation that “occurred between [Dalo] and a third party who is not the defendant in the present action [for fees],” the wrongful-involvement-in-litigation exception is inapplicable here. 7 Dalo points out that the litigation also involved the banker D’Arco, who is not involved in the fee claim. Dalo, however, has not claimed attorney’s fees for collateral litigation with D’Arco or for any litigation involving independent allegations by D’Arco. His claim for fees against Kivitz and Liptz lacks sufficient involvement with a third party litigant to meet the demands of the exception.
Dalo argues, however, that this appeal is not really about the American Rule (and its prohibition on fee-shifting, save in narrow circumstances) at all but instead about whether a client wronged by his attorney’s breach of fiduciary duty in suing him can recover as damages attorney’s fees directly caused by the wrong. “In cases where the American rule applies,” Dalo asserts, “the successful plaintiff has incurred fees to remedy a wrong, but — unlike here — the fees were not directly caused by the wrong itself.” The argument is creatively presented, but we conclude that Dalo in effect urges us to create a new exception to the American Rule when an attorney sues a current client in breach of the attorney’s fiduciary duty. Since we are unpersuaded that it is possible *39 to fashion this new exception in a principled way, we reject it.
Dalo points out by analogy that, as an item of compensatory damages, plaintiffs in cases sounding in malicious prosecution are entitled to attorney’s fees incurred in defending the unmeritorious suit.
See Weisman v. Middleton,
Dalo argues, nevertheless, that the breach of duty in this case — a “uniquely improper” lawsuit filed by attorneys against a current client — is a sufficient equivalent to the malice required for malicious prosecution. To accept this analysis, however, would permit clients sued by their attorneys in breach of fiduciary duty to recover damage awards enhanced by awards of attorney’s fees, while other clients victimized by malpractice equally severe but not including an attorney-initiated suit would be barred from such enhanced recovery. Moreover, we can discern no principled basis for distinguishing in this regard any other fiduciary who brings suit against a party in what is determined to be a breach of the trust relationship. We thus reject this novel and ill-defined exception to the American Rule. 10
Dalo’s remaining argument is that the conduct of Kivitz and Liptz satisfied the conventional “bad faith” exception to the American Rule.
11
Under that exception, the court may award attorney's fees to a prevailing litigant “when the other party ‘has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’ ”
*40
Launay v. Launay, Inc.,
III.
Dalo next challenges the court’s refusal to award him punitive damages. In rejecting the claim for punitive damages, the judge conceded that Dalo had “proven by well beyond a preponderance of the evidence that Kivitz and Liptz committed legal malpractice in numerous respects.” She concluded, however, that the conduct did not “rise[] to the level of willful or reckless or malicious disregard” of Dalo’s rights. We find no error in the judge’s ruling.
Punitive damages are justified
only when the defendant commits a tor-tious act accompanied with fraud, ill will, recklessness, wantonness, oppressiveness, willful disregard of the plaintiff's rights, or other circumstances tending to aggravate the injury_ Whether punitive damages will lie depends on the intent with which the wrong was done, and not on the extent of the actual damages.
Washington Medical Center v. Holle,
Dalo attempts to surmount this obstacle by arguing that the judge misapprehended the law: that although she twice found no “malicious or reckless or willful” misconduct by Kivitz and Liptz, she must have meant that Dalo failed to prove “actual malice” or evil motivation, when the law is that a lesser showing of reckless indifference will suffice. It would not be surprising if trial judges labored under some confusion about the meaning of malice in this area given the varying formulations in our decisions.
Compare, e.g., Parker v. Stein,
IV.
We turn finally to the part of Dalo’s argument we find to have merit: that the judge erred in dismissing his claim for compensatory damages in the amount of $87,-000 for the loss he suffered as a result of the unwillingness of the Greystone stakeholders to release the escrow funds while the Kivitz and Liptz lawsuit was pending. Dalo was to receive that money if Wills through his own fault failed to purchase Greystone.
The judge dismissed Dalo’s claim for the $87,000 because of Dalo’s failure to make “any request at all” for the escrowed funds. Thus, the judge held that Dalo’s conduct, not the lawsuit tortiously filed by Kivitz and Liptz, was the proximate cause of his loss. The record is unmistakable, however, that the Kivitz and Liptz lawsuit — naming Dalo, the title company, and the escrow agent as defendants — foresee-ably caused the funds to be frozen in the escrow account. Hence the filing of the lawsuit was a substantial and direct causal link in the events leading to Dalo’s injury, his inability to obtain the funds. 16 As a matter of law, therefore, the filing of the lawsuit was the proximate cause of the injury.
As with any tort action, legal malpractice liability is predicated on a finding that the injury was proximately caused by the breach of duty.
District of Columbia v. Freeman,
In this case, the evidence established that in early October 1988, after the Kivitz and Liptz lawsuit was filed but before Wills failed to purchase Greystone, the stakeholder refused in writing to release any funds held in escrow “pending the outcome of the suit.” At trial the stakeholder testified that after the failure of the Greystone transaction, he was unwilling to release the $87,000 unless certain conditions were satisfied — either all the parties consented to release or a court ordered disposition of the funds. Thus, so long as Kivitz and Liptz maintained their lawsuit (and hence themselves plainly would not agree to the release), the funds were effectively frozen. Certainly it was foreseeable to the attorneys that Dalo would not undertake the futile act of demanding the escrow funds from a stakeholder that had announced it would not release them while the suit was pending. 20 It was also foreseeable that Dalo would not expend the effort to obtain authorizations from other parties whose consent was a necessary but insufficient condition of winning release of the funds. In short, Dalo’s failure to request the money or do other acts necessary to obtain it were not intervening causes sufficient to overcome the “central role,” Freeman, su *43 pra, played by the lawsuit in causing Dalo’s loss. We therefore must reverse the determination of the trial judge to the contrary.
There remains, nevertheless, the question whether Dalo is entitled to the $87,000 representing the facial amount of the money in escrow. In the summer of 1988, developer Wills deposited at least one check for $25,000 and a promissory note for $62,000 in the escrow account. Wills apparently had received a bank commitment to finance the Greystone deal, and there was evidence that during this period he possessed considerable wealth. On the other hand, the stakeholder was informed in December 1988 that there were insufficient funds in the bank to cover the $25,000 check. Kivitz and Liptz argued below that “it is speculative to suggest that there were even funds available to satisfy the liquidated damages provision of the assignment contract as of October 18th, 1988,” but the trial judge did not reach this issue in view of her finding on causation. We therefore must remand the case to the trial judge with directions to ascertain, as best she can, the actual value of the instruments in the escrow account as of October 1988, which will be the measure of the loss Dalo sustained from the tortious filing of the lawsuit.
The judgment is affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.
So ordered.
Notes
. Dalo also challenges an evidentiary ruling made at trial. He contends that the judge should have excluded from evidence a handwritten agreement offered by Kivitz and Liptz to impeach Dalo’s testimony, arguing that Kivitz and Liptz violated discovery rules by failing to produce the document earlier in the proceedings. A trial judge, however, has "wide latitude" in overseeing discovery and the trial process,
Corley v. BP Oil Corp.,
. Kivitz and Liptz had served as Dalo’s attorneys for several years before Dalo negotiated the Greystone deal.
.Dalo’s counterclaim alleged legal malpractice (Count I), breach of fiduciary duty (Count II), intentional interference with contractual relations (Count III), conspiracy to commit tortious conduct (Count IV), abuse of process (Count V), defamation (Count VI), disparagement of title (Count VII), replevin (Count VIII), and punitive damages (Count IX). This appeal stems from the liability of Kivitz and Liptz found on Counts I and II and denied on Count IX.
. Kivitz and Liptz but not D'Arco appealed that decision. The appeal was voluntarily dismissed on February 13, 1991.
. These violations included improperly engaging in business dealings with current clients, filing a lawsuit against the current client, and ”precipitous[ly]” terminating the attorney-client relationship with that client.
. Courts have deviated from this requirement of third party litigation in one situation. In cases of a breach of a covenant not to sue or a breach of a release agreement, some courts have held that attorney’s fees may be recovered against the breaching party as compensation for expenses incurred defending an action resulting from the breach.
See, e.g., Anchor Motor Freight, Inc. v. International Bhd. of Teamsters, Local Union No. 377,
Inasmuch as this case involves no breach of an express release or covenant not to sue, we need not decide whether this court would carve out a similar exception to the requirement of third party litigation.
. Thus we need not decide whether Dalo’s claim meets the other two requirements of the exception.
. Attorneys in their professional capacities face potential liability for torts involving malicious prosecution.
See, e.g., Epps
v.
Vogel,
.
See Tyler v. Central Charge Serv., Inc.,
. Dalo cites
Winter v. Brown,
.This argument is made belatedly. Dalo acknowledges that his claim for attorney’s fees as damages "relied upon different grounds” in his briefs and that only at oral argument, in response to questioning by the court, did he contend that the conduct of Kivitz and Liptz falls within the bad faith exception to the American Rule.
. The judge found "evidence that there was a partnership agreement” and that "Mr. Dalo knew this and that Mr. Dalo deliberately and calculatedly reneged on that agreement,” pursuing “the counterclaim in this case with full knowledge that he reneged on ... that agreement, and he defended against that claim not only for the reasons on which I granted the Motion for Summary Judgment [void agreement] but also on the basis of a denial that there was such an agreement."
.
See Hutto
v.
Finney,
. We reject Dalo’s argument that the judge, in denying punitive damages, considered only the malpractice involved in filing the lawsuit rather than the attorneys’ other ethical misconduct as well; the preface of the judge’s ruling was that the attorneys "committed malpractice in numerous respects.”
. Contrary to Dalo’s argument that the judge failed to take account adequately of the breach of fiduciary duty by
attorneys
in this case, we held in
Boynton v. Lopez,
.Although the trial judge dismissed the Kivitz and Liptz lawsuit in March 1990, their appeal from that ruling was not dismissed until February 1991. Meanwhile, in July 1989, nine months after the Greystone deal fell through, Wills initiated bankruptcy proceedings.
.
See, e.g., Murphy v. Edwards & Warren,
.
See also, e.g., Collins v. Perrine,
.
See, e.g., De La Maria v. Powell, Goldstein, Frazer & Murphy,
. As the trial judge herself acknowledged, "Mr. Dalo testified without contradiction that Miss Benzinger [of the stakeholder law firm] ... told him that no funds would be released because of the lawsuit.”
