Eastern Shore Title Co. v. Ochse

Getty, J. “The long and winding road that leads to your door Will never disappear I’ve seen that road before ⅜ ⅜ ⅜ ³¹¹ But still they lead me back to the long winding road ...” The Beatles, The Long & Winding Road (Apple Records 1970). In this case, the long and winding road virtually disappeared and, more regrettably, went undetected during the title search for the 2001 sale of a five-acre residential lot in Dorchester County. Eastern Shore Title Company (“ESTC”), Petitioners and Cross-Respondents, conducted the title search for Mr. Steven Ochse and Ms. Shari Ochse (“the Ochses”), Respondents and Cross-Petitioners, when they purchased the lot from Mr. William Henry and Ms. Jessie Henry (“the Henrys”). However, vestiges of the road leading to the Ochses’ door were evident in the physical remains of a gravel roadbed.

To further compound the confusion, an outline of the roadbed was documented on the Henrys’ subdivision plat 1 but was mistakenly designated as a “driveway.” In the course of improving the property, a landscape contractor advised the Ochses about his suspicions that the gravel roadbed was more than just a “driveway.” After further investigation, the Ochses filed their initial lawsuit to quiet title against the Henrys (“the Henry litigation”). After residing on the property for approximately seven years, the Ochses finally learned during the Henry litigation that the “driveway” encumbrance bisecting their lot was actually part of a thirty-foot-wide strip of land, which had been granted in fee simple determinable to Dorchester County by a 1919 deed for the purpose of making a new county road. Thereafter, the Ochses’ melancholy ballad took a long winding road through Maryland’s appellate courts (see E. Shore Title Co. v. Ochse, No. 0999, 2015 WL 9590716 , at ¹ (Md. Ct. Spec. App. 2015); Ochse v. Henry, 216 Md.App. 439 , 88 A.3d 773 [hereinafter Ochse 2 ], cert. denied, 439 Md. 331 , 96 A.3d 146 (2014); Ochse v. Henry, 202 Md.App. 521 , 33 A.3d 480 (2011) ³¹² [hereinafter Ochse 1 ], cert. denied, 425 Md. 396 , 41 A.3d 571 (2012)); but still it leads them back to this Court on issues of the collateral litigation doctrine and the collateral source rule.

The underlying case to this appeal is a lawsuit collateral to the Henry litigation that was filed by the Ochses on June 25, 2010 in the Circuit Court for Talbot County against Chicago Title Insurance Company (“Chicago Title”) 2 and ESTC, the title examiner, in which the Ochses alleged that ESTC breached the contract intended to benefit the Ochses and was negligent in its title examination. The trial court found in favor of the Ochses and, as a result, awarded them compensatory damages for their litigation costs and expenses, including a $215,710.60 judgment against ESTC and Chicago Title, which was the amount of the attorney’s fees awarded to the Ochses in the Henry litigation. ESTC and Chicago Title thereafter moved to alter or amend that judgment, pointing out that the Henrys had already paid the attorney’s fees awarded in the Henry litigation. The trial court granted that motion and reduced its judgment against ESTC and Chicago Title by the full $215,710.60—the amount of attorney’s fees that the Ochses had already recovered from the Henrys in the Henry litigation.

The Ochses and ESTC appealed the case to the Court of Special Appeals. In an unreported opinion, the Court of Special Appeals remanded the case for a determination of whether the collateral litigation doctrine applied and to clarify the attorney’s fees award. E. Shore Title Co., 2015 WL 9590716 , at ¹⁸, ²¹. ESTC petitioned this Court for a writ of certiorari, and the Ochses filed a cross-petition.

We granted both the petition and the cross-petition on May 20, 2016. E. Shore Title Co. v. Ochse, 448 Md. 29 , 136 A.3d 816 (2016). We hold that, in order to recover attorney’s fees against a negligent title searcher using the collateral litigation doctrine theory of damages, the plain ³¹³ tiff must show that the title searcher s negligence proximately caused the plaintiff to file a necessary collateral action, resulting in the plaintiff incurring reasonable litigation costs or expenses necessarily and in good faith, and that the plaintiff has not otherwise received compensation for those costs and expenses. Thus, we reverse the judgment of the Court of Special Appeals, and affirm the judgment of the trial court.

I Background A Factual Background The underlying facts and procedural paths of this case and the collateral case have been thoroughly described in three appellate opinions. See E. Shore Title Co., 2015 WL 9590716 , at ¹; Ochse 1, 202 Md.App. at 521 , 33 A.3d 480 ; Ochse 2, 216 Md.App. at 439 , 88 A.3d 773 . We restate the facts that are relevant to this appeal, all of which are uncontested. 1919 County Road Deed The elusive 1919 county road deed was executed on March 2, 1919, and was recorded on May 27, 1919 among the Land Records for Dorchester County Maryland in Liber W.H.M. 6, folio 332. A total of fourteen property owners conveyed portions of their land to Dorchester County to create a thirty-foot-wide strip of land, “for the purpose of making a new county road.” According to the deed, the strip of land had been “marked out, partly cut out and opened.” 3 Dorchester County thus acquired a fee simple determinable interest in the strip of land. 4 However, the deed included a reversionary ³¹⁴ clause, which stated that “if the [county road] is abandoned by the said County Commissioners of Dorchester County, or their successors in interest, the lands hereby conveyed shall revert back to the said grantors, their heirs and assigns, so far as the same are within the bounds of the lands of the respective grantors heretofore mentioned.” Chronology of Pertinent Property Interests One of the fourteen property owners was Henry B. Messenger, who held title to approximately 150 acres of land in this vicinity south of Federalsburg. 5 Over the years, portions of Mr. Messenger’s property were conveyed to various property owners.

Of significance to this litigation, one of those conveyances—Mr. Messenger’s conveyance on August 30,1966 of two parcels to the Mayor and Council of Federalsburg for conservation efforts along Marshythorpe Creek, which adjoined his property—referenced two plats that depict a roadway labeled as a “county road” within the vicinity of Mr. Messenger’s remaining property (the “1966 plats”). 6 Subsequently, a thirty-five-acre parcel of the Messenger property was conveyed on June 29, 1972 by Esther White ³¹⁵ Messenger 7 to R.T.R., Inc. On March 18, 1987, R.T.R., Inc. conveyed the same property by deed 8 to the Henrys. This thirty-five-acre parcel ultimately purchased by the Henrys included the county road owned by Dorchester County as referenced in the 1919 deed and 1966 plats. In 1998, the Henrys subdivided this parcel to create a lot of approximately five acres that included the county road, known as 2890 Mowbray Creek Road, Federalsburg. 9 Then, on September 13, 2001, Mr. and Ms. Ochse entered into a contract with the Henrys to purchase the subdivided parcel of land for $325,000.00 (the “Contract of Sale”). The Contract of Sale, which was in the standardized form of a Maryland Residential Contract of Sale, provided that “[tjitle to the Property ... shall be good and merchantable, free of liens and encumbrances except as specified herein.” Significantly to this appeal, the Maryland Residential Contract of Sale, signed by the parties, contained a standard form fee-shifting provision, which stated: In any action or proceeding between the [Ochses] and the [Henrys] based in whole or in part, upon performance or no performance of the terms and conditions of this Contract, including, but not limited to, breach of contract, negligence, misrepresentation or fraud, the prevailing party in such action or proceeding shall be entitled to receive reasonable attorney’s fees from the other party as determined by the court arbitrator.

The Contract of Sale further specified that “[t]he [attorney’s fees] provision ... shall survive closing and shall not be deemed to have been extinguished by merger with the deed.” ³¹⁶ Ochse Property Title Search The Ochses received a policy of title insurance from Chicago Title, which guaranteed and represented that the Ochses’ property title was precisely as depicted in the 1998 subdivision plat. As an agent of Chicago Title, and for the benefit of the Ochses, ESTC performed the title search, prepared a title insurance binder and drafted the deed. It is uncontested that the Ochses were the customers of ESTC and dealt directly with ESTC. The title search and title insurance binder were intended to “permit [the Ochses] to make an informed decision whether to proceed with the purchase.” 10 Closing on the 2890 Mowbray Creek Road Property On December 14, 2001, at a real estate closing conducted by the general manager of ESTC, Veronica Wainwright, the Ochses acquired as tenants by entireties, via deed, 11 a fee simple interest in 2890 Mowbray Creek Road.

The Ochses’ deed included a provision (the “driveway provision”) indicating that their property interest was “SUBJECT, HOWEVER, to the rights of others legally entitled to the use of a ‘Driveway’, for purpose of ingress, egress and regress, over [the Ochse Property].” At a subsequent trial proceeding, the Ochses testified that they asked Ms. Wainwright about the meaning of the provision’s language during the closing, and that she verbally advised the Ochses that the driveway provision referred to utility easements, with the utility companies being the unidentified “others” in the provision. 12 Discovery of Ochses’ Property Title Defect After residing at the property for four years, the Ochses hired a contractor in 2005 to undertake significant renovations ³¹⁷ and landscaping to their home. Based upon an inquiry from the contractor and prior to finalizing the renovation plans, Ms. Ochse reviewed the property deed to determine whether the gravel roadbed could be removed and contacted ESTC for clarification. In response to Ms. Ochse’s questions, ESTC performed a second title search. This second title search again failed to uncover the 1919 county road deed.

Based on this second attempt, ESTC offered a new theory that the “driveway provision” in the Ochses’ deed was not for utility easements, as originally represented to the Ochses at closing, but instead a right-of-way for the benefit of the Henry property. ESTC offered to prepare a release for the Henrys’ signature to quitclaim any and all rights and eliminate the driveway provision from the Ochses’ deed. However, when presented with the draft release, the Henrys would not agree to sign it or to relinquish their claims to any right-of-way over the Ochses’ property. The Ochses subsequently wrote a letter to their title insurer, Chicago Title, alerting the insurer to the presence an “undisclosed right of-way” that they contended ESTC had either “failed to pick up on” during the course of the title search, or failed to list in their Owners Policy.

In the letter, the Ochses requested that Chicago Title “initiate a claim on [their] behalf against Eastern Shore Title Company.” Chicago Title denied the claim, referring to a portion of the Ochses policy that excepted from coverage “easements ... and other limitations” shown on the 1998 subdivision plat. The Ochses subsequently retained an attorney who continued to pursue obtaining a release from the Henrys, but without success. 13 ³¹⁸ B. Procedural History The Henry Litigation Consequently, on December 11, 2007, the Ochses filed a complaint against the Henrys in the Circuit Court for Dor-chester County (“the circuit court”) seeking reformation of their deed and for declaratory, injunctive, and related relief. The Ochses sought damages for breach of contract, breach of special warranties, and fraud in the inducement based on the driveway provision in their deed. Thereafter, on February 22,- 2008, seven years after purchasing the 2890 Mowbray Creek Road property, the Ochses finally learned of the true legal status of the gravel roadbed— which up until that time they had presumed was, as stated in their deed, a driveway within property which they owned and over which some others merely had rights-of-way—when an attorney representing the Henrys mailed a letter to the Ochses’ counsel revealing the existence of the 1919 county road deed, and Dorchester County’s ownership of the county road.

Then, the Henrys’ attorney mailed a second letter to the Ochses’ counsel stating that the Ochses’ only remedy was to petition Dorchester County to convey the county road to the Ochses and that any judgment against the Henrys was fruitless because they could not deliver title for the roadbed to the Ochses. Instead, on April 11, 2008, the Ochses filed an amended complaint, in which they added Dorchester County as an interested party defendant, while maintaining the same claims as in their earlier complaint: reformation of the deed, declaratory relief, injunctive relief, and damages for breach of contract, breach of special warranties, and fraud in the inducement. The amended complaint requested the circuit court to remove the driveway provision from the Ochses’ deed, and to declare that Dorchester County did not have a fee simple interest in the county road. The Henrys thereafter filed a counterclaim seeking an award of attorney’s fees pursuant to the fee-shifting provision of the Contract of Sale that specifically survived merger with the deed. ³¹⁹ On May 13, 2008, Dorchester County filed an answer to the Ochses’ amended complaint and asserted its fee simple interest in the county road.

On August 4, 2008, Dorchester County filed a motion for summary judgment asserting that there was no dispute of material fact regarding Dorchester County’s ownership of the county road, including that portion of it described as a “driveway” in the Ochses’ deed. Dorchester County asserted that it did not abandon, convey away, or otherwise dispose of its interest in the county road. On October 29, 2008, after a hearing, the circuit court granted Dorchester County’s motion for summary judgment declaring that Dorchester County owned the thirty-foot-wide strip of land in fee simple. The circuit court subsequently held a two-day bench trial, on May 26 and 27, 2009, as to the surviving claims made in the Ochses’ amended complaint, as well as the Henrys’ counterclaim for attorneys’ fees pursuant to the fee-shifting provision in the Contract of Sale.

Ultimately, in a written opinion and order entered September 18, 2009, the circuit court denied relief to the Ochses, “concluding] that the [Contract of Sale] merged into the deed and that there was no breach of the special warranties of title.” Ochse 1, 202 Md.App. at 528 , 33 A.3d 480 . The circuit court, however, granted the Henrys’ counterclaim, and subsequently, in a supplemental order entered on October 20, 2009, awarded the Henrys $100,020.00 in attorney’s fees 14 to be paid by the Ochses. The Ochses appealed all of the circuit court’s judgments to the Court of Special Appeals. Ochse 1, 202 Md.App. at 521 , 33 A.3d 480 .

The Ochses also filed a petition with the County Council for Dorchester County, requesting that the county close, abandon, and convey to them the portion of the county road lying across their property. 15 E. Shore Title Co., 2015 WL ³²⁰ 9590716, at ⁶. Following court-ordered mediation before the Court of Special Appeals, the parties filed a consent motion to stay proceedings before that court pending the disposition of the petition by Dorchester County. After that petition was granted through a bill passed by the Dorchester County Council, “the county conveyed its interest in the 30-foot wide strip to the Ochses” through a quit-claim deed. 16 Ochse 1, 202 Md.App. at 525 , 33 A.3d 480 . Dorchester County was then dismissed from the Court of Special Appeals case.

The Court of Special Appeals then proceeded to review the circuit court’s judgments to deny the Ochses’ breach of contract, breach of special warranties, and fraud in the inducement claims, and to grant the Henrys’ attorney’s fees counterclaim. The intermediate appellate court determined that the circuit court did not err in its conclusions that the Henrys had neither breached the special warranties of encumbrance or of title, nor fraudulently induced the Ochses into entering the Contract of Sale. Id. at 530-42 , 33 A.3d 480 . But, the Court of Special Appeals also determined that there was a mutual mistake between the Henrys and Ochses and, therefore, the Contract of Sale did not merge into the deed, “and the Ochses should have been able to sue on the contract.” Id. at 542-43, 33 A.3d 480 . 17 The intermediate appellate court held, however, that the central issue underpinning the Ochses’ suit against the Henrys based upon the Contract of Sale—the issue of ³²¹ clear title to the Ochses’ property—had been “resolved” by the successful petition to the Dorchester County Council and resultant quitclaim deed to the thirty-foot wide strip of land to the Ochses.

Id. at 543, 33 A.3d 480 . As to the issue of attorney’s fees, the Court of Special Appeals held that, despite its finding that there was a mutual mistake of fact that prevented the Contract of Sale from merging into the deed, “the circuit court was acting within the terms of the contract and deed by awarding attorney’s fees,” because “[rjegardless of whether the contract merged with the deed, the attorney’s fees provision of the contract survived.” Id. at 544, 33 A.3d 480 . But, the Court of Special Appeals felt that, in light of its holdings, the apportionment of legal fees to the Henrys was in error. Id.

The intermediate appellate court explained that “at the time of the conveyance [of the 2890 Mowbray Creek Road property], the Henrys did not convey marketable title to the Ochses, breaching the [Contract of Sale].” Id. Therefore, the Court of Special Appeals vacated the attorney’s fees award to the Henrys and remanded the case to the circuit court. Id. The Court of Special Appeals’ holdings in Ochse 1 that the fee-shifting provision survived and the Henrys had breached the Contract of Sale meant that the Ochses were the “prevailing party” in the litigation and, pursuant to the fee-shifting provision, entitled to “receive reasonable attorney’s fees from the other party.” See id. at 526 n.2, 33 A.3d 480 (noting that “[b]ecause the [Contract of Sale] contained an attorney’s fees provision, the Ochses are entitled to attorney’s fees,” and that even though the title issues had been resolved in favor of the Ochses through the county petition process, the circuit court “must view the case as it appeared when initiated” in issuing that award).

Consequently, after the case was remanded to the circuit court, the Ochses filed, on January 24, 2012, a motion requesting attorney’s fees to be awarded in the amount of $333,354.00 for the attorney’s fees incurred through the litigation to that point. Ochse 2, 216 Md.App. at 449 , 88 A.3d 773 . On April 27, 2012, the Ochses filed a supplemental motion for fees that reflected the additional costs incurred in their certio- ³²² rari petition to this Court, 18 which revised the total to $355,731.78. Id.

On July 16, 2012, the circuit court issued an order and opinion granting attorney’s fees to the Ochses. Id. The circuit court explained that, because the Ochses had “prevail[ed] on some issues in [the] case but [did] not prevail on other issues,” it had concluded that a “proportionate award” was appropriate. Id. at 453 , 88 A.3d 773 .

Specifically, the circuit court noted that “the substantial majority of the time in trial and litigation effort put forth by [the Ochses] addressed the issue of willful fraud,” an issue on which they did not prevail in their appeal in Ochse 1. Id. at 453, 88 A.3d 773 . The circuit court concluded that the appropriate “proportionate award” was “the entirety of the post-trial and appeal costs, as well as one-fourth of the attorney’s fees expended in trial.” Id. at 454, 88 A.3d 773 . Therefore, starting from the Ochses’ initial request of $333,354.00, the circuit court deducted $114,731.40 (its calculation of three fourths of the attorney’s fees through the trial), as well as $2,912.00 (which it determined to be a double entry in the Ochses’ motion for fees), to reach an award of $215,710.60.

In its opinion and order, the circuit court made no mention of the Ochses’ April 27, 2012 supplemental motion for fees. Id. The Ochses again appealed to the Court of Special Appeals—this time challenging the rationale of the circuit court’s judgment concerning the award of attorney’s fees. Id. at 449, 88 A.3d 773 .

The Court of Special Appeals rejected the Ochses’ claim that they were entitled to the full amount of fees claimed pursuant to the “common core of facts” doctrine, under which a court may award “a fully compensatory fee where an attorney may not have prevailed on each and every claim or defense but still has achieved excellent results.” Id. at 459, 88 A.3d 773 . The intermediate appellate court noted that it had previously recognized that the “common core of facts” doctrine “comports with Maryland law,” but had not held that ³²³ its application was mandatory. Id. at 467, 88 A.3d 773 (discussing Weichert Co. of Md. v. Faust, 191 Md.App. 1 , 989 A.2d 1227 (2010), aff'd on other grounds, 419 Md. 306 , 19 A.3d 393 (2011)). The Court of Special Appeals noted that the circuit court “did not view the Ochses’ first appellate victory as an excellent result” and held that the circuit court “was free to consider,” as part of its overall determination as to attorney’s fees, “the thin relationship between the Ochses’ appellate success and the thrust of their efforts at trial.” Id. at 468-69, 88 A.3d 773 .

The Court of Special Appeals therefore held that the circuit court did not abuse its discretion in using its “proportionate award” approach to calculate attorney’s fees instead of relying on the “common core of facts doctrine.” Id. at 469, 88 A.3d 773 . However, the Court of Special Appeals remanded the case for the circuit court to correct computational errors and to consider the Ochses’ supplemental motion for fees, which the circuit court had overlooked. Id. On remand, the circuit court recalculated its award for attorney’s fees and awarded a total of $228,771.89 in attorney’s fees to the Ochses.

ESTC Litigation While the Henry litigation was still progressing through the courts, the Ochses filed a complaint against ESTC and Chicago Title on June 25, 2010 in the Circuit Court for Talbot County (“the trial court”). In that complaint, the Ochses alleged breach of contract against Chicago Title, and breach of contract, negligence, and negligent misrepresentation against ESTC, all stemming from the improper preparation of the Ochses’ deed and failure to discover the 1919 deed. The Ochses subsequently filed an amended complaint on July 29, 2011 that added negligence and negligent misrepresentation claims against Chicago Title. The case proceeded to a four-day bench trial beginning on July 9, 2012.

At that trial, the circumstances surrounding the faulty title search were revealed. William Price was the title abstractor who performed the title search on the property at 2890 Mowbray Creek Road on behalf of ESTC. Mr. Price ³²⁴ testified that he searched deeds in the chain of title back to 1902, and that, in his title abstract forwarded to ESTC settlement staff, he had alerted ESTC to the possible existence of a right-of-way running through the property. However, Mr. Price also testified that he had reviewed the 1966 plats in the Ochses’ chain of title that noted a “county road” but found them not pertinent to his title search, and had skipped a search of the Grantor Index forward from 1902 that he conceded would have uncovered the 1919 deed that showed the existence of a county road on the property.

The Ochses presented expert testimony that, under the circumstances, the 1919 deed should have been discovered and disclosed to the Ochses. At the conclusion of the Ochses’ case, the trial court granted a motion for judgment on behalf of both Chicago Title and ESTC as to the negligent misrepresentation counts, finding that they were barred by the statute of limitations. Then, on June 12, 2013, the trial court issued a memorandum opinion and judgment as to the remaining claims in the case. The trial court began that opinion by tracing what it described as the “peculiar and extraordinary route” of the litigation stemming from the failure to detect the 1919 county road deed and the 30-foot wide public road running across the 2890 Mowbray Creek Road property prior to the Ochses’ purchase of that property.

The trial court first summarized the course of the Henry litigation before the Circuit Court for Dorchester County, in which the Ochses had pursued declaratory relief against the Henrys and Dorchester County to gain clear title to the 30-foot wide strip of land. The trial court then described the ESTC litigation pending before it, in which the Ochses pursued breach of contract and negligence claims against ESTC and Chicago Title for failing to alert the Ochses to the presence of the county road across the 2890 Mowbray Creek Road property, a failure that the Ochses alleged caused them to have incurred significant attorney’s fees in the Henry litigation to obtain clear title to their property. As to the specific claims before it, the trial court concluded that Chicago Title could not be held vicariously liable for any ³²⁵ negligence of its title searcher agent, ESTC, and therefore dismissed the negligence count against Chicago Title. However, the trial court found in favor of the Ochses as to all remaining counts.

The court determined that Chicago Title breached its contract with the Ochses because “Chicago Title refused to act or provide a defense” during the initial course of the Henry litigation, as well as because “Chicago Title, through its agent [ESTC] failed to address the unresolved ‘driveway’ issue.” The trial court also held that ESTC was negligent because it had “breached the standard of care in its title examination” by not discovering the 1919 county road deed and that, even though the county road was not in use at the time of the Henry litigation, that breach was “significantly damaging” to the Ochses, as the cloud in title would have been a major constraint on their ability to sell or develop the property. Finally, the trial court concluded that ESTC’s failure to discover the 1919 deed had also breached its contractual obligation to the Ochses to prepare the title search and title insurance binder so that the Ochses’ could make an informed decision as to whether to purchase the property. Turning to the issue of damages, the trial court determined that the Ochses were not entitled to noneconomic damages, but awarded economic damages based upon the attorney’s fees and costs the Ochses had incurred. The trial court entered judgment for the breach of contract claims against Chicago Title and awarded $471,947 to the Ochses for that claim, which the court broke down into $256,237.35 in expenses in the case before it, as well as $215,710.60 in attorney’s fees for the Henry litigation.

The trial court also entered judgment for the breach of contract and negligence claims against ESTC, and awarded $215,710.60 to the Ochses as to those claims. The $215,710.60 amount was, as the court noted, the amount that the Circuit Court for Dorchester County had determined that “the Ochses were entitled for the Henry litigation.” Although relying on that amount, the Circuit Court for Talbot County also stated that the judgment from the Circuit Court for Dorchester County was at that time on appeal, implicitly recognizing that the amount was subject to change. ³²⁶ On June 18, 2013, ESTC and Chicago Title filed a motion to alter or amend the judgment and a motion to stay enforcement, seeking a clarification that the damages would be reduced by any recovery made by the Ochses in the Henry litigation. ESTC and Chicago Title attached the Henrys’ motion to record satisfaction of money judgment filed in the Henry litigation on June 13, 2013, documenting that the Henrys had paid $218,901.89 to the Ochses. 19 On June 28, 2013, the trial court granted ESTC and Chicago Title’s motion and reduced the judgment in the instant case against both ESTC and Chicago Title by the $215,710.60 paid by the Henrys in the Henry litigation. As a result, the judgment against ESTC was reduced to $0.00, and the judgment against Chicago Title was reduced to $256,237.35. 20 The trial court’s order stated: Assuming the motion is approved by the Circuit Court for Dorchester County in the Henry litigation, the judgments in the instant litigation will be reduced [or otherwise satisfied] against Chicago Title and ESTC by $215,710.65.

While presently the “satisfaction” would satisfy the judgment amount against ESTC as of the judgment date, i.e. June 12, 2013, that is subject to change due to the ongoing appeal by ³²⁷ plaintiffs of the attorney’s fees award in the Henry litigation. The Henrys understand, and defendants in the instant case should also, that “... any additional fees assessed pursuant to the August 8, 2012 appeal would constitute a supplemental judgment.” The Court will enter the orders for clarification of the judgments against Chicago Title and ESTC, reducing each judgment by the amount of recovery in the Henry litigation. (Footnote and citation omitted.) The Ochses and ESTC appealed the trial court’s judgment to the Court of Special Appeals.

E. Shore Title Co., 2015 WL 9590716 , at ¹. In an unreported opinion, the Court of Special Appeals remanded the case to the trial court to determine whether the collateral litigation elements were satisfied and to determine whether the collateral source rule applied. Id. at ². The Ochses and ESTC petitioned this Court for a writ of certiorari, which this Court granted. 448 Md. 29 , 136 A.3d 816 (2016).

We have rephrased their questions. 21 ESTC presents the following question for our review: 1. Does the collateral litigation doctrine permit a party to recover their attorney’s fees as “damages”? The Ochses raise the following questions for review: 1. Did the Circuit Court for Talbot County err in its calculation of damages awarded pursuant to the collateral litigation rule? ³²⁸ 2.

Does the collateral source rule apply to an award of attorney’s fees as damages when they are awarded pursuant to the collateral litigation doctrine? II Discussion A. Standard of Review The standard of review for a non-jury trial is governed by Maryland Rule 8-131(c), which states: When an action has been tried without a jury, the appellate court will review the case on both the law and the evidence. It will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses. B. Collateral Litigation Doctrine The first issue this Court is asked to decide is whether the collateral litigation doctrine applies.

In their briefs and at oral argument, ESTC and the Ochses focused on the proximate cause element of the collateral litigation doctrine. 22 ESTC asserts that the collateral litigation doctrine does not apply in this case because the Ochses did not present sufficient evidence to support the necessary elements for the collateral litigation doctrine, specifically that ESTC’s negligence proximately caused the Henry litigation. The Ochses respond that the collateral litigation doctrine does apply, and permits attorney’s fees to be used as a measure of damages. The Ochses contend that ESTC’s professional negligence forced them into litigation with the Henrys to reform their property deed, which satisfies the proximate cause element of the collateral litigation doctrine. ³²⁹ The trial court found that ESTC was negligent in exercising its duty of care to the Ochses, which arose from the contractual relationship between Chicago Title, ESTC, and the Ochses. In 100 Investment Ltd. Partnership v. Columbia Town Center Title Co., 430 Md. 197 , 60 A.3d 1 (2013), this Court held that a title company owes a duty of care, in tort, when conducting a title search.

However, the issue of how to measure damages in the negligence action was not before the Court. A plaintiff in a negligence cause of action has the burden to demonstrate “1) that the defendant was under a duty to protect the plaintiff from the injury, 2) that the defendant breached that duty, 3) that the plaintiff suffered actual injury or loss, and 4) that the loss or injury proximately resulted from the defendant’s breach of the duty.” Hamilton v. Kirson, 439 Md. 501, 523-24 , 96 A.3d 714 (2014) (quoting Taylor v. Fishkind, 207 Md.App. 121, 148 , 51 A.3d 743 (2012)). Consequently, a trial court cannot award damages to a plaintiff unless the plaintiff shows that he or she suffered an actual injury. The Ochses’ theory of damages was that ESTC should be liable for the attorney’s fees from the Henry litigation pursuant to the collateral litigation doctrine.

In the trial court, the Ochses also sought “non-economic damages related to stress and other maladies.” However, the trial court considered these damages as “wildly speculative and not consistent with the purely financial issues of the case.” The Ochses do not challenge this finding on appeal. When attorney’s fees are sought by a party, then “[o]ur basic point of reference when considering the award ... is the bedrock principle known as the American Rule: Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” Baker Botts L.L.P. v. ASARCO LLC, — U.S. -, 135 S.Ct. 2158, 2164 , 192 L.Ed.2d 208 (2015) (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252-53 , 130 S.Ct. 2149 , 176 L.Ed.2d 998 (2010)). The American Rule is rooted in “common law reaching ³³⁰ back to at least the 18th century.” Id.

(citing Arcambel v. Wiseman, 3 U.S. 306 , 3 Dall. 306 , 1 L.Ed. 613 (1796)). Maryland follows the American Rule. Nova Research, Inc. v. Penske Truck Leasing Co., 406 Md. 435, 445 , 952 A.2d 275 (2008); Friolo v. Frankel, 403 Md. 443, 456 , 942 A.2d 1242 (2008); see also St. Luke Evangelical Lutheran Church, Inc. v. Smith, 318 Md. 337, 344-46 , 568 A.2d 35 (1990) (tracing the history of the American Rule). However, in Maryland, there are four exceptions to the American Rule, and an award for attorney’s fees is permitted (1) where a statute allows for the recovery of attorney’s fees; (2) where the parties to a contract have an agreement regarding attorney’s fees; (3) where the wrongful conduct of a defendant forces a plaintiff into litigation with a third party; or (4) where a plaintiff in a malicious prosecution action can recover damages from the defense of the criminal charge.

Hess Constr. Co. v. Bd. of Educ., 341 Md. 155, 160 , 669 A.2d 1352 (1996). The third exception is pertinent to this case, and is commonly known as the collateral litigation doctrine. The collateral litigation doctrine permits Maryland courts to award legal expenses as damages from a separate litigation against another party that was caused by the wrongful acts of the defendant.

Empire Realty Co. v. Fleisher, 269 Md. 278, 286 , 305 A.2d 144 (1973). The collateral litigation doctrine was explained by this Court in McGaw v. Acker Merrall & Condit Co.: The general rule is that costs and expenses of litigation, other than the usual and ordinary Court costs, are not recoverable in an action for damages, nor are such costs even recoverable in a subsequent action; but, where the wrongful acts of the defendant has involved the plaintiff in litigation with others, or placed him in such relations with others as make it necessary to incur expense to protect his interest, such costs and expense should be treated as the legal consequences of the original wrongful act. 111 Md. 153, 160 , 73 A. 731 (1909); see also St. Luke Evangelical Lutheran Church, Inc., 318 Md. at 345-46 , 568 A.2d 35 ³³¹ (“[Attorney’s fees may be awarded when ... the wrongful conduct of a defendant forces a plaintiff into litigation with a third party.”); Kromm v. Kromm, 31 Md.App. 635 , 358 A.2d 247 (“The allowance of such expenses manifestly was grounded on the fact that the wrong there complained of had imposed a necessary obligation upon the plaintiff to institute the collateral action[.]”), cert. denied, 278 Md. 726 (1976). Collateral litigation expenses are only recoverable “for legal services in a separate litigation against another party[,]