Terry Sanderson could be on the hook for covering actress and businesswoman Gwyneth Paltrow’s legal fees after she prevailed against him in a court battle over a 2016 skiing accident.
A jury last week sided with Paltrow, awarding her the symbolic $1 she asked for in a countersuit against Sanderson, who claimed the Goop founder ran into him on a Utah ski slope. The retired optometrist, who had sued Paltrow for $300,000, could now be on the hook for up to $1 million in legal fees if the judge presiding over the case deems him responsible for covering the cost of Paltrow’s defense, according to legal experts.
Sanderson’s liability for Paltrow’s attorney fees hinges on whether or not he is found to have brought the case against Paltrow “in good faith.” According to a Utah statute, attorney fees are rewarded to the prevailing party only if a lawsuit is found to be meritless, which is up to a judge to determine.
“Utah is different from other jurisdictions, where the prevailing party gets certain costs paid by the other side, but not their attorneys fees,” Jessica Corpuz, a shareholder in the litigation department at Weintraub Tobin in Los Angeles, California, told CBS MoneyWatch. “If you win a lawsuit, you get reimbursement of certain statutory fees, but generally you have to pay own attorneys fees.”
The case’s judge, not the jury, will decide if Sanderson’s lawsuit was filed in bad faith and he is therefore responsible for covering Paltrow’s legal fees, which are likely extensive.
Good faith or bad?
“The jury determined she won the case, but that doesn’t mean he necessarily filed in bad faith,” Corpuz said. “She now has the burden to prove that he filed this in bad faith — that he knew he didn’t have any grounds, that it was frivolous.”
Corpuz suspects that Sanderson initially sued Paltrow with the expectation that she would quickly capitulate. “He saw a high-value dollar mark and filed the case thinking she would pay the money to make it go away,” Corpuz added.
Paltrow, for her part said in a statement after the verdict that she went on trial because “I felt that acquiescing to a false claim compromised my integrity.”
Paltrow’s legal fees are likely extensive
Paltrow’s defense likely cost in the high hundreds of thousands of dollars, according to legal experts.
Corpuz pegged her attorneys fees in the $500,000 to $1 million range.
Next, Paltrow’s legal team will submit a detailed account of time spent on the case to determine the total cost of her defense.
Salt Lake City, Utah, attorney David Cutt of Cutt, Kendell & Olson wouldn’t be surprised if her defense cost $1 million.
“Paltrow’s attorneys have probably billed between $800,000 and $1,000,000 in fees, but that is purely my estimation,” he told CBS MoneyWatch. “So, Sanderson could be looking at a very significant judgment. The jury apparently realized that the whole thing was a sham.”
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Liability protection
If he’s deemed liable, some of what Sanderson owes in legal fees — including his own — could be covered by his homeowners insurance policy, if he has one.
This kind of insurance follows individuals around and provides them with financial protection outside of the home, too. Liability protection, a key component of homeowners policies, means individuals are covered against “lawsuits for bodily injury or property damage that you or family members cause to other people,” according to the Insurance Information Institute, or III.
The personal liability portion of a policy pays for the cost of your legal defense in court, as well as any court awards — up to your policy’s stated limit. Liability limits typically start at around $100,000 according to the III.
“My expectation is that Sanderson’s homeowners coverage would pay the award of fees up to the policy limit,” Cutt said. “He would be personally on the hook for any amount above the limits of his coverage.”
Court costs and contingency fees
Roger Kohn, of Kohn Rath Law in Vermont said that typically, in cases like this one, Sanderson would have hired his attorneys on a contingency fee basis, meaning he would only have to pay his attorneys he had successfully sued Paltrow.
“I would be very surprised if his attorney was not being paid on a contingency-fee basis, which means his attorney does not get paid if he loses the case,” Kohn said.
He’s likely also responsible for court costs, which in this case, could be substantial, given the duration of the trial and the number of witnesses called.
“Court costs can be expensive when there are a lot of depositions and there’s an extended trial,” Kohn added. A deposition can cost around $1,000, while other fees include filing and transcription fees.
“This litigation was very complicated and there could be substantial court costs,” he added.
Attorneys for Paltrow declined to comment on the cost of her defense. Sanderson could not immediately be reached for comment.
