Insurance And Attorney Fees

Policy holders in Grand Prairie, Arlington, Fort Worth, Mansfield, Crowley, Burleson, Rendon, Lake Worth, Benbrook, Hulen, and other areas of Texas probably get worried about attorney fees if they find themselves in a position where they need to fight with an insurance company. Some experienced Insurance Law Attorneys will work on a contingency fee basis rather than forcing someone to pay large retainer fees that scare away most people.
The ultimate questions would be: If I win, can I recover my attorney fees? The answer to that question in most all insurance claim lawsuits is “yes.” The District Court for the Western District of Texas, Austin Division, issued an opinion on June 28, 2011, that addresses this question. The style of the case is Berkley Regional Insurance Company, as Subrogee of Venus Rouhani and as Assignee/Subrogee of the Tower of Town Lake Condominium Association v. Philadelphia Indemnity Insurance Company. Here is some background.
In this case, Venus Rouhani is a third party who obtained a judgment against the Towers, the insured under an insurance contract with Philadelphia. Therefore, under Texas law, Rouhani was entitled to enforce the terms of the Philadelphia insurance contract. The court had, in earlier proceedings, held that Berkley obtained Rouhani’s rights under a judgment, either through contractual assignment or statutory subrogation,at which point Berkley became entitled to enforce the contract terms at issue in this case.
This claim was brought under the Texas Civil Practice & Remedies Code, Section 38.001. This section is the section that deals with recovery of attorney fees. It is relevant to point out that there are many sections of Texas statutes that allow recovery of attorney fees including sections in the Texas Insurance Code. For whatever strategic reasons, the plaintiffs in this case sought to recover their attorney fees under Section 38.001 rather than some other section.
This sections says that the award of attorney fees is mandatory if the plaintiff prevails in his or her breach of a contract claim and recovers damages.
As this court pointed out, “For purposes of recovering attorney’s fees under an insurance contract, a third party who has obtained a judgment against an insured is an intended third party beneficiary of the insurance contract and entitled to enforce the contract.” This is well settled case law. Additionally, Section 38.001 says a third party beneficiary may also recover attorney fees.
Philadelphia in this case spent a great deal of time and effort arguing with the court that somehow the plaintiff’s claims were less worthwhile than other claims because their claims were obtained by way of assignment. Evidently there was some sort of anti-assignment clause in the insurance contract which the court had earlier ruled was not applicable to the facts in this situation. The earlier ruling stated:
“Under the circumstances of this case, Philadelphia does not have the right to insist on compliance with the terms of the policy. By failing to pay on Towers’ claim when it had a legal duty to do so, Philadelphia materially breached its contract … Philadelphia apparently believes the rules of law and equity allow it to hold others strictly to the terms of its policy, while at the same time ignoring those terms itself. Philadelphia is mistaken.”
This court further pointed out that the earlier court (1) ruled against Philadelphia on its anti-assignment argument with respect to Rouhani’s claims; (2) concluded Phildelphia is not entitled to enforce the clause at all, in light of its breach of the insurance contract; and (3) considered and denied Philadelphia’s motion for reconsideration. In light of these facts, the Court was not particularly moved by Philadelphia’s statements that it disagrees with the Court’s conclusion, and “that any assignment of Rouhani”s rights to Berkley is ineffective due to the anti-assignment clause in the Philadelphia policy.”
This case can be a bit confusing as to the assignments even for a lawyer. What is important about this case to the policyholder is the re-affirmation that attorney fees are recoverable in insurance disputes with your insurance company.