Fort Worth insurance lawyers need to know about this Beaumont Court of Appeals case. It is styled, Joe Ware v. United Fire Lloyds.
It is an appeal by Ware wherein he is disputing the trial court’s award of attorney fees in a property insurance dispute. He was awarded $3,133.20 in the case but he felt like he proved attorney fees of $133,497.00.
Ware owned two commercial properties in Orange County at the time of Hurricane Rita in 2005 and Hurricane Ike in 2008. After Hurricane Rita, but before Hurricane Ike, Ware filed a lawsuit on an insurance claim for damage to the properties. He was paid $146,170.85. After Hurricane Ike, Ware filed a claim for damage to the same properties. Ware made a written pre-suit demand of $187,121.51. Lloyds paid Ware $12,197.81 on the Ike claim.
Ware sued Lloyds for breach of contract, breach of the duty of good faith and fair dealing, violations of Chapters 541 and 542 of the Texas Insurance Code, and violations of the Deceptive Trade Practices Act. With the exception of the breach of contract claim, the jury rejected his claims. The jury awarded Ware $7,833.01 in damages for breach of contract. In addition to the damages found by the jury, the trial judge awarded Ware $4,300.27 in statutory interest penalty under the Texas Insurance Code and $713.56 for prejudgment interest. Neither party challenged the jury’s verdict.
The parties agreed to submit the issue of attorney fees to the trial court. The court awarded $3,133.20 for attorney fees, and $333.00 for court costs. In its findings of fact and conclusions of law, the trial court found that Ware’s written settlement demand for damages to both properties was $187,121.51, which included attorney fees calculated on the basis of a 40% contingent fee contract with Ware. The findings reflect that the parties later submitted the case to mediation. Ware’s settlement demand then was $251,559.64, subsequently reduced to $245,000.00. Lloyds offered to settle the claims for $9,653.00. The offer was rejected. The case proceeded to trial.
The trial court found that Ware and his attorneys “acted unreasonably and in bad faith in claiming damages from Ike when those damages had been caused by either flooding [excluded under the policy] or by Rita, and such a claim constituted an excessive demand and was unreasonable.” The trial court further found that “Ware stated under oath that his properties had suffered no flood damages as a result of Ike.” “This statement was not true, and it was undisputed that the property had been subjected to flooding of up to 18 inches in one building and 24 inches in another building.” The court also found that Ware’s attorneys “submitted a statement for attorney fees in an amount of $133,947.00 based on various hourly rates” and that Ware’s “original demand letter requested attorney fees based upon a 40% contingent fee contract with Ware.” The court found that the “excessive and unreasonable demands caused unnecessary and excessive litigation costs, including attorney fees and court costs.”
Ware challenged the trial court’s finding–that his damages claim was unreasonable and in bad faith–though he acknowledges that the settlement demand included flood damages which were not recoverable under the policy with Lloyds. Ware asserted that the inclusion of the flood damages in the settlement demand was a mistake, and he states that Lloyds was made aware of the mistake long before trial. There was evidence in the record, however, that Ware’s attorney and his expert met “the week before trial” to remove flood damages from the estimates, and that the expert did not remove each item that he considered to be damages caused by flood waters until the middle of trial. Moreover, Ware had stated under oath in a discovery response that his properties had suffered no flood damages as a result of Hurricane Ike. He does not dispute the trial court’s finding that this sworn statement was not true . The trial court also heard evidence that a portion of the damages sought by Ware in his demand letter were the result of Hurricane Rita or pre-existing leaks to the property.
Ware argues that Lloyds stipulated at trial to Lloyds’ untimely payment of the claim. He contends he is entitled to attorney fees as a matter of law under both the breach of contract claim and the prompt payment provision of the Insurance Code. Arguing that the attorney fees sought by Ware are excessive, Lloyds raised the defense of “excessive demand” with the trial court, and asserted that the fees sought by Ware are unreasonable and, in part, unnecessary.
Whether or not the excessive demand doctrine applies, the attorney fees awarded must be reasonable and necessary. A party seeking to recover attorney fees carries the burden of proof. Even when the testimony on fees is not contradicted by any other witness, the fees sought may be unreasonable.
In this case, the jury awarded $7,833.01 in damages. Ware does not contest the jury’s determination of the value of the claim. Ware asks for $133,947.00 in attorney fees. While acknowledging he signed a contingency fee agreement with his attorney, Ware nonetheless argues he is free to pursue an award of attorney fees based either on the contingency fee agreement or on what he calls a “per diem” basis.
An appellate court may conclude a trial court abuses its discretion if a trial court’s decision is arbitrary, unreasonable, and without reference to guiding principles, or if the court rules without supporting evidence. A trial court’s determination that claimed hours or fees are excessive, duplicative, or unreasonable is given considerable deference.
The trial court heard the testimony along with the jury. When confronted with conflicting evidence, a factfinder sometimes rationally may choose to believe one witness and disbelieve another, may resolve inconsistencies in the testimony of any witness, or may reject expert testimony. The trial court in this case considered the evidence and resolved the conflicts against Ware. The trial court found that Ware’s claim for attorney fees was excessive and unreasonable, and largely unnecessary. Under the circumstances, the appeals court did not see abuse of discretion by the trial court. Thus, Ware’s appeal was denied.
The lesson here is to not be afraid to be aggressive but to still be reasonable and make sure you have good evidence for what is being asserted.