Insurance Claims And Attorney Fees

Dallas area insurance attorneys will eventually try a case wherein, part of the case is won and part is lost. If this happens, does it affect an award of attorney fees? This question is answered in a Fort Worth Court of Appeals case opinion issued in 2014. The style of the case is, Farmers Group v. Poteet. The opinion is long and deals with many other issues. Here is the relevant part.
After a November 2002 discharge of smoke and soot from her heating and air-conditioning system, Poteet reported her claim to Farmers, which investigated and initially determined that the discharge of smoke and soot was caused by cracked heat exchangers in the home’s heating system and that the loss was covered under Poteet’s homeowners’ policy as “sudden and accidental damage from smoke.” Farmers paid for remediation and repair, including temporarily relocating Poteet and her daughter to a hotel during the process, cleaning and replacing furniture and carpet, repainting of the ceiling, and cleaning the home’s walls and contents.
Poteet was dissatisfied with the remediation and cleaning efforts and claimed that continued presence of soot in the air of the home was causing her and her daughter to experience respiratory problems and rendered the home uninhabitable. Poteet hired a Certified Industrial Hygienist, Robert Miller, to investigate whether soot was still present in the home. Miller determined there was still soot present in the house.
The parties disagreed as to any additional amounts for further remediation or additional living expenses owed by Farmers under its policy. Farmers invoked the appraisal provision in the policy on February 26, 2003.
7. Appraisal. If you and we fail to agree on the actual cash value, amount of loss, or cost of repair or replacement, either can make a written demand for appraisal. Each will then select a competent, independent appraiser and notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a district court of a judicial district where the loss occurred. The two appraisers will then set the amount of loss, stating separately the actual cash value and loss to each item. . . .
If the appraisers fail to agree, they will submit their differences to the umpire. An itemized decision agreed to by any two of these three and filed with us will set the amount of the loss. Such award shall be binding on you and us.
Each party will pay its own appraiser and bear the other expenses of the appraisal and umpire equally.

The attorney who assumed Poteet’s representation and filed the suit for damages against Farmers represented her throughout the case–including the summary judgment proceedings in which she did not prevail, the appeal to this court in which she did not prevail with the exception of the claim for breach of the appraisal provision, the petition to the supreme court that was denied, the jury trial regarding her claimed damages as a result of that breach, and this appeal–testified at trial that his fees for the entire litigation totaled $401,144.00. He segregated out fees for “things that we could not receive attorney’s fees for,” in the amount of $53, 493.00. But the only fees segregated out were for the portion of the suit against the Kaisers. The remainder was $347,651.00. Then, he “further segregated this thing so that everybody will understand how much we have spent for this particular case, the appraisal process.” This amount, $243,355.70, was precisely seventy percent of the remainder.
The Texas Supreme Court has reaffirmed the rule that if any portion of an attorney’s fees relates solely to a claim for which fees are unrecoverable, the claimant “must segregate recoverable from unrecoverable fees. Parties seeking attorney’s fees under Texas law ‘have always been required to segregate fees between claims for which they are recoverable and claims for which they are not.
The exhibit showing Poteet’s attorney’s fees does not indicate that the fees have been segregated between those incurred for recoverable and non-recoverable claims. There is merely an estimate at the bottom of the exhibit that seventy percent of the fees are recoverable. The exhibit itself is full of charges for non-recoverable fees for claims involving the Kaiser co-defendants and for claims against Farmers on which Poteet did not prevail, including the first round of summary judgment motions, preparations for trial in 2006, appellate work that preceded the first appellate court decision, and appellate work seeking reconsideration and supreme court review.
An attorney can provide a rough estimate of the percentage of time necessarily spent on a claim that was part of the overall lawsuit. But here, Poteet’s attorney made his “rough estimate” by lumping together hundreds of hours spent working to recover damages that Farmers had no duty to pay. Most significantly, there is no estimate of the reasonable and necessary fees incurred in pursuing the sole claim that survived the first appeal of this lawsuit.
The Texas Supreme Court has added that the degree of the plaintiff’s overall success goes to the reasonableness of a fee award, and the most critical factor in determining the reasonableness of a fee award is the degree of success obtained.
Poteet failed to segregate her attorney’s fees related to the alleged breach of the appraisal provision from those fees incurred in pursuit of the claims upon which she did not prevail in the prior appeal from the summary judgment and the claims upon which we have held that damages are not recoverable on this appeal. However, her failure to segregate her attorney’s fees does not mean she cannot recover any fees at all. Unsegregated attorney’s fees for the entire case are some evidence of what the segregated amount should be. And a remand is required for a separate but equally important reason. Because this court has held that the trial court erred in failing to disregard jury findings of damages totaling $31,300.00, the award of attorney’s fees must be redetermined for that reason as well.

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