Recovery Of Attorney Fees In Insurance Cases – Winning

Insurance lawyers want to help their clients as much as possible in any given case.  The U.S. District Court, Western District of Texas, San Antonio Division, issued an opinion regarding recovery of attorney fees in an insurance case.  The opinion is a 2018, opinion styled, Jesus and Margaret Agredano v. State Farm Lloyd’s.

This case will be discussed in three blogs with each blog discussing the Courts ruling regarding attorney fees in insurance cases.  This is the third blog.

The Agredanos prevailed at trial on their breach of contract claim against State Farm.  The remaining question was whether or not they were entitled to seek and recover attorney’s fees.

Texas law is clear that attorney’s fees are recoverable as a cost of collection only if authorized by statute or contract.  Neither party contends that the contract at issue in this case provided for the recovery of attorney’s fees.  Therefore, the Agredanos can only recover attorney’s fees if a statute authorizes collecting those attorney’s fees.

In this case, the Court appeared to want to help the Agredano’s.  Initially, the claim for attorney fees was shot down by the Court under Chapter 38 of the Texas Practice & Remedies Code and under Section 542.060 of the Texas Insurance Code.

The court asked the question whether failing under the above assertions did the Agredano’s waive attorney fees and interest.

The Court answered its own question by referring to Federal Rules of Civil Procedure 54(c) which states in relevant part, every non-default judgement should grant relief to which each party is entitled, even if the party has not demanded relief in its pleadings.  This case involves a non-default judgment.  So if the fees and interest provided for in Section 542.060 may be characterized as “relief” and if the Agredanos are entitled to that relief, then they may receive those fees and that interest despite not demanding them in their pleadings.

Texas Courts do recognize that fees and interest provided for in Section 542.060 are properly characterized as “relief.”  This is further supported by Fifth Circuit opinion.  Therefore, Rule 54(c) requires that statutory interest and attorney fees be awarded where appropriate regardless of whether the pleadings demanded them.

The statutory interest and attorney’s fees provided for by Section 542.060 are automatic penalties that apply when an insurer fails to pay a claim within the period allowed.  Therefore, Section 542.060 provides “relief” to a plaintiff.  And because the Agredanos satisfy all of Section 542.060’s substantive requirements, they are entitled to that relief. Therefore, under Rule 54(c), the final judgment in the Agredanos favor should grant that relief to them despite their failure to demand it in their pleadings.  In the end, State Farm took a risk when it chose to reject the Agredanos claim.  State Farm lost when it was found liable for breach of contract.  Therefore, it must pay this 18 percent per annum interest and reasonable attorneys’ fees.