Case Title: Running M Farms, Inc. and S&K Company, Inc. v. Farm Bureau Mutual Insurance Company of Arkansas, Inc.

Citation: 

Docket Number: 07-212

State: arkansas

Court: Arkansas Supreme Court

Date: 2007-10-25T00:00:00Z

Document:
SUPREME COURT OF ARKANSAS,
No. 07-212

 
   
  
  
   
 
 
  
 

RUNNING M FARMS, INC. AND S&K
COMPANY, INC.,

pinion Datvered Osuber 28, 2007

AN APPEAL FROM THE CIRCUIT
COURT OF MILLER COUNTY,
ARKANSAS, NO, CV-03-230-3,
HONORABLE KIRK D. JOHNSON,
CIRCUIT JUDGE

APPELLANTS,

vs.

FARM BUREAU MUTUAL
INSURANCE COMPANY OF
ARKANSAS, INC.

APPELLEE ,

TOM GLAZE, Associate Justice

“This cas isthe third appeal arising from a lawauit over a crop-hail insurance policy.
See Farm Bur, Mut, Ins. Co, v. Ruiing M Farms, 366 Ark. 480, _S.W.3d__ (2006), and
Far Bur. Mut, Ins, Co v. Running M Farms, 348 Ark. 313, 72S.W-3d 502 2002). At issue
in he instant appeal isthe trial cours award of attorney's Fes to counsel for che appellans,
Running M Farms and S&eK Company, Inc. (collectively referred to as “Rsnning M").

In March of 1997, Running M purchased crop-hailinsurance from the appellee in thi
case, Farm Bureau Mutual Insurance Co. (“Farm Bureau"), In Apri of 1997, Running M's
young wheat crop was badly damaged by a hail storm. However, when Running M Sled a
claim under its crop-hil policy with Farm Bureau, the insurance company iniilly denied
coverage, Afra reinspection ofthe crops, Farm Bureau offered to sete the matter for

$6,900. Running M declined the offer and filed suit, alleging that Farm Bureau had breached

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its contract and caused damages inthe amount of $124,000 to both farms. See Farm Bur. Mut
Ins. Co, v, Running M Farms, 348 Ark. 313, 72 S.W.3d $02 (2002) (Running M 1).

Running M filed several amended complaints during the course of this litigation,
aiding various claims for extra-contractual damages, fraud, bad th, and tortious interference
with a business expectancy. The case was originally scheduled to go to trial on August 23,
1999, but after Farm Bureau filed a pleading entitled “Confession of Judgment,” admitting
liability under the insurance policy in the amount of $76,000, the matter was continued, and
anew tral was scheduled for June of 2000. Running M 1, 348 Ark. at 316, 72.W.3d 2t $04.

Farm Bureau subsequently fled a motion to withdraw its confession of judgment on
the basis thatthe parties were in dispute regarding the effect of the confession and that it was
not possible to avoid a tial. The trial court granted Farm Bureau's request, and the ease
proceeded to trial on June 22, 2000. ‘The jury, however, was unable to reach a verdict, and
the trial court declared a mistrial. Following the mistrial, Farm Bureau filed a motion for
judgment notwithstanding the verdict. The trial court denied Farm Bureau's motion, and
Farm Bureau appealed. Running M 1, 348 Ark, at 316-17, 72 8.W.3d at 504-05. On appeal,
however, this court determined that the trial cour’s denial of Farm Bureau's motion for
NOV was not a final, appealable order. Id. at 321-22, 72 S.W.3d at 508.

Afier the mistrial and the first appeal, Farm Bureau again confessed judgment of
$76,500, Farm Bureau Ins. Co. v. Running M Farms, 366 Ark, 480, 484, _S.W.3d__,__
(2006) (Running M 1). A second tial took place in 2004, and the jury, on special

interrogatories, found in Running M's fvor on both its contract and tort claims. The trial

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‘court awarded Running M the contract damages previously confessed by Farm Bureau, 38
‘well as the damages assessed by the jury on the tort claims. However, the court declined to
award Running itsattomey’s fees orthe statutory 12% penalty pursuant to Ark. Code Ann,
§ 23-79-208 (Repl. 2005). Id at 484, _S.W.3d at __.

Farm Bureau appealed, and this court reversed the jury's verdicts on Running M's tort
claims, Running M also eross-appealed, arguing that the trial court erred in declining to
award attomey's fees. This court agreed, holding that “the attomey’s fee and penalty attaches
ifthe insured is required to file suit, even though judgment is confessed before tial. A good
faith denial of liability is no defense to the claim for attomey’s fee and penalty.” Id. at 495,
—_S.W.3d at __ (citing Equitable Life Assurance Society v. Gordy, 228 Ark. 643, 647, 309
‘S.W.2d 330, 333 (1958)). ‘Thus, this court held that Running M was entitled to the 12%
penalty and reasonable attorney's fes, and we reversed and remanded forthe circuit court to
award 2 12% penalty based on the confessed judgment for breach of contract and to determine
reasonable attomey’s fees. Id

‘The case then returned to the circuit court, and the circuit court entered an order on
February 5, 2007, In that order, the court noted that, on August 17, 1999, Farm Bureau
confessed judgment on the plaintiff claim for contract damages. Pursuant to the confession
of judgment, the court awarded Running M Farms judgment in the amount of $45,000
against Farm Bureau for contract damages; $16,800 for attorney's fes related to the contract
claim; $5,400 forthe 12% penalty pursuant to Ark. Code Ann, §23-79-208; and prejudgment

interest in the amount of $5,520.40 for the time period from August 1, 1997, until August 17,

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1999, the date on which Farm Bureau confessed judgment. The court also awarded S&K
‘Company $31,500 in contract damages; $11,760 in attorney's fees; $3,780 for the 12%
penalty; and prejudgment interest of $3,864.28.

In awarding fees, the court, citing Phelps v. U.S. Credit Life Ins. Co., 340 Ark. 439, 10
S.W.3d 854 (2000), noted that the fee provided for in Ark. Code Ann. § 23-79-208 was
allowed only to reimburse an insurance policyholder or beneficiary for expenses incurred in
enforcing the contract and to compensate him in engaging counsel thoroughly competent to
protect his interest, The court also noted that it was basing its decision as to a “reasonable”
fee on the factors set out in Phelps, supra. Running M filed a timely notice of appeal, and now
‘urges that the tral court erred in its award of attorney's fees.

In its Gist argument on appeal, Running M contends thatthe tral court ersed in
awarding attorney's fees based on a percentage of the plaintiffs’ recovery, as opposed to an
award based upon the number of hours worked by counsel and legal staff. Running M and
its attomeys, the Texarkana law firm of Crisp, Jondan & Boyd, L.L-P., had a contingency fee
agreement whereby counsel would receive anywhere ffom one-third to one-half of the
amount recovered by the plaintiff, depending on whether the matter went to tral or not,

‘Our court has held that attomeys’ fees are not allowed except where expressly
provided for by statute. Harris v, City of Fort Smith, 366 Ark. 277, _S.W.3d (2006);
Chris w, Sun Indus.,304 Ark, 227, 800 S.W.2d 717 (1990). An award of attorney's fees will
not be set aside absent an abuse of discretion by the trial court. Hanis, supra. Given the tral

judge's close familiarity with the trial proceedings and the quality of service rendered by the

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prevailing party’s counsel, appellate courts usually recognize the superior perspective of the
trial judge in determining whether to award attorney's fees. See FMC Corp. v. Helton, 360
‘Ark, 465, 202 S.W.3d 490 (2005); Chris, supra.

‘Arkansas Code Annotated § 23-79-208(a)(1) (Repl. 2004) provides for attorney's fees
in insurance eases as follows:

In all cases in which loss occurs and the . . . insurance company . .

liable therefor shall fail to pay the losses within the time specified in the policy

after demand is made, the person, firm, corporation, or association shall be

Tiable to pay the holder of the policy or his or her assigns, in addition to the

amount of the loss, twelve percent (12%) damages upon the amount of the loss,

together with all reasonable attomey's fees for the prosecution and collection

of the los
‘This court has interpreted § 23-79-208 a providing that “Jn the event an insurer wrongfilly
refuses to pay benefits under an insurance policy, the insured may recover the overdue
benefits, twelve percent (12%) damages upon the amount ofthe loss, and reasonable attorneys’
fees.” Phelps v. U.S. Credit Life ns. Co., 340 Ark. at 442, 10 S.W.3d at 856 (quoting
[Novtiwestem Nat Life Ins. Co. v. Heslip, 309 Ark. 319, 326-27, 832 8.W.2d 463, 467 (1992).

Morcover, our court has held that the reasonableness ofthe attorney's fee is determined
by examining the following factors: (1) the experience and ability ofthe attorney; (2) the time
and labor required to perform the service properly; (3) the amount in controversy and the
result obtained in the case; (4) the novelty and difficulty of the issues involved: (5) the fee
customarily charged for similar services in the local area; (6) whether the fee is fixed or

contingent; (7) the time limitations imposed upon the client in the circumstances; and (8) the

likelihood, if apparent to the client, that the acceptance of the particular employment will

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preclude other employment by the attorney. Newrourt Financial v. Canal Ins. Co. 341 Ark.
452, 17 S.W.34 83 (2000); Southall ». Farm Bureau Mut, Ins. Co, of Ark, 283 Atk, 335, 676
S.W.24 228 (1984). While courts should be guided by the foregoing factors, there is no fixed
formula in determining the reasonableness of an award of attomey’s fees. See Neweourt
Financial, supra; Shepherd v. State Auto Prop. & Cas. Ins. Co., 312 Atk, 502, 850 S.W.2d 324
(1993).

‘On appeal, Running M argues that the trial court erred in awarding fees on a
contingency basis, citing Equitable Life Assurance Society ofthe United States v. Rummell, 257
‘Ark, 90, 514 S,W.2d 224 (1974), for the proposition that “reasonable attorney's fees” should
not be contingent on the outcome of the case. Running M also cites Fuller. Harford Life
Insurance Co,, 281 F.3d 704 (8 Cir, 2002) (interpreting Ark. Code Ann. § 23-79-208), in
‘which che Eighth Circuit awarded attomey’s fees totaling $125,000 on a plaintiff's award of
$500,000. The attorney in Fuller had submitted two affidavits: the frst one set out an hourly

tate of $350 for an estimated 250-300 hours worked on the case, plus additional hours by an

 

associate attorney and a paralegal; the second affidavit set forth the contingent fee agreement
whereby the expected fee would be one-third of the $500,000 insurance policy limits. ‘The
Eighth Circuit affirmed the district court's award of $125,000 (although it noted the award
was “very generous”), concluding that the trial court had properly taken into account the
appropriate factors to consider in determining the reasonableness of the attorney's fees

pursuant to § 23-79-208. Fuller, 281 F.3d at 708-09 (citing Shepherd v. State Auto Prop. &

as, Ins. Coy 312 Atk. 502, 850 S.W.2d 324 (1993)). Running M urges that, based on the

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Fuller ase, even where there might be a fixed contingency fee agreement, the court should
still consider all cight fictors when determining a reasonable attomey’s fee

As mentioned above, Running M and its counsel had a contingency-fee agreement for
attomey’s fees. On appeal, Running M farther asserts thatthe trial court effectively viewed
that contingency-fee contract as an “absolute ceiling on the attorney's fees to be awarded.”
Here, i cites Blanchard v, Bergeon, 489 U.S. 87 (1988), in which the Supreme Court held that
the existence of a contingency-fee agreement should not serve as a cap on reasonable
aromey’s fees. However, Blanchard involved a suit brought pursuant to 42 U.S.C. § 1983,
‘The central theme of the Court’ opinion was that ivi-rights cases fequently involve non-
‘monetary compensation, and to limit attomey’s fees solely to a percentage of the monetary
awards recovered might put undue pressure on counsel to pursue money damages and to
forego “important civil and constitutional rights that cannot be valued solely in monetary
terms.” Blanchard, 489 US. at 95.

‘The policy concems that are present in a civil-rights action are simply not present in
a case such a the one at hand. Ths, Running M's reliance on this and other eivil-rghts cases
is inapposite. Contrary to the Supreme Court's reluctance to impose a cap in civil-rights
‘cases, this court has held that, in insurance eases involving § 23-79-208, “the fee awarded
should not exceed the amoune that che client is responsible for paying, otherwise the statute
‘would be susceptible to abuse.” Phelps, 340 Ark. at 443, 10 S.W.3d at 857, While our court
has stated that the existence of a contingency fee is but one of the factors forthe tral court

to consider, se id, there is no indication in the trial court’s decision thatthe existence of the

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contingency-fee agreement dominated over the other factors or that the court viewed the
contingeney-fee agreement as a “eap” on the amount it could award. Indeed, the court
explicitly stated that it found the fee awarded to be reasonable based on a consideration of
all ofthe cight factors.

Other than the number of hours worked on the case, Running M does not specifically
point to any other fictor that it claims would support a larger attorney's fee. However,
among the factors to consider are the time required to perform the service properly, s well
as the amount in controversy and the result obtained in the case. We note that the only issue
fon which Running M ultimately prevailed was the contract damages. Running M_ was
awarded $76,500 in contract damages — the same amount for which Farm Bureaus confessed
Judgment, Had Running M accepted this confession of judgment and settlement, it would
have avoided much of the time and expense involved in this case. While we certainly
understand that many factors must have gone into counsel’s decision to pursue the matter
through mull trials and appeals, we nonetheless cannot say that the tral court abused its
discretion in its determination of what constituted a “reasonable” attorney's fee.

In its second point on appeal, Running M argues that, assuming the tial court based
itsaward of attorney's fees on the existence of the contingency-fee agreement, then the court
crred in only awarding one-third of the recovery in attorney's fees. Running M points to the
fee agreement, which provides that, in the event the matter is not settled until affer the

completion of a trial, counsel would be entitled to receive fifty pereent of the amount

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recovered, Because this case went to trial twice, Running M argues that tis entitled to a fifty
percent attomey’s fee.

However, as noted above, there is nothing in the trial court’s order that indicates that
the court was guided solely by the contingency-fee agreement. Instead, the court determined
that the amount of the attorney's fee was reasonable based on all eight of the factors
enumerated by this court in countless cases, Because the trial court did not award the
attorney's fee on the basis ofthe contingeney-fee contract, there is no merit to Running M's
contention that it should have been awarded the fifty-percent fee provided for in the
agreement.

Finally, Running M argues that the trial court erred in its calculation of prejudgment
interest. ‘The trial court awarded prejudgment interest for the time period from August 1,
1997, until August 17, 1999, the date on which Farm Bureau frst confessed judgment. On
appeal, however, Running M argues that the tial court should have awarded additional
prejudgment interest for the time from June 11, 2000, until January 22, 2004, which
represents the time from the date on which the trial court allowed Farm Bureau to withdraw
its confession of judgment until the date on which the confession of judgment was reinstated
following the remand after the fist appeal. Running M argues that it is entiled to this
additional amount of prejudgment interest because it did not concede to Farm Bureau's
‘withdrawal of its confession of judgment, and therefore did not waive its claim for these

additional prejudgment interest amount

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rejudgment interest is compensation for recoverable damages wrongfully withheld
from the time of the loss until judgment. Reynolds Health Care Servs, Inc. HMINH, Inc, 364
‘Ark, 168, 217 S.W.3d 797 (2005); Perkins v. Cedar Mountain Sewer Improvement Dist, 360
‘Ark, 50, 199 S.W.34 667 (2004). Thus, in determining whether Running M is entitled to
the additional prejudgment interes it claims, the first question to be addressed is whether it
‘was entitled to recover damages that were “wrongfully withheld” from the time of the los
until judgment. See Reynolds Health Care, supra. Here, the trial court found that, based on
Farm Bureau’s confession of judgment, the insurer owed Running M the $76,500 that it
confessed. However, the question is whether, in withdrawing its confession of judgment,
Farm Bureau “wrongfilly withheld” those monies.

Farm Bureau's motion to withdraw its confession appeats neither inthe record nor in
the Addendum before us. Therefor, itis unclear why the insurer withdrew its confession of
judgment. The only mention of Farm Bureau’s reasons is found in Running M I, where this,
court noted that Farm Bureau “subsequently filed a motion to withdraw its confession of
Jjudgment on the basis thatthe parties were in dispute regarding the effect ofthe confession
and that it was not possible to avoid atrial.” Running M I, 348 Ark. at 316-17, 72.S.W.3d
at 504-06.

In its brief, Running M offers no proof or argument that Farm Bureau's withdrawal
ofits confesion of judgment was wrongful it asserts only that it “did not concede to the
withdrawal of the confession of judgment.” Moreover, it cites to no authority that would

suppor this court’s drawing ofan inference that the withdrawal was in any way wrongful

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Iisa well-setled principle of appellate law that we will not make a party’s argument for him.
See Kinchen v. Wilkins, 367 Ark. 71, S.W.3d__ (2006); Arkansas Dep't of Human Sens.
+. Schroder, 353 Ark. 885, 122 S.W.3d 10 (2003). Accordingly, we conclude that Running
‘Mis not entitled to reversal on this issue.

Affirmed.

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