Source: https://www.insurancelawhawaii.com/insurance_law_hawaii/attorneys_fees/
Timestamp: 2019-04-22 09:57:26+00:00

Document:
The court determined that the non-participating insurer must reimburse the insurer who defended. Steadfast Ins. Co. v. Greenwich Ins. Co., 2019 Wisc. LEXIS 9 (Wis. Jan. 25, 2019).
Historic rains hit Milwaukee in June 2008, overwhelming the Milwaukee Metropolitan Sewage District's (MMSD) sewage system. Raw sewage backed up into 8,000 homes. Lawsuits were filed against MMSD and two companies who MMSD contracted with the operate and maintain the sewage system, Veolia Water Milwaukee and United Water Services Milwaukee.
MMSD's Operating Agreement with United Water required United Water to maintain comprehensive liability insurance, naming MMSD as an additional insured. United Water secured a policy with Greenwich Insurance Company, with the last policy period beginning July 24, 2007 and ending July 24, 2008. The policy named MMSD as an additional insured United Water maintained that it last provided services to MMSD on February 29, 2008.
Beginning on March 2, 2008, and continuing through the June 2008 heavy rains, MMSD contracted with Veolia to operate the sewage system. Veolia had liability insurance with Steadfast Insurance Company naming MMSD as an additional insured.
MMSD tendered the lawsuits to both Steadfast and Greenwich The lawsuits were settled without MMSD paying any damages. Steadfast reimbursed MMSD for $1.55 million in defense costs. Greenwich refused to contribute to the defense because its policy ended before the June 2008 rains. Greenwich relied on its "other insurance" clause to argue that its policy was excess to Steadfast's policy.
Steadfast sued Greenwich to recover the $1.55 million in defense costs it paid to MMSD. The circuit court granted summary judgment to Steadfast, awarding the entire amount Steadfast paid MMSD, as well as $25,000 in attorney fees that Steadfast incurred in bringing the lawsuit. The court of appeals affirmed.
Further, Greenwich's policy provided potential coverage for a claim made in the lawsuits based on sewage backups. Therefore, Greenwich breached its duty to defend, and was responsible for all damages that naturally flowed from the breach.
The court also held that Steadfast was not entitled to full reimbursement of defense costs, but the defense costs should be allocated between Steadfast and Greenwich. The court adopted the pro rata allocation method to apportion the defense costs based on the insurers' policy limits.
Finally, Steadfast was entitled to recover attorney fees from Greenwich under contractual subrogation. Because Greenwich breached its duty to defend, MMSD had the right to request fees for successfully establishing Greenwich's obligation to defend. Because MMSD's rights of recovery against Greenwich would include attorney fees incurred in successfully establishing coverage, Steadfast was entitled to recover $325,000 in fees from Greenwich as MMSD's subrogee.
The Eighth Circuit affirmed the district court's judgment that the insurer acted in bad faith when it denied the insured's claim based upon misrepresentations in the application after destruction of his house by fire. Hayes v. Metropolitan Pro. and Cas. Ins. Co., 2018 U.S. App. LEXIS 31813 (8th Cir. Nov. 9, 2018).
Hayes' home was insured by Met under a homeowner's policy. Hayes used the detached garage as part of a home base for his plumbing business. He also rented out the second and third levels of the residence to a tenant and her two children. When Hayes applied for the policy in 2007, Met argues he indicated on the application that the premises were not used to conduct business, and were not used as rental property.
The application, however, was a confusing document. Hayes testified that he did not recall personally completing the application in 2007, that he worked with an independent insurance agent when it was filled out, and it was signed with his signature stamp used by his sister. With regard to the tenants, the form asked whether "the residence was held exclusively for rental?" The pre-printed "x" was marked out next to the letter "N" in answer to the question. Regarding the business, the form asked whether "any farming or other business was conducted on the premises?" Again, a box indicating "no" was marked with a preprinted x. Hayes testified that while he did maintain some plumbing supplies at the property, very little of the plumbing equipment was located in the detached garage due to limited space. Further, he had a separate commercial business policy to cover the plumbing business in the detached garage.
On January 24, 2013, the home was destroyed by a fire. Hayes filed a claim with Met. Met made a notation as of January 28, 2013 that it believed the fire was intentionally set. By January 29, 2013, Met knew that Hayes was operating part of his business at the detached garage near the premises, and that he leased the upper portion of the premises to tenants.
Yet, Met did not deny the claim until August 5, 2014. It cancelled the policy ab initio based upon material misrepresentations, and enclosed a check for all premiums Hayes had paid, with interest. Hayes returned the premium check. Met also sent a check to Hayes' bank for $127,342.97 to satisfy the balance due on Hayes's mortgage.
Hayes sued Met in October 2014 for breach of contract and bad faith denial/investigation. The district court dismissed the breach of contract claim as time-barred. The court, however, entered judgment in favor of Hayes on the bad faith claim. The court found that the insurance application was completed by the independent insurance agent and signature stamped by Hayes's sister. Further, the application contained ambiguous questions. Accordingly, there was a lack of evidence that Hayes knowingly provided false answers on the application with the intent to deceive. Damages in the amount of $439,455, and attorneys' fees of $86,160 were awarded to Hayes.
The Eighth Circuit affirmed. Met could not insulate itself from a bad faith claim by creating the fiction that a contrct never existed by voiding or rescinding it "ab initio." Hayes met his burden of proving the elements of bad faith under Nebraska law - Met had no reasonable basis for denying the claim and did so with knowledge or with reckless disregard of that fact.
The damage award was affirmed. The district court properly calculated the economic damages Hayes suffered as a result of Met's bad faith refusal to pay pursuant to the provisions of the improperly rescinded contract. Finally, the attorneys' fees award was also affirmed.
The trial court's use of a multiplier in awarding fees to the insured was affirmed by the Florida Court of Appeal. Citizens Prop. Ins. Corp. v. Laguerre, 2018 Fla. App. LEXIS 11794 (Fla. Ct. App. Aug. 22, 2018).
Following Hurricane Wilma, the insured made a claim for wind damage to her insurer, Citizens. Citizens investigated the claim and paid $8,400.77. The insured then demanded an appraisal and submitted an appraisal estimate in the amount of $60,256.79. There was no response to the appraisal demand.
The insured filed suit against Citizens alleging it breached the insurance policy by failing to participate in the appraisal process. Two motions for summary judgment filed by Citizens were denied. The insured's motion to compel appraisal was granted. The appraisal umpire issued an award in the amount of $27,367.63.
Citizens agreed that the insured was entitled to attorneys' fees under the state statute. A hearing was conducted on the issue of the lodestar amount and whether a multiplier was justified. The insured presented the expert testimony of Roniel Rodriguez, who testified that these types of cases had become very difficult. He stated, "Insureds have a difficult time finding qualified and capable lawyers because of the risk that's involved." Rodriguez testified that a multiplier of 1.6 or 1.7 would be appropriate in this type of case. Citizens cross-examined Rodriguez only with regard to his testimony on the reasonableness of the hourly rate sought by the insured's attorney.
Citizens' expert, Dawn Jayma, testified that the insured's attorneys had thousands of similar cases and that this was not a complex case that warranted a multiplier. The trial court applied an hourly rate of $325.00 and found that a reasonable number of hours expended on the case was 185. The trial court also applied a 2.0 multiplier, determining that a fee multiplier was necessary to obtain competent counsel. After applying the 2.0 multiplier to the lodestar amount, the trial court awarded $120,250.00 in attorneys' fees.
On appeal, Citizens argued the 2.0 multiplier was not warranted because: (1) there was no evidence the insured had difficulty obtaining competent counsel; (2) the results obtained did not warrant a multiplier; and (3) the complexity of the issues could not be a basis for awarding a multiplier.The appellate court affirmed the trial court's award of the multiplier. The court found the testimony of Rodriguez regarding the multiplier persuasive. This testimony was unchallenged by Citizens. Therefore, the trial court did not abuse its discretion in applying the multiplier.
The Federal District Court, District of Hawaii, overruled the insured's objections to the Magistrate Judge's Findings and Recommendations awarding partial fees. Hanover Ins. Co. v. Anova Food, LLC, 2018 U.S. Dist. LEIXS 11493 (D. Haw. Jan. 24, 2018).
A prior post set forth the background of the case. In a prior opinion, the court denied pre-tender defense fees to the insured, but found there were genuine issues of material fact regarding post-tender fees.
Subsequently, Anova filed another motion for its post-tender fees. The Magistrate Judge recommended that Anova be awarded $126,321.59 in attorneys' fees and $9,930.49 in costs. Anova filed an Objection to the Magistrate Judge's Findings and Recommendations, seeking a total of $539,077.78 in fees and costs.
Florida law applied. A Florida statute provided that after judgment against an insurer, the trial court was to award against the insurer and in favor or the insured a reasonable sum of fees for prosecuting the suit in which recovery was had. Earlier in the case, the court had found that Hanover had a duty to defend Anova in the underlying case and that Hanover had breached its contract with Anova. The court denied, however, Anova's counterclaim for bad faith.
Now, Anova objected to the reduced award of fees and costs recommended by the Magistrate Judge. The Florida statute also provided that the attorneys' fees awarded to the prevailing party should be reduced if its success was limited. Although Anova prevailed on the issue of providing a defense, the period of time for which Anova was entitled to a defense was limited to post-tender fees. Further, Anova was not awarded a substantial portion of the fees it sought in the underlying litigation. Anova was also unsuccessful on its claim seeking to recoup the money it contributed to the settlement of the underlying lawsuit. Finally, Anova did not prevail on its counterclaim for bad faith.
The Findings and Recommendations also identified that Anova was responsible for increasing its own attorneys fees. Anova devoted numerous hours to repeating unsuccessful arguments and seeking reconsideration of issues after the District Court had ruled. The court also agreed with the reduction of the lodestar by 50% recommended by the Magistrate Judge considering the relationship between the fee requested and the extent of Anova's success in the action.
Consequently, the Objections to the Findings and Recommendations were overruled.
The Hawaii Intermediate Court of Appeals overturned an award of attorney fees in a declaratory relief action filed by the insurer. See Allstate Ins. Co. v. Silva, 2010 Haw. App. LEXIS 806 (Haw. Ct. App. Dec. 9, 2010).
Silva was injured on his motorcycle when struck by an auto driven by Ponce. Silva sued Ponce for negligence and requested, among other relief, reasonable attorney fees. Ponce defaulted. Silva wrote to Ponce's auto insurer, Allstate, requesting its position on the matter.
Allstate filed an action for declaratory relief, seeking to establish that neither Ponce nor Silva were entitled to coverage. The Circuit Court granted declaratory relief to Allstate. The Hawaii Supreme Court vacated the Circuit Court's decision, holding that Allstate had a duty to defend and/or indemnify under the policy. Allstate then paid $25,000 to Silva, the policy limits for bodily injury.
Two years later, Silva filed a motion for entry of judgment and attorney fees. Allstate opposed the motion, arguing the case was moot because policy limits had been paid. Further, Allstate argued attorney fees were unavailable under Haw. Rev. Stat. 607-14 because its declaratory relief action was not in the nature of assumpsit, as required by the assumpsit fee statute.
Nevertheless, the Circuit Court granted the request for Entry of Judgment and Silva's request for fees under Haw. Rev. Stat. 607-14. Ponce had assigned to Silva all claims for relief Ponce had against Allstate, including a breach of contract claim based on Allstate's initial failure to pay the liability claim.
The ICA vacated the judgment and award of fees. Allstate only sought a declaration as to its rights or responsibilities as the insurer, not money damages. Thus, its declaratory relief action was not in the nature of assumpsit and the Circuit Court erred in awarding fees to Silva under Haw. Rev. Stat. 607-14.
The insured was injured in an auto accident on the Big Island on March 26, 1998. See First Ins. Co. of Hawaii, Ltd. v. Dayoan, Sr., 2010 Haw. App. LEXIS 697 (Haw. Ct. App. Nov. 18, 2010). He was covered by a Personal Auto Policy issued in February 1998 by First Insurance. The policy provided coverage for wage loss to any insured who suffered "bodily injury" which prevented the insured from engaging in his employment.
The accident left the insured disabled and unable to engage in his usual occupation as a kitchen helper/dishwasher. He was sixty years old at the time of the accident. First extended coverage and in a letter dated April 3, 1998, explained that that the policy included optional wage loss benefits that would terminate upon the insured's death. First commenced to pay $1500 in month wage loss benefits pursuant to the policy.
After paying wage loss benefits for almost seven years, First filed for declaratory relief on April 21, 2005, seeking a judgment that it was no longer obligated to extend wage loss benefits to the insured, now sixty-eight years old. The complaint was based on amendments to the Hawaii Insurance Code in 1997 and 1998.
The purpose of the 1997 Amendments was to reduce motor vehicle insurance premiums and to preserve adequate protection of drivers' rights. Costly mandatory coverage for wage loss was converted to optional coverage. The 1997 Amendments became effective on January 1,1998, after the insured's accident. In 1998, further amendments were made by reducing the wage loss benefit option and permitting wage loss caps per accident. The 1998 Amendments continued to permit insurers to offer higher wage loss coverage limits for a higher premium.
First moved for summary judgment, arguing the 1998 Amendments capped the amount of wage loss benefits to which insureds were entitled. First argued that although the amendments were enacted subsequent to the accident, they clarified the legislature's intent in adopting the 1997 Amendments, and thereby capped the insured's lifetime recovery for wage loss at $9,000. Otherwise, First argued, the statute was illogical because an insurer would have to continue paying benefits to an insured who was no longer able to work and would not have suffered any wage loss.
The Circuit Court denied First's motion for summary judgment and granted summary judgment to the insured. Further, attorney fees were awarded to the insured at the rate of $250 an hour. First appealed the ruling on summary judgment and the fee award.
The Intermediate Court of Appeals affirmed. Under both the 1997 Amendments and the policy, the insured was entitled to $1,500 per month in wage loss benefits. The fact that the legislature amended the statute in 1998 to allow wage loss benefit caps was not sufficient to establish that it meant to require the caps in 1997.
Further, the attorney fees award was appropriate. The statute allowed the insured to recover reasonable fees when the insured contested its liability under a policy and was ordered to pay benefits. Haw. Rev. Stat. 431:10-242. First sought declaratory relief establishing it was no longer responsible for paying the wage loss benefits. The Circuit Court denied relief and ordered that First had an obligation "to pay wage loss benefits." First further argued a rate of $250 an hour was unreasonable because the Insurance Commissioner had approved the rate of $125 per hour in an unrelated administrative proceeding. The Commissioner's decision did not preclude the Circuit Court from determining that $250 per hour was a more appropriate rate under different circumstances. Further, the insured provided evidence that $250 per hour was well within the prevailing rate for experienced attorneys in Hawaii.
By statute, Hawai`i allows a party who successfully sues the insurer for benefits to recover reasonable attorney fees. Haw. Rev. Stat. 431:10-242. In Riordan v. State Farm Mut. Auto. Ins. Co., No. 08-35874, 2009 U.S. App. LEXIS 26888 (9th Cir. Dec. 10, 2009), the court determined that Montana case law also allows the insured to recover fees after prevailing against the insurer for full benefits.
The insured was injured in a car accident, entirely the fault of the other driver. The insured had three State Farm automobile policies, which provided uninsured motorist ("UIM") coverage with limits of $50,000 per person and $100,000 per accident. Before suit was filed, State Farm paid $30,586.59 in UIM benefits.
The insured filed suit, contending State Farm was required to provide $150,000 of UIM coverage, the "stacked" total of UIM coverage under the three policies. Before answering the complaint, State Farm paid another $45,413.43, bringing the total UIM benefits paid to approximately $76,000 and leaving $74,000 in UIM benefits remaining under the policies' limits. Then, on the eve of trial, State Farm paid the remaining $74,000 in UIM benefits.
The insured then moved for attorney fees. The magistrate recommended that $30,759 be awarded in fees. The district court adopted the magistrate's recommendations. State Farm appealed.
The Ninth Circuit affirmed. Montana case law allowed the insured to recover attorney fees where the insurer forces the insured to sue to obtain full benefits. See Mountain W. Farm Bureau Mut. Ins. Co. v. Brewer, 69 P.3d 652, 660 (Mont. 2003). Here, State Farm unequivocally denied further liability to the insured and only settled on the eve of trial. This forced the insured to litigate to obtain the full benefits under the policy. Therefore, the insured was entitled to attorney fees under Montana case law.

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