Opinion ID: 1676660
Heading Depth: 1
Heading Rank: 6

Heading: Attorney's Fees and Statutory Penalty

Text: For its last point, Farm Bureau argues that the trial court erred in awarding attorney's fees and a twelve-percent penalty to the Footes, pursuant to Ark. Code Ann. § 23-79-208 (Repl.1999). Subsection (a)(1) provides that in all cases where loss occurs, and the insurance company fails to pay the losses within the time specified in the policy after demand has been made, the insurance company shall be liable to pay the holder of the policy or his assigns, in addition to the amount of the loss, twelve percent (12%) damages upon the amount of the loss, together with all reasonable attorney's fees for the prosecution and collection of the loss. Subsection (d) provides that the right to recover the twelve-percent penalty is conditioned upon the amount recovered for the loss being within twenty percent of the amount demanded or sought in the suit. Farm Bureau asserts that because the Footes sought their policy limits in their complaint and because the judgment recovered by them was set off by the monies paid to the banks for the mortgage and the lien on the vehicle, the Footes did not recover within twenty percent of the amount demanded. This assertion is erroneous under this court's decision in Farmers Mut. Ins. Co. v. Lane, 278 Ark. 53, 643 S.W.2d 544 (1982). There, this court held that [i]t does not matter whether the actual payment under the policy is made to the insured or to the loss payee in order for the insureds to be entitled to the statutory penalty and attorneys' fees when payment by the [insurance] Company is late. Id. at 56, 643 S.W.2d at 546 (citing Farm Bureau Mut. Ins. Co. v. Shaw, 269 Ark. 757, 600 S.W.2d 432 (Ark.App. 1980)). Likewise, in Shaw, 269 Ark. at 758, 600 S.W.2d at 433, the court of appeals held that the statutory penalty and attorney's fees applies regardless whether the late payment is made to the insured or insured's mortgagee. Accordingly, we find no merit to Farm Bureau's argument on this point, and we affirm. THORNTON, J., not participating.