Court Opinion

ID: 9691208
Source: CourtListenerOpinion
Date Created: 2023-08-24 20:16:44.767832+00
Date Added: 2024-06-11T18:19:12.956815
License: Public Domain

Annabelle Clinton Imber, Justice, dissenting. In reversing trial court's award of attorneys fees and penalty, the majority correctly notes that the amount Andrews recovered was within twenty percent of the amount she demanded, but then states that it “is of no significance in this case.” The plain language of Ark. Code Ann. § 23-79-208 (Repl. 2004) belies such a statement, and thus, I must dissent from that portion of the opinion. The plain language of section 23-79-208 mandates that an insurer pay damages and attorney’s fees when the insurer fails to timely pay the insured. Subsection (a)(1) provides that in all cases where loss occurs, and the insurance company fails to pay the loss within the time specified in the policy after a 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.” Ark. Code Ann. § 23-79-208(a)(l) (emphasis added). Subsection (d) provides that the right to recover the twelve-percent penalty applies so long as the amount recovered for the loss is within twenty percent of the amount demanded or sought in the suit. Ark. Code Ann. § 23-79-208(d) (emphasis added). In interpreting this statute, we have held that the attorney’s fees and penalties attach if the insured is required to file suit, even though judgment is confessed before trial. Federal Life & Casualty v. Weyer, 239 Ark. 663, 391 S.W.2d 22 (1965). The present case meets all the statutory requirements. Here, Andrews’s home sustained fire loss on March 5, 2003, and she proceeded with her claim immediately. On May 2, 2003, State Farm issued a check to Andrews for $33,903.84, which Andrews returned, demanding that she was owed the policy limits of $46,500. Two months later and four months after the fire, Andrews filed suit against' State Farm to recover for the loss. In its original answer, State Farm denied that the fire caused a total loss of the property and tendered a check to Andrews for $43,065.52. Andrews returned the check and continued to demand the policy limits of $46,500. Thereafter, State Farm amended its answer to deny all liability to Andrews, arguing that after the Wells Fargo foreclosure, she had no claim to any insurance proceeds. State Farm also pursued a motion for summary judgment on this ground. State Farm continued to dispute its liability to Andrews until the circuit court granted Andrews’s partial motion for summary judgment and ruled that she was entitled to the proceeds of the insurance policy. Only after the circuit court determined that State Farm was liable to Andrews did State Farm begin contesting the amount of the loss. Under these facts, it is clear that State Farm did not pay Andrews for her loss within the sixty-day time limit specified in Andrews’s policy. Furthermore, the jury awarded Andrews $43,065.52, which amount is within twenty percent of the $46,500 policy limits she demanded in her complaint. Ark. Code Ann. § 23-79-208(d). Thus, Andrews was entitled to receive the twelve percent penalty and attorney’s fees. In reversing the circuit court’s grant of the statutory penalty and attorney’s fees, the majority relies on language from our decision in National Std. Ins. Co. v. Westbrooks, 331 Ark. 445, 962 S.W.2d 355 (1998), but that case is not controlling. In Westbrook, we reversed a grant of the penalty and attorney’s fees where the insured did not recover within twenty percent of the amount sought in the suit. It was in this context that the court noted, “When the plaintiff demands an excessive amount he is in the wrong.” Id. at 449, 962 S.W.2d at 357. In light of the statutory language allowing a grant of the penalty and fees when the insured recovers within twenty percent of the amount sought in the suit, the clear import of the above-quoted phrase in Westbrook is that the amount an insured demands is considered “excessive” if the insured does not recover within twenty percent. However, if the insured does recover within twenty percent of the amount sought in the suit, as is the case here, the insured’s demand will not be considered unreasonable. In other words, under the plain language of the statute, the issue in the case is «oí whether the jury ultimately awarded what the defendant offered to pay; rather, the issue is whether the jury awarded within twenty percent of what the insured demanded in the lawsuit. If the answer to the latter question is in the affirmative, the demand will not be deemed unreasonable or excessive pursuant to the statute. The majority’s analysis erroneously implies that the insured must recover all of the amount sought in the suit in order for the demand to be reasonable. Notably, the law did require an insured to recover the entire amount sought for many years, but this harsh position was modified by statutory amendment to allow the insured to recover the penalty and attorney’s fees when the award is within twenty percent of the amount demanded or sought. Ark. Code Ann. § 23-79-208(d) (Supp. 1992). The majority’s analysis on this point effectively eviscerates the amendment. As State Farm did not pay Andrews for her losses within the time specified in the policy and Andrews subsequently recovered within twenty percent of the total amount sought in the suit, she is entitled to the twelve-percent penalty and reasonable attorney’s fees pursuant to Ark. Code Ann. § 23-79-208. Consequently, I would affirm the trial court on this point and respectfully dissent from that portion of the majority opinion.