As all insurance law lawyers know attorney fees in a first party insurance claim case are almost always recoverable. A 2007, Houston Court of Appeals [1st Dist.] case illustrates this. The style of the case is, Rosenblatt v. Freedom Life Insurance Company. Here is some of the relevant information from the case.
After sustaining injuries in an automobile accident, Rosenblatt asserted claims for healthcare benefits from Freedom Life. Rosenblatt sued Freedom Life, seeking damages for the company’s delays in investigating his claims and in paying him compensation.
The case was ultimately submitted to the jury on Rosenblatt’s common-law claim for bad faith and his claim that Freedom Life violated Section 541.060(a)(4)(A) of the Insurance Code and committed an unfair settlement practice by failing to affirm or deny coverage within a reasonable time.
The jury awarded Rosenblatt $10,000 in damages for future physical impairment and $20,000 for conduct committed knowingly. The jury awarded no damages for past and future mental anguish, physical pain, medical bills, and past physical impairment. In addition, and as challenged here, the jury awarded no (“zero”) damages, in response to a three-pronged question concerning attorneys’ fees, for trial, appeal to this Court, and appeal to the Supreme Court of Texas.
In his sole issue on appeal, Rosenblatt contends he is entitled to judgment as a matter of law for attorney fees because no evidence supports the jury’s failure to award any damages in response to the question concerning attorneys’ fees. Rosenblatt argued that the trial court was compelled to disregarded the jury’s zero findings and to render judgment for statutorily authorized attorneys’ fees of $500,000.
As the party seeking attorneys’ fees, who therefore carried the burden of proof, Rosenblatt must demonstrate on appeal that the evidence conclusively established all vital facts in support of his claim as a matter of law.
Well-settled law precludes awarding attorneys’ fees without statutory or contractual authority. Rosenblatt contends he is statutorily entitled to attorneys’ fees as a matter of law because he prevailed and recovered damages on his claim that Freedom Life violated the above Insurance Code section.
The express language of Section 541.151(1) mandates, however, that the party seeking attorneys’ fees establish that the fees sought are both “reasonable and necessary.”
Because Rosenblatt has expressly declined a new trial, both in the trial court and on appeal, the dispositive question becomes whether Rosenblatt established, as a matter of law, that he is entitled to $500,000 as reasonable and necessary attorneys’ fees. Specifically, did Rosenblatt provide evidence to support his claim for attorneys’ fees that was “clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted”?
Rosenblatt’s trial counsel, Tracy Conwell, referred several times during her testimony to the amount of $500,000, describing it as a “reasonable” amount of attorneys’ fees for the work she had done in this case. In addition to relying on that testimony, Rosenblatt argues that Freedom Life (1) did not controvert Conwell’s testimony and (2) conceded that the testimony was uncontroverted in responding to Rosenblatt’s motion to disregard the jury’s failure to award any attorneys’ fees.
This court did not agree that Conwell’s testimony conclusively established that $500,000 was a reasonable amount for attorneys’ fees or that her testimony was uncontroverted, because Conwell controverted her own testimony. Despite testifying that $500,000 was a reasonable fee, Conwell also explained the terms of her contingency-fee contract, the total hours worked, and her hourly rate. She testified that a 40 percent fee, as described in her contract, was reasonable. Conwell did not perform a step-by-step calculation of a total amount from the terms and percentages stated in the contract, but invited the jury to make the calculation. As this Court recognized recently, if a party presents evidence of both a fixed amount as a reasonable attorneys’ fee and a contingency-fee contract that results in a lesser fee and claims that the contract was reasonable and that the jury could rely on either calculation, that party may not argue on appeal that the evidence attesting to the reasonableness of the higher amount is uncontroverted.
Conwell also provided other amounts for the jury. She not only testified that her evidence suggested an award for attorneys’ fees “in the neighborhood of $400,000, maybe $350,000,” but also acknowledged that her contingency-fee contract could be interpreted as resulting in the significantly lesser sum of 40 percent of Rosenblatt’s total recovery, or $12,000. In other testimony, Conwell estimated her personal total time at 997 hours at $250 per hour, which results in yet another calculation of approximately $250,000, to which was to be added her law clerks’ fees, which Conwell “guess[ed] a reaonable rate would be anywhere between [$]25 and $75 an hour, ” though she also invited the jury to “figure out a reasonable rate.” Adding the law clerks’ fees to the $250,000 and calculating them in accordance with the range Conwell suggested results in yet another total, with an approximate high of $340,000 and a low of $287,000.
Conwell also testified that the $500,000 estimate included “over” $100,000 in expenses. But the trial court sustained Freedom Life’s objections to several items listed as expenses on the grounds that they were not recoverable.
Because Conwell’s own testimony provided alternatives to the $500,000 amount that she opined was a reasonable fee and because her proposed amounts included nonrecoverable costs, this court could not agree that her testimony on the $500,000 amount was uncontroverted. To the contrary, Conwell’s testimony that $500,000 was a reasonable award for attorneys’ fees was both controvertible and controverted–by Conwell.
Because Conwell’s testimony failed, therefore, to conclusively establish the $500,000 fee, as a matter law, her interested-witness testimony raised only a triable issue to be determined by trier of fact, in this case, the jury.
Because the evidence presented in support of Rosenblatt’s claim for attorneys’ fees is not conclusive as a matter of law and thus precludes that relief, this court could not render the judgment that Rosenblatt seeks.
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