Recovery Of Attorney Fees In Insurance Cases

Insurance lawyers want to help their clients as much as possible in any given case. The U.S. Western District Texas, San Antonio Division, issued an opinion regarding recovery of attorney fees in an insurance case. The opinion is a 2018, opinion styled, Jesus Agredano; Margaret Agredano v. State Farm Lloyd’s.

This case will be discussed in three blogs with each blog discussing the Courts ruling regarding attorney fees in insurance cases.

The Agredanos prevailed at trial on their breach of contract claim against State Farm. The remaining question was whether or not they were entitled to seek attorney’s fees.

Texas law is clear that attorney’s fees are recoverable as a cost of collection only if authorized by statute or contract. Neither party contends that the contract at issue in this case provided for the recovery of attorney’s fees. Therefore, the Agredanos can only recover attorney’s fees if a statute authorizes collecting those attorney’s fees.

Agredanos point to two statutes that they argue authorize collecting attorney’s fees, one of which will be discussed now. They argue they are entitled to attorney’s fees under Texas Civil Practice & Remedies Code, Section 38.001.

Chapter 38 of the Texas Civil Practice & Remedies Code governs the recovery of attorney’s fees in civil cases. The relevant section of that chapter reads as follows:

A person may recover reasonable attorney’s fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for: … (8) an oral or written contract.

This section allows a prevailing plaintiff in a contract case to recover reasonable attorney’s fees – but only from “an individual or corporation.” State Farm, a Lloyd’s plan, is neither.

That a Lloyd’s plan is not an individual is plain on its face. It is not so clear that a Lloyd’s plan is not a corporation. But Texas courts have, in the context of section 38.001, construed the word “corporation” to mean a corporation specifically, not a generic term for any type of business. The Fifth Circuit has interpreted such cases to mean that the word “corporation” in 38.001 refers specifically and only to incorporated entities. Unincorporated entities, then, cannot be made to pay attorney’s fees under 38.001. Therefore, State Farm, a Lloyd’s plan, is not a corporation within the meaning of section 38.001 and the Agredanos cannot use 38.001 to recover attorney’s fees from State Farm.