Third District Affirms Refusal to Award Any Fees to Insured Who Balked at Apportionment.
Co-contributors Marc and Mike have written an article, “When The American Rule Doesn’t Apply: Attorney’s Fees As Damages In California Litigation,” published in 21 California Litigation, No. 3, at pages 19, 22-24 (2008), which has a discussion on attorney’s fees awardable to insureds for gaining the contract benefits of their insurance policies as damages under the venerable decision in Brandt v. Superior Court, 37 Cal.3d 813 (1985). In that article, we discussed not only Brandt, but the California Supreme Court’s follow-up decision requiring apportionment in Cassim v. Allstate Ins. Co., 33 Cal.4th 780 (2004). This article can be accessed in our November 13, 2008 post, and we again give thanks to the State Bar of California for allowing it to be posted to our blog.
The next case deals with Brandt/Cassim apportionment issues, reinforcing the lesson that a prevailing plaintiff insured needs to apportion rather than taking the draconian position that the entire contingency fee percentage had to be applied to the whole trial verdict. Such a draconian position can yield a draconian result: in this case, zero attorney’s fees even though the trial court seemed amenable to award something if apportionment had been attempted.
Ivers v. Allstate Ins. Co., Case No. C054148 (3d Dist. Dec. 12, 2008) (unpublished) involved a plaintiff insured who ultimately prevailed in a jury trial against Allstate on the breach of contract claim, with the jury awarding him $676,532.80 for a fire loss incident. The first jury deadlocked on a tortious breach claim, but a second jury found in plaintiff’s favor but awarded no additional compensatory damages. No punitive damages were imposed by the second jury. Plaintiff moved to recover an attorney’s fees award as damages on his tortious breach claim, a request which was denied in entirety.
The Third District affirmed, in a 3-0 decision authored by Justice Hull.
Our state supreme court in Cassim considered the proper method of allocating Brandt fees under a contingency fee arrangement where a plaintiff pursues and recovers under both breach of contract and other claims (even though Brandt fees are only recoverable on the contract claim). Cassim set out an apportionment formula that was a midway approach between the draconian positions advocated by the insurer and the insured. The supreme court set forth this formulation: “To determine the percentage of the legal fees attributable to the contract recovery, the trial court should determine the total number of hours an attorney spent on the case and then determine how many hours were spent working exclusively on the contract recovery. Hours spent working on issues jointly related to both the tort and contract should be apportioned, with some hours assigned to the contract and some to the tort. This latter figure, added to the hours spent on the contract alone, when divided by the total number of hours worked, should provide the appropriate percentage.” (Cassim, supra, 33 Cal.4th at 812.)
That brings us to what happened in Ivers.
Because the jury awarded no tort damages, plaintiff contended that no apportionment was appropriate at all, even though the trial court had afforded him an opportunity to make a Cassim-like allocation. The Third District found that this argument was inconsistent with Cassim. “Plaintiff’s argument to the contrary is essentially one of heads the insured wins, tails the insurer loses. If the contract portion of damages is small in comparison to the overall compensatory damages award, plaintiff would have the court compute Brandt fees by apportioning the overall recovery in accordance with the percentage of time spent by his attorneys on the contract claim, as in Cassim. However, if only contract damages are awarded, or the contract portion of damages is large in comparison to the overall award, plaintiff would have the court award Brandt fees based on the contract award alone, without apportionment. We conclude Cassim mandates apportionment in either case.” (Slip Opn., at pp. 8-9.)
In denying attorney’s fees, the trial court indicated that plaintiff submitted $22,000 in billing statements, with $21,000 being for work preceding the denial of his insurance claim. Plaintiff then submitted an additional $72,000 in billing statements, but a substantial amount of the time involved work on non-contract claims. Thus, plaintiff failed to satisfy his burden of properly apportioning under Cassim—despite having been given an opportunity to submit further evidence for allocation purposes. The lower court was correct to reject the entire fee request based on plaintiff’s failure to satisfy his burden to properly apportion.
The lesson from this one extends beyond the Brandt context: if a lower court gives you leave to submit further evidence because it wants apportionment, don’t be stubborn — you are prudent to take advantage of the opportunity and present further proof in line with its directives.
