Fourth District, Division One Rejects Judicial Estoppel Argument and Awards Fees on Appeal (to be Determined by the Trial Court).
Who says that everyone in the insurance industry is cozy-cozy with each other? Not a foregone conclusion at all, especially when assertions of claims mishandling may cast aspersions on the reputation of the claims adjustor. A dispute erupts, one side wins (the claim adjustor), and the winning side seeks an award of fees against the carrier (likely, a former client) under a contractual fees clause. This is exactly the type of dispute we love to report on. Here are the facts and you can play judge on whether the adjustor or carrier should have prevailed.
AIG lost a summary judgment battle brought by defendant Professional Claims Services, Inc. (PCS) under a contract containing both an indemnity provision (to PCS, in favor of AIG) and a contractual fees clause. AIG had sought damages of $607,000 and $150,000 in defense costs in case it lost. PCS was awarded $62,324 in postjudgment attorney’s fees under a fees clause in the contract with AIG.
AIG appealed the adverse fee award and did not win on appeal, as the Fourth District, Division One determined in New Hampshire Indemnity Co. v. Professional Claim Services, Inc., Case No D052106 (4th Dist., Div. 1 Dec. 8, 2008) (unpublished).
AIG’s primary argument was that PCS was barred from a fee award based on the doctrine of judicial estoppel. The Court of Appeal rejected this argument, finding it did not square well with the mutuality principles governing enforcement of contractual fees clauses under Civil Code section 1717.
Had AIG won on the issue of whether the indemnity clause was applicable (even though the issue was won by PCS), AIG would have been entitled to fees. This meant that there was no inconsistency in result at the first tier of analysis on the judicial estoppel issue.
On the second analytical tier of the issue, PCS’ summary judgment motion was not inconsistent with a request for attorney’s fees. The separate battle over applicability of who owed what under the indemnity clause was not inconsistent with a claim by the ultimate victor for fees at the tail end of the litigation.
The fee award in favor of PCS was affirmed on appeal and, in line with the prevailing intermediate appellate thinking on the subject, fixing of fees for the prevailing party on appeal (also PCS) was returned to the lower court for determination. (See, e.g., Security Pacific Nat’l Bank v. Adamo, 142 Cal.App.3d 492, 498 (1983).)