While the traditional American rule is that each party pays its own attorney fees in civil lawsuits, this rule has been eroded by new statutes that shift the burden of paying attorneys fee to parties that do not accept reasonable settlement offers and/or to the prevailing party. Liability insurance is designed to provide coverage for court costs, cost of defense and settlements or judgements arising from injuries caused by a covered risk. Examples include homeowners insurance to cover a dog attack or slip and fall, or car insurance to cover injuries to occupants of another vehicle when you are at-fault in causing an accident. With the rising trend in shifting the burden of paying the opposing party’s legal fees in litigation, the question arises whether liability insurance carriers are obligated to cover this cost.
The Florida 5th District Court of Appeals recently ruled that an insurance company can be liable for the opposing party’s attorney fees under certain circumstances. The case of GEICO General Ins. Co. v. Hollingsworth involved a third-party car accident claim. The plaintiff offered to settle the personal injury action against the insured via a “Proposal for Settlement" under Florida Statutes Section 768.79.
When a Proposal for Settlement which complies with Section 769.79 is rejected, the party who rejects the settlement can be liable for the other party’s attorney fees if the judgment following trial is at least 125 percent of the settlement offer. If the party making the offer is the defendant, the plaintiff can be ordered to pay the other party’s attorney fees when the judgment following trial is for 75 percent or less of the proposed settlement. Because the plaintiff obtained a judgment that exceeded 125 percent of the rejected settlement offer, the plaintiff was entitled to an order that the insured pay the plaintiff’s attorney fees.
GEICO argued that it should not be responsible for covering the plaintiff’s award of attorney fees because the insurance policy did not include coverage of prevailing party fees. The trial judge rejected this argument, and the appellate court affirmed the trial judge’s ruling. The Fifth DCA ruled that the attorney fees were covered under the “Additional Payments” provision of the policy which covered “all court costs charged to an insured in a covered lawsuit.” The court also equated the order to pay attorney fees pursuant to a rejected Proposal for Settlement to an order requiring an insurer to pay sanction costs which had previously been approved by the Third DCA.
The decision to include opposing party attorney fee awards as covered under the liability provision of an insurance policyhttp://www.jpgonzalez-sirgo.com/contact.cfm is important because of the growing tendency of courts to award attorney fees to the prevailing party. If your insurer refuses to pay for losses covered by your insurance policy, you might have a legal claim for financial compensation. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095or Toll Free 1-866-71-CLAIM.