Attorneys’ Fees and Costs When Litigating Against an Insurance Company

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October 6, 2014

By Bart R. Valdes, Esq.

Not every lawsuit involving an insurance company results in the award of attorneys’ fees and costs.   The general attorneys’ fee provision, § 627.428, Florida Statutes, only provides for an award of attorneys’ fees when an insured prevails and an actual recovery of insurance proceeds is obtained.  In fact, §627.428, “‘has consistently been interpreted to authorize recovery of attorneys’ fees from an insurer only when the insurer has wrongfully withheld payment of the proceeds of the policy.””  Progressive American Ins. Co. v. Rural/Metro Corp. of Florida, 994 So. 2d 1202, 1209 (Fla. 5th DCA 2008) (citing Ray v. Travelers Ins. Co., 477 So. 2d 634, 636 (Fla. 5th DCA 1985)).  In Rural/Metro, “because insurance proceeds were not at issue and because [Rural/Metro] was not entitled to recover any wrongfully withheld payment, section 627.428 [did] not apply.”  Id. at 1209.   If an insured does not recover any money or benefits, or if it is determined that the insurer never wrongfully withheld the payment of any insurance proceeds, then attorneys’ fees are not awardable under §627.428, Florida Statutes.

Further, “[a]n insurer’s voluntary dismissal without prejudice does not entitle the insured to attorneys’ fees, as well as costs, pursuant to Section  627.428 . . . and the insureds cannot be considered as prevailing parties under these circumstances.” O.A.G. Corp. v. Britamco Underwriters, Inc., 707 So. 2d 785, 787-88 (Fla. 3d DCA 1998).  The court in O.A.G. recognized the distinction between an action where no monies are paid to an insured and coverage cases where money is paid to an insured, and found that the insured was not entitled to attorneys’ fees because the insurer had dismissed its initial action without prejudice and had not acted to otherwise confess judgment.  Id. at 787 (“Under Section 627.428, an insured must obtain some form of recovery due to the voluntary dismissal to be considered a prevailing party for attorneys’ fees.”).   As such, there are instances where an insurer may voluntarily dismiss a lawsuit and not be liable for attorneys’ fees.  Careful consideration, however, should be given to the particular facts to see whether attorneys’ fees are awardable or not.

Also, § 57.041, Florida Statutes (“§ 57.041”), provides that “[t]he party recovering judgment shall recover all his or her legal costs and charges which shall be included in the judgment . . . .”  “The law is clear that only a prevailing party who recovers a judgment is entitled to recover costs under [§57.041].”  Cheetham v. Brickman, 861 So. 2d 82, 83 (Fla. 3d DCA 2003)(emphasis added); see also del Real v. Dawson, 320 So. 2d 20 (Fla. 4th DCA 1975) (finding no abuse of discretion in trial court’s denial of costs after plaintiff voluntarily dismissed lawsuit following several days of trial).  If the insured does not recover any judgment as a result of the lawsuit, then the insured may not be entitled to an award of costs under §57.041.  Again, much of the analysis turns on whether there is an actual judgment.

Although each case is different and unique, there is no automatic entitlement to attorneys’ fees and costs in all lawsuits where an insurance company is a party.  Both insurance companies and insureds should be aware of the situations in which attorneys’ fees and costs are awardable so that each side can make intelligent decisions in litigation.  Even if attorneys’ fees are awarded, there is often a dispute over the amount of the attorneys’ fees that are reasonable and properly payable.

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