A Florida court has ruled that one of the state’s largest automobile insurers must pay over $100,000 in attorney fees under the “additional payments” provision of its liability coverage.
The Florida Fifth District Court of Appeal handed down its ruling in the case (GEICO General Insurance Com., v. Hollingsworth, 5D14-1437), stating that the definition of “costs” as presented in the policy provision should include attorney fees.
The case stems from an automobile accident between a GEICO covered driver, Mohamed Kassam, and another driver, Kevin Hollingsworth.
Before the case went to trial, Hollingsworth proposed to settle the case and receive $9,999 in damages. Kassam, however, rejected the offer. In the subsequent jury trial Hollingsworth prevailed and was awarded $16,603.
Typically, attorneys who represent automobile accident victims are paid on a contingency basis and receive a percentage of any damages paid to the victim. Payments to attorneys are characterized and considered as “fees.”
Such fees are differentiated from court “costs,” which a prevailing attorney receives from the insurer. Costs can include monies for filing documents, hiring expert witnesses, court transcription services and other expenditures.
There is only one exception to that compensation system. Under a Florida law, if a victim’s jury award exceeds an offer of settlement by more than 25 percent, the victim can request a payment for additional attorney fees.
Since Hollingwood’s jury award of $16,603 exceeded his initial settlement offer of $9,999 by more than 25 percent, he requested that the court award him such fees.
The trial court agreed and awarded Hollingsworth $113,175 in attorney fees to be paid by Kassam through his GEICO policy. GEICO objected to the extra cost, filing an appeal with the Fifth District Court in Daytona Beach.
Judge Jay Cohen in a four-page opinion noted that GEICO and Hollingsworth appeared to disagree about the issue that was the central question before the court.
Notably, Cohen said, GEICO seemed to take the position that as a matter of legal precedent, it is never liable for attorney fees based on settlement offers. GEICO argued that is especially true in cases like Hollingsworth’s, where the insurer was not a direct party to the settlement offer.
Hollingsworth, however, took the position that the fees were covered under the additional payment portion of the policy regardless of how they came about.
“They (Hollingsworth) frame the issue as one of contractual interpretation and insurance coverage; thus focus their argument on the language of the policy,” opined Cohen. “We agree with (Hollingsworth); the real issue is whether the additional payments section of the policy covers the attorney fee judgment.”
Cohen noted that several courts in Florida have ruled that an insurer is not liable for attorney fees when the insurer was not presented an offer to settle a case. However, Cohen noted that those cases never anticipated ones like Hollingsworth where an insurer’s liability under a policy is at issue.
“The trial court did not tax the attorney fees against GEICO solely on the offer of judgment statute; it found that the attorney fee judgment was explicitly covered by the policy,” wrote Cohen. “We believe that GEICO’s expansive interpretation of the case law is overbroad and not supported by precedent.”
Cohen wrote that the issue in the Hollingsworth case is the language of the GEICO policy that under a section entitled “additional payments” stated that the insurer would cover “all court costs charged to an insured in a covered law suit.”
Cohen stated that the language could appear to be ambiguous given how court costs and attorney fees are generally characterized. In such cases, however, he said case law has long established that the ambiguity should go in favor of the insured.
“When interpreting an insurance policy, courts are bound by the plain meaning of the policy’s text,” opined Cohen. “When language in a policy is ambiguous, courts must resolve the ambiguity in favor of the insured by adopting the reasonable interpretation of the policy’s language that provides coverage.”
Was this article valuable?
Here are more articles you may enjoy.
Supreme Court Overturns Chevron Rule in Blow to Regulators 
US P/C Insurers Post Best Q1 Underwriting Result In 17 Years 
Coverage Needed: Hundreds of Thousands in SE Now in Flood Zones With New Maps 
Big ‘I’ Report: Independent Agency Channel Placed 62% of Premiums in 2023 
