Farmers Texas County Mutual Insurance Co. v. Floyd Barr (No. 09-22-00321-CV; May 23, 2024) arose from a declaratory judgment act claim against Farmers for UIM benefits. Plaintiff settled his personal injury claim with the other driver for $30,000, and Farmers paid $10,000 under the Personal Injury Protection coverage of his policy. Claiming that his damages were greater than $40,000, Plaintiff filed a claim for underinsured motorist benefits. The parties could not settle the claim, so Plaintiff sued for a declaratory judgment. In the first phase of a bifurcated trial the jury found that the other driver was negligent and caused the accident. The jury then found that Plaintiff suffered $115,000 in damages, which, after deducting amounts already paid, came to $75,000. In the second phase of the trial, the trial court heard evidence from Plaintiff’s lawyer and Farmer’s attorney’s fees expert. Plaintiff’s attorney testified that he and another lawyer spent 254 hours on the case at $350 per hour, for a total of nearly $89,000. Farmer’s expert opined that $350 was excessive for this type of case in Montgomery County, and that a more reasonable total would be about $50,000. The trial court concluded that 143 hours at $350 was reasonable, which (coincidentally) came to $50,000. Farmer’s appealed.
In an opinion by Justice Horton, the court of appeals affirmed. The test for attorney’s fees under the Declaratory Judgment Act are whether the fees are reasonable, necessary, equitable, and just. In its appellate brief, Farmers did not challenge the trial court’s $350 per hour number, nor the 143 hours the court determined was reasonable. Instead, Farmers based its claim that the fees were unjust on the fact that Plaintiff refused a written settlement offer six months before trial that would have paid him $100,000, opting to demand the full $500,000 policy limit for UIM benefits. Looking to Chapter 42, CPRC, and Texas Rule of Civil Procedure 167 (offer of settlement rule), the court of appeals observed that Farmers did not invoke either the statute or the rule by filing a declaration at the time it made the offer. Consequently, the trial court “could have viewed [Plaintiff’s] decision to reject the offer Farmers made to Barr in December 2021 as reasonable under all the circumstances when the outcome of the case was unknown to both parties.” The trial court may also have considered Plaintiff’s attorney’s 40% contingency fee, which would have come out of the proposed $100,000 settlement.
The court of appeals stated that “[n]either Rule 167 or Chapter 42 make it clear whether the attorney’s fees available to a plaintiff who prevails on a UIM claim are to be considered part of a UIM “award” in calculating whether a ‘judgment award on monetary claims’ is ‘significantly less favorable’ than the defendant’s offer.” Nevertheless, the court thought this a moot issue since “the fee-shifting provisions in both Rule 167 and Chapter 42 would not be triggered because no practical variance exists between Farmers’ offer ($100,000) and the results of the trial ($75,000) plus the approximately $24,500 in attorney’s fees that [Plaintiff] incurred at a rate of $350 per hour (which Farmers did not contest as unreasonable) for 70 hours of time (which Farmers did not contest as unreasonable) to the date that Plaintiff rejected Farmers’ offer.” In any event, the court concluded that the trial court was not bound by the 80% fee-shifting threshold in Rule 167 or Rule 42 since Farmers didn’t invoke them in the first place. Farmers thus failed to meet its burden “that it was [Plaintiff] rather than Farmers whose litigation strategy resulted in the case going to trial.”
The court’s opinion in this case emphasizes the things Farmers didn’t do. It didn’t invoke the offer of settlement rules. It didn’t make the written offer of settlement until a year-and-a-half into the case. It didn’t question its expert on whether Plaintiff, not Farmers, prolonged the litigation. It didn’t object to the $350 per hour fee or the number of hours allegedly worked. It claimed that the insured had a duty to the company to offer to settle his first-party claim, but it didn’t cite any case authority to that effect or any policy provision that required it. And it did not include the reporter’s record from the jury portion of the trial with the appellate record, making it much more difficult for the court of appeals to “second guess” the trial court. When added up, these omissions pretty much made it impossible for the court of appeals to do anything other than it did.
