American Home Assur. Co. v. Keller Industries, Inc.

• Decision Date: 21 June 1977
• Docket Number: No. 76-84,76-84
• Citation: 347 So.2d 767
• Parties: AMERICAN HOME ASSURANCE COMPANY, Appellant, v. KELLER INDUSTRIES, INC., Appellee.
• Court: Florida District Court of Appeals

Page 767

347 So.2d 767

AMERICAN HOME ASSURANCE COMPANY, Appellant, v. KELLER INDUSTRIES, INC., Appellee.

No. 76-84.

District Court of Appeal of Florida, Third District.

June 21, 1977.

Rehearing Denied July 29, 1977.

Corlett, Merritt, Killian & Sikes, Greene & Cooper and Robyn Greene, Miami, for appellant.

Pyszka, Kessler, Adams & Solomon, Richard M. Gale, Miami, for appellee.

Before HENDRY, C. J., PEARSON, J., and CHARLES CARROLL (Ret.), Associate Judge.

PER CURIAM.

This appeal is by the defendant American Home Assurance Company, from an order awarding $78,500.00 as a reasonable fee for the services of plaintiff's attorneys in the action, and entering judgment thereon against the defendant insurance company. The appellant contends the fee allowed was excessive. We do not rule on that contention because we hold the trial court was without jurisdiction to award plaintiff's attorneys' fees and order the payment thereof in this action in which no judgment on the merits was entered against the defendant insurer and in favor of the insured ¹.

What occurred in this instance, as shown in more detail below, was that some time after the action was filed, and while the case was pending on the defendant insurer's motion to dismiss the complaint as amended and with no answer having been filed, the defendant insurer informed plaintiff's attorney it was liable for the plaintiff's claims, and about a month later the attorney for the plaintiff and attorneys for the insurer agreed upon and consummated an out-of-court settlement in the amount of $145,694.12, on the basis of which payment was accepted for the plaintiff by the plaintiff's attorney who informed defendant's attorneys by letter that thereby the defendant insurer was released from the claims. No recovery judgment was entered in the cause. Thereafter the application for plaintiff's attorney's fee was made, and was granted by the order appealed from.

The complaint, filed December 10, 1974, alleged issuance of the policy, described as an umbrella liability policy extending excess insurance "becoming effective upon exhaustion of underlying primary comprehensive, general liability insurance"; that during the year September, 1970, to September, 1971, "a number of losses occurred" for which the underlying primary limit was exhausted; that the defendant had refused to "undertake the defense and/or indemnification of the plaintiff for said losses". The complaint did not list the claims, or losses which formed the basis therefor, and the sum or the amounts claimed were not shown. In addition to the defendant insurer, the latter's local agent was joined as a defendant, and certain relief was sought against that party in a second count. We omit further reference thereto because later the plaintiff voluntarily dismissed that defendant. Against the insurer, the complaint prayed (1) for judgment to be rendered in favor of the plaintiff for the costs and payments it had made incident to disposition of the claims against it which created the losses; (2) judgment to require the insurer to assume responsibility for all claims made against the insured up to the policy limits; and (3) for reasonable plaintiff's attorney's fee. Plaintiff filed a demand for a jury trial.

Motions of the defendants to dismiss were granted, with leave to amend. A copy of the policy sued upon had not been attached to the complaint. An amended complaint was filed to which a copy of the policy was attached. As to the insurer, the allegations of the amended complaint were the same as the allegations in the first complaint except for addition of an allegation that the primary liability insurer had fulfilled its obligations.

The defendant insurer moved to dismiss the amended complaint. That motion was not ruled upon. No answer was filed by the defendant insurer. As stated above, the other defendant was voluntarily dismissed, after the amended complaint was filed.

On September 12, 1975, nine months after the action was filed, an affidavit of the plaintiff's attorney was filed. Therein he stated that the action had been commenced because of denial of coverage by the insurer; that on April 11, 1975, Mr. Cameron of the home office of the insurer had called plaintiff's attorney "to discuss the disposition of the litigation", and in that conversation Mr. Cameron "stated that upon reviewing the file he acknowledged that his company was in error in denying the coverage; that he now in behalf of the company admitted liability and responsibility in the case", and that he instructed affiant to "compile the information with respect to the disbursements and exposures" and to deliver such computation together with the claim files to the insurer's local counsel; that such information and the files were furnished to defendant's local counsel, and certain correspondence with said counsel ensued; and that although there had been numerous requests, payment had not been made. The affidavit did not list the several losses or the claims which they prompted, or contain any evidence to establish the amounts due thereon respectively.

On the day that affidavit was filed, plaintiff filed a motion, stating it was based on said affidavit, for entry of a judgment against the defendant insurer for a $153,194.12, plus interest and costs, and for judgment requiring payment of "all other outstanding obligations incurred or to be incurred", and for plaintiff's attorney's fee.

That motion for judgment was not pressed, and no such judgment was entered. Instead, as recited above, the out-of-court settlement was made and consummated a month later, which was in compensation for the amounts due to the plaintiff under the policy for excess coverage on plaintiff's losses, and for the expenses plaintiff had incurred in handling the claims which resulted in such losses as a result of the defendant's denial of coverage.

Thereafter, on October 31, 1975, a second affidavit of the attorney for the plaintiff was filed, which related the attorney's participation in the proceedings such as above described, and referred to his services in having attempted to obtain payment of the claims during a period of six months prior to the time the action was filed, for all of which it was stated in the affidavit that the plaintiff's attorney "and/or his firm had expended approximately 250 hours". Affidavits of other attorneys as to a reasonable fee for plaintiff's attorney were filed. The affidavit presented on behalf of the plaintiff suggested $100,000.00. The one presented on behalf of the defendant suggested $10,000.00. Thereupon, with no judgment having been entered in the case, the court entered the fee allowance order from which this appeal was taken.

At the time the appeal was argued, this court requested that briefs be filed by the attorneys for the parties on the question of the jurisdiction or authority of the trial court to make such an award of an attorney's fee in the absence of the entry in the case of a judgment on the merits against the insurer and in favor of the insured, in view of the wording of the applicable enabling statute (herein quoted in footnote # 1).

The supplemental brief filed on behalf of the appellant on this question cited cases holding such fee allowances were to be made only when and as provided for by the statute. American National Insurance Co. v. de Cardenas, 181 So.2d 359 (Fla. 3d DCA 1965); Segelstrom v. Blue Shield of Florida, Inc., 233 So.2d 645 (Fla. 2d DCA 1970); Daleo v. Bert & Bette Bayfront 66 Marine, 273 So.2d 113 (Fla. 3d DCA 1973); Midwest Mutual Insurance Company v. Santiesteban, 287 So.2d 665 (Fla.1974); Dawston v. Blue Cross Associates, 293 So.2d 90 (Fla. 1st DCA 1974). See also, Southern American Fire Ins. Co. v. All Ways Reliable Maintenance, Inc., 251 So.2d 11 (Fla. 4th DCA 1971); Morris v. Conn. General Life Ins. Co., 346 So.2d 589 (Fla. 3d DCA 1977); Continental Casualty Co. v. Giller Concrete Co., 116 F.2d 431, 433 (5th Cir. 1941); American Fidelity & Casualty Co. v. Greyhound Corp., 258 F.2d 709, 717 (5th Cir. 1958). With the exception noted below, the courts have held that such a fee allowance and order for its payment by an insurer is not to be made in the absence of entry of a judgment in the action against the insurer and in favor of the insured, or when the action was filed prematurely or where there was no necessity for the filing of the action.

In an action on an insurance policy, the jurisdiction of the trial court to require the insurer to pay a reasonable attorney's fee of the opposing insured or beneficiary, exists only as created and provided for by the statute. Such a fee award made pursuant to the statute is recognized as a penalty provision, in the use and exercise of which the statute is to be strictly construed. In American National Insurance Co. v. de Cardenas, supra, 181 So.2d at 361 the court said:

" * * * The authority to assess an attorney's fee exists solely by virtue of section 627.0127, Florida Statutes, F.S.A., and since the section is in the nature of a penalty, it should be strictly construed. Main v. Benjamin Foster Co., 141 Fla. 91, 192 So. 602, 126 A.L.R. 1434 (1939); American Fidelity & Casualty Co. v. Greyhound Corp., 258 F.2d 709 (5th Cir. 1958). Therefore, the chancellor had no authority to award an attorney's fee when it affirmatively appeared that the conditions upon which the authority depended did not exist."

Also, in American Bankers Insurance Co. of Fla. v. Benson, 254 So.2d 851, 853 (Fla. 3d DCA 1971) this court said:

"This statute must be strictly construed, and in this case no judgment was rendered against the insurer, American Bankers, which permits the recovery of attorneys' fees."

On examining the statute, it appears to be clear that in an action between an insurer and insured or beneficiary under a policy of insurance, the jurisdiction of the court to award attorney's fees to the latter, to be paid by the former, is dependent and consequent...