Commonwealth Lloyd's Ins. Co. v. Thomas

Decision Date18 October 1984
Docket NumberNo. 2-83-171-CV,2-83-171-CV
PartiesCOMMONWEALTH LLOYD'S INSURANCE COMPANY, Appellant, v. Roy E. THOMAS, et al., Appellees.
CourtTexas Court of Appeals

Bankston & Lobingier, John R. Bankston and David B. Lobingier, Joe Shannon, Jr., Fort Worth, for appellant.

Steves & Leonard, Sterling Steves and Michael L. Sampson, Fort Worth, for appellees.

Before FENDER, C.J., and HUGHES and JORDAN, JJ.

OPINION

JORDAN, Justice.

This suit on a fire insurance policy requires us to decide whether: (1) the law permits recovery of attorneys' fees; (2) if so, were they excessive; (3) the trial court erred in refusing a continuance; (4) there was any evidence or sufficient evidence to support the submission of additional living expenses incurred by the insureds and whether the trial court properly submitted that item under the terms of the policy; (5) considering the terms of the policy, submission of an issue as to replacement value instead of cash value of household items was proper; (6) admission of an in-court experiment was proper; (7) admission of personal opinion of good character reputation and of evidence as to good character and reputation generally was proper; (8) an instruction by the trial court sufficiently cured impeachment evidence of a single act of misconduct of a witness; (9) the submission of substantial compliance by the insureds with the Proof of Loss requirement of the policy was improper; and (10) prejudgment interest was correctly computed and properly awarded.

We affirm.

On February 2, 1981, the Thomases' home and contents were totally destroyed by fire. At time of loss they had a homeowners' broad form insurance policy with Commonwealth Lloyd's which provided coverage for the dwelling of $270,000.00, contents of the house of $162,000.00, and up to $54,000.00 for increased living expenses. The insurance company rejected the Thomases' claim for payment of the full amount of the policy. Suit was filed and the insurance company defended on grounds of arson and failure to substantially comply with the requirements of the policy. A jury trial of five weeks resulted in a jury verdict for the homeowners for: $270,000.00 dwelling coverage, less $102,589.56 previously paid by appellant to the Thomases' mortgage company; $162,000.00 for loss of contents of the Thomas home; $27,000.00 additional living expenses; $45,441.46 prejudgment interest, plus $168,582.50 attorneys' fees for the homeowners' attorneys. This appeal raises twenty-one points of error.

By its first two points of error appellant says there is no statutory authority for recovery by appellees of attorneys' fees. Specifically, Commonwealth Lloyd's position is that under TEX.REV.CIV.STAT.ANN. art. 2226 1 (Vernon Supp.1984), as amended, recovery of attorneys' fees in suits founded on oral or written contracts is authorized, but attorneys' fees are not recoverable against fire insurance companies because such companies are excluded from art. 2226 by virtue of their inclusion under TEX.INS.CODE ANN. art. 21.21, sec. 2 and art. 21.21-2, sec. 7 (Vernon 1981).

Some of the other statutes listed in art. 2226, condemning certain unfair or fraudulent practices of insurance companies, specifically authorize recovery of attorneys' fees in suits against insurance companies. The insurance company also insists that since TEX.REV.CIV.STAT.ANN. art. 2226 was amended in 1977 to include recovery of attorneys' fees on oral and written contracts and to add the exclusionary language noted above and emphasized in footnote 1, that appellate court opinions interpreting the exclusionary language of art. 2226 have reached contrary conclusions. Three 1979 cases, all suits on fire insurance policies, held attorneys' fees were not recoverable against fire insurance companies because of the exclusionary language. See Standard Fire Ins. Co. v. Fraiman, 588 S.W.2d 681 (Tex.Civ.App.--Houston [14th Dist.] 1979, no writ); First Preferred Ins. Co. v. Bell, 587 S.W.2d 798 (Tex.Civ.App.--Amarillo 1979, writ ref'd n.r.e.); Allstate Ins. Co. v. Chance, 582 S.W.2d 530 (Tex.Civ.App.--Beaumont), rev'd on other grounds, 590 S.W.2d 703 (Tex.1979).

Four later cases decided by courts of appeals, reached the opposite conclusion, holding that attorneys' fees were recoverable under art. 2226 in all suits on policies against insurance companies. See Bellefonte Underwriters Ins. Co. v. Brown, 663 S.W.2d 562 (Tex.App.--Houston [14th Dist.] 1983, writ pending); Texas Farmers Ins. Co. v. Hernandez, 649 S.W.2d 121 (Tex.App.--Amarillo 1983, writ ref'd n.r.e.); Aetna Fire Underwriters Ins. Co. v. Southwestern Engineering Co., 626 S.W.2d 99 (Tex.App.--Beaumont 1981, writ ref'd n.r.e.); Prudential Ins. Co. v. Burke, 614 S.W.2d 847 (Tex.Civ.App.--Texarkana), writ ref'd n.r.e. per curiam, 621 S.W.2d 596 (Tex.1981). We note that although the most recent cases reached a result different than the 1979 cases, the Supreme Court in three of those cases refused error with the notation "no reversible error." We have decided to follow the reasoning and rationale of the four later cases and hold that appellees here are entitled to recover attorneys' fees.

Attorneys' fees are not recoverable in a suit on a contract absent some express provisions therefore or some statutory authorization thereof. Knebel v. Capital National Bank, 518 S.W.2d 795, 804 (Tex.1974). Since there was no provision for attorneys' fees in the contract of insurance in this case, appellees rely on TEX.REV.CIV.STAT.ANN. art. 2226, as amended, for recovery of such fees.

Appellant argues that the attorneys' fees provisions of art. 2226 are not applicable to it because the latter provisions of that statute exempt insurance contracts that are subject to various provisions of the Insurance Code. The insurance company contends that because it is an insurance company, as defined by TEX.INS.CODE ANN. art. 21.21, sec. 2 (Vernon 1981) and a fire insurance company specifically exempt from the application of art. 2226 by TEX.REV.CIV.STAT.ANN. art. 21.21-2, sec. 7 (Vernon 1981) that recovery of attorneys' fees under art. 2226 is not authorized.

The same argument was rejected in Prudential Ins. Co. v. Burke, 614 S.W.2d at 850, and Texas Farmers Ins. Co. v. Hernandez, 649 S.W.2d at 123-24. In Burke, the Court of Appeals (Texarkana) pointed out that in excluding various insurance contracts from the statute "the purpose of Article 2226 was to exclude only those claims against insurance companies where attorney's fees were already available by virtue of other specific statutes, as they are in those which Article 2226 specifically mentions." (Emphasis ours.) Burke, 614 S.W.2d at 850. In refusing writ of error n.r.e., the Supreme Court wrote that the Court of Appeals correctly decided the case. Burke, 621 S.W.2d at 597. Accord Bellefonte Underwriters Ins. Co. v. Brown, 663 S.W.2d at 575; Aetna Fire Underwriters Ins. Co. v. Southwestern Engineering Co., 626 S.W.2d at 102-03.

Under Burke and Hernandez, the result is that, as stated in Hernandez, attorneys' fees are recoverable in all suits on insurance contracts. If the suit is brought under one of the provisions of the Insurance Code mentioned in the latter part of art. 2226, the attorneys' fees section of that particular statute will allow recovery; otherwise, recovery is permitted under the earlier and general provisions of the statute. We hold that such a ruling is mandated by art. 2226.

The whole purpose of art. 2226 is to permit recovery of attorneys' fees in the circumstances described therein, and the statute is, by the express wording of the last sentence, to be liberally construed to promote its underlying purposes. The points of error are overruled.

By points of error three and four the insurance company complains that the award of attorneys' fees was excessive and the trial court erred in denying its motion for continuance on grounds of surprise based on an alleged late claim for attorneys' fees. These two points will be considered together.

Attorneys' fees, where recoverable by law, must be reasonable under the particular circumstances of the case and must bear some reasonable relationship to the amount in controversy. Argonaut Ins. Co. v. ABC Steel Products, 582 S.W.2d 883, 889 (Tex.Civ.App.--Texarkana 1979, writ ref'd n.r.e.); Union National Life Insurance Co. v. Reese, 476 S.W.2d 928, 929 (Tex.Civ.App.--Houston [14th Dist.] 1972, writ ref'd n.r.e.). Although the amount of attorneys' fees is a question of fact for the jury, the trial or appellate court has the duty to reduce the fee awarded if it is excessive. Southland Life Ins. Co. v. Norton, 5 S.W.2d 767, 769 (Tex.Comm'n App.1928, holding approved); Capitol Life Insurance Co. v. Rutherford, 468 S.W.2d 535, 537 (Tex.Civ.App.--Houston [1st Dist.] 1971, no writ).

With regard to excessiveness, attorneys' fees are in the same category as general awards of damages. Argonaut Ins. Co. v. ABC Steel Products, 582 S.W.2d at 889. It is not necessary, before a remittur may be ordered, to find that the jury was influenced by passion or prejudice or any other improper motive. Flanigan v. Carswell, 159 Tex. 598, 324 S.W.2d 835, 839-41 (1959). In deciding the question of excessiveness, the reviewing court is obligated to look at the entire record and to view the matter in the light of the testimony, the amount in controversy, the nature of the case, and the common knowledge and experience of the court as lawyers and judges. Southland Life Ins. Co. v. Norton, 5 S.W.2d at 769; Union National Life Insurance Co. v. Reese, 476 S.W.2d at 930.

The amount sued for by appellees, and the amount in controversy, excluding attorneys' fees and pre-judgment interest, was $459,741.58, representing $270,000.00 for the dwelling, $162,000.00 for contents, and $27,741.58 additional living expenses. The insurance company, by some curious and rather novel reasoning, argues this was not actually the amount in controversy, and the amount...

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