Fauble v. Nationwide Mutual Fire Ins. Co.

• Court: West Virginia Supreme Court
• Writing for the Court: Per Curiam
• Citation: Fauble v. Nationwide Mutual Fire Ins. Co., 664 S.E.2d 706 (W. Va. 2008)
• Decision Date: 16 June 2008
• Docket Number: No. 33667.,33667.
• Parties: Joseph FAUBLE and Rebecca Fauble, Plaintiffs below, Appellants v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, as Subrogee of Joseph Fauble and Rebecca Fauble, Intervenor, Appellee v. Alex E. Paris Contracting, Inc., Defendant Below, Appellee.

664 S.E.2d 706

Joseph FAUBLE and Rebecca Fauble, Plaintiffs below, Appellants v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, as Subrogee of Joseph Fauble and Rebecca Fauble, Intervenor, Appellee v. Alex E. Paris Contracting, Inc., Defendant Below, Appellee.

No. 33667.

Supreme Court of Appeals of West Virginia.

Submitted March 12, 2008.

Decided June 16, 2008.

Syllabus by the Court

1. "`Where the issue on an appeal from the circuit court is clearly a question of law ... we apply a de novo standard of review.' Syllabus point 1, in part, Chrystal R.M. v. Charlie A. L., 194 W.Va. 138, 459 S.E.2d 415 (1995)." Syl. pt. 2, State ex rel. Orlofske v. City of Wheeling, 212 W.Va. 538, 575 S.E.2d 148 (2002).

2. "The means that a circuit judge uses to calculate a reasonable attorney's fee is a matter left to the judge's discretion. We reiterate our holding in Hayseeds, Inc. v. State Farm Fire & Cas., 177 W.Va. 323, 352 S.E.2d 73 (1986), however, that a reasonable attorney's fee is presumptively one-third of the face amount of the policy, unless the amount disputed under the policy is either extremely small or enormously large. In these latter circumstances, the judge shall conduct an inquiry concerning a reasonable attorney's fee." Syl. pt. 5, Richardson v. Kentucky National Insurance Company, 216 W.Va. 464, 607 S.E.2d 793 (2004).

3. "Where attorney's fees are sought against a third party, the test of what should be considered a reasonable fee is determined not solely by the fee arrangement between the attorney and his client. The reasonableness of attorney's fees is generally based on broader factors such as: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases." Syl. pt. 4, Aetna Casualty & Surety Co. v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986).

Mark Jenkinson, Esq., Lawrence M. Schultz, Esq., Burke, Schultz, Harman & Jenkinson, Martinsburg, WV, for Appellants.

Walter M. Jones, III, Esq., Michael M. Stevens, Esq., Martin & Seibert, Martinsburg, WV, for Appellee, Nationwide Mutual Fire Insurance Company.

PER CURIAM.

This matter is before this Court upon the appeal of Joseph and Rebecca Fauble from the December 5, 2006, order of the Circuit Court of Berkeley County, West Virginia, denying their request for attorney fees from their insurer, Nationwide Mutual Fire Insurance Company. The request of the Faubles arose following litigation concerning the reduction of Nationwide's claim for reimbursement for insurance proceeds Nationwide paid for damages to the Fauble home caused by Alex E. Paris Contracting, Inc., during the installation of a sewer line. Nationwide asserted that, in view of an $80,000 settlement agreement between the Faubies and Paris Contracting, Nationwide was entitled to reimbursement of the entire $49,843.43 it paid the Faubies under the policy. On October 6, 2005, however, the Circuit Court entered an order holding that, pursuant to Federal Kemper Insurance Co. v. Arnold, 183 W.Va. 31, 393 S.E.2d 669 (1990), Nationwide's $49,843.43 reimbursement would be reduced by $16,614.47, representing Nationwide's pro rata share of the cost incurred by the Faubies in obtaining the $80,000 settlement agreement. An appeal by Nationwide from the October 6, 2005, order was refused by this Court.

In this proceeding, neither side challenges the October 6, 2005, order concerning the $ 16,614.47 reduction of Nationwide's reimbursement for its share of the costs incurred by the Faubies. That order resulted from the Faubies' third-party claim against the tortfeasor, Alex E. Paris Contracting, Inc., a party not involved in this appeal. The Faubles contend, however, that the October 6, 2005, reduction of Nationwide's reimbursement to reflect its share of the cost of obtaining the settlement was based upon a point of well-settled law in West Virginia under Federal Kemper and that Nationwide's intransigence in that regard should have resulted in a further order awarding the Faubles attorney fees for successfully reducing Nationwide's reimbursement by $16,614.47. Consequently, the assignment of error to be determined by this Court concerns the order of December 5, 2006, denying such relief upon the Faubles' petition for attorney fees against their insurer, Nationwide, for successfully reducing Nationwide's reimbursement.

This Court has before it the petition for appeal, all matters of record and the briefs and argument of counsel. For the reasons stated below, this Court is of the opinion that, as a result of the litigation which was imposed upon the Faubles to successfully obtain the $16,614.47 reduction, the Faubles should have been awarded reasonable attorney fees against Nationwide. Nevertheless, this Court is further of the opinion that the $60,610 sought by the Faubles is unsupported by the record currently before this Court. Therefore, the December 5, 2006, order of the Circuit Court is reversed, and this matter is remanded to that Court for a determination of the amount of reasonable attorney fees to which the Faubles are entitled upon their petition against Nationwide, including an amount of reasonable attorney fees and costs incurred in appealing the December 5, 2006, order to this Court.

I. Factual and Procedural Background

A. The Order of October 6, 2005

In May 2003, the Faubles' home in Bunker Hill, West Virginia, sustained damages from the use of explosives by Alex E. Paris Contracting, Inc., upon adjacent property during the installation of a sewer line. In June 2003, the Faubles submitted a claim for the damages under their homeowners insurance policy. The policy was issued by the appellee, Nationwide Mutual Fire Insurance Company. In addition, the Faubles hired counsel to pursue recovery from Paris Contracting. Paris Contracting's liability insurer was Zurich American Insurance Company. By September 2004, Nationwide had paid the Faubles $49,843.43 under the homeowners policy.

The homeowners policy contained a subrogation clause pursuant to which Nationwide informed Zurich, in October 2004, that it was seeking reimbursement of the entire $49,843.43.¹ In the meantime, the Faubles pursued and, in January 2005, obtained a settlement agreement with Paris Contracting in the amount of $80,000 concerning the damages to their home. Payment by Paris Contracting of the $80,000 was held in abeyance, however, pending resolution of whether Nationwide was entitled to reimbursement of the full $49,843.43. The Faubles asserted that, because of their efforts in pursuing the third-party claim against Paris Contracting, Nationwide was not entitled to a dollar-for-dollar reimbursement of the $49,843.43.

On February 14, 2005, the Faubles filed an action in the Circuit Court of Berkeley County against Alex E. Paris Contracting, Inc. Alleging negligence and strict liability, the Faubles sought recovery for the damages to their home caused by the use of explosives. Shortly after filing the complaint, the Faubles filed a motion to enforce the $80,000 settlement agreement they reached with Paris Contracting. By order entered on May 11, 2005, the Circuit Court allowed Nationwide to intervene in the action to assert its subrogation claim.² Specifically, the order permitted Nationwide to file a complaint against Paris Contracting demanding judgment in the amount of $49,843.43, the amount Nationwide had paid the Faubles.

Ultimately, the Faubles filed a cross-claim and a request for declaratory relief against Nationwide. The Faubles asked the Circuit Court to determine their rights under the homeowners policy and hold that Nationwide was entitled to reimbursement upon its subrogation claim in the amount of $33,228.96, which represented two-thirds of the $49,843.43. The Faubles alleged that they were entitled to $16,614.47, the remaining one-third, which represented Nationwide's pro rata share of the cost or attorney fees incurred by the Faubles in obtaining the settlement agreement with Paris Contracting. The Faubles asserted that Nationwide's insistence upon reimbursement of the entire $49,843.43 wrongfully prevented the settlement from going forward and constituted a violation of well-settled law in this State under Federal Kemper. Thereafter, the Faubles filed a motion for summary judgment.³

In Federal Kemper, the appellant, Carol R. Arnold, received $5,000 in insurance proceeds from the Federal Kemper Insurance Company. Thereafter, the appellant recovered $215,000 pursuant to a settlement with the tortfeasor, one-third of which went to the appellant's attorney. In an action to enforce the subrogation clause included in the policy, the Circuit Court awarded Federal Kemper the full $5,000. Upon appeal, this Court modified the judgment and held that the $5,000 reimbursement should be reduced to reflect Federal Kemper's pro rata share of the appellant's legal fees with regard to the third-party claim. As the opinion in Federal Kemper states:

Because attorneys' fees and other reasonable expenses are a routine cost in obtaining a satisfactory judgment or settlement, we will construe the reimbursement provisions of the contract as reflecting appropriately the cost to the covered person of obtaining the recovery. In this case, the cost was a fee of one-third of the recovery to the administratrix's lawyer. The reimbursement under the subrogation clause should thus be reduced pro rata, by one-third [.]

183 W.Va. at 34, 393 S.E.2d at 672. See also, syl. pt. 3, Anderson v....