Southern Farm Bureau Cas. Ins. v. Brinker
| Decision Date | 12 September 2002 |
| Docket Number | No. 01-1435.,01-1435. |
| Citation | 84 S.W.3d 846,350 Ark. 15 |
| Parties | SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY v. Overtus BRINKER. |
| Court | Arkansas Supreme Court |
Butler, Hickey, Long & Harris, by: Andrea Brock, Forrest City, for Appellant.
Easley, Hicky & Hudson, by: B. Michael Easley, Forrest City, for Appellee.
This appeal is a continuation of the controversy we addressed in Brinker v. Forrest City School Dist. No. 7, 344 Ark. 171, 40 S.W.3d 265 (2001) relating to injuries appellee Overtus Brinker sustained in an automobile accident caused by the negligence of the school district and its employee, Virginia Roland. The original complaint was amended on December 4, 1996, naming Brinker's insurance provider, Southern Farm Bureau Casualty Insurance Co. (Farm Bureau) as a defendant based on its underinsured tortfeasor coverage of Brinker. Brinker sought $100,000.00 in damages.
The trial court granted Farm Bureau's motion to sever and ruled that Farm Bureau would not be bound by any judgment entered concerning Brinker and the original tortfeasors. The controversy proceeded to trial, and the jury returned a verdict of $100,00.00 in favor of Brinker on June 22, 1998.
On July 8, 1998, Brinker sent a letter to Farm Bureau, demanding that Farm Bureau pay the remaining $75,000.00 of the judgment. Farm Bureau refused to pay, and on July 28, 1998, Brinker promptly filed an amended complaint requesting penalties, payment and interest. Brinker subsequently filed a motion for summary judgment against Farm Bureau, which was denied. Brinker then appealed the trial court decision to sever the case and its ruling that Farm Bureau would not be bound by the verdict of the first trial.
On June 28, 2001, we reversed and remanded the trial court's order and held that Farm Bureau was bound by the verdict in the first trial because the motion to sever should not have been granted without requiring that Farm Bureau be bound by the ensuing judgment. We remanded for further action consistent with that opinion. On remand, Brinker requested an award of attorney's fees, penalties and interest on the unpaid $75,000.00. Farm Bureau objected and argued that Brinker was not entitled to penalties, attorney's fees, and interest because the award of $75,000.00 was not within twenty percent of the amount demanded, as required by Ark.Code Ann. § 23-79-208(d). On June 28, 2001, the trial court entered an order as follows:
The court, having considered the issue of attorney fees and interest, finds:
That if the court had granted the plaintiff's motion for summary judgment in the amount of $75,000.00, penalty and attorney fees would have been awarded. Since the court was in error in its rulings, the plaintiff should be able to recover what it would have if the court had not been in error. Plaintiff is entitled to penalty, interest and attorney fees.
The parties have agreed that $30,000.00 is a reasonable attorney fee.
The interest should begin to run from the judgment date of June 22, 1998.
The decision to award attorney's fees and the amount of an award are discretionary determinations that will be reversed only if the appellant can demonstrate an abuse of discretion. Holmes v. McClendon, 349 Ark. 162, 76 S.W.3d 836 (2002).
Farm Bureau appeals on the issues of whether the statutory requirement for an award of attorney's fees and penalty had been met, and whether postjudgment interest should be awarded from June 22, 1998 through June 28, 2001, arguing that actual judgment against Farm Bureau was not entered until June 28, 2001.
We conclude that the trial court order correctly interpreted and applied our decision in Brinker, supra.
The first issue we address is whether the trial court erred in awarding penalty and attorney's fees to Brinker pursuant to the statute. The rule concerning the award of penalty and attorney's fees is codified at Ark.Code Ann. § 23-79-208(d), which states:
Recovery of less than the amount demanded by the person entitled to recover under the policy shall not defeat the right to the twelve percent (12%) damages and attorney's fees provided for in this section if the amount recovered for the loss is within twenty percent (20%) of the amount demanded or which is sought in the suit.
Farm Bureau argues that the amount recovered was not within twenty percent of the amount demanded and therefore penalties and attorney's fees must be denied. Based upon Brinker's July 8, 1998, demand letter for $75,000.00, we affirm the trial court's award of penalty and attorney's fees and hold that the amount recovered was within the twenty-percent range required by the statute. The statute provides that attorney's fees and the twelve-percent penalty are authorized only if the insured's recovery is within twenty percent of the amount demanded or sought in the suit. National Standard Insurance Co. v. Westbrooks, 331 Ark. 445, 962 S.W.2d 355 (1998). The policy behind the statute is clearly stated in case law:
It could never have been the purpose of the legislature to make the insurance company pay a penalty and attorney's fees for contesting a claim that they did not owe. Such an act would be unconstitutional. The companies have the right to resist the payment of a demand that they do not owe. When the plaintiff demands an excessive amount he is in the wrong. The penalty and attorney's fees is for the benefit of the one who is only seeking to recover, after demand, what is due him under the terms of his contract, and who is compelled to resort to the courts to obtain it.
Id., [Emphasis added.] See, Pacific Mut. Life Ins. Co. v. Carter, 92 Ark. 378, 123 S.W. 384 (1909).
Farm Bureau contends that the demand for payment should be established as the first demand for $100,000.00 in the first complaint, not the second demand for $75,000.00 embodied in the demand letter sent by Brinker to Farm Bureau and in the amended complaint. Farm Bureau relied on National Standard Insurance Co. v. Westbrooks, 331 Ark. 445, 962 S.W.2d 355 (1998) to support its argument. In that case, we determined that the trial court erred in assessing statutory penalties and attorney's fees based on the following reasoning:
[A]ppellee demanded the sum of $78,908.89 in his complaint. Thus he would have had to recover $63,527.11 or greater to come within the twenty percent. As the jury's verdict was...
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