A recent Insurance Journal story, “5th Circuit Sides with Attorney on Contingency Fee in Insurance Settlement” reports that the U.S. Court of Appeals for the Fifth Circuit has sided with an attorney in an appeal of a lawsuit granting the lawyer contingency fees in the settlement of homeowners insurance claims in the aftermath of Hurricane Katrina. The court, however, denied the attorney’s request for fees and damages related to the appeal.
Kenneth Schoenberger provided legal services on a contingency fee basis for Jocelyn Richards in litigation with her insurance company seeking an increased settlement offer for damage to her property during Hurricane Katrina. Schoenberger succeeded in obtaining an increased settlement from Richard’s insurer, Louisiana Citizens Property Insurance. The attorney fees were to come out of the settlement. However, the mortgage holder of Richards’ home, American Home, which also named as an additional mortgagee-loss payee on the insurance contract, “sought the full insurance proceeds on the ground that its mortgage balance exceeds the settlement amount.”
The lower court sided with Schoenberger, holding that “under Louisiana law, Schoenberger’s privilege for his contingency fee in the settlement funds he obtained for Richards is superior to American Home’s right.” American Home appealed, and Schoenberger asked the appeals court to order American Home to pay his attorney fees. The Fifth Circuit Court agreed with the district court that Schoenberger’s contingency fee is supported under Louisiana law. In denying his request for attorney fees and damages related to the appeal, the appeals court said it understood “Schoenberger’s frustration from his years long pursuit of his fees,” but it was “constrained by the applicable law.”