September 11, 2018
A recent Law 360 story by Anne Cullen, “Insurer Owes $1.2M Atty Fees in Construction Suit: 11th Circ,” reports that the Eleventh Circuit affirmed that Houston Specialty Insurance Co. will have to shell out $1.2 million in attorneys' fees to a construction firm and two of its employees after the insurer lost its coverage suit at trial over a contractor's injury. The three-judge panel rejected the insurer’s argument that the district court shouldn't have awarded fees to All Florida Weatherproofing & Construction, the company's president and a sales representative while a separate suit Houston brought against the three was ongoing.
In its second suit, Houston claims the construction company and its employees forfeited their coverage when they rejected the insurer's defense in the underlying case, which was brought by a contractor who said he was paralyzed after falling through the roof of a mobile home that an All Florida sales representative had allegedly failed to inspect. The ruling found that the outcome of the insurer's forfeiture suit doesn't matter. The panel said that because the firm and its employees won the suit over coverage, which was affirmed on appeal, they are entitled to fees.
"Even if Houston Specialty ultimately wins in the forfeiture case, it would not negate the defendants' attorney's entitlement to fees for prosecuting and prevailing in the coverage case," the unpublished opinion said. The panel also was not persuaded by the insurer's assertion that the lower court erred when it doubled the fees awarded to the attorneys representing All Florida — bringing the $565,000 award up to $1.13 million. The appeals court found the construction company's poor financial condition and its low chance of winning the case meant it couldn't have secured competent defense in Houston's suit unless there was a possibility of a multiplier.
Houston appealed the fee award in June, a few months after the Eleventh Circuit upheld an earlier decision in the case backing a jury's finding that Houston had a duty to defend and indemnify All Florida and the two employees from the underlying action. Houston's forfeiture suit is pending before a separate Eleventh Circuit panel, after the insurer appealed a district court ruling in late 2017 in favor of the All Florida defendants.
The case is Houston Specialty Insurance Co. v. Enoch Vaughn et al., case number 18-10635, in the U.S. Court of Appeals for the Eleventh Circuit.