Opinion (PDF)

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ARKANSAS COURT OF APPEALS
DIVISION I
No CV 17-325
Opinion Delivered Dcccmbcr 1 3,2017

STATE FARNI MUTUAL AUTOMOBILE
INSULヽ NCE COMPANY
APPELb憫 T

APPEtt FROM THE BENTON
COUNTY CIRCUIT COURT
N004CV 15-9朗

ALVノヽRO

HONOMBLE ROBIN F GREEN,
JUDGE

ESPARZA
APPELLEE

層

FIF04ED

I-ARRY D. VAUGHT,Judge
Appellant State Fatm Mutual Automobile Insuance Company (State Farm) appeals
the amount of attorney's fees that the Benton County Circuit Court awatded to appeliee
Alvaro Espatza pursuaflt to Atkansas Code Annotated section 23-89-208(Q $.epl. 201,4) after

a jury found

in favot of Espana on his claim for delayed

payment

of

covered medical

expenses. We affi.rm the fee award.

Alvaro Esparza and his two chjldren wete involved in a motot-vehicle accident on

october 1.5, 2013.

E;sparz,. was

insued by State Farm, and his policy included medical-

payment covefage of$5,000 pef percon. Espatza and his children were iniuted in the accident,
and he subsequently submitted theL medical exPenses to Sute Farm fot payment undet the
policy- State Farm refused to pay. He and his children then brought suit, through their attorney

I(en Swindle, to recovet the unpaid medicai exPeflses. Swindle also teptesented Esparza and
his children in their petsonal-iniury lawsuit against the other motorist, and they had entered

into written attorney-client

agreements

with Swindle in which they agreed to pay him

a

peicentage of their recovery.

Aftet a two-day trial, t}e jury awarded Esparza and his children a combined total of
$12,535 in delayed medical-expense payments. Espatza and his chil&en then filed a motion

for attorney's fees pursuant to section 23-89-208(f), which ptovides:
In the event the insuret is required by the action to pay the ovetdue benefits,
the insuter shall, in addition to the benefits teceived, be required to pay the teasonable
aftorney's fees incured by the other party, plus twelve percent (12%) penalty, plus
interest theteon ftom the date these sums became overdue.
(f,1

The court awarded

$2'1,1,97

.50

in attorney's fees based on an hout\ tate calculation. On

appeal, State Farm does not contest that Espatza is entided to an awatd of attotney's fees or

that the fee awaid represented a teasonable tate and numbet of hours worked. The onlv issue

on appeal is whether an houtly fee awatd was permissible when Espatza and his chil&en had
entered into a contingency-fee agteement.

Under the Amedcan rule, parties bear their own litigation expenses, and attotney's fees
are not allowed except when expressly provided

304

fuk.

227

u. San

Indat,

,800 S.W.2d 717 (1990). An awafd of attomey's fees will not be set aside absent

anabuseof discreuon by the circuit court.

^t

fot by statute oi contract. Chiwl

Nrirr N

12-13,518 S.W.3d 89, 97 (citing chisco,304 Atk.

Am., Inc.
227

a.

Ha a4

201'7

A*'

App' 203,

,800 s.W.2d 717). While the decision

to award attorney's fees and the amouot awarded ate reviewed undet an abuse-of-discretion
standatd, we review factual findings by a circuit corft on the existence

of the Chisco factorsr

of fees, while
of the
disctetionary, should be informed by considetation of the experience and abiliry
amount
attorney, ttre time and labot required to perform the legal service plgetfl, the
involv# in the case and the results obtained, the novelty and difficulty of the issues involved,
1ln Chisco, the Arkansas Supreme Court held that a circuit court's award

under a clearly erroneous standard of review. Dauis u. lYilliansoa, 359 Atk. 33, 194 S.!7.3d 197

of

(2004). Due to the circuit court's intimate acquaintance with the record and the quality

service rendered, we also recognize the superior perspective of the trial judge in assessing the

applicable factors.

State Farm argues that, because Esparza and his children entered into a written
attorney-client agteemeflt in which Swindle agreed to iepresent them fot a set petcentage

of

what they recoveted,2 and because the award of fees exceeded that petcentage, the fee award

violated the statute's authorization to awaid the "fees incured" by the party. \X/hile this
argument is persuasive,

it

fai.ls

fot one very simple teason: the contingency-fee conttact on

which State Farm relies was applicable only to Swindle's reptesentation of the Esparzas in

theu personai-iniury case and did not apply to the Esparzas' claim for delayed medical
payments.

The ckcuit court was presented with ample evidence to conclude that the contingencyfee contract did not apply to Swindle's

wotk on the Esparza's delayed medical-payments claim.

The contract speciflcally refers to "damages sustained," and

it

references the date

motor-vehicle accident. The conttact also anticipates that a copy
eventualiy be served on "the defendant
puiposes

of

ot

any insutance comPany

of

of the agreement

the

may

of the defendant" for

establishing ao attorney's Lien, which seems to indicate that the anticipated

the fee customarily chatged in the locality fot similat legal sewices, whether the fee is fixed ot
contiogent, the time limitations imposed on the client or by the circumstances, and the
Likelihood, if appareot to the clieng that the acceptance of the patticulat employrnent will
preclude othet employmeflt by the lawyer. Chisco,304 Atk. at 229 , 800 S.W.2d at 718.

zlhe contingency-fee agteement entided Swindle to foty petcent of the amount
recovered if the case went to ttial.

defendant is the tortfeasor, not an insurance company. Most telling, howevet, is the fact that
Esparza executed an affidavit, which was submitted to the circuit cout, explicidy stating that

the contingency-fee contract was solely for the purposes of representation in the petsonal-

in)ury case and that "it was never my intention that my attorney take as an attotney fee
percentage ofmy medical bi]ls won in [this] case." Esparza also submitted

a

a

letter from Swindle

to State Farm's attomey that specifically warned of the hours Swrndle had already expended
wotking on this case, the additional hours he would likely incut if the case went to trial, and
the type of hourly fee he had pteviously been awarded in a similar delayed medical-payments
case against State Farm. Swindle's iettet invited State Fatm

to serde the delayed medical-

payments case and wamed of the potential fot a high hourly fee awatd

if the case went to trial.

This letter cleady indicates that it was Swindle's undetstanding and intention to pursue this
case on an

hourly fee basis. Therefote, we hold that it was not an abuse of disctetion fot the

circuit coutt to awatd aftorney's fees based on an houtly fee calculation mther than
contingency- fee calculation.

Af6rmed.
KTAPPENBACH and

WHItsareR,

JJ., agree'

4

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