Therefore, the district court properly interpreted the statute strictly so as to require an actual judgment or decree against the insured. Statutes that are in derogation of the common law are to be interpreted narrowly.In all United States jurisdictions, in the absence of a statute or contractual provision, parties to litigation must bear their own attorney fees. Keller Industries and reversed with a single sentence: “A negotiated settlement between an insured and his insurer does not entitle the insured to attorney’s fees pursuant to Section 627.428, Florida Statutes (1979).” The district court cited American Home Assurance Co. However, the district court reversed, interpreting the statute strictly, meaning that, because there was no judgment or decree against Lloyd’s, the statute was not implicated and Wollard was therefore not entitled to attorney fees. The trial court interpreted the statute broadly, allowing Wollard fees under the rationale that Lloyd’s’ settlement was the functional equivalent of a confession of judgment. (1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of an insured or the named beneficiary under a policy or contract executed by the insurer, the trial court, or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court, shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had. The trial court refused to award attorney fees pursuant to section 627.428 of the Florida Statutes, which provides: On the eve of trial, the parties agreed to a settlement of the claim but stipulated that the matter of any award of attorney’s fees would be submitted to the trial court. ![]() Wollard retained an attorney and filed suit. Wollard suffered a loss and brought a claim against his insurer, Lloyd’s and Companies of Lloyd’s, which denied coverage. While the facts of the case were not laid out in any meaningful detail in either the supreme court’s or the district court’s opinion, it can easily be gleaned that the case was a first-party case by Wollard, the insured, against Lloyd’s, his insurer. Lloyd’s & Companies of Lloyd’s, which adopted the “confession of judgment doctrine” into the common law of Florida. In 1983, the Florida Supreme Court released its opinion in Wollard v. ![]() Three other states have also adopted a variant of the confession-of-judgment doctrine. However, only in Florida has the doctrine been extended to third-party suits. A close examination of the evolution of the doctrine demonstrates why it should not be applied in the third-party context. Over 30 years ago, Florida extended the reach of its insurer attorney fee statute to apply when the insurer settles a breach of contract lawsuit on the insurance policy, applying the so-called “confession of judgment doctrine.” The rationale of the doctrine is simple: Where the insured is forced to sue the insurer to obtain benefits it paid for, the insured cannot simply settle the suit in order to avoid paying prevailing-party attorney fees. “Third-party” insurance, by contrast, protects the insured against liability to others, such as automobile or general liability insurance. First-party insurance provides direct benefits to the insured, such as life insurance, homeowners insurance, or uninsured/underinsured motorist coverage. That purpose is well served in the context of first-party claims. These statutes generally require a judgment in favor of the insured and were intended to level the playing field such that insurers could not use their greater financial strength to avoid paying meritorious claims. Virtually every jurisdiction in the United States has a statute on the books that provides for prevailing-party attorney fees in favor of insureds when they are successful in coverage suits against insurers. Republished by Butler with permission from ABA. This article was originally published in the ABA website, a publication by the American Bar Association, © Copyright 2017 by ABA.
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