Posttrial Manipulation Of Fee Agreement Not Allowed, As We Understand The Opinion.
For insurance practitioners, Pulte Home Corp. v. American Safety Indemnity Co., Case No. D070478 (4th Dist., Div. 1 Aug. 30, 2017) (published) is a significant decision addressing what fee arrangement governs an award of attorney’s fees as damages under Brandt v. Superior Court, 37 Cal.3d 813 (1985), when the fee arrangement changes mid-course.
In this case, Pulte—a general contractor and developer of residential projects—was an additional insured under CGL insurance policies issued to subcontractors, potentially covering construction defect claims. American Safety, the insurer, suffered an adverse judgment in favor of Pulte, based primarily on duty to defend and bad faith claims in relation to a CD action. Later, in a very contested battle where there was proof that Pulte changed its original contingency fee arrangement to an hourly fee arrangement, the trial judge awarded Brandt fees to the tune of $471,313.52 in Pulte’s favor. (As far as we can determine, American Safety had argued for no more than $371,000, but Pulte had sought $645,000, subject to allocation between compensable and non-compensable Brandt fees—always an issue under Brandt/Cassim.)
Insurer did win a restudy of the fee award under Brandt. The appellate court, although acknowledging that clients and attorneys usually have free reign to modify a contingency arrangement, was concerned that Pulte did transform its contingency fee arrangement to an hourly arrangement during trial so as to exacerbate potential Brandt fee recovery, a result which would be potentially unfair to the insurer which was “on the hook” for this exposure. The appellate court sent this one back to calculate fees, under an appropriate ratio, to the rate allowed under the original pre-trial contingency arrangement. The modification in fee arrangement did not hold up in this situation.
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