Elardo, Bragg, Appel & Rossi

Insured is Entitled to Attorney’s Fees on UIM/UM Claims

STATE FARM MUTUAL AUTO INSURANCE, 229 Ariz. 216, 273 P.3d 668 (App. Div. 1 03/22/2012). Insured filed breach of contract action against automobile insurer based on insurer’s failure to pay the $50,000 policy limits of insured’s uninsured motorist (UM) coverage in connection with accident. Insurer, which had earlier paid $2,000 on insured’s claim, tendered the $48,000 balance, and parties submitted to superior court the question of insured’s entitlement to attorney fees and costs. The trial awarded $19,000 in fees and $763.80 in costs to insured. Insurer appealed. HOLDING: The Court of Appeals, Division One, held that insured’s action sounded in contract, not in tort, for purposes of statutory provision authorizing an attorney fee award to the successful party in any contested action arising out of a contract; that the insured’s action was a “contested action” under statutory attorney-fee provision; that the statement in UM provision of policy, that insurer was not obligated to pay any amount in excess of the available limits for UM coverage, did not prohibit a court from awarding attorney fees against insurer; that the trial court was not required to cap fee award at the amount that the insured would have owed under contingency provision of fee agreement; that the hourly rate of $400 was not unreasonably high in context of calculating fee award; and that the insured was “successful party” and, therefore, was entitled to a award of costs.