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Judge or Jury: Who Determines Amount of Attorney’s Fees?

Now before the Texas Supreme Court are the cross petitions filed in Knoderer v. State Farm Lloyds, 515 S.W.3d 21 (Tex. App.—Texarkana 2017), pet. pending, No. 17-0306 (Tex. April 21, 2017), continuing the hotly contested underlying insurance coverage litigation. The Knoderers asserted the trial court’s judgment, and court of appeals’ affirmance, erroneously imposed both death penalty and monetary sanctions in their suit against State Farm alleging misrepresentations in violation of the Texas Insurance Code. State Farm responded that judgment was properly entered against the Knoderers based on the unanimous jury findings, however, State Farm appealed the court of appeals’ reversal of the trial court’s award of attorney’s fees under Tex. Ins. Code Section 541.153 based on the determination that the Knoderers’ suit was groundless and brought in bad faith. This discussion of Knoderer focuses on the arguments relating to the award of attorneys’ fees and costs under Tex. Ins. Code Section 541.153 and does not address the seven issues presented by the Knoderers.

The court of appeals agreed with the Knoderers that State Farm waived its entitlement to attorney fees where it failed to introduce evidence at trial and failed to request the submission of a jury question for the affirmative relief sought under Section 541.153. Knoderer, 515 S.W.3d at 47. Looking to the Texas Supreme Court’s interpretation of similar wording under the DTPA, the Knoderer court agreed that determination of whether an action is groundless, brought in bad faith, or brought for the purpose of harassment falls to the trial court. Id. at 45.  However, the dispute here centers on the question of whether the amount of reasonable and necessary attorney fees must be determined by the court or the jury. The Knoderer court found that the amount of attorney fees is a fact question that should be determined by the jury, thus State Farm’s failure to secure a jury determination resulted in waiver of the attorney fees. Id. at 47.

State Farm argues that the plain language of 541.153 provides for determination by “the ‘court,’ meaning the actual jurist,” as did the trial court below. State Farm noted that the language of 541.152 specifies “the trier of fact may award” in contrast to the specific language of 541.153 which provides that “the court shall award.” Thus, State Farm argued that under rules of statutory construction, giving effect to the Legislature’s intent based on the express language and plain meaning of the statutes’ wording, the court of appeals committed reversible error requiring the determination to be made by the jury.

Oral argument has been requested but not yet scheduled.

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