Trial Court Admits Expert Testimony, or Not, at Its Discretion; Attorneys' Fees Must Be Segregated between Fee-Recovering and Non-Fee-Recovering Causes of Action

Beaumont Court of Appeals Chief Justice Steve McKeithen, writing for a panel including Justices Charles Kreger and Hollis Horton withdrew an earlier opinion in State Farm Lloyds v. Webb, No. 09-15-00408-CV. Webb sued State Farm Lloyds for breach of contract and unfair settlement practices. State Farm attacked the admissibility of a plaintiff's expert's testimony. Beaumont's Ninth Court of Appeals finds that admission of the testimony was not an abuse of discretion. They found that Webb could not recover extra-contractual damages beyond the policy benefits for his claim under the Insurance Code because he failed to demonstrate damages independent from the loss of the benefits. They concluded that the evidence did not enable reasonable and fair-minded people to find that State Farm engaged in a deceptive act or practice. And, following from that, denied extra-contractual damages. In the next issue, State Farm offered a field note from one of their adjusters, which the trial court would not admit. The panel found that even if State Farm were right, and that the note should have been admitted, that exclusion would not have changed the verdict, especially since evidence making the same point had been admitted. State Farm complained that cross-examination of State Farm's corporate representative-- also an adjuster-- as to the effect in this action of an unrelated Texas Supreme Court case in which State Farm was found to have acted in bad faith. The panel said that this issue was moot since it had struck the extra-contractual damages. As to Webb's attorneys' fees, it was held that he needed to segregate recoverable attorney’s fees-- the contract-breach fees- from the Insurance Code fees for claims that they lost on appeal, and which are unrecoverable. Tha appeals court rejected Webb's claims that:

1. Taking five percent out of the total contingent fees adequately segregated the two types of action, and
2. In this case, generally, the legal work on one cause of action was inextricably intertwined with the work on all the others, and that under such circumstances, segregation was not required.

The appeals court remanded the case to the trial court to get the different attorneys' fees amounts segregated, and for the amount attributable to the common law tort actions to be removed.

We often think over here that Texas Republican appeals courts are too easy on insurers in unfair practices cases, but in this case, I just don't find any of the horrors that I often read about in case reports and remember from my time clerking in a law firm that often accused insurers of unfair practices, and, at least once represented an insurance company in conservatorship against an abusive insured. This appears to have been a genuinely close case, but which, in the end, the courts overturned the insurer's in-house finding that it lacked liability. Surely the delays attended by all the insurer's investigations were frustrating to Mr. Webb, but it seems that all the insurer did, in this case, was to recheck the various changes of the claims, with adjusters suited to those changes.

This case should also remind contingent fee trial lawyers bringing-- as they should-- all the proper claims they can think of-- to keep time records pre-segregated to the different causes of action. If you're suing State Farm Lloyds with a number of causes of action-- some of which recover attorneys' fees and others which do not-- in Beaumont Texas you should know that State Farm is likely to fight your fees at trial and-- if you are successful at trial-- on appeal (No Democrat appellate justices for you at all) you should start planning your strategy for maximizing your fees, before or only shortly after you file the suit. Real-time time records contemporaneously segregated are much more credible than after-the-fact time records. I understand the argument that doing this might end up cutting your fees at the early part of the suit, but, as a practical matter, you're likely never getting cuttable fees anyway. To think otherwise is to be in denial.

State Farm Lloyds v. Webb, No. 09-15-00408-CV, (Tex. App.-- Beaumont, May 4. 2017, no pet. h.)