Oregon Court Rules Against Percentage Attorney Fees in Insurance Case
In a decision with potentially broad implications for insurance litigation in Oregon, the Court of Appeals has overturned a trial court’s award of attorney fees based on a percentage of a policyholder’s recovery. The ruling, issued on March 19, 2025, clarifies the standard for calculating attorney fees in cases where insurers fail to settle claims.
The case, Griffith v. Property & Casualty Insurance Company of Hartford, centered around a dispute over legal fees stemming from an insurance settlement. The Griffiths, whose home in Wallowa County was destroyed by fire, sued Hartford after a disagreement over their claim. Their attorney, Kelly Vance, represented them in the matter. The parties eventually settled their insurance and contract claims.
However, disputes continued, specifically concerning the calculation of attorney fees. The trial court awarded the Griffiths over $221,000 in fees, calculated based on a percentage of their recovery. The court also denied their requests for prejudgment interest and litigation costs.
The Appeals Court Decision
The Court of Appeals addressed several issues. The Griffiths argued they were entitled to prejudgment interest, but the court dismissed this claim, citing procedural issues. The court also upheld the trial court’s decision to deny the Griffiths’ request for costs. Notably, the appellate panel considered Hartford’s cross-appeal, which challenged the attorney fee award.
Under Oregon law (ORS 742.061(1)), plaintiffs can seek reasonable attorney fees if an insurer fails to settle a claim within six months of receiving proof of loss. Hartford conceded the Griffiths were entitled to fees under this statute. However, Hartford argued the trial court erred by calculating the fee as a percentage of the recovery rather than using the “lodestar” method.
The appellate court agreed with Hartford. Judge Tookey explained that the lodestar method is the prevailing standard in statutory fee-shifting cases, ensuring transparency and fairness by tying fees to actual legal work performed.
The lodestar method involves multiplying the attorney’s reasonable hourly rate by the number of hours worked. The court determined that the percentage-of-recovery approach was inappropriate in this instance. The Griffiths’ counsel did not provide time records, making it difficult to assess the reasonableness of the fee. The appeals court concluded the award, based on a percentage, risked a windfall for the plaintiffs’ counsel. The lower court was directed to recalculate the fees using the lodestar method.
This decision is expected to influence how attorney fees are assessed in Oregon insurance litigation, emphasizing the importance of tying those fees to the actual work performed.
Key Takeaways
The Griffith decision reinforces the use of the lodestar method in statutory fee-shifting cases, promoting transparency and ensuring fees are directly related to the legal work performed. It also reinforces the need to provide detailed time records to justify attorney fee requests.
Case Information
- Case Name: Griffith v. Property & Casualty Insurance Company of Hartford
- Court: Oregon Court of Appeals
- Case Number: A181951
- Decision Date: March 19, 2025
- Trial Court: Wallowa County Circuit Court, Judge Wes Williams
- Appellants: Richard and Rita Griffith
- Respondent: Property & Casualty Insurance Company of Hartford
- Appellants’ Counsel: Kelly Vance
- Respondent’s Counsel: Tom Christ, Sussman Shank LLP
- Outcome: Denial of costs affirmed; prejudgment interest appeal dismissed; attorney fee award reversed and remanded.
The Oregon Court of Appeals ruled against the award of attorney fees based on a percentage of the recovery.
