Oregon Appeals Court Rejects Percentage-Based Attorney Fees in Insurance Case
In a significant decision for Oregon insurance litigation, the Oregon Court of Appeals has ruled that attorney fees should be calculated based on the hours worked, rather than a percentage of the policyholder’s recovery. The ruling, handed down on March 19, 2025, in the case of Griffith v. Property & Casualty Insurance Company of Hartford, clarifies how attorney fees are to be assessed post-settlement and could have a lasting impact on similar cases.
The case arose from a dispute over legal fees in an insurance settlement. The plaintiffs, Richard and Rita Griffith, had their home in Wallowa County destroyed by a fire. They filed a claim with their insurer, Hartford (Property and Casualty Insurance Company of Hartford). Dissatisfied with the handling of their claim, they retained attorney Kelly Vance and sued Hartford for breach of contract, negligence, and emotional distress.
After a relatively brief period of litigation, the parties reached a settlement. However, the Griffiths and Hartford disagreed on several post-settlement issues, including the calculation of attorney fees. The trial court ultimately awarded the Griffiths over $221,000 in attorney fees, basing the amount on a percentage of their insurance recovery, a decision that was later challenged.
The Court’s Reasoning
The central issue on appeal was Hartford’s challenge to the attorney fee award. Oregon law allows plaintiffs to recover reasonable attorney fees if an insurer fails to settle a claim within six months of receiving proof of loss.
However, the appeals court sided with Hartford, finding that the trial court erred by calculating fees based on a contingency percentage rather than using the “lodestar” method. The lodestar method multiplies the attorney’s reasonable hourly rate by the hours worked. In the court’s view, the lodestar method is the prevailing standard in statutory fee-shifting cases, ensuring transparency and fairness by linking fees to the actual legal work performed, as Presiding Judge Tookey explained in the ruling.
The court found no indication of complex litigation or significant risk for the plaintiffs’ attorney, further undermining the percentage-based fee.
The court noted that a percentage-of-recovery approach might be appropriate in class actions or cases involving a common fund, but not in a straightforward insurance dispute where liability wasn’t significantly contested. The lack of time records from the plaintiffs’ counsel further complicated the issue, as it made it difficult to assess whether the fee was reasonable relative to the time spent.
Outcome and Implications
The appellate court reversed the attorney fee award and remanded the case, instructing the lower court to recalculate the fees using the lodestar method, effectively rejecting the percentage-based approach. The court also upheld the trial court’s denial of costs and dismissed the Griffiths’ appeal concerning prejudgment interest, citing procedural limitations.
This ruling is expected to have implications for legal practices in Oregon, reaffirming that courts must evaluate how attorney fees are tied to the actual work done and not simply the recovery amount. It also underscores the importance of proper time records in fee-shifting cases.
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
- Outcome: Denial of costs affirmed; prejudgment interest appeal dismissed; attorney fee award reversed and remanded.
