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Burnaby v. Standard Fire Ins. Co.11/30/1995
VOGEL (Miriam A.), J.:
In Brandt v. Superior Court (1985) 37 Cal. 3d 813, 210 Cal. Rptr. 211, 693 P.2d 796, our Supreme Court decided that, notwithstanding the limitations on the recovery of attorneys' fees imposed by section 1021 of the Code of Civil Procedure, an insured may recover his attorneys' fees as damages in an action alleging tortious breach of the implied covenant of good faith and fair dealing. In the case before us, the trial court extended Brandt to support an award of attorneys' fees as an item of costs incurred by an insured in responding to an insurer's unsuccessful appeal from a Brandt-type judgment in favor of the insured. For the reasons explained below, we suggest it is time for the Supreme Court to reexamine the rule announced in Brandt. But even assuming (as we must) that Brandt is still good law, we cannot agree with the trial court that Brandt permits the recovery of attorneys' fees on appeal.
FACTS
Frank Burnaby owned a home in the Big Rock Mesa area of Malibu. In 1983, he submitted claims to various public agencies, asserting (under oath) that the now infamous Big Rock landslide had damaged his property to the tune of $1.1 million. Later in 1983, Burnaby purchased a homeowner's insurance policy from Standard Fire Insurance Company. The application for that policy, completed and signed by Burnaby's insurance agent and not by Burnaby, stated there had been "no losses prior to the application." In 1984, Burnaby made a claim on his homeowner's policy for landslide damage to his property. Standard denied the claim.
Burnaby sued Standard for breach of contract and tortious breach of the covenant of good faith and fair dealing. At trial, Standard claimed Burnaby had misrepresented or concealed the condition of the property at the time he obtained the policy. The jury rejected Standard's defense, found in favor of Burnaby, and awarded him $235,990.86 in contractual damages, $200, in "extracontractual" damages, and $500,000 in punitive damages. On Standard's appeal, we affirmed the judgment. Remittitur issued in 1993, after which Burnaby filed in the trial court a "Memorandum of Costs (Summary) on Appeal," claiming $234,086.85 for attorneys' fees as costs. Standard moved to tax costs, claiming Burnaby was not entitled to any fees incurred in response to the appeal, and certainly not in the amount claimed. Burnaby responded with a declaration summarizing his calculation of the fee by explaining he had a contingent fee arrangement with his lawyer which increased the fee from one-third to one-half of Burnaby's recovery in the event of an appeal, showing hourly fees of $152,274.30 for all of the time spent handling the appeal, and reiterating his demand for $234,096.85.
The trial court awarded Burnaby $152,274.30, and Standard appeals from that order.
Discussion
I.
In Brandt v. Superior Court, supra, 37 Cal. 3d 813, the insured was covered under a group disability income insurance policy issued to the insured's employer. The insured became totally disabled and demanded the benefits due under the policy. The insurer refused to pay and the insured filed suit for breach of contract and breach of the covenant of good faith and fair dealing, listing as an item of damages the attorneys' fees he had incurred in connection with his efforts to obtain the benefits due under his insurance contract. The insurer moved to strike the claim for attorneys' fees and, when that motion was granted, the insured filed a petition for a writ of mandate. (37 Cal. 3d at pp. 815-816.
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