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Amica Mutual Insurance Co. v. Maloney9/18/1995
FROST, Justice.
1. Amica Mutual Insurance Co. v. Maloney and Silva v. Farmers Insurance Co. both present a common question on appeal: When an insurer has a subrogated interest in a portion of the insured's settlement, is the insurer required to pay a proportionate share of the insured's attorney's fees incurred in settling the claim? In both cases the insureds argue that the settlement created a common fund which included the insurers' subrogated interest. They therefore contend that the insurers were obligated to pay a proportionate share of the insureds' attorneys' fees. The insurers counter that they had adequately protected their respective subrogated interests without the efforts of the insureds' attorneys. The trial court in Amica found in favor of the insured. Conversely, in Silva the trial court found for the insurance company. We have consolidated the two cases for purposes of this opinion, and we affirm the proportionate award of attorney's fees for the settlement in Amica and reverse the corresponding denial of attorney's fees in Silva. We also affirm the trial court's denial of attorney's fees for the insureds' efforts in pursuing their claims for proportionate contribution in both cases.
I. FACTS
A. Amica v. Maloney
2. On June 18, 1989, Defendant-Appellee Margaretta Coulter Maloney (Maloney) was involved in an automobile accident in which her car was rear-ended. Maloney had an auto insurance policy with Plaintiff-Appellant Amica Mutual Insurance Co. (Amica) which provided for up to $5,000 in medical coverage. The Amica insurance policy expressly provided for subrogation of any amounts paid out under the policy and required that Maloney hold in trust any amount she recovered from a third party so that Amica could be reimbursed for payments made.
3. As a result of injuries suffered in the accident, Amica paid Maloney the full extent of her medical coverage under the policy, totalling $5,000. Maloney then hired an attorney and filed suit against the third-party tortfeasor and his insurer, Allstate. During the course of settlement negotiations between Maloney and Allstate, Amica sent Allstate four letters informing Allstate of its subrogated interest in Maloney's recovery and asking for reimbursement of the $5,000. Allstate ultimately settled with Maloney for $77,500. It issued two checks for the settlement amount, one of which was for $5,000, made payable to Maloney, her attorney, and Amica. Amica demanded that Maloney pay it the full $5,000 for its subrogated interest in the medical payment advances. Maloney countered that a prorated share of attorney's fees and costs should be deducted from the $5,000 to pay for Maloney's efforts in obtaining settlement. On October 14, 1992, Amica sued Maloney for breach of contract and conversion. After receiving briefing by both parties, the trial court awarded Maloney $1809.50 plus 36.19% of all accrued interest on the $5,000, which represented Amica's prorated share of attorney's fees. Amica appealed the judgment.
B. Silva v. Farmers
4. On October 28, 1990, Betty Silva and her daughter Roxanne were involved in an automobile accident resulting in personal injury and property damage. Plaintiffs-Appellants Roy and Betty Silva (the Silvas) were insured by Defendant-Appellee Farmers Insurance Co. (Farmers). Farmers' policy similarly furnished medical coverage up to $5,000 and provided for subrogation for amounts paid out under the coverage. The policy also required the Silvas to hold in trust any amount recovered from a third party for Farmers' subrogation interest.
5. Farmer paid the Silvas $1,811.20 for their medical expenses. The Silvas then hired an attorney t
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