COA Warns Insurance Carriers

Today the COA confronted a weird insurance case. It was a car accident case in which the negligent defendant and his carrier never offered to settle, so the case went to a jury trial, at which the plaintiff prevailed, winning a damages of $9,055 and prejudgment interest of $875, for a total judgment of $9,930. Because the total judgment was less than $10,000, the trial court exercised jurisdiction under G.S. 6-21.1 to award attorney fees to the plaintiff. That statute allows fees to be awarded to a plaintiff if the insurer wasn't warranted in refusing to pay the claim and (here's the key part) the judgment is $10,000 or less. What made this case weird is that the defendant appealed on the ground that the trial court should've hit him for more prejudgment interest. The defendant argued that if prejudgment interest were higher, the total judgment would've tipped over $10,000, thus divesting the trial court of jurisdiction to award fees. The COA didn't buy it.

The Court added a warning to insurance companies. The Court thought it "important to note" that the amount of fees was directly attributed to the delay caused by defendant's carrier's failure to make good faith attempts to settle. And, because of defendant's appeal, the insurer "delayed paying plaintiff's counsel an additional year and has likely caused plaintiff to incur additional attorney's fees for this appeal," the Court added. "This common practice has deterred attorneys from representing plaintiffs in these actions due to the likely delay of payment for the attorney's services," the Court said. The Court closed, "We hope that in the future, N.C. Gen. Stat. § 6-21.1 will encourage insurance companies to make efforts to resolve such personal injury claims quickly, so that they are not required to pay additional legal fees of the plaintiff."