SAN ANTONIO - The Fourth Court of Appeals today affirmed a judgment declaring that a State Farm insured is entitled to recover $823 in underinsured motorist benefits, along with an award of $23,854.94 in attorney’s fees and court costs.
According to the opinion, Ernest Valdez was in a vehicular accident and settled with the other driver for their $100,001 policy limit. He then sought compensation from his own insurance carrier, State Farm, which paid Valdez $2,500 pursuant to his personal injury protection benefits and offered to settle his UIM claim for $5,135.
Valdez did not accept the offer to settle his UIM claim and instead sued State Farm, seeking a declaration that his damages exceeded the sum of the other driver’s policy limit and his PIP benefit, and that he was entitled to recover additional damages under his UIM policy.
At trial, the jury awarded Valdez $103,324 in damages – an amount that was offset by the $100,001 settlement and $2,500 State Farm paid in PIP benefits. After reducing the judgment by the offsets, State Farm remained liable to Valdez for $823 under the UIM policy, the opinion states.
The trial court rendered judgment declaring Valdez is entitled to recover from State Farm $824 pursuant to his UIM policy.
The question on whether Valdez was entitled to recover attorney’s fees and court costs was tried to the bench, and the trial court awarded Valdez $20,000 in attorney’s fees and $3,854.94 in court costs.
On appeal, State Farm argued the trial court abused its discretion when it awarded Valdez attorney’s fees after he prevailed on his declaratory judgment action.
Specifically, State Farm maintained it was not necessary for Valdez to incur attorney’s fees because the judgment did not exceed State Farm’s pre-suit settlement offer, the opinion states.
Justices reformed the judgment to reflect that Valdez is entitled to $823 in UIM benefits, affirming the trial court’s judgment as modified.
“Because it was necessary for Valdez to seek a declaration establishing his entitlement to UIM benefits, the trial court did not abuse its discretion when it awarded Valdez attorney’s fees,” the opinion states.
“To hold otherwise would effectively penalize Valdez for declining to accept the pre-suit settlement offer.”
Appeals case No. 04-22-00113-CV