UM INSURANCE - STATE FARM MUT. AUTO INS. CO. V. PRITCHARD
State Farm Mut. Auto Ins. Co. v. Pritchard, [Ms. 2130989, June 12, 2015] __ So. 3d __ (Ala. Civ. App. 2015). The Court of Civil Appeals holds that State Farm, plaintiff’s UIM carrier, has to pay $20,000 of plaintiff’s attorney fee under the common-fund doctrine. The tortfeasor had $50,000 liability coverage, and his insurer offered those limits. State Farm, with $100,000 underinsured motorist coverage for plaintiff, “bought out” the settlement offer as provided for in Lambert v. State Farm Mut. Auto Ins. Co., 576 So. 2d 160 (Ala. 1991). The jury trial necessitated by State Farm’s blocking of the settlement resulted in a verdict and judgment of $400,000. Thus, State Farm received the $50,000 from the tortfeasor’s insurer and paid to plaintiff its $100,000 UIM coverage. The trial court held that the first $50,000 – offered by the liability carrier but paid by State Farm and then recovered by State Farm in subrogation constituted a common fund recovered by the plaintiff’s attorneys for the benefit of both parties and that thus State Farm was required to pay the plaintiff’s 40% attorney fee for the recovery of this common fund. With a detailed opinion, the Court of Civil Appeals affirms the trial court’s award of this fee.
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