Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Smith v. U. S. F. & G. Co.
Citations: 239 Ark. 984; 395 S.W.2d 749; 1965 Ark. LEXIS 1123Docket: 5-3661
Court: Supreme Court of Arkansas; November 22, 1965; Arkansas; State Supreme Court
Wayne Smith, a building contractor, seeks a statutory penalty and attorneys’ fees after recovering $2,462.10 from United States Fidelity and Guaranty Company following a loss incurred during the construction of a gymnasium. Smith had a policy with the company that covered certain losses but claimed damages of $3,229.97 from a roofing joist failure, minus a $500 deductible. The company denied coverage for Smith's loss, leading him to file suit. Smith requested judgment for $2,729.97, plus interest, statutory penalty, and attorneys’ fees. During the trial, the jury awarded Smith $2,462.10, but his motion for attorneys' fees and a penalty was denied by the trial judge, prompting Smith to appeal. The company argued that Smith's demands exceeded his rightful claim, and they contested his entitlement to a penalty and attorneys' fees. The court's precedent requires plaintiffs to recover the amount claimed in order to qualify for such penalties and fees, though Smith contends that this should not be universally applicable and that the statute does not explicitly require recovery of the exact amount sought. The longstanding judicial interpretation reinforces that recovery of penalties and fees is not permitted if a claimant seeks a greater amount than awarded. A demand is a prerequisite for recovery of penalties and attorney's fees; if a complaint seeks more than what is owed, recovery cannot occur. The legislature did not intend for insurance companies to incur penalties and fees for contesting unfounded claims. A plaintiff who demands an excessive amount is at fault. Penalties and attorney’s fees are meant for those seeking to recover what is contractually due after making a proper demand. The appellant argues that this rule should not apply if the insurer denies all liability, suggesting that it discourages insured parties from fully asserting their claims. However, the appellee counters that changing the rule could lead insurers to avoid defending against broader grounds like non-coverage. The appellant also suggests that the discretion of trial courts should dictate penalties and fees based on individual case circumstances, which could create inconsistency. Most disputes in litigation with insurers revolve around coverage issues. The document asserts that any changes to this rule should come from the General Assembly, as the interpretation has persisted for nearly sixty years without legislative amendment, despite opportunities to do so. The court affirms the existing rule that a plaintiff must recover the amount demanded to be entitled to penalties and attorney’s fees and notes that the jury denied the profit sought by the appellant, amounting to $267.86. The relevant statute is Ark. Stat. Ann. 66-3238 [Supp. 1963].