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Polselli v. Nationwide Mut. Fire Ins. Co.

Polselli v. Nationwide Mut. Fire Ins. Co.

United States Court of Appeals for the Third Circuit

February 7, 1997, Argued ; September 30, 1997, Filed

No. 96-1107

Opinion

 [*527] OPINION OF THE COURT

MANSMANN, Circuit Judge.

In this case of first impression, we must decide whether a plaintiff who prevails on a claim for bad faith conduct, pursuant to 42 Pa. Cons. Stat. Ann. § 8371, may recover attorney's fees against an insurer for time spent prosecuting the bad faith claim itself, in addition to those fees attributable to prosecuting the underlying insurance contract claim, under section 8371(3). We conclude that such fees may be assessed.

We are also faced with the issue of whether, and under what circumstances, a court may enhance a fee under Pennsylvania [**2]  law to reflect the contingent risk of nonpayment assumed by the plaintiff 's attorney in accepting the case on a contingent-fee basis. We conclude that a court may enhance a fee in such circumstances, but only to the extent that the enhancement (1) reflects the contingent risk of the particular case and (2) is not based on factors already considered in calculating the lodestar amount.

We will reverse the judgment of the district court in part and will remand for further proceedings.

After a fire destroyed her home, Regina Polselli sued Nationwide Mutual Fire Insurance Company for benefits due under her insurance contract with Nationwide and for damages under 42 Pa. Cons. Stat. Ann. § 8371 for Nationwide's alleged bad faith in handling her claims. 2 On the day of trial, the parties settled Polselli's contract claims for building loss, personalty loss, and additional living expenses. The court conducted a bench trial on the bad faith claim, the only remaining claim.

 [**3]  The court found, by a preponderance of the evidence, that Nationwide had acted in bad faith with respect to Polselli's personalty and living expense claims and awarded $ 90,000 in punitive damages. Polselli v. Nationwide Mut. Fire Ins. Co., 1992 U.S. Dist. LEXIS 14494, No. CIV.A.91-1365, 1992 WL 247271 (E.D. Pa. Sept. 23, 1992). The court did not assess attorney's fees at that time, or upon motion for reconsideration, because Polselli had not presented evidence at trial to establish a reasonable assessment.  Id., 1992 WL 247271, at *8; Polselli v. Nationwide Mut. Fire Ins. Co., 1993 U.S. Dist. LEXIS 5697, No. CIV.A.91-1365, 1993 WL 137376, at *1 (E.D. Pa. Apr. 30, 1993).

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126 F.3d 524 *; 1997 U.S. App. LEXIS 27106 **

REGINA POLSELLI; RUDOLPH R. POLSELLI, (Intervenor-Plaintiff in D.C.) v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY; Regina Polselli, Appellant

Prior History:  [**1]  Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Civ. No. 91-cv-01365).

Disposition: Reversed and remanded.

CORE TERMS

enhancement, attorney's fees, insured, contingency, district court, bad faith, bad faith claim, calculating, lodestar, insurance policy, assess, contingent risk, cases, cause of action, litigating, courts, contract claim, reasonable fee, time spent, prevailing, factors, insurance contract, trial court, fee-shifting, predict, costs, bad faith conduct, bad faith cause, hourly rate, good faith

Civil Procedure, Preliminary Considerations, Federal & State Interrelationships, Erie Doctrine, Constitutional Law, The Judiciary, Jurisdiction, Diversity Jurisdiction, Jurisdictional Sources, General Overview, Governments, Courts, Judicial Precedent, Appeals, Appellate Jurisdiction, Final Judgment Rule, Standards of Review, De Novo Review, Insurance Law, Remedies, Costs & Attorney Fees, Liability & Performance Standards, Bad Faith & Extracontractual Liability, Interest Awards, Penalties, Contracts Law, Contract Interpretation, Good Faith & Fair Dealing, Good Faith & Fair Dealing, Torts, Affirmative Duty to Act, Types of Special Relationships, Fiduciaries, Settlements, Legislation, Interpretation, Banking Law, Banking & Finance, National Banks, Usury Litigation, Attorney Fees & Expenses, Reasonable Fees, Interest & Usury, Abuse of Discretion