{ "id": 11868304, "name": "COLLINS & AIKMAN PRODUCTS CO., formerly COLLINS & AIKMAN CORPORATION, Plaintiff-Appellant v. THE HARTFORD ACCIDENT & INDEMNITY COMPANY, Defendant-Appellee", "name_abbreviation": "Collins & Aikman Products Co. v. Hartford Accident & Indemnity Co.", "decision_date": "1997-02-18", "docket_number": "No. COA96-288", "first_page": "412", "last_page": "415", "citations": [ { "type": "official", "cite": "125 N.C. App. 412" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "436 S.E.2d 243", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "opinion_index": -1 }, { "cite": "335 N.C. 91", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2526565 ], "year": 1993, "opinion_index": -1, "case_paths": [ "/nc/335/0091-01" ] }, { "cite": "416 S.E.2d 591", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "opinion_index": -1 }, { "cite": "106 N.C. App. 357", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 5314387 ], "year": 1992, "opinion_index": -1, "case_paths": [ "/nc-app/106/0357-01" ] }, { "cite": "167 S.E.2d 93", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1969, "pin_cites": [ { "page": "94-95" }, { "page": "94-95" } ], "opinion_index": 0 }, { "cite": "4 N.C. App. 466", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8554243 ], "weight": 2, "year": 1969, "pin_cites": [ { "page": "467-68" }, { "page": "467-68" } ], "opinion_index": 0, "case_paths": [ "/nc-app/4/0466-01" ] }, { "cite": "176 S.E.2d 751", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1970, "pin_cites": [ { "page": "754" } ], "opinion_index": 0 }, { "cite": "277 N.C. 216", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563799 ], "year": 1970, "pin_cites": [ { "page": "219" } ], "opinion_index": 0, "case_paths": [ "/nc/277/0216-01" ] } ], "analysis": { "cardinality": 442, "char_count": 8165, "ocr_confidence": 0.736, "pagerank": { "raw": 2.1997638854603607e-07, "percentile": 0.7750258798872057 }, "sha256": "5dc899251112d8081fad35f4b1129b9f3951fc698485defad97d4454cc764c9c", "simhash": "1:a52e71c70c6097ae", "word_count": 1279 }, "last_updated": "2023-07-14T22:18:02.941264+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Chief Judge ARNOLD and Judge MARTIN, Mark D., concur." ], "parties": [ "COLLINS & AIKMAN PRODUCTS CO., formerly COLLINS & AIKMAN CORPORATION, Plaintiff-Appellant v. THE HARTFORD ACCIDENT & INDEMNITY COMPANY, Defendant-Appellee" ], "opinions": [ { "text": "EAGLES, Judge.\nThe dispositive issue here is whether attorney\u2019s fees may be awarded as damages for an insurer\u2019s breach of its duty to indemnify. Plaintiff cites our Supreme Court\u2019s decision in Jamestown Mut. Ins. Co. v. Nationwide Mut. Ins. Co., 277 N.C. 216, 219, 176 S.E.2d 751, 754 (1970), in support of its argument that attorney\u2019s fees and litigation expenses are awardable as damages in insurance coverage disputes. After careful consideration of the records and briefs, we disagree.\nWhile the Supreme Court in Jamestown did allow attorney\u2019s fees to be awarded as damages, it did so only because the insurer there breached its duty to defend rather than its duty to indemnify. Id. Jamestown is consistent with the general rule that the victorious party\u2019s attorney\u2019s fees are not recoverable except in instances (1) where the breached insurance contract was one for legal services or, in other words, a contract creating a duty to defend, (2) where the insurer acted in bad faith in denying coverage, or (3) where otherwise authorized by contract or statute. Perkins v. American Mut. Fire Ins. Co., 4 N.C. App. 466, 467-68, 167 S.E.2d 93, 94-95 (1969). Under both Jamestown and Perkins, attorney\u2019s fees are awardable only in an amount equal to the value of the legal defense denied to the insured because of the insurer\u2019s breach. The Jamestown decision does not stand for the proposition that attorney\u2019s fees may be awarded as damages where the fees sought are those incurred by the insured while litigating the issue of coverage and alleging that the insurer breached its duty to defend.\nWe note that a typical primary insurance contract imposes two principal duties on the insurer in exchange for the premiums paid by the insured: (1) a duty to indemnify the insured, within policy limits, for the amount of any judgment awarded against the insured; and (2) a duty to provide legal services in defense of a claim against the insured. Unlike the situation where the insurer breaches only its duty to indemnify, a breach of an insurer\u2019s duty to defend generally forces the insured himself to bear the full financial burden of asserting his own legal defense. In this respect a primary insurance contract creating a duty to defend is, in effect, a contingent, fixed-price contract for legal services. In order to make \u201cwhole\u201d the non-breaching party (the insured in cases where coverage is found), the value of the legal defense contracted for by the insured must be awarded as damages, with those damages measurable in attorney\u2019s fees.\nThis reading of the Supreme Court\u2019s decision in Jamestown neither conflicts with nor erodes the general rule as previously articulated by this Court. See Perkins, 4 N.C. App. at 467-68, 167 S.E.2d at 94-95. In Perkins we reviewed an order of the trial court denying recovery of attorney\u2019s fees in a coverage action either as a component of costs or as an element of damages. Id. Affirming the trial court\u2019s refusal to award fees as either damages or costs, the Perkins court stated:\nThe general rule is that, in the absence of any contractual or statutory liability therefor, attorney fees and expenses of litigation incurred by the plaintiff or which plaintiff is obligated to pay in the litigation of his claim against the defendant, are not recoverable as an item of damages, either in a contract or a tort action.\nId. This general rule continues in effect today with regard to coverage litigation.\nWe hold that attorney\u2019s fees incurred by the insured (the non-breaching party here) are not recoverable as damages where those fees are incurred in the course of litigation to determine coverage and compel the insurer to perform its duties. Our decision today does not hold that an insured\u2019s attorney\u2019s fees can never be recovered in coverage litigation. Attorney\u2019s fees clearly can be recovered in situations, for example, where an insurer acts in bad faith in denying coverage or where recovery of fees is otherwise authorized by contract or statute.\nFinally, we note also that we have long recognized that the rules governing insurance contracts at times vary from those governing more conventional contractual situations. In insurance contracts, we encounter the disparity in bargaining power and sophistication of parties that is often reflected in adhesion contracts. With this in mind we note that were Perkins not the law of North Carolina, we might well reach a different result. We need not address plaintiff\u2019s remaining assignments of error.\nAffirmed.\nChief Judge ARNOLD and Judge MARTIN, Mark D., concur.", "type": "majority", "author": "EAGLES, Judge." } ], "attorneys": [ "Parker, Poe, Adams & Bernstein, L.L.P., by Irvin W. Hankins, III, and Josephine H. Hicks, for plaintiff-appellant.", "Patterson, Dilthey, Clay & Bryson, L.L.P., by Ronald C. Dilthey and Charles George, for defendant-appellee." ], "corrections": "", "head_matter": "COLLINS & AIKMAN PRODUCTS CO., formerly COLLINS & AIKMAN CORPORATION, Plaintiff-Appellant v. THE HARTFORD ACCIDENT & INDEMNITY COMPANY, Defendant-Appellee\nNo. COA96-288\n(Filed 18 February 1997)\nAttorneys at Law \u00a7 64 (NCI4th); Insurance \u00a7 382 (NCI4th)\u2014 summary judgment \u2014 declaratory judgment action \u2014 attorney fees and expenses \u2014 not recoverable \u2014 litigation\nPlaintiff could not recover attorney\u2019s fees and expenses incurred in a declaratory judgment action in which the superior court found for defendant liability insurer, but the Court of Appeals reversed, holding that the policy covered punitive, damages. Attorney\u2019s fees incurred by the insured, the non-breaching party, are not recoverable as damages where those fees are incurred in the course of litigation to determine coverage and compel the insurer to perform its duties.\nAm Jur 2d, Damages \u00a7\u00a7 611, 615; Insurance \u00a7\u00a7 1772, 1773.\nAppeal by plaintiff from order entered 29 January 1996 by Judge Marvin K. Gray in Mecklenburg County Superior Court. Heard in the Court of Appeals 20 November 1996.\nBeginning 1 March 1987, defendant Hartford issued a commercial umbrella policy designed to cover plaintiff Collins & Aikman Products Company until 1 March 1988. On 29 February 1988, the negligence of one of plaintiff\u2019s employees caused an automobile accident in which two other motorists were killed. As plaintiff\u2019s primary insurance carrier at that time, the Aetna Casualty and Surety Company (\u201cAetna\u201d) defended the ensuing legal action against plaintiff. At trial, the verdict against plaintiff included an award of punitive damages and the aggregate of the actual and punitive damages awarded was greater than the primary coverage provided by Aetna. Defendant Hartford Accident and Indemnity Company (\u201cHartford\u201d), as the carrier providing excess coverage, denied that its policy included coverage for punitive damages.\nDefendant Hartford filed a declaratory judgment action in United States District Court for the Southern District of New York to determine the question of coverage. The action was later stayed after the New York federal court agreed with plaintiff that this issue should be litigated in North Carolina. After a negotiated settlement with the decedents\u2019 estates, the parties remaining reserved their rights to resolve questions of liability and indemnity among themselves. Thereafter, plaintiff filed a declaratory judgment action on the issue of coverage in Mecklenburg County Superior Court. The Superior Court found for defendant Hartford, but this Court reversed, holding that the policy did cover punitive damages. Collins & Aikman Corp. v. Hartford Acc. & Indem. Co., 106 N.C. App. 357, 416 S.E.2d 591 (1992), aff\u2019d, 335 N.C. 91, 436 S.E.2d 243 (1993). Plaintiff then voluntarily dismissed its claims for damages arising from defendant\u2019s refusal to cover punitive damages.\nOn 4 October 1995, plaintiff filed a complaint against defendant Hartford seeking attorney\u2019s fees and expenses incurred in defending the New York action and in prosecuting the North Carolina declaratory judgment action and alleging that these fees were damages incurred because of defendant\u2019s breach. Plaintiff moved for summary judgment and defendant moved to dismiss. The trial court granted summary judgment for defendant after converting defendant\u2019s motion to dismiss into a motion for summary judgment.\nPlaintiff appeals.\nParker, Poe, Adams & Bernstein, L.L.P., by Irvin W. Hankins, III, and Josephine H. Hicks, for plaintiff-appellant.\nPatterson, Dilthey, Clay & Bryson, L.L.P., by Ronald C. Dilthey and Charles George, for defendant-appellee." }, "file_name": "0412-01", "first_page_order": 450, "last_page_order": 453 }