5th Circuit Sides with Attorney on Contingency Fee in Insurance Settlement

The U.S. Court of Appeals for the 5th Circuit has sided with an attorney in an appeal of a lawsuit granting the lawyer contingency fees in the settlement of a homeowners insurance claim in the aftermath of Hurricane Katrina. It denied, however, the attorney’s request for fees and damages related to the appeal.

Kenneth Schoenberger provided legal services on a contingency fee basis for Jocelyn Richards in litigation with her insurance company seeking an increased settlement offer for damage to her property during Hurricane Katrina, the 5th Circuit explained.

Schoenberger succeeded in obtaining an increased settlement from Richard’s insurer, Louisiana Citizens Property Insurance Corporation. The attorney’s fee was to come out of the settlement funds.

However, the mortgage holder on Richards’ home, American Home, which also was named as an additional mortgagee-loss payee on the insurance contract, “sought the full insurance proceeds on the ground that its mortgage balance exceeds the sum recovered,” according to court documents.

A lower court sided with Schoenberger, holding that that “under Louisiana law, Schoenberger’s privilege for his contingency fee in the settlement funds he obtained for Richards is superior to American Home’s rights.”

American Home appealed, and Schoenberger additionally asked the appeals court to order American Home to pay both court costs and damages to the attorney “for what he deemed to be a frivolous appeal,” the court explained.

The 5th Circuit Court agreed with the district court that Schoenberger’s contingency fee is supported under Louisiana law. In denying his request for attorney’s fees and damages related to American Home’s appeal, the appeals court said it understood “Schoenberger’s frustration from his years-long pursuit of his fees,” but it was “constrained by the applicable law to deny him relief.”