A Capehart Scatchard Blog

Counsel Fee Award Denied When not Preserved in High-Low Agreement

By on May 15, 2015 in Blog with 1 Comment

Babysitter Carol Collins was pushing three-year old Kirsten Jennings in a shopping cart at a jogging pace when she fell, pulling the cart down and causing injuries to Kirsten. In Jennings v. Collins, No. A-0750-13 (N.J. App. Div. Mar. 30, 2015), Kirsten’s father, plaintiff Kevin Jennings, filed suit as his daughter’s guardian ad litem against Collins. Collins submitted the matter to her homeowner’s insurance company, Bay State, for defense and indemnification. On the theory that the policy did not apply to Collins’ coverage due to her employment as a babysitter, Bay State filed a separate action seeking declaratory judgment that it had no obligation to defend or indemnify Collins.

The parties entered into a $75,000/$225,000 high-low settlement agreement that was triggered by the result of Bay State’s declaratory judgment action, in which it had reserved its right to appeal. Thus, if Bay State did not succeed on appeal and it had to protect Collins’ interests, the parties would settle for $225,000. On the other hand, if Bay State was successful on appeal, Collins would settle for $75,000. Bay State was not successful on appeal and thus settled for $225,000.

Thereafter, the plaintiffs filed a motion seeking an award of counsel fees. A filing permitted by a court rule which allowed the award of counsel fees in declaratory judgment actions that resulted in the claimant’s favor. The trial court denied the plaintiffs’ motion; the plaintiffs appealed.

The plaintiffs’ theory on appeal was that the high-low settlement agreement only applied to the Jennings’ negligence lawsuit and the settlement did not prevent them from seeking counsel fees for their successful prosecution of the declaratory judgment action under the rule.

The Appellate Division disagreed, finding that the court rule permitting counsel fees to successful claimants was intended to discourage insurance companies from making groundless disclaimers of coverage and to allow the insured the benefits of the insurance contract without the burden of a judicial determination that the insured was entitled to such protection. The award of counsel fees, however, is not mandatory and relies on the trial judge to use his “broad discretion” regarding the circumstances in which counsel fees are appropriate.

Here, the Appellate Division held that the high-low settlement agreement, drafted by plaintiff, established a hard cap on the amount Bay State would be required to pay at the conclusion of both actions and the settlement agreement properly established that the plaintiff’s counsel fees would come out of the gross settlement. Moreover, the court found, that if plaintiff’s counsel wanted to reserve the right to present a claim for counsel fees as to the coverage issue, that element should have been expressly included in the agreement.


About the Author

About the Author:

Mr. Holmgren is a shareholder in Capehart Scatchard's Litigation Department, focusing his practice in general defense litigation throughout the federal and state courts of New Jersey and Pennsylvania, with a concentration on premises liability, products liability, construction, estates, employment and professional malpractice. His clients include large and small business owners, municipalities and governmental entities, manufacturers, and their insurers.


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  1. Yadia says:

    The riaa is in a very precarious poostiin at this point. If they are shown to give in and let it go..that’s an indication to allow future “lawsuit recipients” to “fight back” as well. If they lose this case, of course, they may lose their ability to sue people anyway.Of course if they win, they will continue their harrassment suits, moreso…but they do have a lot at stake here. I’m sure they will try their best to win this case…hang in there guys..keep the riaa on the run!

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