Insured May Assign Right To "Brandt" Attorney Fees

In a unanimous opinion, the California Supreme Court held last week that when an insured assigns a claim for bad faith against the insurer, and the assignee brings a tort action against the insurer that includes a claim for wrongfully withheld policy benefits, the assignee may recover Brandt fees. (Essex Ins. Co. v. Five Star, S131992 - slip opinion available at http://www.courtinfo.ca.gov/cgi-bin/opinions/.cgi/)

Over 20 years ago, the high court gave the insured the right to attorney fees attributable to the insured's attempt to recover policy benefits tortiously withheld by the carrier. (Brandt v. Superior Court (1985) 37 Cal.3d 813.) It reasoned that when an insurer has deprived the insured of policy benefits in bad faith, attorney fees the insured reasonably and necessarily incurs to obtain those policy benefits constitute an economic loss proximately caused by the insurer’s tort, and thus those attorney fees (now commonly referred to as Brandt fees) are recoverable as tort damages.

The court reasoned that disallowing recovery of Brandt fees incurred by assignees would also tend to discourage assignment of bad faith claims against insurance companies, contrary to the public policy favoring transferability of causes of action.