## Facts

- Standard Insurance Company issued a group disability income policy to Vicom Associates, covering its employee, Albert Brandt.
- Brandt became totally disabled and demanded disability benefits allegedly owed under the policy.
- Standard allegedly refused to pay benefits without justification.
- Brandt sued for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing (bad faith), and (3) violation of statutory prohibitions against unfair claims practices.
- As part of his tort and statutory claims, Brandt sought as damages the attorney’s fees incurred to obtain the withheld policy benefits.
- The trial court granted Standard’s motion to strike the attorney-fee allegations.
- Brandt sought a writ of mandate to reinstate the attorney-fee allegations.

## Issues

1. Whether, when an insurer tortiously withholds policy benefits, the insured may recover as tort damages the reasonable attorney’s fees incurred to compel payment of those benefits.
2. Whether the general rule against fee shifting bars recovery of such fees when they are claimed as compensatory damages rather than litigation costs.

## Decision

- The Supreme Court of California issued a writ of mandate directing the trial court to reinstate the complaint allegations seeking attorney’s fees as damages on the bad-faith cause of action.
- The court held that reasonable attorney’s fees incurred to obtain wrongfully withheld policy benefits are recoverable as damages proximately caused by the insurer’s tort.
- The court limited the recoverable fees to those attributable to efforts to obtain the contractual benefits, not fees incurred to litigate the bad-faith tort claim for additional recovery.
- The court confined its decision to the bad-faith cause of action and did not decide the availability of such fees under the statutory unfair-practices theory.

## Legal Principles

- When an insurer’s tortious refusal to pay benefits reasonably compels the insured to hire counsel to obtain the benefits due, the fees incurred for that purpose constitute economic loss recoverable as tort damages.
- Such fees are treated as compensatory damages, not as prevailing-party costs; therefore, the general rule that each side bears its own attorney’s fees does not bar recovery.
- Recoverable attorney’s fees must be limited and allocable to legal work performed to obtain the policy benefits that were wrongfully withheld, excluding fees devoted solely to pursuing tort remedies beyond contract benefits.

## Conclusion

The court recognized a damages remedy in insurance bad-faith cases for reasonable attorney’s fees incurred to recover withheld policy benefits, characterizing those fees as economic loss caused by the insurer’s tort and limiting recovery to fees attributable to securing the contract benefits.


Brandt v. Superior Court, 37 Cal. 3d 813, 210 Cal. Rptr. 211, 693 P.2d 796 (Cal. 1985)