A “fateful miscalculation” resulted in Simmons Foods Inc.’s missing out on more than $1 million for attorneys’ fees and damages in a lawsuit against its insurance carriers, according to a ruling by the 8th U.S. Circuit Court of Appeals.
The Siloam Springs pet food manufacturer sued its insurance carriers, Industrial Risk Insurers and Ironshore Specialty Insurance Co., in 2013 after they refused to pay the entire claim for damage sustained by Simmons’ canning building in Oklahoma, damage caused by a snowstorm. In a lawsuit filed in U.S. District Court in Fayetteville, Simmons said it was entitled to recover the cost to rebuild the building while the insurance companies argued it only had to cover the costs to repair specified damage, court records showed.
Simmons submitted invoices to the insurance companies that totaled $7,367,859. The insurance companies, however, paid only $3,879,098, according to the 8th Circuit’s ruling last month.
Simmons said it was seeking the difference, which it said was $3,584,042.
The 8th Circuit noted that the math didn’t add up. The actual difference was $3,488,761.
“That is, Simmons’s demand was about $95,000 too high,” Chief Judge William Jay Riley said in the order. “We discuss the significance of this fateful miscalculation later.”
An Arkansas statute says that if an insured must resort to litigation against an insurance carrier and then recovers at least 80 percent of the amount sought, then the insurer must pay a 12 percent penalty and attorneys’ fees, said Todd Lewis of the law firm Conner & Winters LLP of Fayetteville, which represented Simmons.
The dispute went to a U.S. District Court jury in Fayetteville in October 2015. The jury found in favor of Simmons, resulting in an award of $2,817,380 — 78.6 percent of the damages sought.
In November 2015, Simmons’ attorneys asked U.S. District Court Judge Timothy Brooks to award it attorney fees and the 12 percent additional damages. In that filing, Simmons had corrected the miscalculation of the difference between its actual costs and the amount the insurers originally paid. And the award ($2,817,380) represented 80.8 percent of the actual difference ($3,488,761) — enough to entitle Simmons to 12 percent more ($338,086) and attorneys’ fees, which at that time were $862,466.
The insurance companies accused Simmons of rewriting history, arguing that the amount sought was $3.58 million. Marshall Ney of the Rogers office of Friday Eldredge & Clark was one of the attorneys representing the defendants.
Judge Brooks agreed with the insurance companies and denied the 12 percent penalty and the attorneys’ fees. “By the slightest of margins, Simmons fails to chin this statutory bar,” Brooks wrote in a January 2016 order.
Both sides appealed the case to the 8th Circuit. The insurance companies argued that Simmons waited too long to file the lawsuit, and it should have been dismissed long before the case made it to a jury.
The 8th Circuit found that the case was filed in time.
Simmons also appealed the denial of the attorneys’ fees and the 12 percent damages.
“The district court was right to reject this attempt at revisionist history,” Chief Judge Riley wrote.
The $3.4 million was as much as Simmons should have sought, he determined. “Yet for some unknown reason, Simmons consistently demanded an amount almost $100,000 more than that,” Riley said.
Riley also noted that when Brooks “expressed concern about the origin of this number, Simmons doubled down and reaffirmed that ‘at the end of the day … this lawsuit is for 3.584 million.’”
Riley said that since Simmons didn’t recover 80 percent of that amount, it wasn’t entitled to the damages or attorney fees.
Still, Lewis, an attorney for Simmons, said the company “was very satisfied that they recovered what the jury awarded, … given the extent of the damage to the building.” That was the core issue in the case, he said.
Simmons said in a filing last week that the $2.8 million judgment has been paid.