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Hillerich & Bradsby Co. v. ACE American Ins. Co.

United States District Court, D. Montana, Helena Division

March 26, 2013

HILLERICH & BRADSBY CO., Plaintiff,
v.
ACE AMERICAN INSURANCE CO., Defendant

For Hillerich & Bradsby Co., Plaintiff: Jason S. Ritchie, Kyle A. Gray, W. Scott Mitchell, LEAD ATTORNEYS, HOLLAND & HART, Billings, MT.

For ACE American Insurance Company, Defendant: Perry J. Schneider, LEAD ATTORNEY, MILODRAGOVICH DALE STEINBRENNER & BINNEY, Missoula, MT; Thomas M. Jones, LEAD ATTORNEY, PRO HAC VICE, COZEN O'CONNOR, Seattle, WA.

For ACE American Insurance Company, Counter Claimant: Perry J. Schneider, LEAD ATTORNEY, MILODRAGOVICH DALE STEINBRENNER & BINNEY, Missoula, MT; Thomas M. Jones, LEAD ATTORNEY, PRO HAC VICE, COZEN O'CONNOR, Seattle, WA.

For Hillerich & Bradsby Co., Counter Defendant: Jason S. Ritchie, Kyle A. Gray, LEAD ATTORNEYS, HOLLAND & HART, Billings, MT.

OPINION

Page 1185

OPINION & ORDER

Donald W. Molloy, United States District Judge.

This is an insurance coverage case. It stems from the Patch lawsuit in state court that involved the death of a young man who was struck by a baseball that had been batted from a metal bat manufactured by Hillerich & Bradsby Company. (" H& B" ). ACE American Insurance Company insured H& B. In this lawsuit, H& B claims that ACE wrongly refused to pay further post-judgment interest and attorney's fees after ACE recommended

Page 1186

that H& B and ACE pay the $850,000 jury verdict in the underlying state case.

Summary judgment in favor of ACE American Insurance Company was granted on March 7, 2013. That order explained a detailed opinion supporting that decision would be issued at a later date. This opinion and order follows that determination and explains my reasoning.

Background

Brandon Patch died in a July 2003 baseball game after being hit by a baseball that was batted by a metal bat manufactured by H& B. H& B notified ACE of a potential lawsuit. The Patches sued H& B in Montana state court.

H& B's policy with ACE indemnified H& B for $2,000,000. But H& B had a $250,000 self insured retention for indemnity, which, much like a deductible, meant that H& B had to pay the first $250,000 to satisfy any judgment or settlement. The policy also provided H& B with $1,000,000 of coverage, per occurrence, for Allocated Loss Adjustment Expenses--e.g., attorney's fees, costs, and post-judgment interest. H& B had a self insured retention for this coverage in the amount of $350,000. These coverages were governed by an endorsement to the main policy--i.e. " Self Insured Retention with ALAE Limits Endorsements."

The Montana state court jury returned a verdict of $850,000, in favor of the Patches. H& B wanted to appeal the verdict, but ACE wanted to put the case to rest. It recommended that together H& B and ACE pay the $850,000 verdict, with H& B paying $250,000 (the amount of the self insured retention for indemnity) and ACE paying $600,000. H& B didn't heed this settlement recommendation. ACE then took the position that, under the Endorsement, it could stop paying post-judgment interest and attorney's fees (i.e. Allocated Loss Adjustment Expenses) because it had recommended a settlement that was acceptable to the Patches.

H& B pursued its appeal and lost. Patch v. Hillerich & Brads by Co.,2011 MT 175, 361 Mont. 241, 257 P.3d 383 (Mont. 2011). ACE then paid $600,000 to H& B, which ACE considered its share of the judgment. ACE also paid what it believed was its share of the Allocated Loss Adjustment Expenses owed up ...


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