United States District Court, D. Montana, Butte Division
L. Christensen, Chief Judge.
the Court is Plaintiff Scott Johnson's
("Johnson") Rule 54(d) motion for attorneys'
fees and costs. (Doc. 71.) For the reasons explained below,
the Court denies Johnson's motion.
December 14, 2016, this Court issued its Order on the
parties' Federated's motion for partial summary
judgment regarding the D&O Policy at issue. The Court
granted Federated's motion in part and found that the
D&O Policy does not provide a duty to defend Johnson in
the underlying litigation as to the claim of conversion for
$14, 264.17, but that Federated was still under a duty to
advance defense costs as they are incurred as to the
remaining covered claims.
acknowledges that while Federated was successful in avoiding
any obligation to pay the $14, 264.17 conversion claim,
Johnson was more successful in the outcome because he
obtained full, complete, and ongoing insurance coverage in
the underlying case on all other claims. (Doc. 72 at 6.)
Federated counters that while both Johnson and Federated
achieved a victory on certain issues as to coverage, neither
was totally successful because both parties also suffered a
loss. Therefore, Johnson is not a "prevailing
party" and is not entitled to attorneys' fees under
the insurance exception to the American Rule, nor is Johnson
entitled to attorneys' fees as supplemental relief under
Montana Code Annotated § 27-8-313 (2015). (Doc. 73 at
2-3.) Further, Federated argues that since Federated has
continued to pay all of Johnson's defense fees and costs,
it was not necessary for Johnson to seek a declaration
showing he was entitled to relief and the declaratory relief
sought was not necessary to change the status quo.
(Id. at 3-4.)
follows the general American Rule that a party in a civil
action is not entitled to attorney fees absent a specific
contractual or statutory provision." Mountain West
Farm Bureau Mut. Ins. Co. v. Brewer, 69 P.3d 652, 655
(Mont. 2003). However, pursuant to the insurance exception to
the American Rule, an insured is entitled to recover attorney
fees "when the insurer forces the insured to assume the
burden of legal action to obtain the full benefit of the
insurance contract, regardless of whether the insurer's
duty to defend is at issue." Brewer, 69 P.3d at
660. This insurance exception applies only when the insured
prevails. Id. at 655 (citing Kunst v. Pass,
957 P.2d 1 (Mont. 1998)). Even if a party prevails in one
respect, the party may not be entitled to fees because it
must have prevailed in total. In re Marriage of
Pfennigs, 989 P.2d 327, 334 (Mont. 1999)
("[N]either party is totally successful on appeal and,
as a result, neither is the prevailing party for purposes of
the Agreement's attorney fees provision").
the Montana Supreme Court has recognized that even though
Mont. Code Ann. § 27-8-313 does not contain a specific
attorney fee provision, it gives a court the ability to grant
"supplemental relief when equitable considerations
support that award. United Nat. Ins. Co. v. St. Paul Fire
& Marine Ins. Co., 214 P.3d 1260, 1270 (Mont. 2009);
Trustees of Indiana University v. Buxbaum, 69 P.3d
663, 673 (Mont. 2003). Once the court finds that equity
supports such an award, the court must also find that the
award is "necessary and proper." United Nat.
Ins. Co., 214 P.3d at 1270-1271. The tangible parameters
test provides that fees are "necessary and proper"
when: (1) an insurance company possesses what the plaintiffs
sought in the declaratory relief action; (2) it is necessary
to seek a declaration showing that the plaintiffs are
entitled to the relief sought; and (3) the declaratory relief
sought was necessary in order to change the status quo."
Martin v. SAIF Corp., 167 P.3d 916, 920 (Mont.
2007). Further, the Montana Supreme Court has recognized a
party's "tactical decision" to file a
declaratory judgment action does not automatically presume
attorney fees are "necessary or proper."
Buxbaum, 69 P.3d at 675.
pursuant to this Court's December 14, 2016 Order, both
parties achieved some success: Federated was not obligated to
defend or indemnify Johnson any further in the underlying
litigation as it related to the claim for conversion, but
Johnson was still entitled to Federated's coverage with
respect to the remaining claims. Thus, because both parties
gained a victory, no party is considered to have wholly
prevailed. Johnson is not entitled to attorneys' fees on
the Court will not grant Johnson supplemental relief here
because equity does not support such an award. Federated has
paid over $2, 000, 000 in this case to defend Johnson in the
underlying litigation, and Federated will continue to pay
Johnson's fees and costs as it relates to the remaining
claims. Moreover, the Court's order on Federated's
motion for partial summary judgement did not alter the status
quo because Federated had already stipulated to pay
Johnson's fees and costs.
IT IS ORDERED that Johnson's Rule 54(d) Motion for