Mlekush v. Farmers Insurance Exchan, 2017 MT 256

On Jan 15, 2011 Tanya Mlekush was injured in a two-vehicle collision and had underinsured motorist (UIM) coverage with Farmers Insurance Exchange.
The parties exchanged medical information and settlement communications; Farmers made multiple settlement offers (largest pre-trial offer $77,500) and Mlekush demanded policy limits ($200,000).
Mlekush sued on Jan 24, 2013 for UIM benefits after Farmers questioned causation and denied advance surgical payments; mediation failed.
A jury returned a verdict of $450,000; judgment was entered for the $200,000 policy limit.
The district court denied Mlekush’s motion for attorney fees under the insurance exception to the American Rule; this court previously remanded for factual development and ultimately heard the fee issue on remand.
The Montana Supreme Court reversed, holding that when an insured sues for UIM benefits and recovers at trial more than the insurer’s last offer, the insurer must pay reasonable attorney fees.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an insured compelled to sue for UIM benefits who recovers more at trial than the insurer's last offer is entitled to attorney fees under the insurance exception to the American Rule	Mlekush: yes — she was forced to litigate to obtain the full benefit of her policy and therefore should recover fees	Farmers: no — the exception should not apply where only the value of the claim (not coverage) is disputed; a legitimate valuation dispute should not trigger fee shifting	Held: Yes. A verdict exceeding the insurer’s last offer is prima facie proof the insured was forced to assume the burden of litigation; insurer must pay reasonable attorney fees (district court to determine reasonableness)

Mt. W. Farm Bureau Mut. Ins. Co. v. Brewer, 315 Mont. 231 (2003) (establishes insurance exception: insured entitled to fees when insurer forces litigation to obtain full benefit of policy)
Mlekush v. Farmers Ins. Exch., 381 Mont. 292 (2015) (remanded for factual development on fee entitlement; partially overruled insofar as inconsistent with this opinion)
Winter v. State Farm Mut. Auto. Ins. Co., 375 Mont. 351 (2014) (discusses equitable exceptions to the American Rule in insurance context)
Goodover v. Lindey’s Inc., 255 Mont. 430 (1992) (attorney-fee exception where insurer breaches duty to defend)
Truck Ins. Exchange v. Woldstad, 212 Mont. 418 (1984) (attorney-fee relief tied to insurer’s breach of defense/coverage duties)
Lindsay Drilling v. U.S. Fidelity & Guar., 208 Mont. 91 (1983) (similar recognition of fee recovery tied to insurer conduct)
Home Ins. Co. v. Pinski Brothers, Inc., 160 Mont. 219 (1972) (early Montana authority awarding fees when insurer wrongfully denies defense/coverage)
Chase v. Bearpaw Ranch Ass’n, 331 Mont. 421 (2006) (standard for district court review of reasonableness of attorney fees)
Modroo v. Nationwide Mut. Fire Ins. Co., 345 Mont. 262 (2008) (discusses adhesive nature of insurance contracts and insured expectations)