Mlekush v. Farmers Insurance Exchange
2015 MT 302
| Mont. | 2015Background
- On Jan 15, 2011 Tanya Mlekush was injured in a car accident; the tortfeasor admitted liability and Mlekush recovered the tortfeasor’s $50,000 policy limit.
- Mlekush’s own auto policy with Farmers provided $200,000 underinsured motorist (UIM) coverage; she retained counsel on a contingency basis and submitted medical records and bills to Farmers.
- Farmers requested additional information, acknowledged potential UIM exposure, and exchanged settlement communications; Farmers also filed (and later lost) a third‑party indemnification claim against the tortfeasor.
- Mlekush sued Farmers for benefits in January 2013; after discovery and trial in July 2014, a jury awarded $450,000 and Mlekush stipulated to a $200,000 UIM judgment against Farmers.
- Mlekush moved for attorney fees and nontaxable costs under Montana’s “insurance exception” to the American Rule; the District Court denied fees, finding Farmers did not deny coverage and Mlekush filed suit prematurely.
- The Supreme Court reversed and remanded, holding the record was insufficient and the court must consider the entire litigation to determine whether Farmers forced Mlekush to litigate to obtain the full benefit of her policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insured may recover attorney fees under Montana’s insurance exception | Mlekush: Farmers forced her to litigate to obtain full UIM benefits, so fees and nontaxable costs are recoverable | Farmers: No denial of coverage; insured filed suit before evidence developed, so exception does not apply | Reversed and remanded — court must evaluate the entire litigation to decide if Farmers forced litigation and fees are warranted |
Key Cases Cited
- Winter v. State Farm Mut. Auto. Ins. Co., 328 P.3d 665 (Mont. 2014) (describing insurance exception: insured may recover fees when insurer forces insured to litigate to obtain contract benefits)
- Mont. W. Farm Bureau Mut. Ins. Co. v. Brewer, 69 P.3d 652 (Mont. 2003) (discusses narrow exceptions to American Rule and the insurance exception)
- Riordan v. State Farm Mut. Auto. Ins. Co., 589 F.3d 999 (9th Cir. 2009) (insurer’s refusal to settle until eve of trial can force insured to litigate; supports insurance‑exception analysis)
- Estate of Gleason v. Cent. United Life Ins. Co., 350 P.3d 349 (Mont. 2015) (insurer’s conduct during litigation can trigger fee entitlement despite some payments)
- BNSF Ry. Co. v. Cringle, 281 P.3d 203 (Mont. 2012) (standards for appellate review of factual findings and mixed questions)
- Nat’l Cas. Co. v. Am. Bankers Ins. Co., 19 P.3d 223 (Mont. 2001) (district court’s awardability of attorney fees reviewed for correctness)