Mlekush v. Farmers Insurance Exchange, 404 P.3d 704

On Jan 15, 2011 Tanya Mlekush was injured in a two‑vehicle collision and held UIM coverage under a Farmers Insurance policy.
The other driver tendered $50,000; Mlekush then sought UIM benefits from Farmers and exchanged medical information with Farmers’ adjuster.
Farmers made multiple settlement offers (largest pretrial offer $77,500); Mlekush filed suit Jan 24, 2013 and the parties mediated unsuccessfully.
A jury awarded $450,000 and judgment was entered for the $200,000 policy limit; Mlekush moved for attorney fees under the insurance exception to the American Rule.
The district court denied fees, finding Farmers acted reasonably and did not deny coverage; this Court previously remanded for factual development and then again considered the fee issue on appeal.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a first‑party insured who is compelled to sue for UIM benefits and recovers at trial more than the insurer's last offer may recover attorney fees under the insurance exception to the American Rule	Mlekush: when an insured must litigate to obtain the policy's full benefit and recovers more than insurer's last offer, the insurer should pay attorney fees	Farmers: the exception should not cover mere disputes over claim value where coverage is not contested; a legitimate valuation dispute shouldn't trigger fee liability	The Court holds that when a first‑party insured is compelled to litigate and obtains a verdict exceeding the insurer’s last settlement offer, that showing is prima facie proof the insured was forced to assume the burden of litigation and the insurer must pay reasonable attorney fees (district court to determine amount).

Mt. W. Farm Bureau Mut. Ins. Co. v. Brewer, 315 Mont. 231 (2003) (expanded insurance exception: insurer liable for fees when it forces insured to litigate to obtain contractual benefits)
Mlekush v. Farmers Ins. Exch., 381 Mont. 292 (2015) (remanded for factual findings to determine whether insured was forced to litigate)
Winter v. State Farm Mut. Auto. Ins. Co., 375 Mont. 351 (2014) (discussing equitable exceptions to the American Rule in insurance context)
Goodover v. Lindey’s Inc., 255 Mont. 430 (1993) (attorney fees awarded where insurer breached duty to defend)
Truck Ins. Exchange v. Woldstad, 212 Mont. 418 (1984) (attorney fees in defense/coverage contexts)
Lindsay Drilling v. U.S. Fidelity & Guar., 208 Mont. 91 (1984) (attorney fees in insurance coverage disputes)
Home Ins. Co. v. Pinski Bros., 160 Mont. 219 (1972) (early recognition of fee awards against insurers in certain circumstances)