Southern Farm Bureau Casualty Insurance Co. v. Watkins
2011 Ark. App. 388
Ark. Ct. App.2011Background
- The case previously involved Watkins v. Southern Farm Bureau Cas. Ins. Co., where insurers sought a declaratory judgment seeking no defense/indemnity.
- Turner sued Watkins and a $1,000,000 settlement was reached; Farm Bureau refused Watkins’s reimbursement request.
- Appellees sought attorney’s fees, penalties, and interest under Ark. Code Ann. §§ 23-79-208, -209, and 16-22-308.
- The trial court awarded some fees, prejudgment interest, and fees for this action; Farm Bureau appealed.
- This appeal affirmed some fee awards but reversed others, addressing whether §§ 23-79-208 and -209 apply together or separately.
- The court discusses the duties to defend vs. indemnify and the proper method to award attorney’s fees under the statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §23-79-209 permits fees in declaratory actions with monetary counterclaims | Watkins argues §23-79-209 authorizes fees for declaratory relief. | Farm Bureau contends §23-79-208 governs monetary claims and §23-79-209 does not apply here. | Yes; §23-79-209 applies alongside §23-79-208 as complementary. |
| Whether §23-79-208 penalties/fees apply when recovery is partial | Appellees argue they recover under §23-79-208 for defense costs. | Farm Bureau argues §23-79-208 should not apply in this context. | Yes; penalties/fees under §23-79-208 can apply when relief is monetary or declaratory. (Note: court treated as applicable on cross-appeal) |
| Whether prejudgment interest is due on unpaid defense fees | Watkins incurred a definite loss and prejudgment interest should accrue. | Farm Bureau disputes the award of prejudgment interest. | Prejudgment interest awarded on unpaid defense fees. |
| Whether the insurer owes fees for defense of Turner suit and this action | Appellees seek full fee recovery including defense of Turner and this action. | Farm Bureau contends only certain fees were recoverable. | Affirmed on direct appeal; reversed on cross-appeal regarding some fee aspects. |
Key Cases Cited
- Newcourt Financial, Inc. v. Canal Ins. Co., 341 Ark. 181 (2000) (clarifies §23-79-208 vs §23-79-209 in combined actions)
- Farm Bureau Casualty Ins. Co. v. Krouse, 2010 Ark.App. 493 (2010) (two statutes may apply as alternative, complementary; declaratory vs monetary claims)
- Watkins v. Southern Farm Bureau Cas. Ins. Co., 2009 Ark.App. 693 (2009) (duty to defend broader than duty to indemnify; fee award upheld)
- Newcourt Fin., Inc. v. Canal Ins. Co., 341 Ark. 181 (2000) (distinguishes declaratory judgment vs counterclaims for fees)
- Stamps v. State Farm Auto. Ins. Co., 2009 Ark. 621 (2009) (prejudgment interest when loss is ascertainable)
- Murphy Oil USA, Inc. v. Unigard Sec. Ins. Co., 347 Ark. 167 (2001) (duty to defend arises from potential coverage; broader than indemnify)