Walton v. Hartford Insurance
818 P.2d 320
Idaho
1991
Check Treatment

*1 616

wise, in its Memorandum Decision and Valley Shopping Or- v. Center Idaho Power Co., der the trial stated that the award (1991). 119 Idaho 803 P.2d 993 “attorney fees and costs shall be deter- Applying analysis case, this instant pursuant mined procedure to the in Rule 54 we hold trial court did not abuse I.R.C.P.” The trial court considered both determining its discretion that Burns parties’ terms of the contract and the only was entitled to those attorney fees provisions making of I.R.C.P. 54 in the fee which obtaining were incurred in award. We hold the trial court did not err liminary injunction. The record before us nor abuse its discretion. demonstrates that the properly trial court considered the written terms of the con- In seeking damages addition to tract applied between the and action, breach of contract this Burns’ provisions in making of I.R.C.P. 54 complaint sought damages in excess of one award of fees to Burns. There million dollars under several theories. The showing has been no of an abuse of discre- only trial court awarded Burns dam $45.00 tion and no error. ages pursuant breach claim and dismissed all other claims. of attorney award the dis- 54(d)(1)(B) court, I.R.C.P. directs the trial in trict appeal court is affirmed. Costs discretion, exercising respondent. to consider No fees awarded on litigation result of the appeal. relation to the

relief sought determining prevailing party. It is well established that an C.J., award BAKES, BISTLINE, and of attorney fees rests in the sound discre McDEVITT, JOHNSON JJ. concur. tion of the trial court. Valley Shop Sun

ping Center v. Idaho Power (1991). addition, 803 P.2d 993 In party disputing burden is on the the award show an abuse discretion. Anderson v. Ethington, Idaho 651 P.2d 923 (1982); Trust, v. Palmer Idaho Bank & 818 P.2d 320 603 P.2d 597 Douglas Frederick WALTON Janet Hedger, State Idaho v. Walton, wife, husband and Third- (1989), citing P.2d 1331 Associates North- party Plaintiffs-Respondents, west, Beets, Inc. v. 733 P.2d v. (Ct.App.1987), adopted we the analysis appellate courts of this state will COMPANY, HARTFORD INSURANCE in determining make whether Third-party Defendant-Appellant. court has abused its In Hedger, discretion. Nos. we stated: Idaho, Supreme Court of

When an exercise of discretion is re- Moscow, April 1990 Term of Court. appeal, apellate viewed on court con- inquiry. ducts a multi-tiered The se- Sept. quence (1) inquiry whether the rightly perceived lower the issue as discretion; (2)

one of whether the court acted within the outer of such boundaries consistently legal

discretion and with applicable choices; specific standards (3) whether the court reached its decision an exercise reason. Idaho at 1333. We principle subsequently reaffirmed this applied analysis in the multi-tiered Sun *2 Mitchell, T. A. and John

Thomas Mitchell plaintiffs- d’Alene, third-party Coeur argued. A. Mitchell respondents. Thomas BISTLINE, Justice. (Hart- Company Insurance

The Hartford ford) solely challenge the district appeals to the Wal- fees court’s award of challenge the appeal tons. ruling allowed attor- district court’s claimed, ney amount less than interest. prejudgment and which denied prejudgment on the denial of We reverse to the district court We remand interest. a redetermination reconsideration of fees to awarded Waltons. AND

I. FACTS PROCEEDINGS

BELOW court’s statement of

The district helpful is- facts to a discussion sues: 7, 1986, a September there was

On Highway 41 in Kootenai collision on involving Toyota County the 1984 owned Walton, by Douglas a 1985 operated Eck- operated John Ford owned father-in-law, man, and a Mr. Walton’s Billy Jo Honda driven Walton, age 12, the Henderson. Jake Douglas son of and Janet Walton Eckman, passen- grandson of John was ger in the Eckman vehicle. Jake Walton killed in the collision. 4,1986, suit was filed December On injuries received in the Hendersons for The vehicle driven John the accident. Eckman rear collided with the had it a left vehicle when slowed for Walton stopped in the turning vehicle which had oncoming traffic. roadway because into the Eckman vehicle slammed After vehicle, it back of the Walton lane oncoming into the where swerved by the Henderson vehicle. was struck liability had insur- Although Eckmans $100,000.00. ance, policy limits were insurance, liability carried The Waltons including motorist cover- underinsured P.S., Evans, Lackie, The Hartford age Coeur with the Hartford. Craven & January letter on d’Alene, defendant-appel- was informed third-party under had a claim Cartwright argued. 1987 that Waltons P. lant. Jarold policy. their own negotiation Hartford acknowl- After lengthy and discus- edged February sion, letter on all of into a entered Thereafter, February March agreement. With some ex- 16,1987, urged and June the Waltons ceptions matter, pertaining to this *3 negotiate. 9, 1987, Hartford to April On were the Hendersons to receive the $170,- the Waltons offered to for settle $100,000.00, was which the limit Eck- of 000.00, $4,000.00 within of the amount liability policy mans’ insurance and which by awarded arbitration. had been to the tendered Court in an interpleader action. The agreed Waltons (emphasis 65-66 supplied). any dismiss against to and all claims addition to the death of Jake Walton and Hendersons, Eckmans and no the to make injuries by Douglas and suffered Janet funds, Walton, interpleaded claim to and very injuries there were serious to they waive bad faith claim that occupants the of the Henderson vehicle. might against have had the Hartford. point during At one litigation, the Hart- agreed policy Hartford to waive its ford’s counsel wrote to counsel for the requirement that the Waltons exhaust Waltons and to counsel for the policy proceeding the Eckman before understanding Hendersons: “It our with their against underinsured claim the financially desperate Hendersons are approved The Hartford. This Court the $100,000 and even payment this cannot settlement and begin dismissed all claims compensate the Hendersons for exception the following with set forth expenses their out-of-pocket as a incurred Order an filed October 1988: result of this accident.” R.Vol. 44. Pri- thereto, the insurer of the Eckmans had It is specifically ordered that paid into its liability policy limits of claims ... against [the] $100,000, leaving it to be determined who ... Company, Insurance Hartford it, Hendersons, would receive the Wal- pending shall not be dismissed tons, or both. conclusion of arbitration between they agreed to which and have Not mentioned oth- district court’s by which is contemplated the terms of sequence erwise well-narrated of events is Stipulation agreement the reluctance of counsel for Waltons parties. At such time as said arbitra- Apparently embroil them a trial. consummated, tion upon has been then anticipating recognize that Hartford would parties, notice this those Court liability exposure under underin- that claim shall likewise be dismissed. coverage sured policy, motorist of its coun- provided Arbitration is for in the sel retained the Waltons into entered a portion underinsured motorist arrangement, contingent upon written fee policy issued covering recovery, provided only 25 per- for Waltons as follows: litigate, cent if not have counsel did but percent necessary. 33V3 if such became ARBITRATION 23, 1987, attempts As of July person If we and a covered do not fruitlessly

initiated Waltons had agree: end, and, come judge to an as the district person wrote in 1. legally his decision: Whether damages entitled this to recover under Finally, party the Waltons filed a third endorsement; or against July action The Hartford on alleging damages; that: 2. As to the amount of may party party Hartford is a named third defen- either make a de- written event, dant because it failed and mand for In this herein has arbitration. party refused to settle with the Waltons each will select arbitrator. loss, although express their under the The two will select a third. arbitrators agree thirty policy obligated they terms it is to do If within cannot days, request may so. either that selection thirty twenty to minutes having by judge approximately a made be to Mr. an award jurisdiction. party will: and issued Each injuries, concerning his claim Walton incurs; and Pay expenses concerning her $15,000 Mrs. Walton expenses of the third Bear the $150,000 to the injuries, claim equally. arbitrator wrongful death of Jake. for the otherwise, parties agree Unless both award, The Hart- Within hours of place in the coun- will take arbitration $166,000.00 in the amount ford’s draft person the covered lives. ty in which to Mr. Mrs. Walton. tendered procedure rules of and evidence Local thereafter, ad- Shortly The Hartford was agreed apply. A decision will counsel intended to that Waltons’ vised binding two of the arbitrators will *4 contingent at- petition for his one-third to: as pursuant Idaho Code torney’s fees to person is 1. Whether the covered The Hartford Section 41-1839. Because damages; legally entitled to recover attorney’s for opposed petition the fees since, policy, terms of under the the damages. of This 2. The amount may de be obtained within trial novo only specified if the amount applies award, the The Hartford with- days of for not the minimum limit does exceed pending resolution of the tender drew by bodily liability specified the injury the issue. responsibility of the state financial law Con- applied The Waltons for Order principal- your in which covered auto The Wal- firming Arbitration Award. garaged. If exceeds ly the amount Attor- tons also submitted Motion for limit, may party either demand Objection Fees. filed an ney Hartford right the to a trial. This demand must of Arbitration Award and Confirmation days made of the arbitra- within 60 attorney’s fees. opposed an award tor’s decision. If this demand not Memoran- parties have submitted Both made, damages agreed the amount of hearings were dums these issues and by binding. the arbitrators bewill 29, on November 1988 and Decem- held did not R.Vol. 65-67. The settlement ber 1988. years materialize until more than two after added). (emphasis R.Vol. 67-68 Jake killed and the Henderson Walton was against Hart- The district court ruled seriously injured. children policy provision that a ford’s contention THE ATTORNEY FEE II-A. AWARD declaring pay party will “[each] expenses applied attorney it incurs” The district court’s decision included concluded that best the fees. court to attorney its final conclusions as fees language ambiguous interpreted was by recapitulated claimed the Waltons and of the adversely Hartford as the drafter proceedings of arbitration: Thus, the court ruled that contract. On November the arbitration preclude policy the Wal- did d’Al- proceeding was conducted Coeur obtaining attorney fees. tons from ene, proceeding lasted Idaho. entire provisions of The court set out the I.C. just presided was over two hours and addressing application Mitch- 41-1839.1 by three in Mr. over arbitrators § statute, it was the court stated that [attorney Mr. Mrs. ell’s for & Walton] recent decision in of this Court’s aware office. The arbitrators deliberated contract, court, policy, or pro certificate synopsized under such the district those As brought against any are: shall in action visions thereafter any court in the state recov- the insurer in (1) Any issuing policy, certificate insurer policy, ery certificate or under the terms which shall fail or contract of insurance ... contract, (30) pay further amount as the such period thirty days proof after for a attorney’s adjudge as reasonable provided court shall as in such loss has been furnished contract, per- policy, fees in such action. certificate or (emphasis original). justly due entitled thereto the amount son Brinkman v. Aid Ins. tion was concluded could insist that dam- ages The district court be decided at trial in district court. therefrom, requirement concluded as to the II-B. THE AMOUNT OF proof loss, policies that “insurance FEES AWARDED require proof cannot more than is neces- sary When the prima for a case.” ordered that facie R.Yol. the Waltons entitled were fees case, The court added that the instant “[i]n insurer, setting from their it deferred it is any proof not clear that of loss was of the fees until such time as the case required was policy The Hartford.” fully concluded, particularly having in mind R.Vol. 72. The court went on to observe agreement above-mentioned which set that Hartford notified of the claim aspects proceeding involving tled all letter, and that the offer Waltons’ to settle Hendersons, Waltons, the Eck proof was sufficient of loss. mans, (other and Hartford than the Wal Relative to the for claim Hartford). against tons’ action The trial the district court wrote: there observed that would be an arbi that, This Court after an holds action has tration, provided in policy, as but there insurer, been brought against an attor- party after either dissatisfied with the out *5 ney’s fees are allowable under Idaho days come sixty had in which request Code Section 41-1839. damages that the amount of be decided This result is consistent with the policy sixty trial in the district court. When the behind the The Supreme statute. Idaho days expired, the Waltons moved for con Court statutory has held that the attor- firmation of the arbitration award and for ney’s fee is penalty not a but is an addi- they fees had which incurred tional compensation sum rendered as per their retaining counsel. Hart when the insured is entitled to recover motion, opposed ford but did not reas policy. under the purpose insurance previous objection sert its and the court’s of Idaho Code Section 41-1839 is to ruling written was in favor of the vent the sum is due the that insured it, Waltons. As the court worded Hartford being under the policy from diminished argue nevertheless “has continued to that by expenditures for the services of an attorney’s fees not should be awarded to attorney. Halliday v. Farmers Insur- According Waltons. to Hartford’s ar 293, ance Exchange, 89 Idaho 404 P.2d gument, under the insurance policy, each (1965). 634 An insurer should not be party pay expenses.” was to its own permitted to circumvent the statute sim- district court firm on previous stood its ply by demanding arbitration after a suit ruling, but then discussed Hartford’s con is filed. tention that the should fees be determined This result is not an also unfair one in by rate, time expended hourly relying at an that The option Hartford still has the of upon (Nal citing to Nalen v. Jenkins demanding right provided its to a trial as I), II,2 en Nalen and to Decker v. Home for in policy. the insurance According to guard Sys., 105 Idaho 666 P.2d 1169 policy, party may either demand a (Ct.App.1983). It observed from Decker sixty days trial within after the arbitra- plaintiffs prevailing that the were awarded tor’s decision. in they fees excess of what would have paid contingent Thus, agreement, under their fee 73-74. district court Decker, quoted from 105 Idaho at upheld vitality Halliday the continued v. 666 P.2d at 1174: Exch., Farmers Ins. 89 Idaho its reasoning 634 We affirm required Under the rule the court is applying recognizing Halliday and that ... existence and terms consider the party sixty days contingency arrangement. But either within after arbitra- I), II), (Nalen (Ct.App.1988). P.2d 2. Nalen v. Jenkins 1081 (Nalen (Ct.App.1987); P.2d 366 Nalen v. Jenkins 54(e)(3) kept It give should be required not that I.R.C.P. factors. court is Waltons, weight representing be more than should in mind that in factor given applicable initially to the other factors tried to orchestrate their counsel reaching arbitration, the ultimate determination litigation without or the amount to awarded. delay, ... certainly in which event without would of counsel to Waltons the costs 3, 23. From the court turned R.Yol. there recovery. percent of the only have been v. in Brinkman to our then recent decision However, Hart- abundantly clear that is P.2d Co., 115 Aid Ins. as procrastinated may very well have (1988), quoted from it: ford paying long possible order to avoid as the standard contin- An award at near provisions under the underinsured gent necessarily inappro- is fee level not willingly who policy sold to priate a fee is set at that and the fact paid premium with the reasonable had ipso proof is of a manifest level not facto discretion____ expectation the Hartford umbrella cov- An abuse $300,000. contingent equal up in the ered to the amount of to standard them was, willing quite an amount same locale not As it $52,- clearly settling, erroneous. The is the hold and has cost back from fact was what Brinkman’s attor- considerably 000 award more ex- ney actually costs were. Those delay caused the ultimate fees. Hartford’s penses solely were incurred because statute, result, not consistent with the improperly Aid substantially diminishing re- the Waltons’ refused the contract insurance. claim under court, although district well covery. The simply The amount awarded makes it, Brinkman, did considered but aware of insured whole. deciding the claim apply it in Waltons’ *6 added). (emphasis 25 for fees. Counsel for direction, Waltons, acting the the at court’s

which for that manner the Halliday v. Farmers Ins. compiled clared it to be reasonable in a case which was deemed The trial the tractually obliged recovery, ing reimbursement than a one-third district court so held extraordinarily difficult circumstances. clearly recognized Waltons P.2d his judge recognized were at his usual hours hours amounted to judicially the court to not contain Waltons, to contingent that of time this Court’s from Hartford. pay one-third notwithstanding hourly restricted Exch., purpose who this expended fee, fee of to were con- holding $26,350. but to Idaho $150, gain- their that less I.C. for de- In Aid, Brinkman would read: 766 P.2d stances are so similar to those man v. ed by guage tons were entitled to recover ment [8] the district out III. PREJUDGMENT INTEREST WAS CLEARLY The final issue is whether ... Wal The in the (pre-award) in Waltons’ Aid for the denial Ins. Brinkman, latter, court was error.3 As jury Co., interest prejudgment (1988), (arbitrators) IN brief, and Hartford changing upon ORDER that the circum the entire prejudg the lan interest names, Brink- award. point for due prevent governs the sum that is this 41-1839 to Idaho Code 28-22-104 § § being policy from the insured under the issue: — by expenditures for services diminished Legal rate of interest 28-22-104. attorney. of an (1) express no contract When there is writing fixing a different rate give court did not our view district interest, at the rate fee interest allowed proper contingent consideration to the by the twelve cents on the hundred agreement, though it recited even began prejudg- to accrue when the arbitration district court did allow for some interest Citing Reynolds v. American ment interest. rendered and continues to accrue decision was Ins. Mut. judgment Hardware is entered.” R.Vol. until a (1988), "prejudgment the court ruled that (1) year Money by express judgment on: due interest from the date of contract. accident on the medical bills which be- owing prior came due Hartford to and Waltons were to suit express timely paid were not Aid. contract: underinsured mo- appealed Brinkman policy. By asserting torist the terms of that this con- tract, judgment obligated Hartford interest should compen- have been al- injuries upon sate Waltons lowed jury sustained at the the entire amount of the including hands of an general damages. underinsured award motorist. When the 28-22-104(1), underinsured driver swerved Pursuant to I.C. this § across the lane center and hit Waltons stating, Court held in favor of Brinkman head-on, duty pay Hartford’s accrued. significant It is duty Aid’s arose loss, Had required proof out of a contract between Aid and duty Hartford’s would have come Brinkman, not out of a tort action. due when proof Waltons submitted their Because Aid contracted to insure of loss statement the form of the $300,000 up Brinkman for all event, In any brochure. injuries losses suffered at duty pay pursuant Hartford’s tortfeasor, hands of an underinsured prior insurance came due to tri- prejudgment Aid is liable interest al. on the entire amount awarded significant It is duty Hartford’s jury. Prejudgment interest accrues arose out of a contract between Hartford general damages from the date out of a tort action. accident, because that is date Because Hartford contracted to insure Aid’s duties contractual accrued. up Waltons for inju- for all 353-54, 115 Idaho at 766 P.2d at 1234-35. ries and losses at the suffered hands of Emery, 120 815 P.2d at 445. tort-feasor, an underinsured Hartford is We observe that the facts and circum- prejudgment (pre-award) liable for inter- virtually stances of the instant case are est on the entire amount awarded indistinguishable from those in Brinkman. (pre-award) Prejudgment arbitrators. in- Accordingly, brought we are to the conclu- general damages terest accrues on the sion that the district court erred in not accident, from the date of because *7 awarding prejudgment interest. alsoWe is the date Hartford’s contractual conclude that in underinsured motorist cov- accrued____ duties erage begins interest accrue on the Brief, Waltons’ 13-14. date of the accident. As was Emery stated in v. United Pacif- We affirm district court’s decision Co., ic Ins. 120 Idaho 815 P.2d 442 award attorney fees and remand this cause (1991): to the district court reconsideration as interest, In awarding prejudgment to the amount in with thereof accordance trial our holding court relied on recent in expressed. the views herein We also direct Co., Brinkman v. Aid Ins. compute the district court 766 P.2d 1227 In Brink- prejudgment recoverable In interest. both man, similarly injured the insured was appropri- instances the will enter court an by an underinsured motorist. The insur- judgment. appeals ate final Costs on both er, Company, Aid Insurance refused to are awarded to the not inclusive Brinkman, causing him to file suit to of attorney fees. recover under the underinsured motorist clause of A policy. jury his insurance McDEVITT, JJ., BOYLE and concur. awarding returned a verdict Brinkman Justice, JOHNSON, concurring and damages. in The trial in dissenting. 28-22-104(1) to I.C.

Brinkman looked § except I opinion, concur in the Court’s provides prejudgment interest (The Awarded), part II-B “money express on Amount Fees due contract” and found that from which I Brinkman entitled to dissent. Co.,

In Brinkman v. Aid Ins. (1988), held Court that the trial did not discre- abuse its awarding

tion in insured an roughly equal fee fee that was charged contingent in a fee be- attorneys. tween the insured and his 350-51, Idaho at 766 P.2d at 1231-32. Here, the Court turns Brinkman effect, and,

head trial holds that awarding court abused its discretion equal the insured fee to a an contingent fee. view, my court considered the 54(e)(3)

factors enumerated I.R.C.P. awarding did not abuse its discretion in attorney fee that was less than a one-third contingent fee.

BAKES, C.J., concurs.

BAKES, Justice, dissenting: Chief

I my dissent for the reasons set forth dissenting opinion Emery Pa- v. United Ins. 815 P.2d 442

cific (1991). P.2d Burns, Kenneth R. BURNS and Mardale wife; Aviation, Boundary husband and Inc., Plaintiffs-Appellants,

v. BOUNDARY, politi- The COUNTY OF Idaho; cal subdivision the State of *8 County the Board of Commissioners County Boundary, po- and for the Idaho; litical subdivision of the State of Baker; Blake; Clyde Chester Richard Stone; Clark, and Chris the members Board; Defendants-Respon- said

dents.

No. 18183. Appeals Court of of Idaho. Dec. Petition for Review Granted

Dec.