Enberg v. American Home Assurance et al

Filing 35

ORDER granting 20 Defendants' Motion for Partial Summary Judgment. Plaintiff cannot recover attorney fees as damages under any of her claims. Signed by Judge Richard F. Cebull on 1/9/2013. (EMA)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION

SUZY ENBERG,

Case No. CV-11-125-BLG-RFC

Plaintiff,
ORDER GRANTING
DEFENDANTS’ MOTION FOR
PARTIAL SUMMARY
JUDGMENT AS TO ENBERG’S
CLAIM FOR ATTORNEY FEES

vs.
AMERICAN HOME ASSURANCE,
SEDGWICK CLAIMS
MANAGEMENT SERVICES, INC.,
Defendants.
I.

INTRODUCTION
Plaintiff Suzy Enberg brings claims against Defendants American Home

Assurance and Sedgwick Claims Management Services, Inc. for breach of
contract, common law bad faith, and violation of Montana's Unfair Trade Practices
Act arising out of the handling of her workers' compensation claims. Defendants
have moved for partial summary judgment on the issue of whether Enberg may
recover attorney fees as bad faith damages. Doc. 20. As the facts are familiar to
the parties and were detailed in a prior Order of this Court, they are repeated here
only as necessary.
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II.

ANALYSIS
Defendants’ motion raises a purely legal question for which the material

facts are not in dispute. See docs. 22 & 23. Accordingly, Defendants are entitled
to partial summary judgment in their favor if, as a matter of law, attorney fees may
not be awarded as damages. Rule 56(a) Fed.R.Civ.P.
Montana follows the “American Rule,” which prohibits the award of
attorney fees to the successful litigant absent either a statutory or contractual
provision awarding attorney fees or application of one of the rule’s recognized
exceptions. Sampson v. National Farmers Union Property and Cas. Co., 144 P.3d
797, 800 (Mont. 2006). The Montana Supreme Court has applied this rule in the
insurance bad faith context to expressly hold that “attorney fees are not a
recoverable element of damages in a claim for insurance bad faith, whether
brought under the UTPA or the common law, absent an exception to the American
Rule.” Jacobsen v. Allstate Ins. Co., 215 P.3d 649, 656 (Mont. 2009). Enberg
tries to distinguish this clear mandate with the argument that it is limited to thirdparty bad faith cases and that she is the insured under the worker’s compensation
insurance, but she is wrong. As she alleges in her Complaint (doc. 1, ¶ 4) and her
Statement of Genuine Issues (doc. 23, ¶ 4), American Home Insurance is
Walmart’s insurer, making Walmart the insured. Accordingly, unless, as argued
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by Enberg, the equitable or insurance exceptions to the American Rule apply,
Defendants’ motion must be granted.
The equitable exception must be narrowly construed and is only available
where a party is forced into a frivolous lawsuit through no fault of their own and
must incur attorney’s fees to dismiss the claim. Jacobsen, 215 P.3d at 656. That
is not the situation here or in the underlying lawsuit. With respect to the instant
case, even if Enberg felt she had no choice but to file this lawsuit to get the
compensation she felt she was entitled to, that does not mean she can avail herself
of the equitable exception on the grounds that she was forced into litigation
through no fault of her own. Id.
As to the underlying case, Enberg argues her status as the plaintiff does not
defeat application of the equitable exception because she was forced to sue when
Defendants refused to cover her injuries. She further argues that after she filed
suit in the Workers’ Compensation Court, Defendants stipulated to a judgment.
But Enberg’s own Statement of Genuine Issues reveals that Defendants’ initial
denial of her 2011 claim was not frivolous. Defendants initially denied the 2011
claim because the emergency room doctor indicated that the injury might have
occurred when she was sledding with her kids. Doc. 23 ¶¶ 6-11. Defendants
agreed to a judgment in the 2011 case after doctors retained for an independent
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medical examination opined that the 2011 injury was “was most likely a late
development from the injury of June 2008.” Doc. 23, ¶ 12-16. And even then the
doctors believed it was possible that Enberg’s condition in 2011 was related to the
2011 injury. Doc. 23, ¶ 16.
The equitable exception must be construed narrowly and the facts of this case do
not warrant its application.
The insurance exception applies “where an insurer breaches its duty to
defend or indemnify the insured party, forcing the insured “to assume the burden
of legal action to obtain the full benefit of the insurance contract …” Jacobsen,
215 P.3d at 656. Significant here, the insurance exception is “justified by the
contractual relationship between the insurer and the insured, and the enhanced
fiduciary obligation which arises therefrom.” Id. The Montana Supreme Court
has refused to apply it to third-party claimants because doing so would “drive a
stake into the heart of the American Rule.” Id. Since Enberg was not a party to
the workers’ compensation insurance contract between American Home Assurance
and Walmart, Defendants had no duty to Enberg and the insurance exception is
inapplicable.
Finally, Enberg also argues that Defendants stipulated to an award of
attorney’s fees when the 2011 claim was settled in the Worker’s Compensation
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Court. Specifically, Enberg cites the following language from the Workers’
Compensation Court Order of dismissal: “[American Home Assurance] has
acknowledged the Lockhart lien in this case …” Doc. 23-1. A Lockhart lien is a
lien in favor of the attorney that attaches to medical benefits recovered due to the
efforts of an attorney in a workers’ compensation case. Dildine v. Liberty
Northwest Ins. Corp., 204 P.3d 729, 730 (Mont. 2009). The fact that Defendants
acknowledged that Enberg’s attorney had such a lien is not a basis for ignoring the
American Rule and the mandatory authority applying it.
III.

CONCLUSION
For those reasons, IT IS HEREBY ORDERED that Defendants’ Motion

for Partial Summary Judgment (doc. 20) is GRANTED: Enberg cannot recover
attorney fees as damages under any of her claims.
Dated this 9th day of January, 2013.
/s/ Richard F. Cebull______
Richard F. Cebull
United States District Judge

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