By statute, Hawai`i allows a party who successfully sues the insurer for benefits to recover reasonable attorney fees. Haw. Rev. Stat. 431:10-242. In Riordan v. State Farm Mut. Auto. Ins. Co., No. 08-35874, 2009 U.S. App. LEXIS 26888 (9th Cir. Dec. 10, 2009), the court determined that Montana case law also allows the insured to recover fees after prevailing against the insurer for full benefits.
The insured was injured in a car accident, entirely the fault of the other driver. The insured had three State Farm automobile policies, which provided uninsured motorist ("UIM") coverage with limits of $50,000 per person and $100,000 per accident. Before suit was filed, State Farm paid $30,586.59 in UIM benefits.
The insured filed suit, contending State Farm was required to provide $150,000 of UIM coverage, the "stacked" total of UIM coverage under the three policies. Before answering the complaint, State Farm paid another $45,413.43, bringing the total UIM benefits paid to approximately $76,000 and leaving $74,000 in UIM benefits remaining under the policies' limits. Then, on the eve of trial, State Farm paid the remaining $74,000 in UIM benefits.
The insured then moved for attorney fees. The magistrate recommended that $30,759 be awarded in fees. The district court adopted the magistrate's recommendations. State Farm appealed.
The Ninth Circuit affirmed. Montana case law allowed the insured to recover attorney fees where the insurer forces the insured to sue to obtain full benefits. See Mountain W. Farm Bureau Mut. Ins. Co. v. Brewer, 69 P.3d 652, 660 (Mont. 2003). Here, State Farm unequivocally denied further liability to the insured and only settled on the eve of trial. This forced the insured to litigate to obtain the full benefits under the policy. Therefore, the insured was entitled to attorney fees under Montana case law.
