Opinion ID: 441755
Heading Depth: 2
Heading Rank: 2

Heading: Attorney's Fees Related to the Present Litigation

Text: 50 Eureka's claim for the award of attorney's fees incurred in this action presents a wholly different picture, however. It is well established that the American rule ordinarily bars the award of attorney's fees. 59 It is equally well established that a successful litigant may recover attorney's fees when his opponent has acted 'in bad faith, vexatiously, wantonly, or for oppressive reasons.'  60 The bad faith exception to the general rule against award of attorney's fees is a narrow one, however, to be applied only in exceptional circumstances. 61 The district court correctly found that the facts of this case do not fit within its narrow exception. 62 51 CTI's failure to confess its liability for Eureka's delay damages may have been wrongful and a breach of its obligations under the policy, but it cannot be said that this error rose to the level of bad faith. As the court below observed, CTI simply failed to recognize promptly that its representative Cooney had provided Eureka with coverage for a novel and substantial risk. 63 An insurer's failure to respond immediately to a claim does not necessarily amount to bad faith justifying an award of attorney's fees incurred in subsequent litigation between the insurer and the insured, 64 particularly where, as here, no past experience or body of interpretation provided guidance to the parties. 65 CTI's overall good faith toward its insured is amply demonstrated by its prompt assumption of responsibility for defense of the tenant actions before Eureka had even been named as a respondent in those actions. Thus, the trial court's denial of Eureka's demand for attorney's fees incurred in this litigation must be upheld.