Opinion ID: 1179761
Heading Depth: 1
Heading Rank: 9

Heading: Attorney Fees Under Wolfe's Claim for Breach of Contract

Text: We also address Wolfe's claim that he is entitled to attorney fees in his breach of contract suit against Farm Bureau. We hold that the legislature did not, through the enactment of I.C. § 41-1839, grant parties an independent right of action simply for the recovery of attorney fees incurred in arbitration, when such fees clearly cannot be awarded as part of the arbitration. Reciting again, in pertinent part, I.C. § 41-1839 provides: Allowance of attorney fees in suits against insurers.(1) Any insurer issuing any policy . . . which shall fail for a period of thirty (30) days after proof of loss has been furnished as provided in such policy, certificate or contract, to pay to the person entitled thereto the amount justly due under such policy, certificate or contract, shall in any action thereafter brought against the insurer in any court in this state for recovery under the terms of the policy, certificate or contract, pay such further amount as the court shall adjudge reasonable as attorney fees in such action. (emphasis added). Wolfe contends that the terms of § 41-1839 became an implied term of his insurance policy. E.g., Emery, 120 Idaho at 247, 815 P.2d at 445. Therefore, according to Wolfe, his action to recover attorney fees under that provision is technically an action for recovery under the terms of the policy, and he is thus entitled to an award of attorney fees pursuant to § 41-1839. While we agree that Wolfe's breach of contract suit is a court action, we do not agree that it is a court action within the meaning of § 41-1839. We have identified the purpose of § 41-1839 as providing an incentive for insurers to settle just claims in order to reduce the amount of litigation and the high costs associated with it. [1] Hansen v. State Farm Mut. Auto. Ins. Co., 112 Idaho 663, 671, 735 P.2d 974, 982 (1987). In light of this purpose, we have construed § 41-1839 as limiting the award of attorney fees to those instances where: (1) [the insured] has provided proof of loss as required by the insurance policy; (2) the insurance company fails to pay an amount justly due under the policy within thirty days of such proof of loss; and (3) the insured thereafter is compelled to bring suit to recover for his loss. Id. (emphasis added). See also Reynolds v. American Hardware Mut. Ins. Co., 115 Idaho 362, 366, 766 P.2d 1243, 1247 (1988) (same); Emery, 120 Idaho at 247, 815 P.2d at 445. (holding that an award of fees under § 41-1839 was mandatory where an insured is compelled to file a lawsuit by reason of an insurer's refusal to pay to recover for a loss under her insurance contract); Walton, 120 Idaho at 620, 818 P.2d at 324 (same). Thus, the legislature clearly contemplated the filing of a lawsuit to recover for a covered loss in order to trigger the attorney fee provisions of I.C. § 41-1839. This is not such a lawsuit. Although it might be desirable to permit an award of attorney fees under circumstances where a dispute is arbitrated after an insurer has refused to pay a claim justly owing, the express terms of I.C. § 7-910 simply do not allow for such an award. Any change in this clear statutory mandate is the responsibility of the legislature, not the Court. Moreover, I.C. § 41-1839(2) clearly prohibits an award of attorney fees under § 41-1839(1) in this case. Section 41-1839(2) provides: In any [action falling within the terms of § 41-1839(1) ], if it is alleged that before the commencement thereof, a tender of the full amount justly due was made to the person entitled thereto, and such amount is thereupon deposited in the court, and if the allegation is found to be true, or if it is determined in such action that no amount is justly due, then no such attorney's fees may be recovered. As Farm Bureau points out, the amount justly due cannot include an award of attorney fees under § 41-1839(1). Where an insurer fails to pay an amount justly due, subsection (1) mandates that the insurer shall pay such further amount as the court shall adjudge reasonable as attorney's fees in such action. Stated differently, the amount justly due within the meaning of § 41-1839 is the amount determined to be properly owing by the insurer to the insured, excluding the sum that might additionally be awarded as attorney fees under that provision. Since this amount was tendered prior to commencement of Wolfe's breach of contract action, I.C. § 41-1839(2) mandates that no such attorney's fees may be recovered. Thus we affirm the district court's determination that Wolfe is not entitled to his attorney fees incurred during arbitration, either in the confirmation case or the breach of contract action. JOHNSON and SILAK, JJ., and Justice Pro Tem LEGGETT, concur. McDEVITT, C.J., dissents.