Court Opinion

ID: 9694631
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:49:21.298964+00
Date Added: 2024-06-11T12:12:08.366374
License: Public Domain

MEAD, J.,
dissenting.
[¶ 19] It is well established that with respect to the payment of attorney fees, Maine follows the so-called American Rule, which provides that litigants generally bear the expense of their own attorney fees in the absence of specific statutory authority, court-created exceptions, or contractual provisions to the contrary. See Soley v. Karll, 2004 ME 89, ¶ 10, 853 A.2d 755, 758 (citation omitted). We have previously carved out an exception to this Rule by allowing an insured to recover attorney fees accumulated in the successful defense of a declaratory judgment action brought by the insurer seeking a judicial ruling on its duty to defend pursuant to the terms of the insurance contract. Gibson v. Farm Family Mut. Ins. Co., 673 A.2d 1350, 1354-55 (Me.1996); Union Mut. Fire Ins. Co. v. Town of Topsham, 441 A.2d 1012, 1019 (Me.1982). The Legislature has codified this Rule in 24-A M.R.S. § 2436-B(2) (2006). The Court today creates another exception to the American Rule by allowing an insured to recover attorney fees in declaratory judgment actions commenced by the insurer to determine its duty to indemnify.5 Because this *1191exception is supported neither by statute,6 nor by the reasoning supporting the duty to defend exception, I cannot join the Court. Therefore, I respectfully dissent.
[¶ 20] Title 24-A M.R.S. § 2436-B(2) provides that “[i]n an action ... to determine an insurer’s contractual duty to defend an insured under an insurance policy, if the insured prevails in such action, the insurer shall pay court costs and reasonable attorney’s fees.” The plain meaning of the statute’s language leaves little doubt that the Legislature intended that the insured be awarded attorney fees only when prevailing in duty to defend actions. See Yeadon Fabric Domes, Inc. v. Me. Sports Complex, LLC, 2006 ME 85, ¶ 13, 901 A.2d 200, 205 (noting that the primary goal of statutory interpretation, to give effect to the intention of the Legislature, begins with the plain meaning of the statute). However, neither the Court’s holding in Gibson, nor the Legislature’s subsequent codification of that holding in subsection 2436-B(2), allows the prevailing insured to recover attorney fees in a duty to indemnify action.
[¶ 21] The award of attorney fees to a prevailing insured in a duty to defend declaratory judgment action is wholly appropriate given the sui generis nature of such litigation. The scope of an insurer’s duty to defend is broad and is determined merely by comparing the allegations in the underlying complaint with the provisions of the insurance policy. Found. for Blood Research v. St. Paul Marine & Fire Ins. Co., 1999 ME 87, ¶4, 730 A.2d 175, 177. Accordingly, duty to defend declaratory judgment actions are inevitably legal “long shots” for the insurer with almost certain results. Although the commencement of such a declaratory judgment action by an insurer does not ipso facto demonstrate bad faith, it is often a dubious proposition that almost always inflicts upon the insured an onerous financial burden. Such actions are not to be commenced lightly; the specter of attorney fees creates an appropriate cause for reflection and reconsideration.
[¶ 22] Declaratory judgment actions seeking to clarify the duty to indemnify are fundamentally different from duty to defend cases because they rest upon a comparison of the policy to the actual facts of the case, as proved at a trial. See York Ins. Group of Me. v. Lambert, 1999 ME 173, ¶ 5, 740 A.2d 984, 985. It is well-settled that an insurer’s duty to indemnify is much narrower than its duty to defend. Id. Unlike duty to defend actions, it is often difficult to predict the fact-driven outcome of the duty to indemnify case prior to hearing. Although a duty to defend action may be presumptively ill-founded upon its face, the same cannot be said of duty to indemnify actions.7
*1192[¶ 23] The Court refers to the “special relationship between insurer and insured” as part of its justification of the award of attorney fees.8 Indeed, an insurer has a duty of fair dealing with the insured and a violation of that duty can constitute evidence of bad faith. See Marquis v. Farm Family Mut. Ins. Co., 628 A.2d 644, 648 (Me.1993) (citation omitted). A declaratory judgment action brought by an insurer against an insured for the express purpose of avoiding liability where liability clearly exists is an example of reprehensible, bad faith conduct. However, not every declaratory judgment action addressing the duty to indemnify — even those where the insured ultimately prevails — can be presumed, without more, to constitute bad faith.
[¶ 24] The Court maintains that an insured loses a substantial benefit of the insurance policy when he is forced to defend a declaratory judgment action. However, the same can be said of virtually any contract and subsequent litigation regarding its terms. Where the parties to a contract face a bona fide dispute over the obligations and benefits created by its terms, the Declaratory Judgments Act, 14 M.R.S. §§ 5951-5963 (2006) offers a relatively summary procedure to address the dispute. The prevailing party is not typically awarded attorney fees in the absence of some statutory authority to the contrary.9
[¶ 25] The Court admonishes the insurance industry, stating that declaratory judgment actions addressing issues of coverage should not be brought (or should be stayed) while an underlying action is pending. Such an approach avoids duplicative demands on limited judicial resources and unnecessary legal expenses to insureds. Although the Court’s guidance is well taken, there are instances where the insurer and the insured both have a significant interest in having coverage questions answered definitively before a final judgment is entered on the underlying claim. If it is determined prior to trial that the insurance policy does cover the claim, the insurer will have a powerful motivation to settle the claim early — a motivation that might not be present if the insurer strongly believes that there is no coverage. In addition, a definitive ruling prior to trial that coverage is lacking would save an insured from the unpleasant surprise — months after verdict — that he or she is personally liable for the judgment. As such, I cannot view the commencement of a declaratory judgment action addressing the duty to indemnify with the same jaundiced eye that I might turn to a duty to defend action.
[¶ 26] If a duty to indemnify action is commenced without a good faith basis purely to oppress an insured, clearly the body of insurance law dealing with bad faith may be appropriately invoked. In such circumstances, the insured would be able to recover consequential damages10 *1193and, in some instances, attorney fees pursuant to 24-A M.R.S. § 2436-A (2006).11 However, in cases where there is a meritorious question of coverage to be decided, as in the instant matter,12 I would not automatically impute a nefarious motive to the insurer thereby justifying an award of attorney fees — even where the insured has technically prevailed. For these reasons, I would vacate the award of attorney fees and join those jurisdictions that allow attorney fees to prevailing insureds in duty to defend cases but not in duty to indemnify cases. See, e.g., N.H. Ins. Co. v. Christy, 200 N.W.2d 834, 845 (Iowa 1972); Nelson v. Am. Reliable Ins. Co., 286 Minn. 21, 174 N.W.2d 126, 131 (1970).

. The Court acknowledges that its decision to allow an insured to recover attorney fees in a duty to indemnify action places it amongst the minority of jurisdictions that have considered the issue.

. The Legislature's express inclusion of duty to defend actions and omission of duty to indemnify actions within the purview of 24-A M.R.S. § 2436-B(2) (2006) suggests a statutory preemption of the field. Indeed, the legislative history of the statute suggests that the Legislature considered and rejected a more expansive view of subsection 2436-B(2), one which included both the duty to defend and the duty to indemnify. See Legis. Rec. S-481 (2001); L.D. 49, Summary (120th Leg-is.2001); see also Musk v. Nelson, 647 A.2d 1198, 1201-02 (Me.1994) ("However, a well-settled rule of statutory interpretation states that express mention of one concept implies the exclusion of others not listed. The statute provides for a single exception and implicitly denies the availability of any other.”) (citation omitted); see also Wescott v. Allstate Ins., 397 A.2d 156, 169 (Me.1979) (invoking the well recognized maxim of statutory construction expressio unius est exclusio alterius — the expression of one thing is the exclusion of another).

. Levesque argues that the complaint and motion for summary judgment filed by Foremost in this matter ostensibly seek rulings on the duty to indemnify and to defend. Although this is technically correct, the record discloses that Foremost did supply Levesque with an attorney (on the underlying matter) and the *1192parties herein litigated only the duty to indemnify issue. Accordingly, as a practical matter, we have only addressed the issue of the duty to indemnify.

.The Court’s reasoning also relies upon the disparity in bargaining power between an insured and the insurance company. However, if the disparity in bargaining power between the parties to a contract were the touchstone for an award of attorney fees, innumerable classes of cases would be removed from the ambit of the American Rule.

. An insured might argue that his insurance policy protects him from loss and a declaratory judgment action causes him to incur a loss in the amount of his attorney fees. This argument is without merit. The policy insures against specific losses and the costs of litigation are not enumerated within the typical schedules of covered events.

. Although the Court has specifically rejected an independent tort of bad faith, Marquis v. Farm Family Mutual Insurance Co., 628 A.2d 644, 652 (Me.1993), I would award at*1193torney fees as an element of consequential damages in cases where the insured proves a breach of the insurer’s contractual duty of good faith and fair dealing by the commencement of a meritless duty to indemnify declaratory judgment action. The rationale offered for the award of attorney fees in duty to defend actions supports this result.

. Title 24-A M.R.S. § 2436-A (2006) provides, in pertinent part:
1. Civil actions. A person injured by any of the following actions taken by that person’s own insurer may bring a civil action and recover damages, together with costs and disbursements, reasonable attorney’s fees and interest on damages at the rate of 1 'k% per month:
A. Knowingly misrepresenting to an insured pertinent facts of policy provisions relating to coverage at issue;
B. Failing to acknowledge and review claims, which may include payment or denial of a claim, within a reasonable time following receipt of written notice by the insurer of a claim by an insured arising under a policy;
C. Threatening to appeal from an arbitration award in favor of an insured for the sole purpose of compelling the insured to accept a settlement less than the arbitration award;
D. Failing to affirm or deny coverage, reserving any appropriate defenses, within a reasonable time after having completed its investigation related to a claim; or
E. Without just cause, failing to effectuate prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear.
2. Without just cause. For the purposes of this section, an insurer acts without just cause if it refuses to settle claims without a reasonable basis to contest liability, the amount of any damages or the extent of any injuries claimed.

. Two members of the panel in Foremost I dissented on the coverage issue. Foremost Ins. Co. v. Levesque, 2005 ME 34, ¶ 17, 868 A.2d 244, 248.