Court Opinion

ID: 9581266
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:13:12.433152+00
Date Added: 2024-06-11T13:36:48.977276
License: Public Domain

HENDERSON, Justice
(specially concurring).
Supporting an injured and defenseless public, the State Legislature declared the existence of two laws to rectify a social need of growing dimension. Sanctions were placed upon insurance companies who took premiums from the public but did not respond in law to their contractual obligations mandated by insurance policies.
Pertinent to our inquiry is SDCL 58-12-3 set forth in extenso:
*495In all actions or proceedings hereafter commenced against any insurance company, including any reciprocal or interin-surance exchange, on any policy or certificate of any type or kind of insurance, if it appears from the evidence that such company or exchange has refused to pay the full amount of such loss, and that such refusal is vexatious or without reasonable cause, the department of labor, the trial court and the appellate court, shall, if judgment or an award is rendered for plaintiff, allow the plaintiff a reasonable sum as an attorney’s fee to be recovered and collected as a part of the costs, provided, however, that when a tender is made by such insurance company or exchange before the commencement of the action or proceeding in which judgment or an award is rendered and the amount recovered is not in excess of such tender, no such costs shall be allowed. The allowance of attorney fees hereunder shall not be construed to bar any other remedy, whether in tort or contract, that an insured may have against the same insurance company arising out of its refusal to pay such loss. (Emphasis supplied.)
Germane to our decision is SDCL 58-12-3.1 which I set forth verbatim:
The determination of entitlement to an allowance of attorney fees as costs and the amount thereof under § 58-12-3 shall be made by the court or the department of labor at a separate hearing of record subsequent to the entry of a judgment or award in favor of the person making claim against the insurance company, and, if an allowance is made, the amount thereof shall be inserted in or added to the judgment or award. Such a hearing shall be afforded upon the request of the claimant made within ten days after entry of the judgment or award. (Emphasis supplied.)
It is indispensable to our decision, which we now factually note, that subsequent to the trial on this action, a separate hearing on attorneys fees was held. The trial court found that the insurance company’s refusal to provide coverage under its contract was without reasonable cause. Nevertheless, the trial court found that attorneys fees could not be awarded under SDCL 58-12-3.1 because there was no allegation of refusal to pay benefits nor was this an action commenced by an insured against an insurance company. Therefore, I perceive the legal question to be decided herein is not whether the refusal to provide coverage was unreasonable, but, rather, whether SDCL 58-12-3.1 is applicable to this type of action. And, joining the majority, I would hold that it is applicable to declaratory actions, brought by an insurance company against one of its policyholders, as the claim for attorneys fees should not be defeated by the juxtaposition of the parties. See Hartford Fire Ins. Co. v. Aetna Ins. Co., 270 Or. 226, 235-36, 527 P.2d 406, 411 (1974). Key language in a Nebraska statute, consonant with our statute, expressed: “In all cases where the beneficiary, or other person entitled thereto, brings an action upon any type of insurance policy * * *, the court, upon rendering judgment against such company, * * * shall allow the plaintiff a reasonable sum as an attorney’s fee * * Neb.Rev.Stat. § 44-359 (Supp. 1972). Under this language, a trial court ruled with essentially the same logic as the trial court in this case in State Farm Mutual Auto. Ins. Co. v. Selders, 189 Neb. 334, 202 N.W.2d 625 (1972), also a declaratory action brought by the insurer to determine the coverage afforded. In reversing, the Nebraska Supreme Court held that the allowance of attorneys fees should not depend upon who institutes the action.
As for the “refusal to pay benefits” argument of the insurance company, it is true the insurer did not refuse to pay the full amount of the loss; however, its policyholder did not know the amount of loss. Policyholder could not assert a counterclaim because the amount of loss was unknown. Basically, one must focus on this concept: The insurance company resolutely denied coverage under the policy; then, it sued its policyholder to manifest in law its private conviction.
*496We must lend support to the will of the legislature and not rule against the spirit of this legislation. Our legislators foresaw a social need to be treated, in law, to help the weak against the strong. To decide this case adversely to the policyholder because he did not strike the first blow, would permit the law of reason to be governed by the law of absurdity.
Substantively, major surgery is required and I concur in a reversal. Cosmetically, the trial court’s decision needs minor surgery upon remand and in this I likewise concur.