Court Opinion

ID: 9690497
Source: CourtListenerOpinion
Date Created: 2023-08-24 19:16:34.405345+00
Date Added: 2024-06-11T18:18:57.962280
License: Public Domain

Robert L. Brown, Justice, dissenting. I disagree with the majority opinion for three reasons. First, the majority decides the certified question on a ground not briefed by either party, no doubt because neither party considered the majority’s reasoning as being applicable to the question before us. What this means is that the losing party will quickly petition this court for rehearing to brief whether the American Rule is germane to the question at hand because it has not had an opportunity to argue that point. Clearly, a better course for the majority to take, since it believes the American Rule has some pertinence, is to request briefs on whether the American Rule is apposite to the certified question. The second reason I disagree with the majority is that it has decided the issue on a rule that no other jurisdiction has employed, though it appears that virtually every state in the union, other than Alaska, has adopted the American Rule. That should be a clear signal to the majority that the American Rule should not be invoked in this context. For example, courts in California, Florida, Illinois, Montana, Texas, and Wyoming, among others, as well as multiple federal courts have decided the question before us, either in favor of the insurance company or against it. Our research has disclosed that no state court or federal court has based its reservation-of-rights decision on the American Rule, or even discussed it. See, e.g., Buss v. Superior Court of Los Angeles County, 939 P.2d 766 (Cal. 1997); Colony Ins. Co. v. G & E Tires & Service, Inc., 777 So. 2d 1034 (Fla. Dist. Ct. App. 2000); Gen. Agents Ins. Co. of Am., Inc. v. Midwest Sporting Goods Co., 828 N.E.2d 1092 (Ill. 2005); Travelers Cas. & Sur. Co. v. Ribi Immunochem Research, Inc., 108 P.3d 469 (Mont. 2005); Matagorda County v. Texas Ass’n of Counties County Gov’t Risk Mgmt. Pool, 975 S.W.2d 782 (Tex. Ct. App. 1998); Shoshone First Bank v. Pac. Employers Ins. Co., 2 P.3d 510 (Wyo. 2000); Cincinnati Ins. Co. v. Grande Pointe, LLC, 501 F. Supp. 2d 1145 (E.D. Tenn. 2007); United Nat’l Ins. Co. v. SST Fitness Corp., 309 F.3d 914 (6th Cir. 2002); Knapp v. Commonwealth Land Title Ins. Co., Inc., 932 F. Supp. 1169 (D. Minn. 1996). And, finally, I dissent because the American Rule simply does not control the certified question. The American Rule applies to claims for attorney’s fees by prevailing litigants. American Jurisprudence states the rule succinctly: “Many states generally follow the ‘American Rule,’ which provides that absent statutory authority or a contractual agreement between the parties, each party to litigation must bear its own attorney’s fees and may not recover those fees from an adversary.” 20 Am. Jur. 2d Costs § 55 (2005). Arkansas case law agrees: “This court follows the American rule, which requires every litigant to bear his or her attorney’s fees, absent a state statute to the contrary. Lake View Sch. Dist. No. 25 v. Huckabee, 340 Ark. 481, 10 S.W.3d 892 (2000); Love v. Smackover Sch. Dist., 329 Ark. 4, 946 S.W.2d 676 (1997).” Fox v. AAA U-Rent It, 341 Ark. 483, 489, 17 S.W.3d 481, 485 (2000) (emphasis added). What we have under the facts leading to the certified question is not a prevailing litigant seeking to recover attorney’s fees from the losing litigant. Again, that is when the American Rule applies. What we have here is a question of whether an implied contract was formed by MLMIC’s reservation of rights. That reservation, according to MLMIC, obligated Evergreene to reimburse MLMIC for costs and attorney’s fees spent by it to defend Evergreene against multiple claims, including wrongful death, brought by the Ferrell Estate, a third party.1 Whether an implied contract was formed to reimburse costs advanced in defense of a third-party claim is a far cry from the issue of payment of costs to a prevailing litigant, which is the subject of the American Rule.2 Simply put, that rule has no relevancy to the certified question before us. In short, the majority follows neither the majority position nor minority position, as briefed by the parties. Rather, it blazes a new trail and forces adherence to a rule that no other court has seen fit to apply under these circumstances. The upshot of this is that insurance carriers will be forced to defend all uncovered claims and incur that expense based on an insured’s demand without hope of reimbursement. That runs directly counter to the prevailing view in most states. In addition, the majority leaves unanswered the issue of whether costs other than attorney’s fees may be recouped by MLMIC. For these reasons, I respectfully dissent. FIannah, C.J., joins this dissent.   To clarify further, MLMIC does not sue for its attorney’s fees incurred in its declaratory-judgment action brought against Evergreene where it prevailed. It claims attorney’s fees and costs for hiring counsel to defend Evergreene against an uncovered claim brought by the Ferrell Estate.    The majority opinion cites to Arkansas statutes that all refer to situations where the issue is recovery of attorney’s fees between litigants. See Ark. Code Ann. § 23-79-209 (Repl. 2004) and Ark. Code Ann. § 16-22-308 (Repl. 1999). Again, that is not the fact situation before this court.