(Article from Insurance Law Alert, June 2020)
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The Tenth Circuit ruled that an insured that received a favorable judgment was the “prevailing party” entitled to attorneys’ fees pursuant to Oklahoma statutory law even though the insured rejected a settlement that was substantially higher than the ultimate judgment. Hamilton v. Northfield Ins. Co., 2020 WL 3042064 (10th Cir. June 8, 2020).
Hamilton sued Northfield Insurance Company, seeking coverage for a leaking roof. Northfield offered $45,000 to cover Hamilton’s actual damages, litigation expenses and other fees. Hamilton rejected the offer and the case proceeded to trial, resulting in a $10,642 jury verdict in Hamilton’s favor. Thereafter, Hamilton sought attorneys’ fees and interest pursuant to Okla. Stat. tit. 36 § 3629. Northfield argued that Hamilton was not the “prevailing party” under the statute because the settlement offer exceed the final damages award. An Oklahoma district court agreed and denied Hamilton’s motion. On appeal, the Tenth Circuit affirmed, but subsequently granted rehearing and vacated its decision. The Tenth Circuit certified to the Oklahoma Supreme Court the following questions:
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In determining which is the prevailing party under Okla. Stat. tit. 36 § 3629(B), should a court consider settlement offers made by the insurer outside the sixty-(formerly, ninety-) day window for making such offers pursuant to the statute?
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In determining which is the prevailing party under Okla. Stat. tit. 36 § 3629(B), should a court add to the verdict costs and attorney fees incurred up until the offer of settlement for comparison with a settlement offer that contemplated costs and fees?
Last month, the Oklahoma Supreme Court answered the first question in the negative, stating that a court “may consider only those timely offers of settlement of the underlying insurance claim—and not offers to resolve an ensuing lawsuit that results from the insurer’s denial of the same—when determining the prevailing party for the purposes of awarding attorney fees and costs under section 3629(B).” (Emphasis in original). Having ruled that section 3629(B) applies only to settlement offers made by the insurer prior to litigation (and thus before legal fees have been incurred), the court noted that the answer to the second question was inherently resolved in the negative.
On remand, the Tenth Circuit ruled that in light of the Oklahoma Supreme Court’s answer to the first certified question, Hamilton was the prevailing party because he received a favorable judgment. The court explained that Northfield’s post-litigation settlement offer was not a statutory settlement offer within the meaning of section 3629(B). As such, Hamilton was entitled to reasonable attorneys’ fees and statutory interest.