IN THE SUPREME COURT OF THE STATE OF MONTANA
DONALD J. TIGART,
Plaintiff and Respondent,
-vs-
RICHARD J. THOMPSON,
Defendant and Appellant.
and
DOUGLAS C. BROOKINGS,
Plaintiff and Respondent,
-vs-
DICK THOMPSON,
Defendant and Appellant,
CLtn!: OF SLI:',:EE;C COURT
RICHARD J. THOMPSON, L i A-\S'E tli" P,rcr~r ikl"JA
Third-Party Plaintiff and Appellant,
-vs-
DONALD J. TIGART,
Third-Party Defendant and Respondent.
APPEAL FROM: District Court of the Ninth Judicial District,
In and for the County of Pondera,
The Honorable R.D. McPhillips, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Lon T. Holden, Jardine, Stephenson, Blewett &
Weaver, , Great Falls, Montana
For Respondent:
Philip J. OIConnell, Thueson Law Office, Helena,
Montana
~atricia OtBrien Cotter, Cotter & Cotter, Great
Falls, Montana
submitted: July 13, 1990
Decided: August 20, 1990
Filed:
Justice John C. Sheehy delivered the Opinion of the Court.
Richard J. Thompson appeals from the judgment of the District
Court, Ninth Judicial District, Pondera County, awarding
respondents attorney fees and costs. We affirm the District Court.
The sole issue is the award of attorney fees and costs under
the authority of 5 37-61-421, MCA.
The issue of attorney fees and costs was before this Court
originally in Tigart v. Thompson (1989), 237 Mont. 468, 774 P.2d
401. That portion of the appeal was dismissed without prejudice
for being premature, as the award was not yet in the form of a
final order. Rule 1, M.R.App.P. We set out here only those facts
necessary for the review of this issue.
Suit was initiated by respondents Donald Tigart and Douglas
Brookings as the result of a truck accident in Conrad, Montana, on
January 4, 1985. Respondents alleged that Richard Thompson
negligently entered a highway when the conditions were icy, causing
the pickup driver Tigart to slide into a ditch to avoid a
collision. Thompson was unaware of any accident until contacted
by investigating officers. Thompson maintained throughout
discovery and pretrial proceedings that he knew nothing of the
accident, had no knowledge of any actions or circumstances of the
day in question and had no independent recollection of being in the
vicinity of the accident that day. Thompson further denied giving
statements to anyone other than the investigating officer. Counsel
for Thompson stated that her client would not refute any of
Tigartls contention of what transpired on the day of the accident.
2
However, at trial, counsel for Thompson took issue in opening
statement with Tigart's contentions as to where and with what care
Thompson entered the highway, the road conditions that day, and
asserted as a defense that Tigart was driving too fast for
conditions.
It came to light after the first week of trial that Thompson
had in fact given a statement to his insurance carrier, Safeco
Insurance Company, eleven days after the accident. The statement
was revealed when counsel for Tigart subpoenaed the insurance
adjuster and his records. Defense counsel notified the court and
counsel of the statement's existence just prior to the adjuster's
testimony.
The statement contained several inconsistencies when compared
to the contentions made in defendant's opening statement. As a
result, plaintiffs moved for a new trial based on surprise and for
personal sanctions against defense counsel for concealment of
evidence. No sanction was imposed; however, when a verdict for the
defense was returned by the jury, the lower court granted
plaintiffs' motion for a new trial. In addition, the court awarded
plaintiffs attorney fees and costs associated with the first trial.
The lower court's award of attorney fees and costs, pursuant to 3
37-61-421, MCA, in the amount of $31,275.97 is the subject of this
appeal.
In its order of April 24, 1988, the District Court stated:
It is hereby ordered that the motion to award monetary
sanctions against Safeco Insurance Company in favor of
Douglas Brookings and Donald Tigart is denied. It is
ordered, however, that Safeco Insurance Company is
ordered to pay the plaintiffs1 reasonable attorney fees
and costs incurred during the first trial, including
attorney fees and costs incurred between the close of
discovery and the commencement of trial (which would be
spent primarily in trial preparation), and attorney fees
and costs incurred in obtaining a new trial.
The court based its award on 5 37-61-421, MCA, which states:
An attorney or party to any court proceeding who, in the
determination of the court, multiplies the proceedings
in any case unreasonably and vexatiously may be required
by the court to satisfy personally the excess costs,
expenses, and attorney fees reasonably incurred because
of such conduct.
The District Court went on to state that:
Here, the failure of Safeco Insurance Company to produce
the tape-recorded statement of Thompson, despite multiple
requests by the plaintiffs to do so, prevented the
plaintiffs from having a fair trial, required the post-
trial motions, and necessitated this second trial. The
court is convinced had the tape been produced prior to
trial, plaintiff may well have altered the presentation
of his case with perhaps substantial expectation of
different results. Safeco1s conduct was I1unreasonable"
and therefore, under the statute, it should pay these
expenses.
Appellant contends that such an award, under § 37-61-421, MCA,
is improper for a number of reasons: (1) No sanctions were
imposed by the ~istrictCourt; (2) Safeco is not a I1party" under
the meaning of 5 37-61-421, MCA; and, (3) an award of attorney fees
is improper where plaintiff is represented on a contingency fee
basis.
Appellant asserts that, as the court specifically determined
no sanctions to be in order, 5 37-61-421 is misapplied in this
instance. Appellant states that, as the statute requires an
attorney or party to have "unreasonably and vexatiouslyu multiplied
the proceedings, the court's order is inconsistent. The District
Court, states Thompson, neither found that Safeco intentionally
withheld the statement nor that it failed to produce it in the
proper manner once it was discovered. Therefore, Safecols
inadvertance cannot be considered to have met the standard of being
"vexatious.
We disagree with appellant's contention. The District Court,
in its order of April 29, 1988, stated that "the defendant has
prevented the plaintiffs from receiving a fair trial and created
unfair surprise at trial by withholdins a major item of evidence
. . .I1 The District Court further stated that I1Safeco Insurance
Company's tactic of concealins the Thompson statement1'violated the
principle of pretrial discovery. The District Court's order does
not speak of "inad~ertence'~ appellant maintains, but of tactical
as
conduct at odds with the letter and spirit of pretrial discovery.
Such withholding is certainly both unreasonable and vexatious. It
was within the District Court's discretion to award costs and
attorney fees under 3 37-61-421, MCA. We find no abuse of that
discretion here.
Appellant next contends that Safeco is not a "party1' as
envisioned by 9 37-61-421, and cannot be held responsible for the
attorney fees and costs. Again, we must disagree with appellant's
contention.
In Jessen v. OIDaniel (D. Mont. 1962), 210 F.Supp. 317, 331,
Judge William Jameson held that insurance contracts "have the
effect of placing absolute and exclusive control over the
litigation in the insurance carrier." This Court followed that
reasoning in Safeco Insurance Co. v. Ellinghouse (1986), 223 Mont.
239, 725 P.2d 217, holding that the insurance carrier has "the
correlative duty to exercise diligence, intelligence, good faith,
honest and conscientious fidelity to the common interest of the
parties.'' If an insurer may be held liable for the actions of its
attorney, as was the case in Ellinshouse, under a theory of agency,
it is axiomatic that the insurer may be responsible for costs,
expenses and attorney fees when the insurer llmultiplies the
proceedings in any case unreasonably and vexati~usly.~~
Safeco was
in possession of Thompson's statement from two weeks following the
accident until the trial, and it was easily discoverable by Safeco.
Appellant next contends that an award of attorney fees was
inappropriate in this instance. Appellant states that an award of
attorney fees under 5 37-61-421, MCA, is required to satisfy
"attorney fees reasonably incurred." As counsel for both of the
respondents were working on a contingency fee basis, and the trial
resulted in a defense verdict, appellant maintains that no attorney
fees resulted.
We disagree with appellant's reasoning. The District Court
held that the respondents were denied a fair trial due to
appellant's conduct. The attorney fees and costs were
unnecessarily multiplied by that conduct, a situation expressly
addressed in the statute. The liability of Safeco for attorney
fees arises not from the fee contract between the other parties and
their attorneys, but from a liability imposed by statute. It is
the multiplication of proceedings unnecessarily that 5 37-61-421,
MCA, was meant to curb. We affirm the District Court.
.
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We Concur: (+.
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