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Willard Hurley v. State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company

December 3, 2012

WILLARD HURLEY,
PLAINTIFF,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY AND STATE FARM FIRE AND CASUALTY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Karen E. Schreier Chief Judge

ORDER DENYING DEFENDANTS' MOTION FOR PARTIAL SUMMARYJUDGMENT

Plaintiff, Willard Hurley, alleges a bad faith claim against defendants, State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company (collectively State Farm). State Farm moves for partial summary judgment on the issue of attorney's fees. Docket 52. Hurley opposes the motion. For the following reasons State Farm's motion is denied.

BACKGROUND

The pertinent facts viewed in the light most favorable to plaintiff are as follows:

Hurley maintained auto coverage and umbrella coverage policies with State Farm. Hurley had underinsurance coverage with a limit of $250,000 per person, $500,000 per accident, and umbrella coverage with a limit of $5,000,000. Docket 54 at 1.

On October 21, 2007, Hurley was injured in an automobile accident as a result of another driver's actions. The other driver had personal liability insurance limits of $100,000, which was an insufficient amount to compensate Hurley. On June 26, 2009, Hurley accepted the limits of the other driver's policy and entered into a release with the driver.

Hurley then filed a claim with State Farm for underinsured motorist benefits, which State Farm initially denied. Hurley brought suit against State Farm for breach of contract to recover under the underinsured motorist provisions of his policy. After nearly one year of litigation, State Farm made an unconditional payment of $340,000 to Hurley and later paid an additional $200,000 to resolve the case.

The parties entered into a settlement agreement to resolve the breach of contract action. They agreed that State Farm's payment of $540,000 was in consideration for Hurley to "fully and forever release and discharge State Farm . . . from any and all claims, demands, obligations, actions, causes of action, and all liability on account of any losses, injuries, damages, costs and expenses, including those now or hereafter arising, directly or indirectly, as a result of [the October 21, 2007, accident]." Docket 64-1 at 2. The parties specifically agreed, however, that the settlement did not "release [Hurley's] right to pursue a bad faith claim against State Farm." Docket 64-1 at 2. The agreement also stated that the $540,000 was "in consideration for physical injury . . . [and] that all payments by State Farm are solely attributable to all of the undersigned's claims arising out of and derivative of physical injuries and/or sickness related to the accident[.]" Docket 64-1 at 3.

Following the settlement and in accordance with a joint stipulation for dismissal, United States District Judge Roberto A. Lange dismissed Hurley's breach of contract action with prejudice. Docket 64-2 ("ORDERED that this action is hereby dismissed without costs and with prejudice, each party to pay their own costs.").

The action currently pending before this court is Hurley's bad faith claim. As part of his bad faith claim, Hurley is seeking damages that include $180,000 in attorney's fees that were allegedly incurred during the breach of contract litigation. State Farm moves for partial summary judgment with regard to any claim Hurley has to the attorney's fees that were expended in the breach of contract litigation. In addition to considering the briefs of both parties, the court also heard oral arguments on the motion.

STANDARD OF REVIEW

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) ("[A] party seeking summary judgment always bears the initial responsibility of . . . demonstrat[ing] the absence of a genuine issue of material fact." (internal quotations omitted)). The moving party must inform the court of the basis for its motion and also identify the portion of the record that shows that there is no genuine issue in dispute. Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992). Once the moving party has met its initial burden, the "nonmoving party may not 'rest on mere allegations or denials, but must demonstrate on the record the existence of specific facts which create a genuine issue for trial.' " Mosley v. City of Northwoods, Mo., 415 F.3d 908, 910 (8th Cir. 2005) (quoting Krenik v. Cnty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995)). For purposes of summary judgment, the facts, and inferences drawn from those facts, are "viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).

DISCUSSION

State Farm moves for summary judgment on the issue of attorney's fees expended by Hurley during the breach of contract litigation. Hurley claims that he is entitled to such attorney's fees as an element ...


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