Angela Dowson, as authorized representative of MONTANA PRIDE BUILDERS, LLC v. Scottsdale Insurance Company

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ANGELA DOWSON, as authorized
representative of MONTANA PRIDE
BUILDERS, LLC, and as personal
representative of JOHN D. DOWSON, Jr.,
and MOUNTAIN WEST FARM
BUREAU MUTUAL INSURANCE
COMPANY, INC.,
Plaintiffs - Appellees,
v.
SCOTTSDALE INSURANCE
COMPANY,
Defendant - Appellant.
No. 13-36087
D.C. No. 4:12-cv-00015-SEH
MEMORANDUM*
Appeal from the United States District Court
for the District of Montana
Sam E. Haddon, District Judge, Presiding
Argued and Submitted March 8, 2016
Portland, Oregon
Before: FISHER, BERZON, and WATFORD, Circuit Judges.
FILED
MAR 23 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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1. The district court correctly held that Scottsdale Insurance Company
breached its duty to defend John Dowson and Montana Pride Builders. To justify
its decision to deny a defense, Scottsdale had to demonstrate unequivocally that its
policy did not provide coverage. See Tidyman’s Mgmt. Servs. Inc. v. Davis, 330
P.3d 1139, 1149 (Mont. 2014). But Scottsdale’s letters denying coverage merely
quoted various policy provisions and exclusions restricting the scope of coverage.
The letters did not explain why any of the exclusions (including the “Owned
Property” exclusion, the only exclusion Scottsdale invokes on appeal) might apply
to the facts alleged in the Kovaciches’ lawsuit against Dowson and Montana Pride.
As the Montana Supreme Court has observed, exclusions “are frequently subject to
challenge for ambiguity or inconsistency,” and as a result “the mere existence of
the exclusions in Scottsdale’s policy [does] not establish an ‘unequivocal
demonstration’ that the claim [does] not fall within the insurance policy’s
coverage.” Newman v. Scottsdale Ins. Co., 301 P.3d 348, 355 (Mont. 2013).
2. Because Scottsdale breached its duty to defend Dowson and Montana
Pride, it is liable for 100% of the defense and settlement costs incurred in the third-
party lawsuit. Under Montana law, once an insurer unjustifiably fails to defend its
insured, the insurer is “estopped from denying full coverage for [the insured’s]
defense costs and judgment, including settlement.” Swank Enters., Inc. v. All

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Purpose Servs., Ltd., 154 P.3d 52, 58 (Mont. 2007); accord Farmers Union Mut.
Ins. Co. v. Staples, 90 P.3d 381, 386–87 (Mont. 2004).
3. The district court did not err when it awarded $36,141 in attorney’s fees
in the present action. Under Mont. Code Ann. § 27–8–313, courts may award
attorney’s fees in suits seeking declaratory relief. See Trs. of Indiana Univ. v.
Buxbaum, 69 P.3d 663, 670–74 (Mont. 2003). In addition, Montana courts have
long awarded attorney’s fees in cases in which an insurer breached its duty to
defend. See, e.g., Mountain W. Farm Bureau Mut. Ins. Co. v. Brewer, 69 P.3d 652,
655 (Mont. 2003) (noting the court “ha[s] approved attorney fee awards in the
absence of statutory or contractual authority where an insurer breaches its
obligation to defend an insured”); see also Buxbaum, 69 P.3d at 668 (discussing
“the insurance exception” as distinct from § 27–8–313). Scottsdale contends that
attorney’s fees may not be awarded in declaratory relief actions between two
insurers, but this case involves a suit between an insured and an insurer. Dowson
and Montana Pride assigned their right to pursue this action against Scottsdale to
Mountain West. Thus, Mountain West stands in the shoes of Dowson and
Montana Pride and is entitled to seek recovery of attorney’s fees as their assignee.
See Newman, 301 P.3d at 361–62.
AFFIRMED.

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