In a case of first impression, the Oklahoma Supreme Court has ruled that an insured that filed a declaratory judgment action against its insurers – and was awarded judgment in its favor – may recover appeal-related attorneys' fees.

The Case

Several landowners in Payne County, Oklahoma, sued JP Energy Marketing, LLC, alleging damage associated with a fire caused during work on the Great Salt Plains Pipeline.

After JP Energy's insurers – Alterra America Insurance Company, Navigators Insurance Company, and BITCO General Insurance Company – denied coverage and refused to provide JP Energy with a defense, JP Energy sought declaratory relief in an Oklahoma court.

The trial court granted summary judgment to JP Energy and an intermediate appellate court affirmed.

The Oklahoma Supreme Court denied the insurers' petitions for certiorari, and issued an order approving the appellate court opinion.

JP Energy subsequently filed a motion seeking appeal-related attorneys' fees. JP Energy maintained that it was the prevailing party in the underlying declaratory judgment action and relied on 36 O.S.2011 §3629 as authority for such an award.

The attorneys' fee issue was decided by the Oklahoma Supreme Court.

Oklahoma Law

Section 3629 provides:

A. An insurer shall furnish, upon written request of any insured claiming to have a loss under an insurance contract issued by such insurer, forms of proof of loss for completion by such person, but such insurer shall not, by reason of the requirement so to furnish forms, have any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion.

B. It shall be the duty of the insurer, receiving a proof of loss, to submit a written offer of settlement or rejection of the claim to the insured within ninety (90) days of receipt of that proof of loss. Upon a judgment rendered to either party, costs and attorney fees shall be allowable to the prevailing party. For purposes of this section, the prevailing party is the insurer in those cases where judgment does not exceed written offer of settlement. In all other judgments the insured shall be the prevailing party. If the insured is the prevailing party, the court in rendering judgment shall add interest on the verdict at the rate of fifteen percent (15%) per year from the date the loss was payable pursuant to the provisions of the contract to the date of the verdict. This provision shall not apply to uninsured motorist coverage.

The Oklahoma Supreme Court's Decision

The court granted JP Energy's motion for appeal-related attorneys' fees.

In its decision, the court pointed out that although it had not previously rendered a decision on the issue, federal courts had awarded attorneys' fees pursuant to Section 3629. It found these decisions – An-Son Corporation v. Holland-America Ins. Co., 767 F.2d 700 (10th Cir.1985), where the circuit court rejected the insurer's argument that Section 3629 only applied to "first party actions where the insured has sustained a loss and the insurer rejects a claim made under the policy," Stauth v. National Union Fire Ins. Co. of Pittsburgh, 236 F.3d 1260 (10th Cir. 2001), and Atain Specialty Ins. Co. v. Tribal Constr. Co., No. CIV-11-1379-D (W.D. Okla. July 17, 2013) – persuasive and as a result granted JP Energy's motion for appeal-related attorneys' fees.

It concluded by directing the trial court to determine, in an adversarial hearing with notice, the amount of the fee to be awarded to JP Energy.