Murphy Oil USA, Inc. v. Employers Surplus Insurance Company

Breach of lease, attorney fees - Murphy Oil USA , Inc filed suit in Union County against a number of its insurance carriers seeking a declaration that the carriers were obligated under certain general comprehensive liability ("CGL") policies to indemnify Murphy Oil for a judgment for compensatory and punitive damages previously rendered against it in a federal district court in Alabama. Prior to trial in Union County, certain insurance carriers settled with Murphy Oil, and others, such as Lloyd's of London and Century Indemnity Company (formerly California Union Insurance Company), won summary judgment and were dismissed from the case. The Union County jury returned a verdict in Murphy Oil's favor on its indemnification claims against appellants Unigard Insurance Company and Employers Surplus Lines Insurance Company ("ESLIC") but found against Murphy Oil on its indemnification claim against Associated International Insurance Company. Murphy Oil, as the prevailing party, filed a motion for attorney's fees The trial court conducted a hearing on Murphy Oil's motion and entered an order on May 16, 1996, awarding Murphy Oil a net judgment for attorney's fees in the amount of $1,714,000. Shortly thereafter, the trial court amended the May 16, 1996 judgment to reflect that the judgment for attorney's fees in favor of Murphy Oil was against ESLIC and Unigard. On January 29, 1998, the Arkansas Supreme court held that none of the policies involved in this case covered Murphy Oil's liability, and reversed the judgment against Unigard and ESLIC and dismissed. On March 19, 1998, Unigard and ESLIC, as the prevailing parties in an action for breach of contract, filed motions for attorney's fees. Associated International filed a similar motion for reconsideration of its earlier request for attorney's fees on June 17, 1998. Murphy Oil opposed these motions for attorney's fees by the insurance companies on two grounds: 1) that the Insurance Code's specific provision for attorney's fees would take precedence over the general fee-shifting provision and did not provide for the award of fees to insurance companies; and 2) that the court's determination that none of the insurance policies provided coverage was tantamount to a declaratory judgment.

On June 22, 1998, the trial court conducted a hearing on the motions for attorney's fees filed by Unigard, ESLIC, and Associated International. The trial court awarded attorney's fees totaling $1,200,000 to the insurance companies.

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ESLIC appealed. The Supreme Court of Arkansas affirmed. See 993 S.W.2d 481 (Ark. 1999). The date shown above is the date of the appellate court decision and not the trial date. Reported by JAB.