                                                                            FILED
                           NOT FOR PUBLICATION                              MAR 23 2016

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


ANGELA DOWSON, as authorized                     No. 13-36087
representative of MONTANA PRIDE
BUILDERS, LLC, and as personal                   D.C. No. 4:12-cv-00015-SEH
representative of JOHN D. DOWSON, Jr.,
and MOUNTAIN WEST FARM
BUREAU MUTUAL INSURANCE                          MEMORANDUM*
COMPANY, INC.,

              Plaintiffs - Appellees,

 v.

SCOTTSDALE INSURANCE
COMPANY,

              Defendant - Appellant.


                    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.




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                                                            Page 2 of 3
      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
                                                                           Page 3 of 3
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.
