Background:

• John Belton sued Katie Spencer in 2012 for injuries from handling her horse.
• Martin & Hillyer Associates (MHA) represented Belton on contingency and secured a $100,000 Legal Expense Insurance (LEI) policy from Omega.
• Belton’s claim was dismissed in 2020, and in 2021, he was ordered to pay $469,972.52 in costs.
• MHA sought $59,842.23 for disbursements.

Application & Positions:

• Spencer and Elite Insurance sought declarations that they were “Defendants” under the LEI, that the costs awarded were covered as “Defendant’s Costs,” and that the dismissal was an “Unsuccessful Outcome.” They also sought full or pro rata access to the policy funds.
• MHA initially claimed exclusive rights to the funds but later abandoned its claim.
• Belton argued he was the sole beneficiary but withdrew related claims against MHA.

Court’s Analysis & Ruling:

• The LEI covered both adverse costs and MHA’s disbursements but did not specify priority of payment.
• The court ruled a pro rata distribution was reasonable.
• Since MHA withdrew, the entire $100,000 was awarded to Spencer and Elite Insurance.
• The LEI did not grant Belton direct control over the funds.

Conclusion:

• Spencer and Elite were third-party beneficiaries entitled to the funds.
• Costs submissions were requested if parties could not agree.