duty to defend the insured against any suit seeking those damages. However, we will have no duty to defend the insured against any suit seeking damages for bodily injury or property damage to which this insurance does not apply. ... counsel for Fairless sent a letter to Acuity demanding payment of all attorney fees and expenses incurred in the ...
OHIO BAR LIABILITY INSURANCE COMPANY, : Plaintiff-Appellee, : No. 110038 v. : ... that OBLIC owes no duty to defend or indemnify the Wallace or Bache ... the policy provides coverage for “damages,” not attorney fees charged as costs; (2) the …
Aug 25, 2020 · State Automobile Insurance Co., 2008-Ohio-5066 (10th Dist.) (permitting parties to recover attorney fees incurred to enforce a settlement agreement as compensatory damages “encourages parties to comply with the terms of their settlement agreements, lest they put themselves at risk of paying the nonbreaching parties’ attorney fees ...
Apr 24, 2011 · Indeed, New York courts have been resolute in awarding attorney fees in coverage actions, because "an insurer's duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against an insurer's declaratory judgment action." 43. Ohio Permits Recovery of Policyholder Attorney Fees
Attorney's Fees Do Not Constitute Actual Damages.Oct 10, 2017
The “duty to defend” means that, when you timely report a potentially covered claim against you: The insurer must appoint and pay for defense counsel to defend you against the claim, unless you select your own counsel.Dec 31, 2020
An insurer has a duty to defend if the face of the complaint alleges something covered and does not allege an exclusion to coverage. Extrinsic facts not alleged in the complaint do not affect the insurer's duty to defend in these jurisdictions.
Duty to Defend: The carrier is contractually required to respond to all claims, will pay expenses and liabilities, and bill the client for their responsible amount (deductible). Right but not the Duty to Defend (Reimbursement) Indemnification policy: The carrier has the right but not the duty to respond to all claims.Sep 1, 2017
The duty to defend is triggered when the insurance company receives notice that the policyholder has been or might be sued in a lawsuit potentially resulting in covered liability (i.e., a judgment that the insurance company would be required to pay).May 1, 2017
The duty to defend is a promise to render, or fund, the service of providing a defense on the indemnitee's behalf--a duty that usually arises as soon as a claim is made against the indemnitee and may continue until the claim has been resolved.Aug 16, 2019
The duty to indemnify describes an insurer's obligation to pay a claim for loss or damage against an insured. Both are typically included in a policy's insuring agreement. The duty to defend and the duty to indemnify are primarily found in liability policies—those with third party coverage implications.
The differences between the duty to indemnify and to defend, while nuanced, are critically important. The obligation to indemnify arises once a judgment has been entered, whereas the obligation to defend is triggered as soon as a claim is filed against the indemnitee.Jul 24, 2020
Tips for Enforcing Indemnification ProvisionsIdentify Time Periods for Asserting Indemnification Rights. ... Provide Notice in a Timely Fashion. ... Notify All Concerned Parties. ... Understand Limitations on Recovery. ... Exclusive Remedy. ... Scope of Damages. ... Claims Process/Dispute Resolution.Feb 24, 2016
Defense inside the limit means that all defense costs (attorney's fees, court costs, investigation and filing legal papers) are deducted first from the policy limit, which cuts into the overall limit of dollars available to pay for monetary damages awarded by a ruling.
A non-duty to defend policy stipulates that it is the “duty of the insured and not the insurer” to select his or her own defense counsel. Contractually, the carrier still retains the right to approve the defense counsel selected by the insured, but such consent cannot be unreasonably withheld.Dec 19, 2005
A hammer clause is an insurance policy clause that allows an insurer to compel the insured to settle a claim. A hammer clause is also known as a blackmail clause, settlement cap provision, or consent to settlement provision.
Allegations of defamation or disparagement are the lynchpins of obtaining a defense from a carrier under the personal injury coverage. However, the allegations are usually buried in a voluminous complaint, the primary focus of which is often other traditionally non-covered causes of action such as breach of contract, antitrust violations, fraud, or misappropriation of trade secrets.
by Bob Rutter, Rutter & Russin. Like the Big Bad Wolf who hounded Little Red Riding Hood, a lawsuit filed against a business owner means big trouble , not only in terms of commanding the company's time and energy, but also in siphoning off from the operating budget significant finances to pay attorney fees and litigation expenses.
Generally, there is no downside to giving notice of claim to an insurance company. If the carrier accepts coverage, all the better. If not, the matter can be litigated with the insured's choice of counsel and according to the insured's wishes. Once the matter is concluded, the insured can decide whether or not to pursue a declaratory judgment action against its carrier. This decision will turn, in large part, on the result of the underlying business lawsuit and the costs expended in defending it.
Because of a conflict among panel decisions on this issue, the Eighth District heard this case en banc. In a 7-5 decision, the Eighth District affirmed the trial court’s decision to enforce the settlement agreement between Rayco and the Law Firms but reversed the trial court’s denial of attorney fees to the Law Firms. In so holding, the majority found that attorney fees can be awarded as compensatory damages to a prevailing party on a motion to enforce a settlement agreement when the attorney fees are incurred as a direct result of a breach of the settlement agreement. The Eighth District remanded the case to determine the amount of reasonable attorney fees that the Law Firms had incurred to enforce the settlement agreement.
In a 7-5 decision, the Eighth District affirmed the trial court’s decision to enforce the settlement agreement between Rayco and the Law Firms but reversed the trial court’s denial of attorney fees to the Law Firms.
The only thing decided by the advisory jury in this case was that a settlement contract had been formed, and not even on the basis the Law Firms had argued. The Law Firms filed a motion in limine stating this was not a trial on the merits and asked the trial court to bar any testimony on any issue other than whether a contract had been formed and what the terms of that contract were. The argument that this was really a determination that the contract was breached is something that the Law Firms expressly stated below was not the purpose of the litigation.
On October 21, 2013, Rayco Manufacturing (“Rayco”) filed a legal malpractice suit against its former attorneys Murphy, Rogers, Sloss, & Gambel (“Murphy”) of Louis iana, Murphy’s local counsel, the Cleveland firm of Cavitch, Familio and Durkin “ (Cavitch”) (collectively, “The Law Firms”) and a number of individually named lawyers, who had represented Rayco in a prior lawsuit .
An insurance company's improper refusal to defend the policyholder should entitle the policyholder to recover attorney fees and costs. Although the vast majority of jurisdictions permit attorney fees in coverage actions to some degree, courts in several jurisdictions have limited the scope and applicability of attorney fee awards. This is particularly true in the context of third-party liability insurance. Where the policyholder establishes the insurance company's duty to defend in a subsequent declaratory judgment action, the insurance company should bear the consequences of its wrongful action and reimburse the policyholder for its attorney fees and costs in the declaratory judgment action. For example, in Legacy Partners Inc. v. Travelers Ins. Co ., the court found that under Texas law "an insurer who has breached the duty to defend is liable for damages including the attorneys' fees incurred in pursuing an insurance coverage action." 7
Where the policyholder establishes the insurance company's duty to defend in a subsequent declaratory judgment action , the insurance company should bear the consequences of its wrongful action and reimburse the policyholder for its attorney fees and costs in the declaratory judgment action.
The New Jersey Rules of Court explicitly provide for the recovery by the policyholder of the attorney fees and costs incurred in successfully enforcing its rights under an insurance policy. New Jersey Rule 4:42-9 provides:
In the liability insurance context, a breach of the duty to defend is one event supporting an award of policyholder attorney fees. The nature of the insurance promise as "peace of mind" and "liability insurance" is such that the award of attorney fees to a policyholder in a coverage action protects the value of the "duty to defend" provision.
Under Kansas law, a policyholder is entitled to its reasonable attorney fees when it is forced to sue an insurance company for refusing "without just cause or excuse" to defend or indemnify the policyholder. Specifically, K.S.A., section 40-256, provides:
Maryland courts have stated unwaveringly that " [t]he rule in this State is firmly established that when an insured must resort to litigation to enforce its liability insurer's contractual duty to provide coverage for its potential liability to injured third persons, the insured is entitled to a recovery of the attorneys' fees and expenses incurred in that litigation." 31
These rationales generally are founded on (1) the nature of the insurance promise; for example, the nature of an insurance company's duty to defend its policyholder; (2) the theory of consequential damages; (3) the language of particular insurance policy provisions; (4) public policy considerations; and (5) specific statutory provisions.
In Trustees of Indiana University v. Buxbaum,25 the sued party who sought defense and indemnity coverage from Indiana University and prevailed in the coverage dispute filed by the University was confronted with multiple problems in recovering attorney fees. First, Indiana University was self insured, so it was not an insurance company and did not have an insurance policy contract with the party demanding defense. Accordingly, the insurance exception to the American Rule did not apply to provide a legal basis for attorney fees.
In Lindsay Drilling & Cont racting v. United States Fidelity and Guaranty Co.,21 USF&G refused to defend its insured, Lindsay Drilling , on claims that the company salted core samples to make it appear that certain mining properties contained more minerals than in fact existed. In a case filed under the Uniform Declaratory Judgment Act by Lindsay Drilling, the District Court held for USF&G. However, the Montana Supreme Court reversed, holding that the counterclaim alleging the salting did state claims covered by USF&G’s policy. The court held the insurer “liable for reasonable attorney fees, expenses and court costs occasioned thereby” citing Home Insurance Company v. Pinski Brothers, Inc. The court’s stated basis for the award was that “It was USF&G’s wrongful refusal to defend Lindsay which led to this action.” The case was remanded for determination of the attorney fees, expenses and costs. It appears that the attorney fees in question were those involved in the declaratory judgment action brought by the insured. Simply put, Lindsay Drilling fits under the insurance exception to the American Rule.
Montana has developed a significant body of common law allowing attorney fees in declaratory actions involving insurance. In 1978, the court, in Foy v. Anderson,17 established that it could award attorney fees in a declaratory action under its inherent equity power. In that case, injured plaintiffs, Foy and Gilreath, brought claims against Anderson, the driver who rear-ended them. A third passenger in the Gilreath vehicle, Karen Eggan, apparently suffered some injury but chose not to bring a claim. Driver Anderson sought defense and indemnity from his insurer, Farmers Insurance Exchange, which refused. Anderson then brought a declaratory judgment action against Farmers and included as party defendant the unwilling Karen Eggan, who subsequently prevailed on the court to dismiss her and award her attorney fees incurred in getting out of the declaratory action.
Most American courts have rejected attempts by insureds to obtain their attorney fees in proceedings under declaratory judgment statutes.11 Nationally, the majority rule refuses attorney fees to the insured in declaratory actions over coverage.12 Under the “New York Rule,” the insured cannot recover in the action he initiates even if he prevails against the insurer in enforcing coverage.13 Nevertheless, nationally there is a split of authority on recovery of attorney fees in declaratory actions over the insurer’s duty to defend.14 If the insured has to defend himself where the insurer takes the legal action to avoid coverage, and the insurer is found to have wrongfully refused coverage, courts do award the insured attorney fees.15 Those courts that deny the fees generally follow the American Rule that, absent statutory or contractual provision, there can be no recovery of attorney fees.16
Under the American Rule, one who prevails in a civil action is not entitled to recover attorney fees absent a statute or contract provision that specifically provides for them.1 Consequently, few victims of wrongdoing who seek recompense in the civil system are ever made whole. Plaintiffs’ attorneys know well the irony of perpetually seeking to obtain for their clients compensation that is merely adequate while the corporate media have the public believing that plaintiffs in the civil system are winners of a liability jackpot.
Commercial general liability (CGL) policies typically provide that an insurer will defend a “suit” that seeks covered “damages” that the insured may be “legally obligated to pay.”. This seems simple enough. But can an insurer have any obligation to its insured even before a “suit” is filed?
The insurer will see its interests as aligned with the interests of its insured, and it may want to take steps—even before suit is filed—to avoid a laws uit and head off a potentially larger future liability that may be covered under the policy.
The contractor then has the opportunity to respond and repair the defect if it chooses. If the contractor fails to respond, consequences may follow.
The first line of cases involves statutory pre-suit demands that are required by law before a claimant is allowed to proceed to suit. In some jurisdictions, the recipients of these demands may face significant coercive consequences—analogous to a kind of default judgment—if they fail to respond properly.
General Rule: No Pre-Suit Duties or Obligations. As the court in Sanders noted, this policy language does not require an insurer to involve itself with a claim absent a suit. In most cases, insurers may, and often do, properly resist such involvement.
Insurers generally have no obligation to defend under their policies until an actual suit is filed. In some cases—such as where insurers view their interests as aligned with their insureds—insurers may agree voluntarily to assist an insured in responding to a pre-suit demand.
The second insurer declined to defend , on various grounds. In the ensuing coverage litigation, the court determined that the second insurer had, in fact, owed the general contractor a defense. It then found that the duty extended to the pre-suit costs that the first insurer had incurred.