The Court in the case of QBE Americas, Inc. v. ACE American Ins. Co., 44 Misc. 3d 1224(A), 2014 WL 4250089, 2014 N.Y. Slip Op. 51330(U)(N.Y. Sup. Ct., New York County August 27, 2014)(table, text in Westlaw), concisely described the nature of that lawsuit:
Background
This is an insurance coverage action in which QBE seeks indemnification for its participation in alleged kickback schemes involving forced-placed insurance. QBE claims it is entitled to coverage in approximately 40 lawsuits and a state government investigation, though other lawsuits and investigations may be pending.
However, the Court carefully stated several times that the present, unofficially reported ruling ostensibly did not reach QBE's Professional Liability Insurance Coverage claims. The only issue it was deciding at this time, said the Court, was "QBE's entitlement to defense costs from its primary carriers, AIG and Darwin, during the pendency of this action."
The Court determined that AIG had no duty to advance defense costs under its policy, but Darwin does have such a duty at least with respect to "pending litigation for which Darwin has consented to advance defense costs," in the words of the Court in this case. AIG's policy requires the exhaustion of a self-insured retention, and QBE provided no evidence that it exhausted its self-insured retention. Darwin in contrast "has a duty to defend. Hence, Darwin (under New York, California, and Georgia law [the jurisdictions potentially implicated in choice-of-laws governing interpretation of Darwin's policy]) is obligated to advance all of QBE's llitigation costs so long as each lawsuit presents the possibility that any of the QBE entities or any of the claims asserted might be covered." [Emphasis in original.]
The ideas that the duty to defend is determined by comparing the claims alleged against the insured with the terms of the policy, and that Courts will hold that there is a duty to defend so long as any of the alleged claims are potentially covered, are universal. These tests are applied generally, but they do not ordinarily translate into a concomitant determination that the duty to defend includes a duty to advance defense costs particularly, as in this case, while the insured and the carrier contest all coverage.
"An informed coverage determination simply cannot be made at this juncture." This limitation on the Court's decision is clear and concise. There may be a question though whether it disguises the coverage determination that the Court has apparently already made applying the Darwin Professional Liability insurance Policy to cover its insured's lender force-placed insurance kickbacks.
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