Potomac Ins. Co. of Ill. v. Pa. Mfrs. Ass’n Ins. Co.

This case presented an issue of first impression for the Supreme Court: the allocation of defense costs incurred by the common insured of several carriers. Specifically, the issue was whether one insurer with an obligation to indemnify and defend the insured had a direct claim for contribution against its co-insurer for defense costs arising from continuous property damage litigation. Furthermore, the Court considered whether such a claim was extinguished when the insured gave up its claims against the co-insurer in a release negotiated and signed only by the insured and the co-insurer. The dispute arose from construction litigation brought by the Township of Evesham against a contractor, Roland Aristone Inc. for property damage. Although plaintiff, OneBeacon Insurance Company paid half of Aristone's legal fees and defense expenses, Pennsylvania Manufacturers’ Insurance Company, which also insured Aristone, initially disclaimed coverage and did not pay any of Aristone’s defense costs. The Appellate Division affirmed the portion of the trial court’s decision allocating defense costs among the several insurers. It recognized OneBeacon’s claim for contribution against PMA and affirmed the trial court’s holding that OneBeacon’s claim was not extinguished by the release negotiated by Aristone and PMA. Upon review, the Supreme Court held that, in light of each insurer’s obligation to indemnify and defend Aristone for a portion of the period in which the continuing property damage occurred, the trial court properly held that OneBeacon had a contribution claim against PMA. View "Potomac Ins. Co. of Ill. v. Pa. Mfrs. Ass'n Ins. Co." on Justia Law