Payne & Fears LLP offers a full range of business and litigation services to its clients in three primary practice groups: Labor and Employment, Business Litigation, and Insurance Coverage. Across these practice areas, we represent all types of clients, from multi-national corporations to emerging tech startups to individual insurance policyholders.
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Payne & Fears Secures Full Coverage After Multiple Denials by Insurer
Payne & Fears (P&F) achieved a significant victory on behalf of a commercial contractor by securing full defense and indemnity under a commercial general liability policy for an arbitration after the insurer had denied coverage twice previously.
P&F partners Jared De Jong and Kelby Van Patten were retained on the eve of trial to evaluate insurance coverage by the client. Even though the insurer strenuously denied the existence of a duty to defend, P&F, through creative and comprehensive arguments, was able to convince the carrier that coverage existed and the risks to the carrier in refusing to defend were enormous. The carrier agreed to appoint independent counsel on the first day of trial and quickly moved to settle the case, paying 100 percent of the settlement. The settlement avoided a prolonged trial and allowed the client to return to its core business.
In an insurance recovery case being handled by Payne & Fears partners Scott Thomas and Sarah Odia, an Arizona federal court, applying Nevada law, recently held that NGM Insurance Company breached its duty to defend its additional-insured homebuilder by refusing to pay more than a proportionate share of the builder’s defense costs based on what NGM called a “defense-follows-indemnity” formula.
The court rejected NGM’s argument that its duty to defend required it to pay only a small fraction of the builder’s defense costs proportionate to its named insured’s relatively small role in the homeowners’ overall damages; the court correctly applied Nevada law to the effect that if an insurer has a duty to defend any part of a lawsuit, it has a duty to defend the entire lawsuit. This ruling puts to rest the ill-conceived notion that under Nevada law, insurers defending developers and homebuilders as additional insureds under policies issued to subcontractors can get away with anything less than fully defending their additional insureds.
The court also rejected NGM’s argument that the builder “failed to mitigate” its damages by not trying to shift NGM’s defense burden to other defending insurers. Instead, the court held that the builder is entitled to recover from NGM all of the builder’s reasonable defense costs and any consequential damages resulting from NGM’s breach – potentially including its litigation expenses in the recovery action.
The case is Centex Homes et al. v. NGM Insurance Co., case number 2:19-cv-01392, in the U.S. District Court for the District of Arizona (July 9, 2021 Order, ECF No. 195).
