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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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).
Payne & Fears Hits Another Home Run for Policyholder in Coverage Dispute
Payne & Fears’ insurance team partners Nate Cazier and Jared De Jong continued their winning streak on behalf of Rawlings Sporting Goods Co. in its dispute with Starr Indemnity & Liability Co. regarding coverage for an underlying class action lawsuit.
After months of litigation, culminating in summary judgment in favor of Rawlings, Payne & Fears secured payment for all of Rawlings’ unpaid legal fees and invoices, plus interest, and an agreement by Starr to fully defend and indemnify Rawlings through the resolution of the class action, all without Rawlings releasing any of its rights or claims against Starr. As a result, Rawlings was able to dismiss its coverage action without prejudice and turn its undivided attention to defeating the underlying litigation.
“We’re excited to recover all of the unpaid and future litigation costs, which are well into the seven figures,” Nate Cazier said. “What really makes this special is that we were able to maneuver the case in a way where our client was made whole without sacrificing any of its rights or claims in the process.”
“This arrangement may not seem extraordinary, but insurers often require policyholders to release all of their claims (past, present, and potential) before they will issue payment,” Jared De Jong said. “This deal gives our client an additional level of comfort knowing that it can immediately resume litigation if Starr starts playing games with its coverage.”
And Payne & Fears is still on deck, ready to go to bat for Rawlings in case it does.
