Aetna Casualty & Surety Co. v. Certain Underwriters at Lloyds of London

Appellants and respondent Aetna Casualty & Surety Co. (Aetna) were insurers of Union Oil Company (Union) in January 1969, at the time of the Santa Barbara oil well blow-out. Aetna defended Union to the exhaustion of the $50,000 monetary limit of its policy. The instant action for equitable subrogation and declaratory relief was filed be,cause Aetna, although continuing to defend Union, believes its duty to defend ended at the exhaustion of the policy limit; that the other insurers should now take over defense of claims against Union; and that the legal fees and other expenses incurred by Aetna after the exhaustion of the policy limits should be paid to Aetna by the other insurers.

The trial court ordered that from the date of judgment Lloyds shall have the primary responsibility of defense; that Harbor has exhausted its policy limits so no longer shares this responsibility; and that the costs of defense should be apportioned based on a ratio of the amount paid by each insurer to the total amount of such indemnity payments paid by all insurers in the settlement of claims or the satisfactions of judgments. The trial court further ordered that Aetna recover from Harbor…