Chubb/Pacific Indemnity Group v. Insurance Co. of North America

This appeal involves four cases which were consolidated for trial. Each of these four consolidated cases concerns an insured physician who purchased primary malpractice insurance, up to a given policy limit, from appellant Chubb/Pacific Indemnity Group (Pacific Indemnity) and excess insurance, for the same policy period, from respondent Insurance Company of North America (INA). The insured physician was sued for medical malpractice falling within the period of the Pacific Indemnity and INA coverage. Pacific Indemnity appointed an attorney to defend the physician and initially paid the defense costs, but later, while the litigation against the physician was still pending, Pacific Indemnity contacted INA, demanded that INA take over responsibility for the defense of the insured, and offered to pay its policy limit to INA if INA would accede to that demand. INA refused Pacific Indemnity’s demands that it take over the defense, citing the relevant provisions from the INA and Pacific Indemnity insurance policies. Pacific Indemnity continued to defend the insured physician until either the case was settled or judgment was entered against the insured, but it brought the present…