Maryland Casualty Co. v. Nationwide Mutual Insurance

This case involves the allocation of defense costs among insurers—two of which paid for the insured’s defense (Maryland Casualty Company and National Union Fire Insurance Company of Pittsburgh, Pennsylvania) and one of which did not (Nationwide Mutual Insurance Company). The court shifted the entire defense burden to Nationwide under equitable subrogation principles. We conclude the court erred because the equitable contribution doctrine, not subrogation, applies. We reverse and remand for the court to equitably allocate defense costs among these insurers.

Facts

Nielsen Construction Company, a general contractor, was hired to build a residential development. Nielsen retained numerous subcontractors to assist on the project, including West Coast Sheet Metal Inc. (West Coast) and R.W. Strang Mechanical, Inc. (Strang). The subcontract agreements required West Coast and Strang to name Nielsen “as an additional named insured and . . . provide[] specifically that such policies are primary and non-contributing with any other insurance carried or available to [Nielsen].”

Pursuant to these agreements, West Coast and Strang obtained liability insurance coverage from Nationwide…