Scottsdale Insurance v. Century Surety Co.

When multiple insurance companies have the duty to defend the same mutual insured against the same legal action, the costs of the defense are to be allocated among the insurers equitably. When an insurance company which has the duty to defend declines to participate in the defense of the common insured, those insurers who contributed to the defense may pursue an action for equitable contribution against the nonparticipating insurer. In this case, Scottsdale Insurance Company (Scottsdale) brought suit against Century Surety Company (Century) seeking equitable contribution based on Century’s failure to participate in the defense of 17 common insureds in hundreds of actions in which Scottsdale, along with at least one other insurer, shared the costs of the defense of those insured parties. Scottsdale also sought equitable contribution with respect to indemnity of the common insureds in those underlying actions in which Scottsdale (and at least one other insurer) had paid amounts to settle the actions.

Three principal defenses were raised. In the unpublished portion of the opinion we discuss two of them and conclude that the trial court correctly decided both. First, Century…