American Cont'l Ins. Co. v. American Cas. Co. of Reading, PA

In this action between two insurers we are presented with an issue arising under the doctrine of equitable contribution which is a matter of first impression in California. The basic facts may be summarized as follows: Insurer A provides professional liability insurance to a hospital and its employees. One of those employees is a nurse who also has her own professional liability insurance with Insurer B. A claim of malpractice is made against the hospital and its employees arising out of a medical procedure in which the nurse was involved and in which she was allegedly negligent, but the claim and the lawsuit which followed do not name or refer to the nurse. Insurer A defends and settles the suit, but Insurer B refuses to participate. Insurer A then seeks to recover from Insurer B the latter’s “fair share” of the indemnity and defense costs incurred in settling the malpractice claim made against the hospital and its employees (which necessarily included the nurse). The issue presented to us is, under these factual circumstances, does Insurer B have any liability to Insurer A? We conclude it does not.

The plaintiff and appellant, American Continental Insurance Company…