Federal Insurance v. Steadfast Insurance

INTRODUCTION

The United States brought an action against the insureds—the Sterling defendants—for discrimination under the Fair Housing Act ( 42 U.S.C. § 3601 et seq.) (Sterling action). The primary insurance carriers, Steadfast Insurance Company (Steadfast) and Liberty Surplus Insurance Corporation (Liberty), insured against claims for “wrongful eviction,” “wrongful entry,” and “invasion of the right of private occupancy.” The excess and umbrella insurance carrier, Federal Insurance Company (Federal), insured against those claims and specifically insured against claims for discrimination. At different times in the Sterling action, Steadfast and Federal provided a defense for the Sterling defendants.

Federal sought a determination that it had no duty to defend in the Sterling action and claimed reimbursement from Steadfast and Liberty for defense fees and costs it expended on behalf of the insured defendants in the Sterling action. Steadfast, inter alia, sought reimbursement from Federal and Liberty for the defense fees and costs it expended in that action. The trial court granted summary judgment and summary adjudication against Federal.

We hold that only Federal had…