Golden Eagle Insurance v. Federal Insurance

*641 MEMORANDUM *

Golden Eagle Insurance Company appeals the district court’s grant of summary judgment in favor of Federal Insurance Company in a diversity action seeking equitable contribution from Federal for defense costs associated with defending a lawsuit against the two insurers’ mutual insured. Because the parties are familiar with the facts, we do not recite them in detail. We reverse.

The district court incorrectly found that Golden Eagle did not give sufficient notice to Federal that there was an on-going claim prior to incurring defense expenses, for which Golden Eagle would later seek contribution. The circumstances in Truck Ins. Exch. v. Unigard, Ins. Co., 79 Cal.App.4th 966 , 94 Cal.Rptr.2d 516 (2000), on which the district court relied, are distinguishable from the facts here.

There, a company faced with multiple lawsuits tendered the defense of the actions to Truck, one of its insurers. After paying defense costs and indemnity, Truck sought equitable contribution from its apparent co-insurer, Unigard. The court of appeal held that Unigard was entitled to refuse to contribute because it had not been asked to participate in the litigation until after its…

dissenting:

I respectfully dissent.

Golden Eagle insured a company, Federal covered its executives. Both the company and one of its executives were sued, attorneys were hired, and the case settled after some preliminary negotiations. Federal paid its agreed upon share and each insurance company closed its files in January of 1998. As far as Federal knew, the litigation was settled and over.

Six months later, the settlement somehow fell apart and litigation resumed. The company resubmitted the claim to Golden Eagle, Golden Eagle hired new attorneys, and the case headed towards trial. The problem is that nobody told Federal until two years and $138,573.97 in attorneys’s fees later. 1 In December of 2000 — after the $ 138,000 in attorneys fees was incurred — Golden Eagle contacted Federal, told it that the settlement had failed two years earlier, and informed it that a trial date was set for January. Golden Eagle also explained that it was looking for a way out of the case. Golden Eagle did not tell Federal that it might be liable for part of the judgment or request that Federal contribute to the defense.

Federal does not have a duty under its policy to pay defense costs or any…