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Vol. 6, Iss. 9
December 13, 2017

Frank Malpigli On The Duty To Defend That Does Not End

I always enjoy the annual insurance issue of DRI’s “For the Defense” magazine that features several lengthy articles addressing coverage topics. The October 2017 issue contained, as always, several excellent pieces. One in particular that I really enjoyed, and recommend for your reading, is “An Insurer’s Continued Duty to Defend After All Covered Claims Are Dismissed,” by Frank Malpigli of Miranda Sambursky Slone Sklarin Verveniotis LLP in Mineola, New York.

Many thousands of courts have addressed whether a duty to defend is owed. In other words, has a duty to defend begun? Yet very few courts, by comparison, have addressed when a duty to defend ends. What’s more, of the decisions that have, many are written is broad strokes -- such as, an insurer’s duty to defend ceases when all potentially coverage claims have been eliminated or dismissed, or something along those lines.

As Frank Malpigli demonstrates in his excellent piece, insurers face a risk of continuing to defend suits that certainly appear to no longer contain any potentially covered claims.

Frank’s piece is lengthy and I do not want to do it a disservice by trying to summarize all of it here. The crux of it, with substantial supporting case law, is this. Two of the leading cases addressing when a duty to defend ends (or not) are Commerce & Industry Insurance Co. v. Bank of Hawaii (Haw. 1992) and Meadowbrook, Inc. v. Tower Insurance Co. (Minn. 1997). In both cases, involving multiple claims, all of the arguably covered claims had been dismissed. However, these two state supreme courts held that the insurer’s duty to defend could not be terminated until there were no further rights to appeal. Thus, the insurers were required to continue to defend uncovered claims, since the covered claims, although dismissed, still had appellate rights attached to them. Other courts have reached the same conclusion -- some based on Bank of Hawaii and Meadowbrook and some based on other reasons.

Frank notes that “[t]he interesting and somewhat perplexing approach in these cases [Bank of Hawaii and Meadowbrook and others] is that the courts based the insurers’ continued duty to defend on the finality of a claim. They did not delve into discussing whether the language within the policy supported such liberal interpretation. In fact, in coming to their conclusions, the courts added language to the policies where none existed.”

The take-away of Frank’s piece is that, without specifically addressing, in their policies, when a duty to defend ceases, insurers are placing themselves at risk for courts subjecting them to an obligation to continue to defend suits that certainly appear to no longer contain any potentially covered claims. Frank counsels that insurers should consider addressing, in their policies, when they may properly withdraw defense counsel.

I recommend that you check out Frank Malpigli’s article, “An Insurer’s Continued Duty to Defend After All Covered Claims Are Dismissed,” in the October issue of DRI’s “For the Defense” magazine.


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