Frank Malpigli’s article regarding the limits of the duty to defend across the country was published in DRI’s October 2017 edition. Please see attached for the article.
Preview of Article:
An Insurer’s Continued Duty to Defend After All Covered Claims Are Dismiss
By Frank R. Malpigli
Frank R. Malpigli is an attorney with the law firm of Miranda Slone Sklarin Verveniotis LLP. Mr. Malpigli focuses his practice on insurance coverage and bad faith, reinsurance, construction, and commercial litigation. He is also a licensed insurance broker in the state of New York and represents insurers throughout New York state and the country. Mr. Malpigli serves on the membership committee for the DRI Insurance Law Committee.
There has been much written and litigated over the duty to defend, its broad applications, and the undertaking by jurisdictions to tackle the confusing and unpredictable nature of this concept.
When a defense is afforded to an insured, the insured expects the defense to continue until the end of the litigation, i.e., settlement or dismissal of the claim. This expectation is simple and straightforward when the lawsuit involves a single-claim. However, in most situations there are multiple claims alleged in a lawsuit where only a few of them are covered by the subject insurance policy. In such a situation, the question this article addresses is what is an insurer’s duty in regard to a defense when all covered claims are dismissed, leaving the noncovered claims remaining in a lawsuit? Is an insurer required to continue to fund the insured’s defense?
The answer is not straightforward, and frankly, it is surprising. Many jurisdictions hold an insurer has a continuing duty to defend the noncovered claims until there is no possible legal scenario under which the covered claims would be reactivated. Some jurisdictions go even further and hold an insurer’s duty to defend essentially never ends as due to the possibility the dismissed, covered claims could be reactivated during trial if a court allows a plaintiff to amend their complaint.
These holdings stray from the principles governing contracts as well as the reasonable expectations of an insured doctrine. This article offers a multi-state analysis evaluating the different approaches that jurisdictions take regarding a defense withdrawal by an insurer, and whether these findings are in accordance with the language of the insurance policy.