ILLINOIS UNION INSURANCE COMPANY v. ASSURANCE COMPANY OF AMERICA (2012)

OPINION OF THE COURT

The order of the Appellate Division should be modified, without costs, by granting judgment declaring in accordance with this memorandum and, as so modified, affirmed.   The certified question should be answered in the negative.

In this insurance coverage dispute, to which California law applies, plaintiff Illinois Union Insurance Company had a duty to defend the insured in the underlying action because Illinois Union did not “eliminate the possibility that the insured's conduct falls within the coverage of the policy” (Montrose Chem. Corp. v. Superior Ct., 6 Cal.4th 287, 6 Cal.4th 287, 301, 861 P.2d 1153, 1161 [1993] ).   Under the circumstances of this case, however, we agree with Illinois Union that pursuant to equitable contribution principles, it is entitled to reimbursement from defendant Assurance Company of America for an equal share of the costs associated with Illinois Union's defense of the claims in the underlying action.

On review of submissions pursuant to section 500.11 of the Rules of the Court of Appeals (22 NYCRR 500.11), order modified, etc.

MEMORANDUM.

Chief Judge LIPPMAN and Judges CIPARICK, GRAFFEO, READ, SMITH, PIGOTT and JONES, concur in memorandum.