COUNTRY WIDE INSURANCE COMPANY v. ZURICH AMERICAN INSURANCE COMPANY (2024)

Order, Supreme Court, New York County (Arlene P. Bluth, J.), entered on or about October 4, 2023, which granted defendant's motion for summary judgment to the extent of dismissing plaintiff's claims and awarding summary judgment on defendant's counterclaims as to liability only, declared that defendant excess insurer was not obligated to assume the defense of plaintiff's insureds in three underlying actions, and ordered that the issue of the amount of defense fees to be recouped by defendant be severed for a trial, unanimously affirmed, with costs.

The court properly granted defendant's motion to the extend indicated.  Plaintiff, as the primary insurer, had the corresponding primary duty to defend the insureds in the underlying actions (see Fieldston Prop. Owners Assn, Inc. v. Hermitage Ins. Co., 16 N.Y.3d 257, 265, 920 N.Y.S.2d 763, 945 N.E.2d 1013 [2011];  General Motors Acceptance Corp. v. Nationwide Ins. Co., 4 N.Y.3d 451, 455, 796 N.Y.S.2d 2, 828 N.E.2d 959 [2005]).  Plaintiff is an auto insurer, and it is well established both that Insurance Department Regulations (11 NYCRR) § 60–1.1(b) requires it to pay the defense costs until the case has ended.  Plaintiff cannot avoid its duty by simply tendering its policy limits (see Liberty Mut. Fire Ins. Co. v. National Cas. Co., 90 A.D.3d 859, 935 N.Y.S.2d 319 [2d Dept. 2011];  Matter of East 51st St. Crane Collapse Litig., 84 A.D.3d 512, 513, 923 N.Y.S.2d 64 [1st Dept. 2011];  Haight v. Estate of DePamphilis, 5 A.D.3d 547, 548, 772 N.Y.S.2d 833 [2d Dept. 2004];  see also Allianz Ins. Co. v. Lerner, 416 F.3d 109, 117 [2d Cir. 2005]).  Irrespective of the Insurance Department's regulations, plaintiff would still be required to provide a defense in this action, as its policy limits were not actually exhausted in the underlying cases until they were finally settled in 2022 (cf.  Sport Rock Intl., Inc. v. American Cas. Co. of Reading, PA, 65 A.D.3d 12, 22, 878 N.Y.S.2d 339 [1st Dept. 2009]).

We have considered plaintiff's remaining arguments and find them unavailing.