UNITED STATES FIDELITY AND GUARANTY COMPANY v. NEW YORK SUSQUEHANNA AND WESTERN RAILWAY CORP (2000)

 Plaintiff commenced this declaratory judgment action seeking reimbursement from defendant for amounts it expended in the defense and indemnification of defendant in the underlying personal injury action.   Supreme Court erred in denying defendant's motion seeking the attorney's fees and costs incurred in defending this action.   By commencing this action, plaintiff has “cast [defendant] in a defensive posture by the legal steps [plaintiff has taken] in an effort to free itself from its policy obligations” (Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12, 21, 416 N.Y.S.2d 559, 389 N.E.2d 1080), and thus defendant is entitled to recover from plaintiff the attorney's fees and costs incurred in defending this action (see, Allegany Co-op. Ins. Co. v. Williams, 216 A.D.2d 894, 895, 628 N.Y.S.2d 900, lv. denied 87 N.Y.2d 806, 641 N.Y.S.2d 597, 664 N.E.2d 508;  see also, Reliance Ins. Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 262 A.D.2d 64, 66, 691 N.Y.S.2d 458;  Mohawk Minden Ins. Co. v. Ferry, 251 A.D.2d 846, 849, 674 N.Y.S.2d 512;  Sphere Drake Ins. Co. v. Block 7206 Corp., 237 A.D.2d 427, 428, 655 N.Y.S.2d 86;  U.S. Liab. Ins. Co. v. Staten Is. Hosp., 162 A.D.2d 445, 447, 556 N.Y.S.2d 153).   The fact that plaintiff initially paid the cost of defendant's defense in the underlying action is of no moment. “[A]n insurer's responsibility to defend reaches the defense of any actions arising out of the occurrence” (Mighty Midgets v. Centennial Ins. Co., supra, at 21, 416 N.Y.S.2d 559, 389 N.E.2d 1080 [emphasis in original] ), including a declaratory judgment action such as this commenced by the insurer (see, Chase Manhattan Bank v. Each Individual Underwriter Bound to Lloyd's Policy No. 790/004A89005, 258 A.D.2d 1, 5, 690 N.Y.S.2d 570).   We therefore reverse the order insofar as appealed from, grant defendant's motion and remit the matter to Supreme Court to determine the amount of the attorney's fees and costs to which defendant is entitled (see, U.S. Liab. Ins. Co. v. Staten Is. Hosp., supra, at 447, 556 N.Y.S.2d 153).

Order insofar as appealed from unanimously reversed on the law without costs, motion granted and matter remitted to Supreme Court for further proceedings.

MEMORANDUM: