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INSURER WHICH OPTED NOT TO DEFEND THIS CONSTRUCTION ACCIDENT CASE WAS REQUIRED TO INDEMNIFY THE INSURERS WHICH SETTLED THE CLAIM FOR BOTH DAMAGES AND EXCESS ATTORNEYS’ FEES, PLAINTIFF HIRED A MORE EXPENSIVE LAW FIRM ($795/HR) RATHER THAN USE THE FIRM HIRED BY THE WORKERS’ COMPENSATION CARRIER ($150/HR).

The First Department, over a dissent, determined the plaintiff’s insurer (RLI), which opted not to defend this construction accident case, was required to indemnify the insurers who paid the $2.5 million settlement, both for the damages and the excess attorney’s fees. The plaintiff opted to hire a law firm other that the firm used by the workers’ compensation carrier (SLI). The workers’ compensation carrier paid $150/hour toward the other attorneys’ fees. The firm hired by plaintiff (Greenberg Traurig) charged $795/hr. The dissent argued the fees should have been capped at $150/hr. The other issue addressed by the court was the late notification of plaintiff’s insurer. The late notice was excused because of a good faith belief recovery was limited to workers’ compensation (and therefore subject to a policy exclusion):

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RLI’s argument that the voluntary payment doctrine bars recovery of amounts paid to Greenberg Traurig in defense of the underlying claim is without merit. Having chosen to deny coverage and not participate in the defense, RLI “excluded itself from any aspect of the [p]laintiff’s defense in the Vasquez estate’s action,” including the negotiation of attorneys’ fees and the selection of attorneys, as so found by the motion court, and cannot now be heard to complain. Plaintiff is entitled to recover attorneys’ fees incurred in defense of the underlying action as “damages which are the natural and probable consequence of the breach” by RLI of the contract of insurance … .

We reject defendant’s argument that the $150 per hour contributed by SIF acts as a ceiling on fees … . Any agreement between SIF and plaintiff as to fees has no bearing on RLI’s responsibility to provide a defense, save as it pertains to any eventual allocation of defense costs as between the two carriers … . The record does not contain a copy of the SIF policy, so we are unable to make any determination as to whether the carriers share the costs of defense in equal parts as primary carriers, or whether defendant RLI is solely responsible. It may be noted that under RLI’s policy, competing primary insurers are to contribute on an equal basis. Cohen Bros. Realty Corp. v RLI Ins. Co., 20 17 NY Slip Op 04776, 1st Dept 6-13-17

 

INSURANCE LAW (ATTORNEY’S FEES, INSURER WHICH OPTED NOT TO DEFEND THIS CONSTRUCTION ACCIDENT CASE WAS REQUIRED TO INDEMNIFY THE INSURERS WHICH SETTLED THE CLAIM FOR BOTH DAMAGES AND EXCESS ATTORNEYS’ FEES, PLAINTIFF HIRED A MORE EXPENSIVE LAW FIRM ($795/HR) RATHER THAN USE THE FIRM HIRED BY THE WORKERS’ COMPENSATION CARRIER ($150/HR))/ATTORNEYS (INSURANCE LAW, FEES, INSURER WHICH OPTED NOT TO DEFEND THIS CONSTRUCTION ACCIDENT CASE WAS REQUIRED TO INDEMNIFY THE INSURERS WHICH SETTLED THE CLAIM FOR BOTH DAMAGES AND EXCESS ATTORNEYS’ FEES, PLAINTIFF HIRED A MORE EXPENSIVE LAW FIRM ($795/HR) RATHER THAN USE THE FIRM HIRED BY THE WORKERS’ COMPENSATION CARRIER ($150/HR))/EMPLOYMENT LAW (INSURANCE LAW, WORKERS’ COMPENSATION LAW, INSURER WHICH OPTED NOT TO DEFEND THIS CONSTRUCTION ACCIDENT CASE WAS REQUIRED TO INDEMNIFY THE INSURERS WHICH SETTLED THE CLAIM FOR BOTH DAMAGES AND EXCESS ATTORNEYS’ FEES, PLAINTIFF HIRED A MORE EXPENSIVE LAW FIRM ($795/HR) RATHER THAN USE THE FIRM HIRED BY THE WORKERS’ COMPENSATION CARRIER ($150/HR))

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