(Article from Insurance Law Alert, December 2021)
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A Connecticut trial court ruled that Florida law does not permit a primary insurer to recover defense costs from another insurer that was also obligated to defend the mutual insured. Hartford Cas. Ins. Co. v. XL Ins. Am., Inc., 2021 WL 5112993 (Ct. Super. Ct. Oct. 21, 2021).
MCM, the general contractor for the construction of a pedestrian bridge in Florida, was insured under a general liability policy issued by Greenwich. MCM was also listed as an additional insured under a policy issued by Hartford to a subcontractor involved in the project. When the bridge collapsed, lawsuits were filed against MCM and others. Greenwich agreed to defend MCM and thereafter sought reimbursement of $6 million in defense costs from Hartford. In ensuing litigation, both insurers moved for summary judgment. The court ruled in Hartford’s favor, finding that it had no duty to reimburse Greenwich for amounts Greenwich incurred in defending MCM in the underlying lawsuits.
The insurers’ summary judgment motions centered on whether the underlying allegations gave rise to additional insured coverage for MCM under Hartford’s policy. However, the court declined to address those substantive coverage arguments, instead ruling as a threshold matter that “Florida law is clear that an insurer cannot recover from another insurer costs incurred in defending a mutual insured.”
Greenwich argued that this rule of law did not apply because its policy provided excess coverage whereas Hartford’s coverage was primary. The court ruled that even assuming that Greenwich’s policy was excess to Hartford, Greenwich’s claim for reimbursement would nonetheless fail because Greenwich also provided primary coverage to MCM under a different policy issued to another MCM subcontractor. The court explained that both the Hartford policy listing MCM as an additional insured and the other Greenwich policy listing MCM as an additional insured contained “Other Insurance” provisions purporting to make each policy excess to the other. The court held that these polices “cancel each other out,” rendering both insurers primary to MCM as a mutual insured. Based on the co-primary status, the court concluded that Florida law bars Greenwich from seeking reimbursement of defense costs from Hartford.