(Article from Insurance Law Alert, December 2022)
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A Washington district court granted an insurer’s summary judgment motion, ruling that it had no obligation to contribute to a settlement because the policyholder had never tendered the claim to it. Munich Re Syndicate Ltd 457 v. Fireman’s Fund Ins. Co., 2022 WL 16625601 (E.D. Wash. Nov. 1, 2022).
A winery sought coverage from Munich Re for losses incurred as a result of contaminated wine. The winery did not tender the claim to Fireman’s Fund, which had also issued a policy during the relevant time period, based on a broker’s belief that the Fireman’s Fund policy did not cover the loss. Munich Re ultimately paid nearly $700,000 and then sought contribution from Fireman’s Fund. In connection with its contribution request, Munich Re forwarded to Fireman’s Fund an unsigned “Release and Subrogation Agreement” that purportedly assigned all indemnification rights to Munich Re. When Fireman’s Fund refused to contribute to the settlement, Munich Re sued, asserting claims for equitable contribution and equitable indemnification. The court dismissed both claims.
The court ruled that under Washington’s selective tender rule, Fireman’s Fund could not be liable to Munich Re for a claim for which its insured did not request coverage. As the court noted, the selective tender rule “preserves the insured’s right to invoke or not to invoke the terms of its insurance contracts.” Because the underlying claim was never tendered to Fireman’s Fund, the court concluded that there could be no right of equitable contribution. The court also dismissed the equitable indemnification claim, noting that under Washington law, that cause of action is “mainly recognized as an equitable ground under which attorney’s fees may be awarded.” In any event, the court noted that Munich Re failed to allege any wrongful act or omission, a required element of an equitable indemnification claim.
Finally, the court rejected Munich Re’s attempt to assert a contribution claim under a theory of subrogation. Munich Re argued that the selective tender rule does not bar contractual subrogation pursuant to the draft Release and Subrogation Agreement. Rejecting this contention, the court explained that subrogation was not pled in the complaint and was presented for the first time in opposition to Fireman’s Fund’s summary judgment motion. It declined to allow Munich Re to amend its complaint, stating “[a]mendment at this time would render pointless the Court’s scheduling deadlines and also prejudice Fireman’s Fund.”