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Insurance Defense Costs Obligation

By: WISCONSIN LAW JOURNAL STAFF//January 23, 2023//

Insurance Defense Costs Obligation

By: WISCONSIN LAW JOURNAL STAFF//January 23, 2023//

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7th Circuit Court of Appeals

Case Name: Indemnity Insurance Company of v. Westfield Insurance Company

Case No.: 21-1775

Officials: Brennan, Scudder, and St. Eve, Circuit Judges.

Focus: Insurance Defense Costs Obligation

Three insurance companies—Indemnity Insurance Company of North America, Westfield Insurance Company, and Star Insurance Company—dispute their respective obligations to defend a swine farm (Sandstone) in a state court nuisance case. The underlying lawsuit has since concluded with a verdict in favor of the swine farm, and now, Westfield and Star seek reimbursement from Indemnity for some or all of the costs that they incurred while defending the farm during the litigation. To clarify Indemnity’s duty to share in these defense costs, Indemnity and Westfield separately filed declaratory judgment actions in federal court. Star filed a counterclaim against Indemnity in Westfield’s action. The cases were consolidated, and each insurer filed a motion for summary judgment. The district court granted in part and denied in part Westfield’s and Star’s motions and denied Indemnity’s motion.

Reversing the district court, the Seventh Circuit ruled in favor of Indemnity. Its insurance is “excess” and Star had a duty to defend, so Indemnity’s “other insurance” provision relieves it of any duty to defend Sandstone. Indemnity is not estopped from asserting that defense because it promptly responded to Sandstone’s tender of defense.

Reversed.

Decided 01/19/23

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