Judge Davis Orders Insurance Company to Indemnify Plaintiff in Breach of Duty to Defend Case

July 13, 2017

Publication

In CNH Industrial Am., LLC v. American Casualty Company of Reading, Pa., C.A. No. N12C-07-108-EMD-CCLD, Judge Davis held that defendant Travelers Indemnity Company (“Travelers”) must indemnify plaintiff CNH Industrial America, LLC (“CNH”) for defense costs in over 200 underlying asbestos-related lawsuits. In prior decisions, the Court determined that, among other things, Wisconsin law applied to the policies at issue and that Travelers had a duty to defend CNH for particular claims.

As explained by the Court, Wisconsin takes a dim view of insurance companies breaching their duty to defend and allows the insured to collect damages flowing from the claims, including costs and attorneys’ fees incurred by the insured in defending the claims. However, damages are only recoverable to the extent they are established to a reasonable degree of certainty.

Judge Davis held that Travelers must pay for CNH’s attorneys’ fees related to defending the underlying claims where such fees were substantiated. The Court found that CNH established a “clear causal connection” between CNH’s costs and covered cases, and did so with reasonable certainty. Judge Davis, however, held that CNH did not meet its burden of proof for unsubstantiated costs. The internal payment logs and other supporting documents provided by CNH were insufficient to identify the work performed, or that the work performed related to the defense of the underlying asbestos claims.

Analysis: The CCLD has quickly become a favored venue for litigating insurance coverage disputes—particularly those involving asbestos coverage. In fact, one of the first CCLD jury trials involved insurance policies related to asbestos coverage. Viking Pump Inc. v. Century Indemnity Co. et al., C.A. No. N10C-06-141 PRW CCLD.