In Hurney v. Mattson (59 AD2d 934, 399 NYS2d 449 [2d Dept 1977]), the insureds were named defendants in a negligence action, and commenced a third-party action against Sentry Insurance for defense and indemnification.
The insurer Sentry "counterclaimed against the insureds for a declaration with respect to its obligation to afford coverage and defend" the insureds (id. at 934 ).
By stipulation the counterclaim was separately tried, and the trial court found that the insureds were entitled to coverage and defense.
The insureds (plaintiffs) were granted attorneys' fees incurred in their defense of the insurer's counterclaim for declaratory relief, as"their posture in the counterclaim, brought as a result of the insurer's breach of its obligation to defend, was that of defendants" (id. at 935 ).