Insured Attorneys' Fees After His Complaint Was Dismissed in New York
In American Motorists Ins. Co. v. GTE Corp. (2000 WL 1459813 [SD NY 2000]), the insurer commenced a declaratory judgment action against its insured to be relieved from reimbursing the insured's portion of a settlement of an underlying negligence action, on the grounds that certain conditions to coverage were breached and that coverage did not extend to the portion of the settlement based on liability for punitive damages. (The insurer had provided the defense for its insured in the underlying negligence suit.)
The insured then commenced a separate action for a declaration of coverage under the same policy, and both declaratory judgment actions were consolidated.
Thereafter, the insured moved to dismiss the insurer's complaint, which was granted, but the court permitted the insurer to amend its claim to deny coverage relating to the punitive damages issue.
In granting the insured attorneys' fees, the court rejected the insurer's argument that it should not be liable for such fees as one of the two consolidated cases was filed by the insured.
According to the court, "the two cases are mirror images of each other, and, indeed, the insured's case was in direct response to American Motorists attempt to avoid payment under the Policy".