National Surety Corp. v. Immunex Corp.
176 Wash. 2d 872
| Wash. | 2013Background
- National Surety insured Immunex under excess/umbrella policies (1998–2002).
- Immunex notified National Surety of government investigations into drug pricing, seeking confidential handling.
- A series of complaints alleging pricing manipulation were filed from 2001 onward.
- Immunex tendered defense in Oct 2006; National Surety reserved rights and began coverage investigation.
- Trial court found no duty to defend in 2009; Court of Appeals affirmed partial judgment on defense costs with prejudice issues pending.
- This Court addresses whether a reservation-of-rights defense may require the insured to absorb defense costs if there is no coverage, and whether late tender/prejudice affects recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can an insurer recoup defense costs paid under a reservation of rights if no duty to defend exists? | Immunex argues no recoupment; insurer bears defense costs. | National Surety contends it may recoup under reservation of rights. | No; insurer may not recoup defense costs while duty to defend is uncertain. |
| Does late tender by the insured justify excusing defense costs or require prejudice to be proved? | Immunex argues prejudice shows entitlement to defense despite late tender. | National Surety asserts prejudice as a matter of law warrants no reimbursement. | Prejudice questions are fact-bound; summary judgment on prejudice inappropriate. |
| Should unjust enrichment or other equitable theories permit recoupment despite a reservation of rights? | Immunex would benefit from defense costs; unjust enrichment supports recovery. | Majority rule denies recoupment to avoid altering insured's contract. | Court declines broad unjust enrichment rule; emphasizes case-specific factors; remand for fact-finding on enrichment. |
Key Cases Cited
- Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751 (Wash. 2002) (duty to defend broader than indemnity; reservation of rights context)
- Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558 (Wash. 1998) (duty to defend; reservation of rights context)
- Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381 (Wash. 1986) (insureds' interests require equal consideration; reservation risks)
- Woo v. Fireman’s Fund Ins. Co., 161 Wn.2d 43 (Wash. 2007) (duty to defend when colorable claims; reservation of rights emphasized)
- Buss v. Superior Court, 16 Cal.4th 35 (Cal. 1997) (recoupment allowed only for non-covered claims; mixed claims foreclose full reservation recoupment)
- Gen. Agents Ins. Co. of Am., Inc. v. Midwest Sporting Goods Co., 215 Ill.2d 146 (Ill. 2005) (rejects unilateral contract modification via reservation of rights to recoup costs)
- Shoshone First Bank v. Pac. Employers Ins. Co., 2 P.3d 510 (Wyo. 2000) (rejects full recoupment where policy does not distinguish covered vs non-covered)