*1170 MEMORANDUM AND ORDER
This mаtter is before the Court on a motion for summary judgment in which defendant Commonwealth Land Title Insurance Company (“Commonwealth”) seeks the reimbursement of attorney’s fees and costs that it incurred in defending plaintiff Robert J. Knapp (“Knapp”). Defendant also seeks the determination of the Court that the amount sought, $28,681.77, is reasonable. For the reasons set forth below, Commonwealth’s motion for summary judgment is granted and attorney’s fees and costs requested in the amount of $28,681.77 are reasonable. Factual Summary
In 1988, Knapp aрplied for, and was granted, title insurance (“Title Policy”) from Commonwealth for land that he had purchased from a bankruptcy estate. Knapp’s title to this land was subsequently contested. Commonwealth agreed to defend Knapp against the claims, prefacing this undertaking with a “reservation of rights” letter. That letter, dated August 9, 1990, specifically accepted the tender of defense of the claim against the insured property, but also specifically reserved Commonwealth’s right to later seek аttorneys’ fees and costs if coverage was later denied. In that letter, Commonwealth stated:
[T]his claim will be subject to a reservation of rights in favor of Commonwealth Land Title Insurance Company ... [I]t should be distinctly understood that no action by Commonweаlth heretofore or hereinafter taken in this matter is to be constructed in any way as a waiver of our right to later disclaim liability in the event it comes to light that Commonwealth has provided a defense for matters excluded from Policy coverage ... Commonwealth reserves the right to deny the claim, discontinue payment of outside counsel and seek reimbursement from you for counsel fees and costs incurred by the Company by reason of the claim subsequently found not to be within Policy coveragе.
Commonwealth proceeded to defend Knapp against the title dispute to land which Knapp claimed was within the scope of the Title Policy. Knapp lost in his defense to the claims against the property and consequently lost somе of the land. Knapp then moved for summary judgment against Commonwealth for these losses, claiming said losses were covered by the Title Policy. On March 30, 1995, this Court granted Commonwealth’s motion for summary judgment and held that no coverage existed for the claim.
Cоmmonwealth, pursuant to its earlier “reservation of rights letter” of August 9, 1990, having successfully challenged the Knapp’s claim for policy coverage, now seeks to be reimbursed for all attorneys fees and costs it incurred on behalf of Knapp.
Standard for Summary Judgment
Under Fеderal Rule of Civil Procedure 56, a moving party is entitled to summary judgment if the evidence shows that “there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett,
Analysis
There are three issues in this case: 1) whether an insurer can recover expenses incurred defending insured pursuant to a “resеrvation of rights” letter; 2) if a right to reimbursement exists, whether Commonwealth is entitled to such reimbursement based upon the facts herein; and 3) whether the amount of attorney’s fees and costs incurred in defense of the insured is reasonable.
*1171 Does an insurer have a right to recover defense costs?
It is established law in Minnesota that an insurer has a duty to defend where only part of a claim is arguably within the scope of a policy’s coverage.
United, States Liability Insurance Company v. Johnson & Lindberg, P.A.,
Commonwealth argues that even though it considered the claims outside the scope of the policy coverage, it met its duty to defеnd and clearly indicated to Knapp in its reservation of rights letter that it would seek reimbursement for fees and costs incurred by it in defense of the claims.
Knapp argues that parts of his claims arguably fell within the scope of coverage under the Titlе Policy, therefore Commonwealth had a duty to defend and is not entitled to reimbursement. Knapp further argues that Commonwealth is misreading this Court’s previous Order granting summary judgment to Commonwealth for that Order did not specifically find no duty to defend. The Court’s Order granting Commоnwealth summary judgment is clear, there was no basis for covez’age. Knapp did not put forth any facts which would arguably establish coverage. Therefore, Commonwealth did not have a duty to defend.
See, Lanoue,
A determination of no duty to defend does not necеssarily entitle Commonwealth to i’eimbursement of its attorney’s fees and costs expended defending the claims on behalf of Knapp. Minnesota has not before determined whether or not an insurer may be reimbursed for attorney’s fees and costs, when it has been determined that no coverage exists and the insurer undertook the defense under a reservation of rights letter.
In support of its claim for reimbursement, Commonwealth cites to established law in California that supports the right of the insurer to reimbursemеnt of its attorneys fees and costs if the insurer has either secured a nonwaiver agreement from the insured or made an adequate reservation of rights.
Gossard v. Ohio Casualty Group of Insurance Companies,
In
Walbrook Insurance Co. Ltd. v. Goshgarian & Goshgarian,
[T]here can be no doubt thаt [the insured] knew that [the insurer] intended to seek reimbursement if it was found that there was no duty to defend ... [T]his awareness can be shown from the fact of the explicit reservation letters sent to [the in *1172 sured] explaining the reservation prior to the payment of dеfense costs ... While [the insured] did specifically object to this reservation, they also accepted $500,000 in defense costs from [the insurer] ... [T]his court holds that acceptance of the monies constitutes an implied agreement to the reservation.
Id.
at 784.
See also, First Federal Savings and Loan v. Transamerica Title,
Knapp offers little to dissuade this Court from following those courts that have recognized the rights of insurers to seek reimbursement for its attorney’s fees and costs under certain circumstanсes. California law is persuasive and consistent with earlier Minnesota cases addressing the responsibility of an insurer to meet its duty to defend first and challenge policy coverage questions later. See e.g., Braum, supra. The courts should be consistent in encouraging insurance companies to properly meet their duty to defend its insured against third party claims and minimize unnecessary claims to enforce policy coverage. However, where an insurer has properly met its duty and subsequently successfully challengеs policy coverage, it should be entitled to the full benefit of such a challenge and be reimbursed for the benefits it bestowed, in good faith, to its insured.
Did Commonwealth adequately reserve its right to reimbursement?
The remaining question is whether the “reservation of rights” letter sent by Commonwealth served to put Knapp on notice as to his possible liability for reimbursing the insurance company for the litigation costs, and thus properly reserve Commonwealth’s right to seek reimbursement.
The law in California currently provides: Rеimbursement is available to an insurer if it has either secured a nonwaiver agreement from the insured [footnote omitted] or made an adequate reservation of rights ... When an insurer chooses to defend a lawsuit under reservation of rights, it typically sends а letter to the insured stating its intention to assert noncoverage and seek reimbursement if it later shows it had no duty to defend the action. In such cases, “[t]he insurer need only notify, or attempt to notify, the assured [sic] that is conducting the investigation and defense ... under a reservation of the right to assert policy defenses at a later time, and the assured’s [sic] silence will usually be deemed acquiescence.
Gossard, supra,
at 191,
(citing, Val’s Painting and Drywall, Inc. v. Allstate Ins. Co.,
Knapp argues that insurance companies are not allowed to require their insured to pay defense costs by unilaterally sending reservation of rights letters unless there is an agreement or understanding with the insured, citing
State Farm Fire & Cas. Co. v. Thomas,
In the case at bar, no such insufficiency exists. Commonwealth clearly indicated its desire to reserve its right to later sеek reimbursement for attorney’s fees and costs. Under these circumstances, the Court finds it appropriate to determine that Knapp’s silence in response to Commonwealth’s reservations of rights letter, and subsequent acceptancе of the defense provided by Commonwealth, constitutes an implied agreement to the reservation of rights. Gossard, supra, at 200.
Is the amount of Attorney’s fees and costs reasonable?
Where a contract authorized an award of attorney fees, courts will enforce such a provision as long as fees are reasonable.
State Bank of Cokato v. Ziehwein,
Commonwealth has submitted invoices for all fees and expenses paid on behalf оf Knapp with regard to the Gurtek parcel. 1 Knapp argues that the expenses submitted are not reasonable and questions the payment for services rendered by Scholle and Beisel as the billings are without detail.
The Court has reviewed the invoices presented by Commonwealth and finds some of the invoices do not provide the Court sufficient information to determine their reasonableness. The Court agrees with the position of Knapp that the invoices from the Law Offices of Scholle and Beisel, Ltd. do not provide sufficient information to determine their reasonableness. Accordingly, the Court will reserve judgment as to the fees of Scholle and Beisel until such time as Commonwealth can provide the Court detailed information as to the fees incurred by Scholle and Beisel. The Court has reviewed the invoices submitted by Lommen, Nelson, Cole & Stageberg, P.A., and finds such fees and costs reasonable.
Based on the foregoing, IT IS HEREBY ORDERED that:
1. Defendant Commonwealth Land Title’s Summary Judgment Motion is GRANTED to the extent that Commonwealth Land Title is entitled to an award, but RESERVED as to a portion of the amount of attorney’s fees and costs requested.
2. Defendant Commonwealth Land Title shall submit further documentation to support the reasonableness of the attorney’s fees and costs generated by Scholle and Beisel, Ltd.
3. Judgment shall be entered in favor of Commonwealth Land Title in the amount of $14,298.14 for attorney’s fees and costs.
Notes
. In its moving papers, Commonwealth requests attorney's fees and disbursements in the total amount of $28,681.77. In reviewing the invoices supporting this request, the Court notes that the total fees and disbursements generated by Lommen Nelson equals $14,298.14 and the total fees and disbursements generated by Scholle and Beisel is $13,874.13 for a total of $28,172.27.