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Insurer Permitted to Recoup Defense Costs Under Quantum Meruit Theory
Predicting what the Texas Supreme Court would do, the U.S. District Court for the District of Minnesota has allowed an insurer to recover defense costs expended in defending its insured in a liability action. Extrapolating from, and expanding on, a Court of Appeals of Texas opinion, the Minnesota court used a quantum meruit theory to allow the insurer to recoup its defense costs.
St. Paul Fire & Marine Insurance Co. v. Compaq Computer Corp., 2005 WL 1648684 (D.Minn.), was an action by St. Paul to recoup all expenses incurred in defending Compaq in a class action filed in Texas. The underlying class action was filed on Oct. 31, 1999 in federal court in the Eastern District of Texas alleging, among other things, that Compaq had sold computers with defective floppy disk controllers. At the time, Compaq was covered under a St. Paul technology policy, and Compaq tendered its defense to St Paul. By letter dated Nov. 24, 1999, St. Paul accepted the tender and acknowledged its duty to defend, subject to a complete reservation of all of its rights. On Jan. 31, 2000, St. Paul issued a second reservation of rights that stated:
St. Paul reserves the right to withdraw from Compaq's defense upon written notice to you and seek recovery of all fees and expenses incurred in defense of this matter, if it is later determined there is no coverage or duty to defend Compaq in this matter.
St. Paul then indemnified Compaq for more than $668,000 in defense costs and Compaq accepted each check. St. Paul eventually withdrew from the defense.
Compaq won the class action on summary judgment and then filed suit against St. Paul in state court in Minnesota seeking damages and a declaration that St. Paul had a duty to defend. The Minnesota court granted St. Paul's motion for summary judgment. The Court of Appeals of Minnesota affirmed, and the Supreme Court of Minnesota declined to review the Court of Appeals' decision. Immediately thereafter, St. Paul filed suit in a state court in Minnesota to recoup all the expenses it incurred in defense of Compaq in the class action. Compaq removed to federal court and filed a counterclaim alleging breach of contract based on St. Paul's withdrawal from the class action defense. The counterclaim was dismissed based on the res judicata effect of the Minnesota state court judgment.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.