So You Think YOU Pay a Lot in Defense Fees?...

DEFENSE FEES – INSURED VERSUS INSURED EXCLUSION
Trustees of Princeton Univ. v. National Union Fire Ins. Co. of Pittsburgh, Pa.
(1st Dept., decided 6/5/2008)

In this action, Princeton sued National Union to recover the $15 million in attorneys' fees it had already paid out in defending an underlying action relating to a foundation board's alleged breach of fiduciary duties and misappropriation of $100 in foundation assets. National Union argued in defense that the policy's $5 million equitable relief claim sub-limit and the "insured versus insured" exclusion precluded advancing more than the $5 million in defense costs that National Union had already paid. The New York County Supreme Court granted summary judgment to Princeton and awarded it $9,607,021.93.

The First Department AFFIRMED, rejecting as a "strained construction of the terms of the policy" National Union's contention that the policy's $5 million sublimit for claims that seek equitable relief applied also to claims arising from the same underlying occurrence that seek legal relief based on tort and contract law principles. The court also rejected the contention that the policy's "insured versus insured" exclusion applies to claims brought against the insured entities by individual insureds (foundation board members) acting in their individual capacities.