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Employers Ins. Co. of Wausau v. Travelers Indem. Co.

ELR Citation: 36 ELR 20138
Nos. No. A110973, (Cal. App. 1st Dist., 07/14/2006)

A court upholds a declaratory judgment requiring the defendant insurance company to contribute to a second insurance company's cost of defending a manufacturing plant that both companies insured. The defendant previously entered into a settlement agreement with the plant that released it from any obligation to defend or indemnify the plant against past, present, and future environmental actions. Based on that agreement, the defendant argues that it had no duty to contribute to the second insurer's defense costs. But California case law provides that where, as here, two or more insurers' policies potentially cover an insured's liability and one of them bears the defense burden alone, the insurer bearing that burden is entitled to equitable contribution from the non-defending carriers. This obligation to contribute to another insurer's defense or indemnification of a common insured arises independently and is separate from any contractual obligation owed to their insured. Consequently, the trial court correctly required the defendant insurance company to contribute to the second insurance company's defense costs. Similarly, the defense costs were correctly apportioned.