The New Jersey Supreme Court found Thursday that a plaintiff who went after a defendant’s insurer to force coverage of the suit is entitled to attorneys' fees even though the defendant was ultimately cleared, a decision experts say could have insurers thinking twice about denying litigation coverage.
A ruling that Mercer had to indemnify Keppler for damages forced the insurer to continue defending the contractor and justified the fee award to Occhifinto, the high court found. Mercer had initially agreed to defend Keppler under a reservation of rights.
Trial and appellate courts held that Occhifinto couldn't recover counsel fees under a New Jersey's statute that covers fee shifting in insurance cases because Keppler ultimately wasn't found liable for damages in the underlying suit.
Allowing those decisions to stand would have eroded a powerful disincentive against insurers attempting to avoid their coverage responsibilities, policyholder attorneys told Law360.
According to Robert Chesler:
"The high court controls its own docket and didn't have to take up the case, but it obviously wanted to make a statement."
“I think it's sending a broad message that courts should award attorneys' fees.”