Opinion ID: 2307532
Heading Depth: 1
Heading Rank: 8

Heading: Continental's Claims

Text: In its cross-appeal, Continental contends the court erred in rejecting its affirmative defenses of waiver, unclean hands, and laches to Liberty's cross-claim for restitution. Relying on Jefferson Insurance Co. v. Travelers Insurance Co., 159 Vt. 46, 614 A.2d 385 (1992), Continental contends Liberty waived its right to seek restitution by failing to reserve its right in the settlement agreements with Tamarack and the State. In Jefferson, we approved the rule that when, with knowledge of facts that would place liability for a loss on another insurer, an insurer negotiates and settles a claim against its insured without expressly reserving rights to pursue a cause of action for contribution, indemnity or subrogation at a later time, such a claim is waived. Id. at 50, 614 A.2d at 388 (emphasis added). As the court here found, however, Liberty entered the settlement agreement with the State and Tamarack under the belief that it was the only insurer, which plainly distinguishes this case from Jefferson. Continental also contends that Liberty forfeited any claims against Continental as the subrogee of its insured, Tamarack, as a result of Liberty's unfair dealings with Tamarack. See Norfolk & Dedham Fire Ins. Co. v. Aetna Cas. & Sur. Co., 132 Vt. 341, 346, 318 A.2d 659, 662 (1974) (subrogee must have clear equity and subrogation may be defeated by countervailing equities). The trial court found, however, that the settlement negotiations among Liberty, Tamarack, and the State were conducted fairly, that Liberty's subsequent denial of further benefits after discovering Continental's potential liability was reasonable under the circumstances, and that Continental had not established a bad faith breach of fiduciary duty. These findings and conclusions were supported by credible evidence and therefore may not be disturbed on appeal. Nor will we second-guess the court's finding that all of the parties were under the mistaken belief that Liberty was the only insurer, that Tamarack learned of coverage under Continental's policies in 1992, and that Liberty did not, therefore, unreasonably sit on its rights in failing to seek restitution against Continental until the filing of its cross-claim in 1993. That portion of the judgment denying prejudgment interest on the restitution award against Continental is reversed and remanded for further proceedings consistent with the views expressed herein. In all other respects, the judgment is affirmed.