Opinion ID: 457688
Heading Depth: 2
Heading Rank: 3

Heading: Fees and Expenses Incurred Before John Hancock Filed Suit

Text: 22 Of the total of $1.75 million in fees incurred by Robertson and Liberty, somewhere between $13,500 and $37,000, was for services rendered before the John Hancock suit was filed. 9 Continental, in its appeal, claims that the jury should have been told that these services were not to be considered because they were incurred before Continental's duty to defend Robertson arose. The court refused to so instruct the jury and the jury evaluated these expenditures, as well as the post-filing expenditures, for their reasonableness. 23 Continental bases its claim primarily on the following language in the policy: the [insurer] shall have the right and duty to defend any suit against the insured.... Continental claims that, under these terms, the duty to defend could not have arisen until the first suit was filed, citing to Marvel Heat Corp. v. Travelers Indemnity Co., 325 Mass. 682, 685, 92 N.E.2d 233, 234-35 (1950), Haines v. St. Paul Fire & Marine Insurance Co., 428 F.Supp. 435, 438 (D.Md.1977); also 14 G. Couch, Cyclopedia on Insurance 2d Sec. 51:43, at 457. 24 While we do not disagree with this general proposition or with the cited authorities, we find that neither are particularly helpful in addressing the narrow question posed here. In Marvel and Haines, the respective courts were trying to answer the question of whether the duty to defend had ever arisen. Indeed, the Marvel court stated explicitly that there was no evidence that an action had ever been brought against the insured, and the court noted that it was not dealing with a situation in which the insurer had refused to defend. 325 Mass. at 684-85, 92 N.E.2d at 234-35. Here, by contrast, the fact that Continental had breached its duty to defend was already established. The only issue remaining was whether the fees that Robertson incurred in anticipation of the John Hancock and Mama Leone suits should have been considered as part of the fees reasonably incurred by Robertson in conducting its own defense. 25 Under the circumstances of this particular case, we hold that the pre-suit services were correctly considered as part and parcel of the defense against the liability suits. John Hancock made its initial claim no later than June 1, 1973, and Continental was notified of it immediately thereafter. The extent of the window problem was so great that it was almost certain that a suit would be filed. Indeed, John Hancock and Robertson, as well as others involved in the construction of the Hancock Tower, entered into an agreement to delay the filing of any suits until after further efforts were made to solve the immediate problems posed by the defective curtain wall. Without this agreement, the suit would have been filed much sooner, in which case the technical issue now before us probably would not have arisen. Finally, both the exhibits and the testimony of witnesses strongly suggest that most, if not all, of the pre-suit services would have been performed after suit was filed had they not been performed before and that the insurance experts felt that Robertson had little choice but to retain counsel and prepare to defend itself when it did. Under these particular circumstances, we conclude that it was not error to allow the jury to evaluate the pre-suit services and charges for their reasonableness. Cf. Walters v. American Insurance Co., 185 Cal.App.2d 776, 785-86, 8 Cal.Rptr. 665, 671-72 (1960) (plaintiff, insured under policy similar to that found here, allowed to recover costs of reaching settlement after insurance claim was filed but before suit could be commenced where evidence established the need to settle quickly to minimize losses and costs). 26