Opinion ID: 1169781
Heading Depth: 3
Heading Rank: 3

Heading: Reasonable Defense Expenditures

Text: Hartford finally argues that even if we find that its settlement with the insured did not defeat Aetna's subrogation claim, we must remand this issue for the trial court to determine if the expenses paid by Aetna were reasonable. We agree. In general, where an insurer breaches its duty to defend, the insured is entitled to recover the amount it paid for reasonable attorney fees. Crist v. Insurance Co., 529 F.Supp. 601, 605-06 (D.Utah 1982); see also IMCERA Group, Inc. v. Liberty Mut. Ins. Co., 50 Cal.Rptr.2d 583, 603, 47 Cal.App.4th 699 (Ct.App.1996) (Where an insurer wrongfully refuses to provide a defense, it `is manifestly bound to reimburse its insured for the full amount of any obligation reasonably incurred by him.... If there be uncertainty as to the nature or extent of the services reasonably to be rendered by counsel engaged by the insured, that uncertainty must be resolved against [the] insurer.' (quoting Arenson v. National Auto. & Cas. Ins. Co., 48 Cal.2d 528, 310 P.2d 961 (1957))), review granted, 54 Cal.Rptr.2d 41, 917 P.2d 1164 (1996); 7c John Alan Appleman, Insurance Law and Practice § 4691, at 261 (Walter F. Berdal ed., 1979) ([A]ttorneys' fees incurred by the insured in the defense of an action must be shown to be reasonable to allow a recovery thereof from the insurer.). Where the claim for breach of the duty to defend is between two insurers, courts have also held that one insurer is entitled to reimbursement only for those fees that are reasonable. Liberty Mut. Ins. Co. v. Continental Cas. Co., 771 F.2d 579, 581-82 (1st Cir.1985). We agree. We do not accept Aetna's proposition that Hartford, in failing to pay its fair share of the fees, waived its right to contest the reasonableness of the fees paid by Aetna. [16] As noted by the First Circuit in Liberty Mutual, 771 F.2d at 582, there might have been merit to this claim if Hartford had acted in bad faith or had attempted to mislead Aetna. Hartford, however, tendered a five percent share in the belief that that was all it was obligated to pay for the defense of the Liquidating Trust. We therefore conclude that although Hartford may not have paid its fair share, it should not be required to pay anything beyond the reasonable expenses paid by Aetna. As a result, we remand this case to the trial court to determine which defense expenditures were reasonable. [17]