Opinion ID: 556730
Heading Depth: 2
Heading Rank: 3

Heading: Damages for Breach of Duty to Defend

Text: 28 The Scanlons argue that Washington law mandates damages for Underwriters' breach in an amount equal to their $70,000 settlement with Industrial Indemnity. Instead, the district court relied on the well-accepted measure of damages for a good faith, but unjustified breach: the costs and reasonable attorneys' fees incurred by the insured in defending itself plus consequential damages that the insured incurred as a result of the breach. See Windt, supra Sec. 4.31; see also Lawrence v. Northwest Casualty Co., 50 Wash.2d 282, 287, 311 P.2d 670, 673 (1957) (insurer responsible for reasonable expenses incurred by insured in defending action). No damages were awarded because Industrial Indemnity paid all outstanding defense costs and because Denali suffered no prejudice that would cause consequential damages. Underwriters, 729 F.Supp. at 725. 29 We agree with the district court that damages beyond those taken into account by the traditional standard are foreclosed by the contract damages rationale applied in Greer v. Northwestern Nat'l Ins. Co., 109 Wash.2d 191, 203, 743 P.2d 1244, 1250 (1987). See Underwriters, 729 F.Supp. at 725. The logic of Greer supports the conclusion that an insurer's failure to defend a claim ultimately found not to be covered by the policy should not be subject to reimbursement within the policy limits. The cases relied on by the Scanlons to discredit this reasoning are either distinguishable or inapposite. We affirm the district court's refusal to award damages.