Court Opinion

ID: 9734834
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:47:42.756678+00
Date Added: 2024-06-11T18:26:51.558587
License: Public Domain

VANDE WALLE, Justice,
dissenting.
I disagree with the conclusion in the majority opinion that a declaratory-judgment action seeking a determination of a duty to defend under an insurance policy does not present a justiciable controversy. In many instances the issue of the duty to defend is *175the overriding issue involved in an action and the duty of contribution and indemnification of the party of the insurance company may be only secondary. It is not inconceivable that the expenses incurred in defending an action may well exceed any judgment for which the insurance company might be held responsible. Furthermore, the duty to defend is not speculative because an action against Cochran Electric Company, Inc., is pending.
Admittedly there are factual questions involved in this case which do not permit us to determine the ultimate responsibility for contribution or indemnification by the insurance companies involved. That issue is speculative until and unless a judgment is ordered .against Cochran. However, we have previously recognized that an insurer’s obligation to defend and an insurer’s obligation to indemnify are separate and distinct contractual elements. Smith v. American Family Mut. Ins. Co., 294 N.W.2d 751 (N.D.1980). Therefore, it is not necessary for this court to decide the ultimate responsibility for contribution or indemnification in order to determine the duty to defend. The duty to defend arises now, regardless of the outcome of the merits of the action against Cochran Electric Company, and, as such, there is a present justiciable controversy which we should decide.
Not only have we recognized that a duty to defend is a distinct contractual element from the duty to indemnify, we have also recognized the effect on the insured of an insurer’s failure or refusal to defend. See Smith v. American Family Mut. Ins. Co., supra. Delaying the determination of the duty to defend until the duty to indemnify or contribute is also determined is merely an extension of the uncertainty which he must live with.
Although the majority opinion indicates the responsibility for defense and for contribution and indemnity should be determined in one action, I have some questions as to the procedural posture of that statement. As an example, if an insurance company refuses to defend and the insured must defend himself, a separate action apparently would be necessary to determine the issue of a duty to defend as well as the duty to indemnify or contribute if a judgment is recovered against the insured. In the instance in which the insurer defends, although protesting that it is under no obligation to do so, and the plaintiff recovers no judgment against the insured, will the insurer be able to raise the issue of duty to defend and recover its costs if it was under no duty to defend? These are procedural questions, the answer to which may well negate the judicial economy referred to in the majority opinion.
Because of the position of the majority opinion it seems futile to discuss at length the merits of the issue of the duty to defend. For the record, however, I would hold that both United Pacific Insurance Company and Aetna Insurance Company have a duty to defend with the issue of indemnification and contribution if a judgment is recovered against Cochran Electric to await the outcome of the action brought against it.