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Effect of Interpleader on Duty to Defend
eCopy, Inc
2008-11-14T12:24:15-06:00
2008-11-14T12:24:15-06:00
2008-11-14T12:24:15-06:00
eCopy, Inc.
3.0
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/Im13 Do Q
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BT
3 Tr
/F14 11.99 Tf
53.28 717.12 TD
(issue and noted a difference in the law of Indiana and Ilinois regarding the affect of interpleader on the) Tj
/F14 11.92 Tf
0.00 -13.92 TD
(duty to defend, when funds have not been unconditionally tendered or distributed. Any difference) Tj
/F14 12.01 Tf
-.48 -13.68 TD
(between Ilinois and Indiana law would not affect the outcome if the insurer irretrievably surrendered its) Tj
/F15 11.58 Tf
-.24 -13.92 TD
(policy limits.) Tj
/F14 11.91 Tf
36.24 -27.60 TD
(The court noted that Carolina made an unconditional tender of its policy limit and relinquished) Tj
/F14 11.93 Tf
-36.24 -13.44 TD
(any claim to those funds. Citing the Zurich v. Raymark, 118 Il1.2d 23 \(1987\) case, the court concluded) Tj
/F14 12.02 Tf
-.48 -13.92 TD
(that although the duty to defend is separate and distinct from the duty to indemnify, it is only broader) Tj
/F14 12.01 Tf
0.00 -13.68 TD
(than the duty to indemnify in certain circumstances. If the complaint alleges facts which bring the claim) Tj
/F14 11.93 Tf
0.00 -13.68 TD
(within a potential for coverage, the insurer is obligated to defend the action, even if it may not later be) Tj
/F14 12.00 Tf
0.00 -13.92 TD
(obligated to indemnify the insured. If, the insurer has exhausted its indemnity limits, it cannot be) Tj
0.00 -13.68 TD
(obligated to indemnify the insured. Thus, the duty to defend is broader than the duty to indemnify only) Tj
/F14 12.01 Tf
-.48 -13.92 TD
(when the insurer has the potential obligation to indemnify. The court concluded that Carolina had no duty) Tj
/F14 11.89 Tf
-.24 -13.68 TD
(to defend because it had no potential indemnity obligation.) Tj
/F14 12.16 Tf
36.24 -27.84 TD
(The Carolina Casualty court distinguished two Ilinois: American Standard v. Basbagil, 333) Tj
/F16 8.30 Tf
-36.48 -13.68 TD
(Il.App.3d 11, 775 N.E. 2d 255 \(2002\), and Douglas v. Allied American Insurance, 312 Ill.App.3d 535,) Tj
/F14 12.00 Tf
0.24 -13.68 TD
(727 N.E. 2d 376 \(2000\). The appellate court in each case declined to discharge the duty to defend after) Tj
/F14 11.94 Tf
-.48 -13.68 TD
(the insurers tendered policy limits to the court. The Carolina Casualty court determined that Douglas and) Tj
/F14 12.03 Tf
0.00 -13.68 TD
(Basbagil were factually distinguishable because the Douglas insurer tendered its policy limits without) Tj
/F14 11.93 Tf
0.00 -13.92 TD
(admitting liability and withdrew its defense without knowing whether its policy limits would actually be) Tj
/F15 10.92 Tf
0.00 -13.68 TD
(exhausted. The Carolina Casualty noted that the Basbagill insurer refused to admit any liability and) Tj
/F14 11.93 Tf
-.24 -13.68 TD
(conceded that it would get some, if not all, of the interpled funds back in the event that it was not found) Tj
/F16 7.72 Tf
-.24 -13.68 TD
(liable or was liable for less than the full amount. The Basbagil court made its decision based upon an) Tj
/F14 12.01 Tf
0.00 -13.92 TD
(interim agreement to cover whatever liability the plaintiff might incur in the future. This differed) Tj
0.00 -13.68 TD
(substantially from the actions taken by Carolina. Thus, the Carolina Casualty court concluded that) Tj
/F14 11.94 Tf
0.00 -13.92 TD
(Carolina Casualty had no potential obligation to indemnify and was discharged from its duty to defend) Tj
/F14 12.12 Tf
-.48 -13.68 TD
(under either Ilinois or Indiana law.) Tj
/F14 12.00 Tf
36.24 -27.84 TD
(The Carolina Casualty case confirms that insurers may extinguish their duty to defend and) Tj
/F14 12.02 Tf
-36.48 -13.44 TD
(indemnify by fiing an interpleader action, but cautions that insurers may not give with one hand take) Tj
/F15 11.05 Tf
-.24 -13.92 TD
(away with the other. Instead, an insurer must unconditionally tender the policy limit to the court registry,) Tj
/F14 12.09 Tf
0.00 -13.92 TD
(as opposed to conditioning payment upon a future event which mayor may not occur. The insurer must) Tj
/F16 5.00 Tf
-.24 -13.68 TD
(waive any potential to recover any portion of ) Tj
/F14 12.06 Tf
218.64 -1.44 TD
(the policy limit paid into the court. These criteria are meant) Tj
/F14 11.95 Tf
-218.88 -12.48 TD
(to allow an insurer to exhaust its policy limits in an interpleader action as if it had done so through) Tj
/F14 12.01 Tf
0.24 -13.68 TD
(settlement or judgment and not be required to defend its insureds indefinitely.) Tj
/F16 5.00 Tf
36.00 -27.60 TD
(Please contact Bil Busse, Jr. Ed Grass, or Jason DeVore of ) Tj
292.08 -1.92 TD
(Busse, Busse & Grass if ) Tj
/F14 11.81 Tf
123.60 -.96 TD
(you have) Tj
/F14 11.93 Tf
-452.16 -10.80 TD
(any questions related to the issues discussed herein or any other coverage matter.) Tj
/F14 11.86 Tf
251.04 -28.80 TD
(Very truly yours,) Tj
/F14 11.96 Tf
-.24 -27.60 TD
(BUSSE, BUSSE & GRASS, P.C.) Tj
/F14 11.88 Tf
-.24 -55.20 TD
(Jason E. DeVore) Tj
/F14 10.58 Tf
-251.52 -38.16 TD
(Copyright 2008) Tj
/F16 7.99 Tf
92.88 -.48 TD
(Busse, Busse & Grass, P.C.) Tj
/F15 9.91 Tf
149.28 -.96 TD
(20 N. Wacker, Suite 1860, Chicago, IL) Tj
/F14 10.87 Tf
193.92 -1.44 TD
(312.750.1212) Tj
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