Insured Entitled to Fees After Prevailing on Claim for Declaratory Judgment

On December 30, 2014, the First Department issued a decision in American Home Assurance Co. v. Port Authority of N.Y. & N.J., 2014 NY Slip Op. 09044, affirming an award of attorney's fees against an insurer.

In American Home Assurance Co., the trial court granted the defendant's motion for attorney's fees after the defendant was granted summary judgment on its counterclaim for a declaration of the plaintiff insurer's obligation to provide coverage. The First Department affirmed, explaining:

An insured who is cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations, and who prevails on the merits, may recover attorneys' fees incurred in defending against the insurer's action. Here, the motion court correctly determined that defendant is entitled to the legal fees incurred in connection with its prior successful motion for summary judgment on its counterclaim for declaratory relief. Defendant's counterclaim is a mirror image of the declaratory claim asserted against it by plaintiff, its insurer. Accordingly, the counterclaim did not cast plaintiff in a defensive posture.

(Internal quotations and citations omitted) (emphasis added).