July 6, 2022

Volume XII, Number 187

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July 06, 2022

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July 05, 2022

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“Slam Dunk” Liability Defense Does Not Abrogate Duty to Defend

In Home Federal Savings Bank v. Ticor Title Insurance Company, No. 1:10-cv-0999 (Sept. 6, 2012), the Seventh Circuit held that the title insurer owed the policyholder mortgage company a defense against a mechanic’s lien complaint seeking priority over or parity with the mortgage.  The court found that under Indiana law, the insurer should have defended against the “weak, even hopeless” claim, so long as the counterclaim potentially triggered coverage.

Although coverage disputes under title policies are rare, this case serves as an important example of how insurers often erroneously conflate liability concepts with coverage concepts.  The lack of merit of the suit against the insured did not absolve the insurer of its duty to defend.

Therefore, the Seventh Circuit reversed the ruling of the district court, finding that the court should have granted the insured’s motion for summary judgment and denied the insurer’s motion.

© 2022 Neal, Gerber & Eisenberg LLP.National Law Review, Volume II, Number 258
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About this Author

Jill B. Berkeley, Partner, Neal Gerber law firm
Partner

Jill B. Berkeley chairs the firm’s Insurance Policyholder practice group. Chambers USA reports that clients describe her as “a breath of fresh air in litigation,” and “an outstanding lawyer with encyclopedic knowledge of case law.” She is recognized by her peers as having “great stature nationally” and being “a pillar of the policyholder community.” Jill represents policyholders and claimants in insurance coverage disputes involving toxic torts and hazardous wastes, environmental pollution, construction, products liability, intellectual property, first-party property, business...

(312) 269-8024.
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