Underlying Action Following a Settlement Funded by the Insurer

Reversing what it characterized as an “erroneous” ruling, the panel concluded that 360Heros, Inc. v. Mainstreet Am. Assur. Co was entitled to recover attorneys’ fees incurred in the defense of the Underlying Action following a settlement funded by the insurer, MSA. The fees incurred arose when many additional months of litigation was required to resolve business issues in the Underlying Action appropriate co-existence following the resolution of a trademark infringement dispute. The insurer’s monetary payment did not compensate defense counsel for its legal work to secure post-lawsuit determination resolution of pending business issues.

“Under New York law, where an insured is represented by counsel of its own choosing, the insurance company’s duty to defend extends to the payment of reasonable fees and costs.” Id at 558.

MSA could not require that the compulsory counterclaim for patent infringement be dismissed, so it continues on.