Asbestos: Defense Costs for Independent Counsel

Policyholder in NY defeats motion to dismiss on defense expenses despite having rejected Insurer’s counsel

A New York State Judge refused to dismiss Colgate’s counterclaims that its insurer had breached its duty of the implied covenant of good faith in defending cases alleging that Colgate’s talc products contained asbestos.  Colgate had rejected defense counsel appointed by OneBeacon to defend it, alleging that the counsel had conflicts of interest, and claiming that OneBeacon was attempting to sell its asbestos and long-tail liability book, leaving it without sufficient reserves.  OneBeacon refused to pay the cost of Colgate’s counsel and claimed that Colgate was breaching its duties of assistance and cooperation.  The Court refused to dismiss the counterclaim, finding that it stated a colorable cause of action.  OneBeacon America Insurance Co. v. Colgate-Palmolive Co., No. 651193/2011, (N.Y. Sup. Ct. Nov. 1, 2013).

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