A federal court decision in Navigators Specialty Insurance Company v. SVO Building One, LLC emphasizes the breadth of the duty to defend under California law and the difficulty insurers face when attempting to allocate defense costs between covered and uncovered claims. The insurance dispute between Navigators and SVO arose from a lawsuit by an equipment manufacturer, Vertiv, against SVO, a data center designer, involving a data center project.

Navigators agreed to defend SVO after a defamation claim was brought against it by Vertiv. After the defamation claim was voluntarily dismissed, Navigators tried to withdraw its defense but ultimately continued defending SVO through resolution. Navigators then sued SVO, seeking reimbursement for defense costs, arguing that upon dismissal of the defamation claim, there could be no coverage for the remaining claims.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth LLP and Yosef Itkin, Hunton Andrews Kurth LLP

Mr. Levine may be contacted at mlevine@hunton.com
Mr. Itkin may be contacted at yitkin@hunton.com