ACE American Won’t Receive Reimbursement for Defense of Safelite

Zurich American Insurance Company, and Discover Property & Casualty Company are off the hook for $1.65 million each now that a federal judge in Ohio has granted their motion for summary judgment. That means Safelite’s insurance company, ACE American Insurance Company, won’t be reimbursed by the two defendants for its costs in defending Safelite in a 2015 lawsuit.

According to the court’s opinion, ACE sought $1.65 million each from defendants Zurich American Insurance Company, and Discover Property & Casualty Company in relation to costs it incurred while defending mutual insureds Safelite Group Inc., Safelite Solutions LLC and Safelite Fulfillment Inc. in a 2015 lawsuit.

The lawsuit by plaintiffs Richard Campfield and Ultra Bond Inc. alleged that Safelite engaged in false windshield replacement advertisements. ACE argued that some of the alleged offenses occurred during the policy periods of the two other insurers, and as such, they should contribute to defense costs.

Court documents filed by the plaintiffs state Ultra Bond developed a method of repairing windshield cracks exceeding 6 inches long.  Campfield said that Safelite began advertising that all windshields must be replaced if they have a crack of 6 inches or more, according to his amended complaint.

An Ohio federal judge granted summary judgment to Safelite in March 2021. ACE American then turned its attention to the two other insurance companies for contributions to defense costs it says totaled approximately $5 million as of August 2019. Defendants, on the other hand, argued that they weren’t liable to contribute to costs incurred prior to August 2019, the time at which they say they were notified of the litigation.

In regards to the timeline, the court’s opinion notes that Safelite told Discover and Zurich of the suit four years after Campfield filed and more than eight months after ACE learned of the Discover policy and asked for more information.

“Safelite waited nearly four years after Campfield filed suit before notifying Discover and Zurich,” the court wrote in its opinion. “This nearly four-year delay, coupled with the evidence indicating that Safelite knew how to provide notice because it did so with ACE shortly after Campfield filed suit, leads the court to conclude that Safelite’s notice to Discover and Zurich was unreasonably late, and therefore breached the relevant policies’ prompt-notice provisions.”

While both parties moved for summary judgment, it was Zurich and Discover that were awarded the ruling in late October 2022.

“ACE cannot seek equitable contribution from Discover and Zurich for the pre-tender litigation expenses because equitable contribution requires the existence of a shared obligation, and Discover and Zurich simply did not share this obligation with ACE,” the court wrote in its opinion.

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