Safelite Insurers Must Return to Court

The United States Sixth Circuit Court of Appeals has vacated and remanded to a district court ruling which said that Zurich American Insurance Co. and Discover Property & Casualty Insurance Co. did not owe money for “equitable contribution” to ACE American Insurance Co. for its defense of Safelite in the Ultra Bond Inc. lawsuit. All three insured Safelite at the time the lawsuit was filed.

When Ultra Bond Inc. sued Safelite in 2015, Safelite informed ACE of the lawsuit and ACE contributed to the legal defense per its policy, at a cost of more than $5 million.  Safelite did not notify Zurich or Discover about the lawsuit until 2019.

At that point, ACE, Zurich and Discover agreed to split the defense costs going forward, but Zurich and Discover did not agree to retroactively split the costs ACE had covered up until then, which the Sixth Circuit Court’s unpublished opinion listed as about $5 million. ACE sued the other two insurance companies in 2021, wanting them to contribute $1.6 million each.

In October 2022, U.S. District Judge Edmund A. Sargus ruled that since Zurich and Discover hadn’t been told about the lawsuit against Safelite previously, they couldn’t be expected to help pay for the defense from that time period.

ACE appealed the ruling, and Sixth Circuit Court judges Richard Allen Griffin, John K. Bush and Joan L. Larsen determined that the district court had failed to conduct a “fact-intensive prejudice analysis” and sent the case back to the lower court.

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