The United States District Court for the Western District of Washington, applying Washington law, has held that no Washington state public policy prevents an insurer from enforcing a defense cost recoupment provision. Massachusetts Bay Ins. Co. v. Walflor Indus., 2019 WL 1651659 (W.D. Wash. Apr. 17, 2019). The court resolved the issue based on precedent and saw no need to certify the question of the enforceability of such provisions to the Washington Supreme Court as the insured urged.
An insurer initially concluded that it had no duty to defend a suit alleging that products were distributed bearing the insured’s supplier’s trade name in violation of a distribution agreement. In response to the insured’s argument that the suit implicated the policy’s “personal and advertising injury” coverage, the insurer agreed to defend subject to a full reservation of rights, including the right to recoup defense costs if it was later determined that there was no coverage, pursuant to an endorsement providing for recoupment in that...
