Colliers argued that Maxum secured a ruling from a Northern District of Georgia judge that it had no obligation to defend Colliers in the Texas suit, due to Collier’s untimely notice of claim, but that the district court finding does not liberate Maxum from covering $1.6 million in defense costs.
Judge Geraghty also took exception to the declaration freeing Maxum from its coverage obligations. In her order filed on Monday, the judge found that the declaration does not apply retroactively.
The judge said, “If credited, Maxum’s argument that a declaration of non-coverage retroactively eliminates an insurer’s duty to defend could have profound implications.” “An insurer that chooses to defend under a reservation of rights could be incentivized to delay defense payments and or underpay defense costs while hoping for a forthcoming declaration of non-coverage.”
In its complaint, Colliers argues that Maxum breached its contractual duty to defend it in the Texas case and did so in bad faith, for which the agency seeks reimbursement the underlying litigation defense costs, as well as damages.
