NO "Buss" TO ALASKA FOR FEES DESPITE POLICY, DISREGARD AGREEMENT.

The Alaska Supreme Court just answered these two certified questions, effectively letting the tires out of the "Buss" for liability carriers seeking to recoup defense fees and costs in cases where they defend counts and claims which they do not cover, even with their insureds' concurrence and agreement to the carriers' reserved rights of reimbursement, when at the same time the carriers defend counts and claims their policies affirmatively do cover:

1. Does Alaska law prohibit enforcement of a policy provision entitling an insurer to reimbursement of fees and costs incurred by the insurer defending claims under a reservation of rights, where (1) the insurer explicitly reserved the right to seek such reimbursement in its offer to tender a defense provided by independent counsel, (2) the insured accepted the defense subject to the reservation of rights, and (3) the claims are later determined to be excluded from coverage under the policy?
2. If the answer to Question 1 is “Yes,” does Alaska law prohibit enforcement of a policy provision entitling an insurer to reimbursement of fees and costs incurred by the insurer defending claims under a reservation of rights, where (1) the insurer explicitly reserved the right to seek such reimbursement in its offer to tender a defense provided by independent counsel, (2) the insured accepted the defense subject to the reservation of rights, and (3) it is later determined that the duty to defend never arose under the policy because there was no possibility of coverage? 

    The answer to both questions is “yes.”

Attorneys Liability Protection Society, Inc. v. Ingaldson Fitzgerald, P.C., No. S–15683, 2016 WL 1171299, at *1 (Alaska March 25, 2016) (STATED BY WESTLAW AS NOT PRECEDENT BECAUSE "THE CASE WAS ENTERED IN THE WESTLAW DATABASE BEFORE THE TIME FOR REHEARING HAD EXPIRED.").

          So, read the answers in this case for what they are worth in other words.  Assuming that these answers to certified questions remain unchanged, Alaska will clearly join the minority view on these questions.

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with  Supplements).  The majority and minority views on these questions, including the ground-breaking views expressed by the California Supreme Court in its Buss v. Superior Court decision, are set out in 1 id. § 3:6, "Informing the Insured:  Insurer assertion of rights to reimbursement from the insured of clearly noncovered indemnity and defense expenses," and in 2 id. § 13:21, "Damages payable to insurer--By insured."  All rights reserved.