UNDER MINNESOTA LAW, THE 8TH CIRCUIT FINDS THAT EXCESS INSURERS THAT DID NOT PARTICIPATE IN THE INSURED’S DEFENSE WERE ALLOWED TO SEEK ALLOCATION OF THE JURY’ VERDICT BETWEEN COVERED AND NON-COVERED CLAIMS

In RSUI Indemnity Co. v. New Horizon Kids Quest, Inc., 933 F.3d 960 (8^th Cir. 2019), applying Minnesota law, the 8^th Circuit held that when an excess insurer had not participated in the insured’s defense, that insurer was allowed the opportunity to allocate the jury’s verdict between covered and noncovered claims in a subsequent coverage action.

The 8^th Circuit reasoned that whether the insured’s liability in the underlying action arose out of an uncovered claim was a question of coverage that had not been decided in the underlying action and thereby could be litigated in a subsequent coverage action. The 8^th Circuit also determined that if the excess insurer was able to establish that the jury’s unallocated damages award included uncovered damages, that the District Court was required to allocate the unallocated jury award between covered and uncovered claims.