RECOUPMENT OF DEFENSES COSTS WHEN OFFERING A RESERVATION OF RIGHTS DEFENSE

Interpreting Georgia law, the 11^th Circuit Court of Appeals in Continental Casualty Co. v. Winder Laboratories, LLC, 73 F.4^th 934 (11^th Cir. July 13, 2023) (interpreting Georgia law) concluded that insurance companies could not recoup defense costs expended before a determination was made that no duty to defend existed absent having policy language which gave the insurer the right to recoupment.  An insurance company’s unilateral reservation of rights to seek recoupment was unenforceable under Georgia law due to a lack of consideration.  Moreover, the insurer’s payment of defense costs it was otherwise not obligated to pay, did not constitute unjust enrichment to the insured.