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Broom v. Continental Casualty Co.11/16/2005
were not identified. Moreover, it was not until June 11, 2004, that the trial court foreclosed the possibility that the dissemination of allegedly defamatory memoranda within STT during the policy coverage period could be considered "publication" for the purposes of the declaratory judgment action. Thus, when the appellants made their December 6, 2001 request for a defense from Interstate, there existed a reasonable possibility that the underlying claim fell within the policy's coverage.
We have said that " insurer's obligation is not merely to defend in cases of perfect declarations, but also in cases where by any reasonable intendment of the pleadings liability of the insured can be inferred, and neither ambiguity inconsistency . . . in the underlying plaintiff's complaint . . . can justify escape of the insurer from its obligation to defend." Green Mt. Ins. Co. v. Foreman, 138 N.H. 440, 443 (1994) (quotation omitted). In a case of doubt as to whether the complaint against the insured alleges a liability of the insurer under the policy, the doubt must be resolved in the insured's favor. Id. Because a reasonable intendment of the initial complaint alleged injuries potentially within the scope of Interstate's policy coverage, we conclude that Interstate owed the appellants a defense at the time it was requested, and breached that duty by denying coverage on January 4, 2002.
In light of our conclusion, we hold that the trial court's grant of summary judgment to Interstate in its June 11, 2004 order was in error. We, therefore, also hold that the trial court's order of August 23, 2004, denying the appellants' motion for reconsideration amounted to an unsustainable exercise of discretion.
As to the appellants' motion for reimbursement of defense costs, when an insurer breaches its duty to defend, it must reimburse the insured for the costs incurred in defending the claim. Concord Hosp. v. N.H. Medical Malpractice Joint Underwriting Assoc., 142 N.H. 59, 61 (1997); see also A.B.C. Builders v. American Mut. Ins. Co., 139 N.H. 745, 751 (1995). Interstate asserts that it owes the appellants no reimbursement for defense costs because the appellants received, in whole or in part, a defense from Continental, Nationwide, and another carrier, Steadfast Insurance Company, and because they hired their own private attorney instead of relying upon counsel retained by the carriers. By the time of the trial court's December 2, 2003 order, Continental had already expended approximately $495,000 in defending the appellants. The issue of reimbursement of defense costs, if any, is not a matter for this court to decide in the first instance. Accordingly, we vacate the trial court's order denying the appellants' motion for reimbursement of defense costs and remand for further proceedings.
At oral argument, Interstate introduced the alternative theory that it owes no duty to the appellants because they are not insureds under the policy in question. Because Interstate failed to raise this issue before the trial court, we need not address it. See Marikar, 151 N.H. at 397.
Reversed in part; vacated in part; and remanded.
BRODERICK, C.J., and NADEAU, DUGGAN and GALWAY, JJ., concurred.
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