U.S. Underwriters Ins. v. City Club Hotel, LLC, 822 N.E.2d 777 (N.Y. 2004). · Go Syfert
U.S. Underwriters Ins. v. City Club Hotel, LLC, 822 N.E.2d 777 (N.Y. 2004). Cases Citing This Book View Copy Cite
Quick Summary

An insured who prevails in a declaratory judgment action brought by an insurer seeking to avoid policy obligations may recover attorneys' fees regardless of any underlying defense provided.

An insurer issued a commercial liability policy and later disclaimed coverage for a named insured while providing a defense in the underlying personal injury action. The insurer then filed a declaratory judgment action seeking to establish that it had no duty to defend or indemnify. The insured prevailed in that action. The question presented is whether the insured may recover attorneys' fees incurred in defending against the insurer's declaratory judgment action, even though the insurer had provided a defense in the underlying suit. The court applies the rule that an insured cast in a defensive posture by an insurer's attempt to free itself from policy obligations may recover fees if it prevails. The court holds that the insured is entitled to recover those fees as incidental to the insurer's contractual duty to defend.

202 citation events (202 in the last 25 years) across 12 distinct courts.
Treatment trajectory · 2005 → 2026 · click a year to view as-of
2005 2015 2026
Cited for
3 N.Y.3d at 597 Awarding attorneys' fees to insured defending against insurer's declaratory judgment56 citing cases“it is well settled in new york that a prevailing party may not recover attorneys' fees from the losing party except where authorized by statute, agreement or court rule”10 citing courts quote it · also cited as 789 N.Y.S.2d at 472; 789 N.Y.S.2d at 473 · 52 listed here
  • Fishberg v. State Farm Fire & Cas. Co., No. 1:20-cv-06664, 2021 WL 3077478 (S.D.N.Y. July 20, 2021).
    ([A] prevailing party may not recover attorneys’ fees from the losing party except where authorized by statute, agreement or court rule.)
  • Liberty Surplus Ins. v. Segal Co., 420 F.3d 65 (2d Cir. 2005).published 4 cites
    (The reasoning behind Mighty Midgets is that an insurer’s duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against the insurer’s declaratory judgment acti…)
  • Liberty Surplus Ins. Corp. v. Segal Co., 420 F.3d 65 (2d Cir. 2005).published 4 cites
    (The reasoning behind Mighty Midgets is that an insurer's duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against the insurer's declaratory judgment acti…)
  • Scottsdale Ins. Co. v. City of New York, 245 A.D.3d 428 (N.Y. App. Div. 1st Dep't 2026).published 2 cites
    Co. v City Club Hotel, LLC , 3 NY3d 592, 597 [2004] [internal quotation marks omitted]).
  • Lex 54 Condo. v. Eltech Indus., Inc., 2025 NY Slip Op 32901(U) (N.Y. Sup. Ct., New York Cty. 2025).unpublished
    (holding that "a prevailing party may not recover attorneys' fees from the losing party except where authorized by statute, agreement, or court rule)
  • Knocking Inc. v. Carter, No. 1:24-cv-09020 (S.D.N.Y. Aug. 7, 2025).
    Co. v. City Club Hotel, LLC, 3 N.Y.3d 592, 597 (2004).
  • LM Ins. Corp. v. Saf. Nat'l Cas. Corp., No. 1:21-cv-01802 (E.D.N.Y. Mar. 24, 2025).
    “The reasoning behind [this rule] is that an insurer's duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against an insurer's declaratory judgment action.” City Club, 3 N.Y.3d…
  • Rhodes Assoc. Exec. Search of N.Y., LLC v. IS Co., 234 A.D.3d 535 (N.Y. App. Div. 1st Dep't 2025).published
    Co. v City Club Hotel, LLC , 3 NY3d 592, 597 [2004]).
  • Integris Risk Retention Grp. v. Capital Region Orthopaedics Assocs., PC, No. 1:23-cv-00989 (N.D.N.Y. Sept. 30, 2024).
    Co. v City Club Hotel, LLC, 3 N.Y.3d 592, 597 (2004).
  • Burlington Ins. Co. v. Mordini Estates Inc, 2024 NY Slip Op 32584(U) (N.Y. Sup. Ct., New York Cty. 2024).unpublished
    Co. v City Club Hotel, LLC, 3 NY3d 592, 597-98 (2004), quoting Mighty Midgets, Inc. v Centennial Ins.
Show 42 more citing cases
3 N.Y.3d at 598 Insured's right to recover fees in declaratory judgment action13 citing cases“the reasoning behind mighty midgets is that an insurer's duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against an insurer's declaratory judgment action.”1 citing court quotes it
  • GuideOne Nat'l Ins. Co. v. Sys. 2000 Plumbing Serv., Inc., No. 1:22-cv-05018 (S.D.N.Y. Aug. 31, 2026). 2 cites
    Co. v. City Club Hotel, LLC, 822 N.E.2d 777, 780 (N.Y. 2004) (“[A]n insured who prevails in an action brought by an insurance company seeking a declaratory judgment that it has no duty to defend or indemnify the insured may recover attorne…
  • Liberty Surplus Ins. v. Segal Co., 420 F.3d 65 (2d Cir. 2005).published 4 cites
    Id.; see also id., 3 N.Y.3d at 597-98 , 822 N.E.2d at 780 , 789 N.Y.S.2d at 473 (“The reasoning behind Mighty Midgets is that an insurer’s duty to defend an insured extends to the defense of any action arising out of the occurrence, includ…
  • Liberty Surplus Ins. Corp. v. Segal Co., 420 F.3d 65 (2d Cir. 2005).published 4 cites
    Id.; see also id., 3 N.Y.3d at 597-98 , 822 N.E.2d at 780 , 789 N.Y.S.2d at 473 ("The reasoning behind Mighty Midgets is that an insurer's duty to defend an insured extends to the defense of any action arising out of the occurrence, includ…
  • Oriska Ins. v. Am. Textile Maint., 322 F. App'x 36 (2d Cir. 2009).unpublished 6 cites
    “the reasoning behind mighty midgets is that an insurer's duty to defend an insured extends to the defense of any action arising out of the occurrence, including a defense against an insurer's declaratory judgment action.”
  • Houston Cas. Co. v. Prosight Speciality Ins. Co., No. 1:18-cv-09574 (S.D.N.Y. July 28, 2020).
    Co. v. City Club Hotel, LLC, 3 N.Y.3d 592, 598 (2004).
  • State Farm Fire & Cas. Co. v. Ricci, 96 A.D.3d 1571 (N.Y. App. Div. 4th Dep't 2012).published 2 cites
    Co. v City Club Hotel, LLC, 3 NY3d 592, 598 [2004]).
  • Estee Lauder Inc. v. OneBeacon Ins. Grp., LLC, 31 Misc. 3d 379 (N.Y. Sup. Ct. 2011).published
  • Progressive Halcyon Ins. v. Giacometti, 72 A.D.3d 1503 (N.Y. App. Div. 4th Dep't 2010).published
  • RLI Ins. v. Smiedala, 77 A.D.3d 1293 (N.Y. App. Div. 4th Dep't 2010).published
  • Farm Fam. Cas. Ins. v. Habitat Revival, LLC, 91 A.D.3d 903 (N.Y. App. Div. 2d Dep't 2012).published
Show 3 more citing cases
822 N.E.2d at 780 Recovering attorneys' fees after declaratory judgment action7 citing cases[A]n insured who prevails in an action brought by an insurance company seeking a declaratory judgment that it has no duty to defend or indemnify the insured may recover attorneys’ fees regardless of whether the insurer provided a defense to the insured.1 citing court put it this way
822 N.E.2d at 779 Insured recovering fees in declaratory judgment actions3 citing cases
3 N.Y.3d at 596 Insured recovering fees in declaratory judgment action2 citing cases“an insured who prevails in an action brought by an insurance company seeking a declaratory judgment that it has no duty to defend or indemnify the insured may recover attorneys' fees regardless of whether the insurer provided a defense to the insured.”8 citing courts quote it · 1 listed here
3 N.Y.3d at 595 cited at this page1 citing case
Retrieving the full opinion text from the archive…
U.S. Underwriters Insurance Company, Appellant,
v.
City Club Hotel, LLC, Et Al., Appellants-Respondents, and Marek Szpakowski Et Al., Respondents
New York Court of Appeals.
Dec 16, 2004.
Published opinion
822 N.E.2d 777
2004 N.Y. LEXIS 3798
POINTS OF COUNSEL, Bryan Cave LLP, New York City (Mark J Bunim, Alan Garten and Matthew K. Fleming of counsel), for appellants-respondents., Miranda & Sokoloff LLP, Mineóla (Steven Verveniotis and Jason B. Gurdus of counsel), for appellant., Melito & Adolfsen, EC., New York City (Ignatius John Melito and S. Dwight Stephens of counsel), and Wiley Rein & Fielding LLP, Washington, D.C. (Laura A. Foggan, John C. Yang and David P. Sullivan of counsel), for Complex Insurance Claims Litigation Association, amicus curiae., Nixon Peabody LLP, New York City (Aidan M. McCormack and Rajika Bhasin of counsel), for CNA Insurance Companies, amicus curiae., Anderson Kill & Olick, PC., New York City (Eugene R. Anderson and William G. Passannante of counsel), and Amy Bach, San Francisco, California, for United Policyholders, amicus curiae.
Smith.
Cited by 99 opinions  |  Published
1 passages pin-cited by 2 cases
Pinpoint authority: #4,861 of 633,719
Citer courts: Second Circuit (6) · D. New Jersey (2) · Supreme Court (2)

OPINION OF THE COURT

G.B. Smith, J.

The United States Court of Appeals for the Second Circuit, by two certified questions, has asked this Court to clarify whether[*596] an insured who prevails in an action brought by an insurer seeking a declaratory judgment that it has no duty to defend or indemnify the insured, may recover attorneys’ fees expended in defending against the declaratory judgment action regardless of whether the insurer provided a defense to the insured. We answer that question in the affirmative.

Plaintiff, U.S. Underwriters Insurance Company, issued a commercial general liability policy for the policy period of May 15, 1999 to May 15, 2000, to defendants City Club Hotel, LLC and Shelby Realty, LLC, as named insureds, in connection with renovation work City Club was to perform on Shelby’s property. On April 27, 2000, while performing the renovation work, Marek Szpakowski, a construction worker employed by City Club, fell from a scaffold and sustained serious injuries. In July 2000, U.S. Underwriters received notice of Szpakowski’s claim and a copy of his counsel’s letter to Shelby informing it that it might be sued. When the insurer confirmed receipt of the notice of claim, it identified City Club and Shelby as “Our Insured.”

In November 2000, Mr. Szpakowski and his wife brought a personal injury action in Supreme Court asserting various labor and industrial law claims against Shelby, Forthright Development, LLC and Metropolitan Hotels, LLC. A copy of the verified complaint was sent to U.S. Underwriters on or about December 13, 2000. By letter dated December 20, 2000, approximately five months after it received notice of the claim, the insurer disclaimed coverage of City Club and Shelby with respect to the claims based on the employee exclusion clause of the policy, but nonetheless provided Shelby a defense in the underlying action.

In September 2002, U.S. Underwriters, asserting diversity jurisdiction, brought the instant action in the United States District Court for the Southern District of New York seeking a declaratory judgment that it has no duty to defend or indemnify defendants Shelby, City Club, Forthright and Metropolitan, or their named officers. The insurer moved, and defendants subsequently cross-moved, for summary judgment. The District Court granted summary judgment to defendants on the issue of disclaimer of coverage, finding that the disclaimer was untimely as a matter of law. The court, however, denied defendants’ motion to recover attorneys’ fees incurred in successfully defending the declaratory judgment action, ruling that attorneys’ fees were not warranted because U.S. Underwriters did not breach the duty to defend.

In its appeal to the Second Circuit, U.S. Underwriters challenged the District Court’s finding that its disclaimer of cover[*597] age was untimely. Defendants challenged the denial of attorneys’ fees. The Second Circuit affirmed and held that U.S. Underwriters’ disclaimer of coverage as to Shelby, Forthright and Metropolitan was untimely as a matter of law; that U.S. Underwriters is obliged to defend and indemnify Shelby in the underlying action; and that the complaint against defendants City Club and the named officers must be dismissed as these parties do not seek coverage under the policy. As to whether attorneys’ fees can be awarded to defendants, the Second Circuit noted a division in interpreting the relevant law and certified the following two questions to this Court:

“1. Whether, in a case in which an insurance company has brought a declaratoiy judgment action to determine that it does not have obligations under the policy but has defended in the underlying suit, a defendant prevailing in the declaratory judgment action should be awarded attorneys’ fees expended in defending against that action?
“2. Whether, in the special circumstances of this case, attorneys’ fees should be awarded to one or more of the defendants?” (369 F3d 102, 113 [2d Cir 2004].)

We accepted certification (2 NY3d 787 [2004]) and now answer the first question in the affirmative as to Shelby, a named insured under the policy. Since it is not clear what is meant by the “special circumstances of this case,” * we decline to answer the second question, concluding it is more appropriate for the District Court or the Second Circuit to resolve this issue.

It is well settled in New York that a prevailing party may not recover attorneys’ fees from the losing party except where authorized by statute, agreement or court rule (see Chapel v Mitchell, 84 NY2d 345, 349 [1994], quoting Hooper Assoc., Ltd. v AGS Computers, Inc., 74 NY2d 487, 491 [1989]; Mighty Midgets, Inc. v Centennial Ins. Co., 47 NY2d 12, 21-22 [1979]). However, an insured who is “cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations,” and who prevails on the merits, may recover attorneys’ fees incurred in defending against the insurer’s action (Mighty Midgets, 47 NY2d at 21). The reasoning behind Mighty Midgets is that an insurer’s duty to defend an insured extends to the[*598] defense of any action arising out of the occurrence, including a defense against an insurer’s declaratory judgment action.

In the instant case, it is undisputed that Shelby, a named insured under the policy, was cast in a defensive posture by U.S. Underwriters in their dispute over whether the insurer had a duty to defend and indemnify Shelby in the underlying personal injury action. Further, it is undisputed that Shelby successfully defended against the insurer’s summary judgment motion and thereby prevailed in the matter.

Based on Mighty Midgets, Shelby is entitled to recover attorneys’ fees. We hold that under Mighty Midgets, an insured who prevails in an action brought by an insurance company seeking a declaratory judgment that it has no duty to defend or indemnify the insured may recover attorneys’ fees regardless of whether the insurer provided a defense to the insured. Given that the expenses incurred by Shelby in defending against the declaratory judgment action arose as a direct consequence of U.S. Underwriters’ unsuccessful attempt to free itself of its policy obligations, Shelby is entitled to recover those expenses from the insurer. In other words, Shelby’s recovery of attorneys’ fees is incidental to the insurer’s contractual duty to defend.

Accordingly, certified question No. 1 should be answered in the affirmative and certified question No. 2 not answered.

Chief Judge Kaye and Judges Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.

Following certification of questions by the United States Court of Appeals for the Second Circuit and acceptance of the questions by this Court pursuant to section 500.17 of the Rules of Practice of the Court of Appeals (22 NYCRR 500.17), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question No. 1 answered in the affirmative and certified question No. 2 not answered.

*

In their briefs and at oral argument before this Court, counsel had differing views as to what the “special circumstances” were.