Contractual Duty to Defend: “Occurrence” v. “Allegation”
July 21, 2014This breach of contract case addressed a loan guarantor’s contractual duty to defend the lender in a fraud lawsuit. The Court was asked to interpret a duty to defend provision that conditioned the duty on the “occurrence” of fraud, when the pending lawsuit at issue had to this point only raised “allegations” of fraud. According to the Court, the duty to defend is a contractual duty depending on the precise terms of the contract. Thus, the Court refused to rewrite the section at issue to replace the word “occurrence” with “allegation.” Because the pending fraud claim only involved fraud “allegations” at this point, the defendant owed no duty to defend.
