Recall Total Info. Mmgt., Inc. v. Fed. Ins. Co.Annotate this Case
Recall Total Information Management, Inc. (Recall) contracted with IBM to transport and store computer tapes containing personal information of IBM employees. Recall subcontracted with Executive Logistics Services, LLC (Ex Log) to provide transportation services for the tapes. In connection with the agreements, Federal Insurance Company (Federal) issued a commercial general liability policy and Scottsdale Insurance Company (Scottsdale) issued an umbrella liability policy to Ex Log. Both policies named Recall as an additional insured. When Ex Log lost the computer tapes, IBM spent large sums providing identity theft services. In informal negotiations, IBM sought reimbursement of those sums from Recall and Ex Log (together, Plaintiffs). Defendants - Federal and Scottsdale - refused to participate in the negotiations or to provide coverage to Plaintiffs under the policies. Plaintiffs commenced this action alleging breach of the insurance contracts. The trial court rendered summary judgment in favor of Defendants. The Appellate Court affirmed. The Supreme Court affirmed, holding that the Appellate Court did not err in concluding that (1) Defendants did not waive coverage defenses by breaching their duty to defend Plaintiffs in settlement negotiations; and (2) the policy provisions at issue did not afford coverage for claims made against Plaintiffs by a third party.