National Surety Corp. v. Immunex Corp.

Wiggins, J.

¶43 (dissenting) — Rather than focus on the equities of the case at hand, the majority seizes on this opportunity to pronounce that insurers who defend under a *892reservation of rights may never recoup defense costs after a court determines that an insurance policy does not cover an insured’s claim and that the insurer never had a duty to defend. This rule is both overly broad and unnecessary, and in the context of this case, it is unjust. I dissent.

¶44 I would reverse the Court of Appeals in part6 and remand with instructions to the trial court to vacate its order granting summary judgment to Immunex on the issue of defense costs. The trier of fact, not this court, should weigh the facts of this case to decide whether National Surety should be forced to pay for Immunex’s defense costs.

DISCUSSION

¶45 The majority concludes that insurers may never recoup defense costs paid under a reservation of rights because a defense under a reservation of rights protects insurers by limiting their liability on claims of bad faith or breach, rendering “the defense portion of a reservation of rights defense illusory,” majority at 885 (emphasis omitted). But the out-of-state authority the majority says provides “valuable guidance,” majority at 883, actually gives little guidance at all. And even the cases that do provide some support for the majority’s position involve facts and circumstances very distinct from those at issue here.

¶46 More importantly, the majority fails to acknowledge that its rule — that insurers may never recoup defense costs paid under a reservation of rights even when it is later determined that the insurer owed no duty to defend — is the minority view. The majority does not mention that a majority of American courts have allowed insurance companies to recoup reservation-of-rights defense costs and overlooks the leading theory, unjust enrichment, that most of these juris*893dictions, and the Restatement (Third) of Restitution and Unjust Enrichment, have invoked to justify insurer recoupment.

¶47 This court should follow the majority rule and majority rationale, opting to engage in an analysis based on fairness under the circumstances of this case to determine whether National Surety’s payment of Immunex’s defense costs would work an unjust enrichment in Immunex’s favor. The majority does not acknowledge these considerations and would allow Immunex and other similarly situated insureds to receive defense costs, after a determination that no defense is owed, in exchange for nothing at all. Instead of announcing such a sweeping and categorical rule that ignores the unique facts at hand, Washington courts should make individualized determinations on the recoupment issue by balancing the equities of each case.

¶48 In this case, because individualized determinations on the issue of recoupment reveal several genuine issues of material fact, summary judgment on the issue of defense costs was inappropriate. We should remand this case for consideration of the facts that bear on whether payment of Immunex’s defense costs would result in an unjust enrichment to the detriment of National Surety.

I. A majority of American jurisdictions allow recoupment under an unjust enrichment theory

¶49 The majority ignores the fact that a majority of American jurisdictions that have considered the recoupment issue have permitted recoupment.7 The jurisdictions that have allowed recoupment have largely done so on the basis of *894unjust enrichment, holding that insureds who receive their defense costs for uncovered claims are unjustly enriched because they gain a benefit they never bargained for. This is also the position taken by the drafters of the Restatement (Third) of Restitution and Unjust Enrichment.

¶50 The leading case allowing recoupment, Buss v. Superior Court, 16 Cal. 4th 35, 939 P.2d 766, 65 Cal. Rptr. 2d 366 (1997), held that forcing an insurer who reserves its right to recoup defense costs paid for uncovered claims would work an unjust “ ‘enrichment’ of the insured by the insurer through the insurer’s bearing of unbargained-for defense costs.” 939 P.2d at 777. Following the line of reasoning in Buss, several other courts the majority cites have recognized the importance of reimbursement under an unjust enrichment theory. As the Connecticut Supreme Court noted,

A cause of action for reimbursement is cognizable to the extent required to ensure that the insured not reap a benefit for which it has not paid and thus be unjustly enriched. Where the insurer defends the insured against an action that includes claims not even potentially covered by the insurance policy, a court will order reimbursement for the cost of defending the uncovered claims in order to prevent the insured from receiving a windfall.

Sec. Ins. Co. of Harford v. Lumbermens Mut. Cas. Co., 264 Conn. 688, 826 A.2d 107, 125 (2003). Similarly, in Hebela v. Healthcare Insurance Co., the Appellate Division of the New Jersey Superior Court held that “the right of reimbursement exists because the insured would be unjustly enriched in benefiting by, without paying for, the defense of a non-covered claim.” 370 N.J. Super. 260, 851 A.2d 75, 86 (Ct. App. Div. 2004); see also Cincinnati Ins. Co. v. Grand Pointe, LLC, 501 F. Supp. 2d 1145, 1169 (E.D. Tenn. 2007) (“It would be inequitable for Defendants to retain the *895benefits of the defense [of a claim not covered in the insurance policy] without repayment of the defense costs.”). These cases hold that insurers that defend subject to a reservation of rights, despite believing a claim is not covered, have an equitable right to reimbursement under an unjust enrichment theory if it turns out the claim was not covered by the pertinent insurance policy.

¶51 The Restatement (Third) of Restitution and Unjust Enrichment also endorses the view that insurers should be able to pursue a restitution claim in this scenario. The Restatement provides:

If one party to a contract demands from the other a performance that is not in fact due by the terms of their agreement, under circumstances making it reasonable to accede to the demand rather than to insist on an immediate test of the disputed obligation, the party on whom the demand is made may render such performance under protest or with reservation of rights, preserving a claim in restitution to recover the value of the benefit conferred in excess of the recipient’s contractual entitlement.

Restatement (Third) of Restitution and Unjust Enrichment §35(1), at 571 (2011).8 The American Law Institute included a specific illustration very similar to the facts of this case that clearly supports recoupment of defense costs to insurers that defend under a reservation of rights:

[Insured] repudiates the obligation to reimburse [Insurer], no matter what the outcome, but accepts [Insurer]’s defense of [Plaintiff]’s claims. [Insurer] proceeds to defend [Insured], having notified [Insured] that it is acting pursuant to a unilateral reservation of rights. [Insurer] subsequently obtains *896a declaratory judgment that [Plaintiff’s] lawsuit is outside the scope of [Insurer]’s duty to defend, because it states no claims that are even potentially covered under the policy. [Insurer] has a claim under this section to recover the amounts reasonably expended in the defense of the [Plaintiff’s] lawsuit.

Id. at 580 cmt. c, illus. 12. The reporter’s note following the illustrations indicates that this scenario is “based on” Buss and other similar cases, concluding that “Restitution then permits the insurer to recover that part of the benefit conferred on the policyholder that exceeds the insurer’s obligation.” Id. at 585, Reporter’s Note on cmt. c.

¶52 Given that the leading theory permitting recoupment in this context, unjust enrichment, is found both in reported cases and the Restatement, the majority’s assertion that unjust enrichment is “simply irrelevant,” majority at 880, is simply disingenuous. The majority fixates on the benefit that National Surety receives by providing a defense under a reservation of rights, concluding that Immunex’s enrichment is matched by National Surety’s avoidance of claims of breach, bad faith, and coverage by estoppel. Id. But it is baffling to say that National Surety is benefited or enriched by complying with the decisional law of this court. National Surety, uncertain of its duty to defend, did exactly as we have instructed: it offered to defend under a reservation of rights to ensure that it complied with its obligation to its insured. See Woo v. Fireman’s Fund Ins. Co., 161 Wn.2d 43, 54, 164 P.3d 454 (2007); Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 761, 58 P.3d 276 (2002); Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 562, 951 P.2d 1124 (1998); Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381, 386-87, 390, 715 P.2d 1133 (1986). National Surety did not receive a “benefit”; rather, it prudently made certain that it complied with its duties under the law.

¶53 The trial court granted summary judgment in National Surety’s favor because it determined that “National Surety ha[d] no duty to defend Immunex with regard to any *897of the claims made against Immunex in the actions tendered to National Surety.” Clerk’s Papers (CP) at 1023. Because National Surety never had a duty to defend Immunex under the terms of the insurance policy, ordering National Surety to pay Immunex’s defense costs, as the majority does today, gives Immunex something that it never bargained for in its insurance contract.9 I turn to Washington law to consider whether majority’s opinion would result in Immunex’s unjust enrichment.

II. Unjust enrichment theory provides a more flexible and equitable approach to respond to the various facets each case presents

¶54 Unjust enrichment is an equitable doctrine that allows recovery for the value of benefits retained absent a contractual relationship, as required by the notions of fairness and justice. Young v. Young, 164 Wn.2d 477, 484, 191 P.3d 1258 (2008). “ ‘[E]quitable doctrines grew naturally out of the humane desire to relieve under special circumstances from the harshness of strict legal rules.’ ” Kingery v. Dep’t of Labor & Indus., 132 Wn.2d 162, 173-74, 937 P.2d 565 (1997) (quoting Ames v. Dep’t of Labor & Indus., 176 Wash. 509, 513, 30 P.2d 239 (1934)). When a court sits in equity, it has great discretion in considering the complex factual matters involved in each case to “fashion! ] broad remedies to do substantial justice to the parties.” Esmieu v. Hsieh, 92 Wn.2d 530, 535, 598 P.2d 1369 (1979).

*898¶55 Our case law applying equitable principles supports a balancing approach that weighs case-specific facts to determine whether a party has been unjustly enriched. Most recently in Young, this court considered work performed by Jim and Shannon Young to prepare Judith Young’s otter sanctuary.10 164 Wn.2d at 481. Later, when Judith Young refused to pay Jim and Shannon, the trial court determined that it would be unjust for Judith Young to retain the value of Jim and Shannon’s work without compensation. Id. at 482. Under the unjust enrichment theory, the trial court allowed Jim and Shannon to recover the market value of their improvements but deducted general contractor’s costs pursuant to a cost expert’s report. Id. We held that the trial court used the improper measure of unjust enrichment recovery by deducting the general contractor’s costs without analysis of the circumstances: “[t]he trial court erred in totally deducting all of these costs without an examination of whether these costs had some consequential relationship to the value of the benefit conferred.” Id. at 488-89. Young demonstrates the importance of placing the unjust enrichment inquiry into the unique factual context of every case.

¶56 We engage in a careful balancing of the facts and circumstances in other equitable contexts as well. See, e.g., Gildon v. Simon Prop. Grp., Inc., 158 Wn.2d 483, 495, 145 P.3d 1196 (2006) (noting that the court looks to equity and good conscience that calls for determinations dependent on the facts and circumstances of individual cases when considering joinder of a necessary party under CR 19); In re Pennington, 142 Wn.2d 592, 603, 14 P.3d 764 (2000) (considering the various factors under Connell v. Francisco, 127 Wn.2d 339, 898 P.2d 831 (1995), to determine whether and how to equitably distribute parties’ property at the end of a *899meretricious relationship in order to avoid unjust enrichment); Myers v. Boeing Co., 115 Wn.2d 123, 138, 794 P.2d 1272 (1990) (holding that balancing various factors to determine whether to apply forum non conveniens “will lead to fair and equitable results”); Tyler Pipe Indus., Inc. v. Dep’t of Revenue, 96 Wn.2d 785, 792, 638 P.2d 1213 (1982) (“[S]ince injunctions are addressed to the equitable powers of the court, the [injunction] criteria must be examined in light of equity [,] including balancing the relative interests of the parties.”). In short, as in other equitable contexts, when considering unjust enrichment, courts balance the unique circumstances of each case to determine whether one party will receive a benefit to which, under notions of fairness and justice, it is not entitled.

¶57 Turning to the mechanics of the claim itself, in order to establish an unjust enrichment claim, the plaintiff must demonstrate that “(1) the defendant receive [d] a benefit, (2) the received benefit is at the plaintiff’s expense, and (3) the circumstances make it unjust for the defendant to retain the benefit without payment.” Young, 164 Wn.2d at 484-85. As a result of the majority’s opinion, Immunex will receive the benefit of payment for its defense costs at National Surety’s expense. Thus, the first two elements of National Surety’s unjust enrichment claim would be easily met. The only remaining issue — whether circumstances would make it unjust for Immunex to receive payment of its litigation costs instead of paying for them itself — depends on a careful balancing of the equities in this case.

III. Genuine issues of material fact exist regarding whether National Surety’s payment of Immunex’s defense costs would unjustly enrich Immunex

¶58 Several considerations would assist in determining whether forcing National Surety to pay Immunex’s defense costs would result in Immunex’s unjust enrichment. These considerations should be carefully balanced before disposal on summary judgment.

*900 A. Timing of Payment

¶59 “Recoupment” of National Surety’s payments for Immunex’s defense is not an actual issue in this case. At least at the time the trial court determined the summary judgment motion on defense costs, National Surety had not paid for any of Immunex’s legal defense. Thus, the real issue is whether National Surety now must pay for defense costs that have already been determined to fall outside National Surety’s duty to defend.

¶60 The majority states that “[i]t makes no difference that National Surety never actually paid any defense costs before the declaration of noncoverage on April 14, 2009.” Majority at 888 n.3. The Court of Appeals came to the same conclusion. Nat’l Sur. Corp., 162 Wn. App. at 777.1 fail to see how this could be so. This is not a clear situation where National Surety is at fault for not paying defense costs. In fact, the record reveals that delay over executing a confidentiality agreement was at least one reason that attorney bills were not more promptly produced to National Surety. See CP at 1199 (letter from Immunex’s counsel to National Surety’s counsel on April 28, 2009, stating that “for some time we have worked to put in place a confidentiality agreement to allow Immunex to produce to National Surety the attorney bills that it has requested in connection with making payment to Immunex”). National Surety actually requested that Immunex provide attorney billings in its March 2008 reservation of rights letter.

¶61 If National Surety’s failure to pay costs was a result of its lack of access to billings through no fault of its own, it seems particularly unjust to force National Surety to pay defense costs now, after a determination that it never owed any defense costs. This is just the type of fact-specific inquiry that should enter the calculus in determining whether National Surety’s payment for defense costs at this late date would unjustly enrich Immunex.

*901 B. Participation in the defense and compliance with policy terms

¶62 When insurers are uncertain regarding their duty to defend, Washington law permits them to defend under a reservation of rights and simultaneously seek a declaratory judgment that they have no duty to defend. Woo, 161 Wn.2d at 54. Upon providing a defense subject to a reservation of rights, insurers are generally able to participate in forming the defense by hiring lawyers, making budgetary determinations, and gathering additional information regarding the claims.

¶63 An insurer’s participation in setting up a defense to claims against its insured is an important consideration in determining whether insurers should be permitted to recoup defense costs paid under a reservation of rights. This is so because it comprises an essential part of the insurer’s bargain with its insured. In this case, Immunex’s policies provided that Immunex must “[c]ooperate with [National Surety] in the investigation or settlement of any claim; or defense of [Immunex] against any Suit . . . [m]ake no admission of liability... [i]ncur no expense [or] [a]ssume no obligation . . . without [National Surety’s] consent.” CP at 639. Immunex appears to have violated this portion of its policy, at least in one respect, when it sent a letter to National Surety “to inform [it] that Immunex is in the process of negotiating a settlement of State of California, pursuant to which Immunex would pay an amount within the limits of its insurance coverage.” CP at 584, 1059. Informing National Surety of its plans for imminent settlement does not seem to comply with the policy terms that National Surety bargained for; at the very least, Immunex was required to cooperate with National Surety and keep it informed of important developments like settling law*902suits.11 Such facts should be considered in determining whether Immunex would be unjustly enriched if National Surety is now required to pay for defense costs — including costs of settlements — despite perhaps never obtaining the benefit of its bargain to participate in providing a defense.

C. Unreasonable delay

¶64 The facts of this case demonstrate a protracted claim process. In 2001, Immunex first notified National Surety of civil investigations. National Surety promptly responded, requesting more information. In 2003, Immunex provided a status report, stating that it would forward any complaints against it as soon as they were served. More than three years elapsed before Immunex tendered its claims. Eighteen more months passed while Immunex and National Surety exchanged correspondence regarding whether Immunex’s claims were covered, until National Surety agreed to provide a reservation-of-rights defense and instituted the instant declaratory judgment action in King County Superior Court in March 2008. Immunex sought a stay of the declaratory judgment action, resulting in another year before the trial court made its determination that National Surety owed no duty to defend.

¶65 I am not suggesting that any of the delays in this claim process were unreasonable but only that this is a valid question that remains open. The majority and the Court of Appeals acknowledge that Immunex’s delay in tender should be considered as to whether National Surety was prejudiced. Nat’l Sur. Corp., 162 Wn. App. at 782; majority at 890. Delay should also be considered in the context of a restitutionary claim for recoupment of defense costs.

*903 D. Entitlement to recover for the same loss under other policies

¶66 The record before us does not disclose much regarding Immunex’s policy with National Surety, other than that there is an excess policy, not at issue here, and an umbrella policy, under which Immunex sought coverage. Whether such policies cover claims in the first instance depends on whether a primary policy is in place, actually applies, or is exhausted. See Hodge v. Raab, 151 Wn.2d 351, 355, 88 P.3d 959 (2004) (quoting RCW 48.22.030(2), which describes “umbrella policies” as policies that apply only in excess to primary insurance); MacKenzie v. Empire Ins. Cos., 113 Wn.2d 754, 757-59, 782 P.2d 1063 (1989) (describing differences between umbrella policies and general liability policies). If an insured may recover for the same loss from several different insurance providers but opts to pursue only one of them, that fact should certainly be considered as to whether the insured would be unjustly enriched by forcing the insurer to foot the bill, especially where the insurer had no duty to do so.

E. Good faith

¶67 Washington insurance statutes require that “all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance.” RCW 48.01.030. Because the legislature has recognized the central importance of good faith in the general context of insurance, whether insurers and insureds meet their good faith standard should certainly enter into the determination of whether an insurer may recover defense costs paid under a reservation of rights.

F Disparity in bargaining power between the parties

¶68 At least in the context of awarding attorney fees to insureds that are forced to litigate against their insurers for *904coverage determinations, we have recognized a “disparity of bargaining power between an insurance company and its policyholder.” Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 52, 811 P.2d 673 (1991). This disparity should also be taken into account in a situation like the one before us: if there is a significant imbalance of power between insurer and insured, the insurer’s ability to recoup defense expenditures under a reservation of rights should be limited accordingly.

¶69 At the same time, this court has indicated that the power differential is at its greatest when insurance companies use standardized, nonnegotiable contracts presented on a take-it-or-leave-it basis. McGreevy v. Or. Mut. Ins. Co., 128 Wn.2d 26, 35, 904 P.2d 731 (1995). This suggests that when the parties have the ability to negotiate the terms of an insurance policy on relatively equal footing, the power differential would change significantly. Where the insured is, as here, a sophisticated corporation with ready access to legal advice that negotiates an insurance policy in its corporate capacity, one would expect the power differential to be less than for an individual purchasing an insurance policy for personal use. In short, the parties’ relative bargaining power is another important factor in considering whether an insurer can assert a restitution claim to recoup defense costs paid under a reservation of rights.

¶70 Though by no means exhaustive, the factors discussed here should be used to determine whether insurance companies that provide defenses subject to reservations of rights may state restitution claims to recover defense costs paid to their insureds if it turns out they never had a duty to defend in the first place. In this case, these fact-specific considerations indicate that a genuine issue of material fact still exists whether Immunex’s enrichment would be unjust. Summary judgment on the defense cost issue was therefore inappropriate.

*905IV. The cases cited by the majority in support of categorically denying recoupment are unpersuasive and distinguishable

¶71 The majority’s conclusion is based on an assumption that the issue before us is a binary one — either recoupment is allowed in all cases or it is allowed in none.12 See majority at 881-82. A closer examination of the cases the majority relies on demonstrates that the majority’s assumption oversimplifies and inaccurately portrays the pertinent case law. The cases cited by the majority are largely a grab bag of unrelated theories and distinguishable facts, never leading to any discernible coherent theory on which to deny recoupment.

¶72 The majority cites several cases for the proposition that permitting recoupment of defense costs under a reservation of rights would permit insurers to “ ‘unilaterally modify its contract.’ ” Majority at 883 (quoting Gen. Agents Ins. Co. of Am,., Inc. v. Midwest Sporting Goods Co., 215 Ill. 2d 146, 828 N.E.2d 1092, 1102, 293 Ill. Dec. 594 (2005); see also majority at 882-83. Although Midwest Sporting Goods held that it could not “condone an arrangement where an insurer can unilaterally modify its contract, through a reservation of rights, to allow for reimbursement of defense *906costs in the event a court later finds that the insurer owes no duty to defend,” 828 N.E.2d at 1102, none of the other cases the majority relies on provides such unequivocal support to sustain, factually or legally, a categorical rule against recoupment.13

¶73 In Shoshone First Bank v. Pacific Employers Insurance Co., 2 P.3d 510, 512 (Wyo. 2000), the Wyoming Supreme Court rejected recoupment where there was at least one covered claim and the insurer had already paid for the defense. The court reasoned that the insurance policy did not distinguish “between covered and non-covered claims so far as the defense of those claims [was] concerned.” Id. at 515. Thus, the Shoshone court felt that allowing recoupment for all defense costs when some claims were covered under the policy would allow the insurer to unilaterally modify the insurance contract. Id. Unlike Shoshone, there was no mixture of covered and uncovered claims here, just a claim that was never covered by the parties’ insurance policy.

¶74 Several of the majority’s cases are readily distinguished by the fact that those insurers participated in selecting counsel and reviewing bills and thus benefited from providing a defense. See Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc., 606 Pa. 584, 2 A.3d 526, 544-45 (2010) (noting that the insurer “had not only the duty to defend, but the right to defend under the insurance contract. This arrangement benefited both parties.” (emphasis added)); Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213, 1219 (3d Cir. 1989) (noting that by defending under a reservation of rights, the insurer avoided the risk of what *907“an inept or lackadaisical defense of the underlying action may expose [the insurer] to if it turns out there is a duty to indemnify”); see also Perdue Farms, Inc. v. Travelers Cas. & Sur. Co. of Am., 448 F.3d 252, 259 (4th Cir. 2006) (same). Unlike these cases, it cannot be said that National Surety was given an opportunity to avoid a subpar defense because, as already discussed, Immunex paid its own defense costs well before it tendered any claim to National Surety and National Surety never participated in any aspect of Immunex’s defense.

¶75 The majority’s other cases are even more easily distinguished. In Capitol Indemnity Corp. v. Blazer, the court denied recoupment because the insurer failed to give its insured “ ‘unambiguous notice that it may later be held responsible for costs incurred,’ ” 51 F. Supp. 2d 1080, 1090 (D. Nev. 1999) (quoting Forum Ins. Co. v. County of Nye, No. 91-16724, 1994 WL 241384, at *3, 1994 U.S. App. LEXIS 13374, at *8 (9th Cir. June 3, 1994) (unpublished)). Had the insurer clearly indicated that it was reserving its rights and intended to seek reimbursement, as National Surety did in this case, the court likely would have allowed reimbursement. Blazer cuts against the majority’s categorical rule.

¶76 In Medical Liability Mutual Insurance Co. v. Alan Curtis Enterprises, Inc., 373 Ark. 525, 285 S.W.3d 233 (2008), the real issue was not recoupment of fees following a defense under a reservation of rights but lack of statutory authority to award attorney fees. The court considered various approaches to the issue of recoupment but ultimately stated that the recoupment issue was irrelevant “because . . . attorneys’ fees are not allowed in Arkansas except where expressly provided for by statute” Id. at 235. This case hardly supports the majority’s position.

¶77 In Zurich American Insurance Co. v. Public Storage, applying Washington law, the court denied the insurer’s request for recoupment because “[a]s a court sitting in diversity, it [was] inappropriate to blaze a new trail in *908Washington insurance law.” 743 F. Supp. 2d 548, 551 (E.D. Va. 2010). The majority’s claim that the court predicted Washington would disallow recoupment is not accurate, majority at 884; the federal court simply refused to allow recoupment because there was no Washington case on point that permitted it to do so. Pub. Storage, 743 F. Supp. 2d at 551.

¶78 In sum, while some of the cases point to the majority’s desired result, they are very factually different from the case we must decide here. The majority has relied on these cases for their ultimate conclusion but has overlooked their facts and their reasoning. These cases are unpersuasive and should not control our decision.

CONCLUSION

¶79 The majority’s blanket determination that insurers may never recoup defense costs under a reservation of rights ignores the unique facts of each case and fails to appreciate the diversity and inapplicability of the different theories on which out-of-state jurisdictions have denied recoupment in certain circumstances. The majority fails to acknowledge that a majority of jurisdictions allow recoupment and that most do so on the equitable basis of avoiding unjust enrichment. Rather than accept the majority’s all or nothing approach, this court should balance the equities of each case to determine whether an insurer has stated a legitimate claim in restitution to recover for its insured’s unjust enrichment. Instead of affirming summary judgment on the issue of Immunex’s entitlement to enrichment in the form of uncovered defense costs, I would reverse the Court of Appeals and remand this matter to the trial court to consider the facts specific to this case, as discussed in this opinion, to determine whether such enrichment would be unjust.

¶80 I dissent.

Madsen, C.J.; J.M. Johnson, J.; and Quinn-Brintnall, J. Pro Tem., concur with Wiggins, J.

Reconsideration denied May 24, 2013.

I agree with the Court of Appeals and with the majority that summary judgment is inappropriate on the issue of prejudice resulting from Immunex’s late tender of its claim. See Nat’l Sur. Corp. v. Immunex Corp., 162 Wn. App. 762, 782, 256 P.3d 439 (2011); majority at 890-90.

A couple of the cases cited by the majority for its position recognize that the majority rule allows insurers to recoup costs under a reservation of rights for uncovered claims. See Med. Liab. Mut. Ins. Co. v. Alan Curtis Enters., Inc., 373 Ark. 525, 285 S.W.3d 233, 235 (2008); Shoshone First Bank v. Pac. Emp’rs Ins. Co., 2 P.3d 510, 514 (Wyo. 2000); see also Michael M. Marick, An Insurer’s Right to Recoup Mon-Covered Defense Costs and Indemnity Payments, in New Appleman on Insurance: Current Critical Issues in Insurance Law 3 (July 2007) (“A majority of the state courts to have considered the issue of whether an insurer may recoup defense costs expended on behalf of its insured have allowed recoupment.”), 23-37 *894(50-state survey demonstrating a majority of American jurisdictions allow recoupment).

This court has repeatedly relied on the current and previous iterations of the Restatement of Restitution for guidance in a variety of contexts in which issues of unjust enrichment and quasi contractual claims arise. See, e.g., Young v. Young, 164 Wn.2d 477, 489-91, 191 P.3d 1258 (2008); Bank of Am., NA v. Prestance Corp., 160 Wn.2d 560, 576 n.13, 160 P.3d 17 (2007); Nelson v. Appleway Chevrolet, Inc., 160 Wn.2d 173, 187-88, 157 P.3d 847 (2007); In re Marriage of Langham, 153 Wn.2d 553, 566-67, 106 P.3d 212 (2005); Chandler v. Wash. Toll Bridge Auth., 17 Wn.2d 591, 601, 137 P.2d 97 (1943).

The majority accuses me of “focus[ing] on National Surety’s contractual obligations” instead of on the proposition that “the scope of an insurer’s duty to defend is broader than the terms of the policy.” Majority at 879. But my focus is on unjust enrichment, the purpose of which is to remedy the value of benefits undeservedly conferred outside the contractual relationship. As to the majority’s statement that an insurer’s duty to defend is broader than the policy’s terms, I am mystified. While I agree with the majority’s general proposition that an insurer’s duty to defend is broader than its duty to indemnify, see majority at 878-79 (citing Truck Ins. Exch., 147 Wn.2d at 760 (citing Hayden v. Mut. of Enumclaw Ins. Co., 141 Wn.2d 55, 64, 1 P.3d 1167 (2000))), I am aware of no authority- — and the majority provides none — that would broaden the duty to defend to matters beyond the policy’s terms.

The majority ignores Young, this court’s most recent opinion discussing the principle of unjust enrichment, because it concerned an otter sanctuary instead of an insurance policy. Majority at 880. It should go without saying that Young and other cases are cited for the principles of law they espouse, not for factual distinctions that make no difference.

RCW 48.18.520 provides in pertinent part that “[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy ....”

The majority also makes the unsupported assertion that “[m]ore recently ... courts [evaluating] whether insurers can recover defense costs have generally concluded that they cannot.” Majority at 883. The majority’s perception of a recent trend to disallow recoupment is belied by a number of recent cases reaching the opposite result. See, e.g., Ill. Union Ins. Co. v. NRI Constr., Inc., 846 F. Supp. 2d 1366,1377 (N.D. Ga. 2012); EMC Ins. Cos. v. Mid-Continent Cas. Co., 884 F. Supp. 2d 1147, 1173 (D. Colo. 2012) (“[W]here an insurer discharged its duty to defend and coverage was nonexistent, it may seek reimbursement for those costs it expended in defending the insured.”); Dupree v. Scottsdale Ins. Co., 947 N.Y.S.2d 428, 429, 96 A.D.3d 546 (N.Y. App. Div. 2012) (“Absent a final adjudication that plaintiff’s alleged wrongdoing does indeed fall under the policy’s exclusions, the policy remains in effect and defendant is required to pay attorneys’ fees and defense costs, subject to recoupment in the event it is ultimately determined that the exclusions apply.” (citation omitted)); Maxum Indem. Co. v. Eclipse Mfg. Co., 848 F. Supp. 2d 871, 884 (N.D. Ill. 2012) (holding that insurer is entitled to reimbursement of its costs because it provided a defense even though it had no duty to defend).

Even Midwest Sporting Goods is factually distinct. There, Midwest Sporting Goods timely tendered defense of the suit to its liability carrier, Gainsco, which denied coverage. 828 N.Ed.2d at 1093. After the complaint against it was amended, Midwest Sporting Goods again timely sought coverage from Gainsco, which offered to defend under a reservation of rights that would have permitted it to recoup any defense costs that were later determined that Gainsco did not owe. Id. at 1093-94. Unlike this case, the tender of claims was immediate and Gainsco actually paid defense costs and participated in the litigation as it was occurring. Id. at 1093, 1095.