In U.S. Underwriters Ins. Co. v. City Club Hotel LLC, the New York Court of Appeals answered the following certified question in the affirmative:

Whether, in a case in which an insurance company has brought a declaratory 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 defending against that action?

The Court held that the rule in Mighty Midgets, Inc. v Centennial Ins. Co. (see prior post) applied to the defending insured in the declaratory judgment action even though the insurer defended the insured in the underlying claim.  Notably, the Court refused to answer the second certified question because it was unclear.