The facts behind Financial Servs. Veh. Trust v Saad  2016 NY Slip Op 01637   Decided on March 9, 2016 Appellate Division, Second Department are tragic.  Saad strikes two pedestrians and kills both.  He had leased a car, and since this was one of the few motor vehicle accidents that involved “grave injury” the commercial lessor was in the case.  The case settled for $ 1,150,000 (a smallish number) and both GEICO and the lessor put in the money.  GEICO, however, did not defend Saad and he had to retain additional counsel.  He then turned to GEICO to repay.  GEICO would not.  Note the all important privity and “American Rule” issues .

“Contrary to GEICO’s contention, GEICO was liable to Saad for breach of contract based on GEICO’s refusal to defend Saad in the main action against him for contractual indemnification arising out the underlying wrongful death action (see GMM Realty, LLC v St. Paul Fire & Mar. Ins. Co., 129 AD3d 909; Allianz Ins. Co v Lerner, 416 F3d 109 [2d Cir]; Tokio Marine & Fire Ins. Co. v Grodin, 2006 WL 3054321, 2006 US Dist LEXIS 78146 [SD NY, No. 05 Civ. 9153 (DLC)]). The Supreme Court erred, however, to the extent that it directed GEICO to reimburse Saad for those attorneys’ fees incurred by Saad in the third-party action. The law “is well established that an insured may not recover the expenses incurred in bringing an affirmative action against an insurer to settle its rights under the policy” (New York Univ. v Continental Ins. Co., 87 NY2d 308, 324; see West 56th St. Assoc. v Greater N.Y. Mut. Ins. Co., 250 AD2d 109, 114).

With respect to those attorneys’ fees incurred by Saad in defending the main action, the Supreme Court erred in failing to limit Saad’s recovery to those attorneys’ fees paid by him. Attorneys’ fees paid by Saad’s father’s business, the third-party defendant Mayer J. Saad, M.D., P.C., are not recoverable by Saad (see Cardo v Board of Mgrs., Jefferson Vil. Condo 3, 67 AD3d 945). On its motion, GEICO submitted, inter alia, transcripts of Saad’s deposition testimony, in which he testified that Mayer J. Saad, M.D., P.C., paid a substantial amount of the attorneys’ fees at issue. In opposition, Saad failed to present any appropriate documentation or evidence demonstrating his right to recover those expenses which he did not personally pay (see Gadani v DeBrino Caulking Assoc., Inc., 124 AD3d 1123; Cardo v Board of Mgrs., Jefferson Vil. Condo 3, 67 AD3d 945).

The Supreme Court properly awarded GEICO summary judgment dismissing the causes of action in the third-party complaint to recover damages for alleged tortious conduct. GEICO established as a matter of law that it did not act in bad faith, since its conduct, under the circumstances, did not constitute a gross disregard of Saad’s interests (see Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 453-454).

The Supreme Court also properly awarded summary judgment dismissing the third-party complaint insofar as asserted against the O’Connor defendants and the Bellavia defendants, as the record demonstrated that Saad was unable to establish that any alleged legal malpractice on the part of those defendants caused him actual and ascertainable damages (see Barouh v Law Offs. of Jason L. Abelove, 131 AD3d 988; Lovino, Inc. v Lavallee Law Offs., 96 AD3d 910; Boone v Bender, 74 AD3d 1111). “Conclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action” (Holschauer v Fisher, 5 AD3d 553, 554).”