Earlier this year, the U.S. District Court for the Eastern District of New York predicted that New York state courts – which have yet to address the issue – would preclude recoupment of defense costs paid for claims that are later deemed to be outside of coverage where policy language did not provide for recoupment and where a policyholder had resisted recoupment requests by its insurer. General Star Indemnity. Co. v. Driven Sports, Inc.,No. 14-CV-3579 (E.D.N.Y. Jan. 23, 2015).  Sued by multiple claimants for false advertising and misrepresentation, the insured Driven Sports sought coverage by insurer General Star, who agreed to defend these actions, but proposed that Driven Sports sign a “non-waiver and defense funding agreement” that would have required Driven Sports to repay any defense costs for claims that were determined to be outside of coverage.  Driven Sports rejected General Star’s offer.  On summary judgment filed by both parties on General Star’s obligations to defend, the court held that the claims against Driven Sports clearly fell under a policy exclusion, such that General Star was not required to defend Driven Sports.  Accordingly, General Star argued that it should be entitled to recoup its costs in defending Driven Sports in the underlying – and now uncovered – actions.  The court ruled that recoupment was not permitted for two main reasons:  (1) the insurance policy did not provide for recoupment and (2) the policyholder was not unjustly enriched.  On both grounds, the court explained that General Star could have contracted for recoupment rights during policy negotiations.