Employment Liability Claim
- A former employee sued an employer for covered and non-covered damages, which suit an EPL insurer agreed to defend under a reservation of rights through ethically conflicted dependent counsel, who over the first three years offered only $100,000 to settle with the plaintiff and insisted that the employer contribute to the settlement for non-covered exposure. Neither the insurer nor its lawyers answered the Questionnaires. Exactly one week after the employer sent both Questionnaires, the insurer proudly announced that it had successfully settled with the plaintiff for $550,000 at no cost to the employer.
- A housemother threatened to sue a college sorority for unpaid wages, which claim an EPL insurer agreed to defend under a reservation of rights through ethically conflicted dependent counsel and agreed to also pay independent counsel. The sorority sent Questionnaires which both the insurer and its lawyers refused to answer in writing, but who lied in telephone conversations that the insurer had no relationship with the dependent counsel. At a mediation the following month, the insurer paid the plaintiffs demand and waived all claims that the sorority pay any portion of the settlement.
- Founders of a business sued officers of the company for breach of contract and employment discrimination. An EPL insurer agreed to defend, but failed to pay defense invoices within 40 days. The company settled with the plaintiffs despite a “no-voluntary-payment” provision. The policyholders sent a Coverage Questionnaire to the insurer that it claimed to not understand. The insurer paid 100% of costs of defense and the remainder of its policy limit to reimburse the policyholders for the settlement.
Construction Defect Claim
- A homeowner sued a building contractor over leaky windows, which suit a liability insurer agreed to defend under a reservation of rights through ethically conflicted dependent counsel and agreed to pay independent counsel. A non-binding arbitration resulting in an award that the homeowner take nothing on the complaint and that the homeowner pay the remaining balance owed to the contractor. The contractor sent the Questionnaires, which both recipients refused to answer, and then moved to disqualify the insurer’s lawyers for their failure to comply with then Rule 3-310 (Now Rule 1.7). The trial court denied the motion to disqualify and on the eve of the Court of Appeal reviewing the denial, the insurer paid to the homeowner the entire cost of new windows and paid the balance due to the contractor so as to render moot and move to dismiss the appeal which might otherwise have resulted in a published opinion making bad law for insurers.
- A apartment complex owner sued a tile contractor for water damage, which suit a liability insurer agreed to defend under a reservation of rights and appointed ethically conflicted dependent counsel to conduct the defense. The tile contractor sent Questionnaires that neither the insurer nor dependent counsel answered. The insurer settled the liability suit on terms that the tile contractor release the insurer. The tile contractor sued dependent counsel for the cost of independent counsel and the contractor’s share of the settlement with the apartment complex owner. To dozens of deposition questions regarding dependent counsel’s analysis of conflicts of interest, the only response was “There was not conflict.” Dependent counsel paid the entire amount of the tile contractor’s settlement offer.
- A homeowner sued a homeowner’s association for failure to maintain a slope that suffered minor subsidence (the repair of which varied from $0 to $800k) and the association cross-complained back against the homeowner for damaging a retaining wall installed by the association (the repair of which was valued at less than $10k). The homeowner’s liability insurer refused to defend, then agreed to defend under a reservation of rights and refused to pay for independent counsel but insisted that the homeowner choose among “panel” lawyers. The homeowner sent the Questionnaires which both recipients refused to answer, but a mediation the next month resulted in a settlement in seven figures with the homeowner’s insurer paying 30% more than the association’s insurers.
Bodily Injury – Policy Limit Settlement
- A drunk guest fell to his death from a homeowner’s balcony whose heirs sued for wrongful death. The homeowner’s liability insurer agreed to defend without any reservation of rights and appointed dependent counsel to defend the homeowner. The heirs offered to settle for the homeowner’s policy limit, which offer the insurer rejected pursuant to dependent counsel’s recommendation, claiming that further investigation was required. The homeowner sent the Questionnaires which both recipients refused to answer, but the insurer issued a written waiver of the policy limit and expressly agreed to pay any adverse judgment in any sum.
- A picture framer damaged fine art, whose owner sued. The framer’s insurer refused to defend, then agreed to defend under a reservation of rights through ethically conflicted dependent counsel who appeared in the lawsuit as counsel of record for the framer, but claimed to represent only the insurer and not the framer. The lawyer recommended that the insurer reject a policy limit settlement offer of $1M. The framer sent Questionnaires following which the recipients refused to answer, but the lawyer quit and the insurer paid a judgment of over seven times the policy limit.