COVERAGE DISPUTE BETWEEN INSURED AND INSURER HELD NOT A FORESEEABLE CONSEQUENCE OF ATTORNEY MALPRACTICE
A minor injured in a softball game obtained a verdict exceeding the $2 million limit on a policy issued to the United States Sports Specialty Association by United States Fidelity and Guarantee Co. and reinsured by Lloyds of London. The reinsurers, USF&G’s behalf, paid a settlement amount also significantly exceeding the policy limits. USF&G filed suit seeking reimbursement from USSSA for amounts paid beyond policy limits. The state supreme court rejected the claim, holding there was no extracontractual right to restitution between an insurer and its insured. The reinsurers, as subrogees of USF&G and the insured, added malpractice claims against the law firm that had been appointed to represent the insured, seeking, among other damages, the litigation expenses incurred by the USF&G and USSSA in determining whether USF&G was entitled to reimbursement from USSSA for amounts spent beyond policy limits. The court granted partial summary judgment to the law firm on this theory, holding that the coverage dispute between USF&G and USSSA was not a foreseeable consequence of the law firm’s alleged malpractice. National Indemnity Co. v. Nelson, Chipman & Burt, Case No. 2:07-CV-996 TS (USDC D. Utah Jan. 18, 2013).
This post written by Ben Seessel.
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