(Article from Insurance Law Alert, June 2019)
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Our February 2019 Alert reported on a Florida appellate court decision dismissing an insurer’s malpractice suit against counsel it hired to represent the insured. The appellate court ruled that the insurer lacked standing to assert such claims. Arch Ins. Co. v. Kubicki Draper, LLP, 266 So.3d 1210 (Fla. Dist. Ct. App. 2019). This month, the Florida Supreme Court agreed to hear the appeal. Arch Ins. Co. v. Kubicki Draper, LLP, 2019 WL 2386336 (Fla. June 6, 2019).
Arch Insurance Company hired counsel to defend its insured in an underlying action. After the suit settled for policy limits, Arch sued the law firm for professional negligence, claiming that the law firm’s delay in asserting a statute of limitations defense resulted in an unnecessarily large settlement. A Florida trial court granted the law firm’s summary judgment motion, finding that Arch lacked standing to sue and that there was no privity between Arch and law firm. The trial court acknowledged that some Florida district courts have recognized an insurer’s right to bring a malpractice claim against an attorney retained to represent its insured, but deemed those decisions non-binding, unpersuasive and distinguishable.
A Florida appellate court affirmed, stating: “where nothing indicates that the law firm was in privity with the insurer, or that the insurer was an intended third-party beneficiary of the relationship between the law firm and the insured, we are unwilling to expand the field of privity exceptions to apply to this case.”
We will keep you apprised of the Florida Supreme Court’s decision in this matter.