State Farm Mutual Automobile Insurance v. Federal Insurance

The primary issue presented by this appeal is whether, for purposes of disqualification, the attorney representing an insured is also representing the insurance company. If the insurance company is a client, this case poses a secondary question regarding the applicable disqualification standard. The issue becomes whether the insurance company is a *1426 “former” or a “concurrent” client when the attorney files a complaint naming the insurance company as a defendant and then settles the insured’s case.

When presented with these issues, the trial court denied the disqualification motion. However, the obligations and duties an attorney owes to an insurance company in this situation support finding an attorney-client relationship for purposes of a disqualification motion. Additionally, the overlap in representation requires application of the “concurrent” client standard. Thus, the motion to disqualify should have been granted.

Statement of the Case

In 1996, respondent, State Farm Mutual Automobile Insurance Company (State Farm) retained the law firm of McCormick, Barstow, Sheppard, Wayte & Carruth (McCormick) to advise State Farm regarding the coverage available to its…

My vote to reverse is registered with reluctance. I find persuasive many of the reasons advanced in favor of the *1436 principle that the relationship between an insurer and counsel selected to defend the insured is not one of attorney-client. (See, e.g., Pepper, Applying the Fundamental of Lawyers’ Ethics to Insurance Defense Practice (1997) 4 Conn. Ins. L.J. 27 ; Silver, Does Insurance Defense Counsel Represent the Company or the Insured? (1994) 72 Tex. L.Rev. 1583; O’Malley, Ethics Principles for the Insurer, the Insured, and Defense Counsel: The Eternal Triangle Reformed (1991) 66 Tul. L.Rev. 511, 512; Winiarski, Walking the Fine Line: A Defense Counsel’s Perspective (1993) 28 Tort & Ins. L.J. 596 , 597; see also Atlanta Intern. Ins. Co. v. Bell (1991) 438 Mich. 512 [ 475 N.W.2d 294 ].) However, the adherence by the courts of this state to the contrary rule, in a variety of contexts, has been of long-standing consistence. It is thus for the Supreme Court or the Legislature, and not for this court, to overturn this history of authority, if it is to be overturned.

In addition, I am not convinced the concept of implied consent is of relevance solely to cases involving successive…

The primary issue presented by this appeal is whether, for purposes of disqualification, the attorney representing an insured is also representing the insurance company. If the insurance company is a client, this case poses a secondary question regarding the applicable disqualification standard. The issue becomes whether the insurance company is "former" or a "concurrent" client when the attorney files a complaint naming the insurance company as a defendant and then settles the insured's case.

When presented with these issues, the trial court denied the disqualification motion. However, the obligations and duties an attorney owes to an insurance company in this situation support finding an attorney-client relationship for purposes of a disqualification motion. Additionally, the overlap in representation requires application of the "concurrent" client standard. Thus, the motion to disqualify should have been granted.

In 1996, respondent, State Farm Mutual Automobile Insurance Company (State Farm) retained the law firm of McCormick, Barstow, Sheppard, Wayte & Carruth (McCormick) to advise State Farm regarding the coverage available to its insured, Gerawan Farming, with…