Coretronic Corp. v. Cozen O'Connor

SUMMARY

Coretronic Corporation, Optoma Technology, Inc., and Technical Service Corporation (plaintiffs) were sued in another action by E&S International Enterprises, Inc. (E&S), in connection with plaintiffs’ manufacture and distribution of plasma televisions. Plaintiffs submitted a claim to Coretronic Corporation’s liability insurer, Insurance Company of North America (INA), demanding that INA provide coverage and a defense of the underlying action. *1385 INA retained the Cozen O’Connor law firm (Cozen) as coverage counsel to advise whether plaintiffs’ claims were covered. Plaintiffs provided Cozen with confidential information to aid in the coverage evaluation. At the same time Cozen was representing INA in evaluating plaintiffs’ tender of the underlying action, Cozen undertook representation of E&S in another lawsuit, unrelated to plaintiffs’.

After discovering Cozen’s representation of E&S, plaintiffs moved for terminating sanctions in the underlying action, claiming collusion and misconduct. The trial court denied the motion, reasoning that E&S should not suffer terminating sanctions because of the allegedly unethical conduct of its counsel, about which E&S had no…