South Carolina High Court Allows Malpractice Claim by Insurer Against its Assigned Defense Counsel

Early March, in a narrow, carefully worded opinion, a divided Supreme Court of South Carolina ruled that a liability insurer may sue an attorney it retained to defend its insured where the attorney’s breach of its duty to the insured proximately causes the insurer damage. The decision adds South Carolina to the growing list of states that recognize a malpractice cause of action by an insurer against its assigned defense counsel. See Sentry Insurance Co. v. Maybank Law Firm, LLC, — S.E.2d
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Law Firm’s Policy Rescinded For Misrepresentation in Application

The Supreme Court of Illinois held that the insurer was entitled to rescind a law firm’s malpractice policy based on material misrepresentations in the firm’s renewal application. The main issue in this case was whether the policy could be rescinded despite one of the firm’s attorneys being unaware of the misrepresentation. The appellate court had ruled that, under the innocent insured doctrine, the insurer was required to maintain coverage for the innocent partner despite the misrepresentation on the application when
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Illinois Appellate Court Penalizes Insurer for Not Re-Asking Questions in Renewal Application the Insured Already Answered Incorrectly in Prior Application

In Illinois State Bar Association Mutual Insurance Co. v. Brooks, Adams & Tarulis, 2014 IL App (1st) 132608, the Illinois Appellate Court held, in relevant part, that the Illinois State Bar Association Mutual Insurance Company (“ISBA”) could not rescind a renewal policy based on a misrepresentation in the initial policy application when there was no incorporation of the initial application of insurance into the renewal policy. As background, Douglas Tibble learned of a claim by Tango Music, LLC (“Tango”) in
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Dear John: Attorney Not Required to Disclose Letter From Dissatisfied Client in Application for Malpractice Policy

Illinois State Bar Association Mut. Ins. Co. v. Gold (Ill. Ct. App. Aug. 7, 2013) An Illinois appellate court recently held that a letter from a dissatisfied client to his attorney did not amount to a potential claim requiring disclosure on the attorney’s application for malpractice coverage. In 2004, the defendant attorney received a letter from his client expressing dissatisfaction with the attorney’s handling of his case. In the letter, the client outlined different options for moving forward, including that
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Too Little, Too Late: Malpractice Coverage Evaporates With Law Firm’s Tardy Notice

Minnesota Lawyers Mut. Ins. Co. v. Baylor & Jackson, PLLC (4th Cir. (Md.) June 27, 2013) The Fourth Circuit recently held that a malpractice insurer was not obligated to defend or indemnify a law firm against a multi-million dollar lawsuit arising from the firm’s failure to submit admissible evidence in opposition to a motion for summary judgment. The court held that the firm breached the policy’s notice provision by waiting until an appellate court affirmed the lower court’s ruling granting
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