The Adjuster – August 2004

The Roth Report: Jurists who write lengthy treatises

James M. Roth, Esq., The Roth Law Firm

​How many of you   read all 53 pages of the Montrose decision? I did, though I had to painstakingly   read it a few times to understand the subtleties.

We seem to be   blessed by jurists who want to ensure precision in their written opinions and   seemingly do so by writing lengthy, and oftentimes boring, treatises. As a   practitioner of insurance law, I need to read the decisions handed down to   remain current with the ever-changing state of insurance law.

​Since I read   all of the cases, I can make your life just a little easier by using this   periodical as a forum to share with you an abstract of the appellate and Supreme   Court decisions which affect the insurance industry. With this inaugural column,   we’ll look at a decision discussing the disqualification of an attorney in a   “bad faith” lawsuit.

Recently, an   attorney and his law firm were disqualified from representing an insured of   Fireman’s Fund Insurance Company (FFIC) in a lawsuit against FFIC alleging “bad   faith” and breach of insurance contract because the attorney had previously   represented FFIC. While you may conclude that a previous relationship with the   defendant insurance company would automatically result in disqualification, a   “substantial relationship” must exist between the subject of the former   representation of the defendant and the subject of the current plaintiff’s   litigation.

In granting the   motion to disqualify, the Court of Appeal in the case styled Farris V. Fireman’s   Fund Insurance Company, 14 Cal.Rptr.3d 618, 2004 WL 1366798 (Cal.App. 5 Dist.),   found the required “substantial relationship” because during the 13 year   relationship with FFIC and while a member of a different law firm, the attorney   (and his previous firm) provided coverage and claims handling advice to senior   employees and decision makers at FFIC, including settlement, litigation and   claims handling strategies in connection with coverage matters, and participated   in confidential communications with top-level FFIC employees.

The attorney,   while with his previous firm, had also been a presenter in educational seminars   given to FFIC employees on issues related to coverage disputes and bad faith   actions. The Court concluded that given the factual and legal issues in the   present case, the information material to the evaluation, prosecution,   settlement, or accomplishment through the attorney’s earlier representation of   FFIC was also material to the evaluation, prosecution, settlement, or   accomplishment of the current representation. The lesson here is that if you’re   sued by a former attorney/law firm, you should be able to disqualify them if   they provided to or received from your company confidential information which   could be used against your company in the threatened suit. Interestingly, other   cases involving conflicts like this have allowed the current law firm to erect a   wall so that the conflicted attorney was quarantined from the file.

Now the legal   disclaimer: This column is provided as a reference for the benefit of members of   the insurance industry. The opinions and comments contained herein are intended   to inform and educate. Legal counsel should be consulted before applying my   reasoning to your question.

​James M. Roth is a shareholder in The Roth Law Firm. Mr. Roth’s practice includes representing TPAs and insurance carriers in coverage, SIU, extra-contractual liability, and third party defense matters.

The Roth Law Firm, APLC

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