Mississippi Appeals ...

Mississippi Appeals Court Allows Excess Carrier to File Legal Malpractice Claim Against Primary Defense Counsel

March 6, 2012 | by Butler Snow

Excess carriers routinely request reports and updates from defense counsel hired by the primary insurer.  The excess carriers consider primary defense counsel reports when evaluating their exposure and, especially in cases where they do not have their own defense counsel involved, in setting the amount in reserve for the particular case.  The submission of reports and updates to the excess carrier is usually done with the approval of the primary insurance company and is considered by most defense counsel to be a routine part of the defense process.  In Mississippi, most defense counsel would not have considered the submission of these reports and updates to the excess carrier as creating a separate “attorney-client” relationship with the excess carrier – until now.

In January 2012, the Mississippi Court of Appeals ruled that an excess carrier may file a legal malpractice case against defense counsel hired by the primary insurance company.  The Court, acting on what it admitted was a case of first impression under Mississippi law, adopted this new rule in Great American E & S Insurance Company v. Quintairos, Prieto, Wood & Boyer, P.A., No. 2009-CA-01063-COA (Miss. Ct. App. Jan. 31, 2012).  The case involved a pre-tort reform nursing home claim.  Defense counsel retained by the primary carrier initially reported to the primary carrier and the excess carrier that the claim had an actual damages exposure of $250,000 and a punitive damages exposure of approximately $500,000.   The defense expert designation was subsequently stricken because defense counsel failed to meet the expert designation deadline.  Defense counsel updated their exposure opinion from $500,000 to a range of $3,000,000 to $4,000,000.   Following the revised exposure opinion, the primary carrier immediately tendered their limits and the excess carrier ultimately settled the case for an undisclosed sum.

In siding with the excess carrier, the Court of Appeals found that defense counsel’s reports to the excess carrier, which contained confidential settlement values, were sufficient to provide a basis for a claim for negligent misrepresentation against the law firm.  The Quintairos case is a must read for defense counsel.

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Commercial Litigation